CORPORATE FINANCE TRAINING & PRIVATE EQUITY TRAINING

In the middle market, corporate finance advisors are typically chartered accountants (ACAs or equivalent) meaning they have an excellent understanding of accounting and financial statements. Depending on the background of the ACA though, they may not be accustomed to the quality of earnings, working capital and net debt due diligence process which are critical components of the price discussion in an M&A deal. Gap filler programmes to plug knowledge gaps here can be useful to ensure the ACA is able to hit the ground running when making the move from Audit, for example, to Corporate Finance.

Where M&A advisors do not have an ACA background, corporate finance training must cover accounting and financial statements, drilling down to debit and credit fundamentals. This may sound overly detailed, however it is of critical importance that middle market M&A advisors understand how specific transactions impact the accounts. It’s very difficult to undertake quality of earnings, working capital and net debt analysis with confidence without this knowledge.

Corporate finance training, from a technical perspective, needs to cover not just valuation and financial modelling, but completion mechanics including the locked box and completion accounts process, funds flows and the key legal documents such as the Sale and Purchase Agreement and, in the case of a private equity deal, the Investment Agreement / Equity Term Sheet, amongst others.

What separates excellent corporate finance advisors from others is their ability to connect with their clients, truly understand their objectives for a transaction and then create a process and structure which delivers for them.

Everyone understands that this requires excellent knowledge of the market and technical ability of behalf of the deal team, but listening skills are a significant differentiator from advisor to advisor. The right application of listening skills means a prospective client is more likely to be “heard” and this eventually leads on to the building of trust and then, all going well, a transaction process which is more likely to fulfil the objectives of clients and with fewer problems down the road.

The softer side of corporate finance therefore, even at the junior level in a bank, deserves at least the same focus from a corporate finance training perspective as the technical side does. As one moves up the seniority level, corporate finance training should be heavily weighted towards softer skills.

Ultimately, corporate finance advisors win based on their ability to deliver a better relationship based on trust than another advisor, therefore the return on investment of soft skills training is exponential.

The objective should be to create well rounded corporate finance advisors who are comfortable operating across all the core corporate finance workstreams.