A quick review of the M&A – Real Estate job…
In this article, Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023) explains how is working as an M&A Analyst in Real Estate any different from being a general M&A.
Let’s recall what M&A is and then, we will assess how working in the Real Estate sector makes it different
M&A (Mergers & Acquisitions) is a profession that advises companies wishing to develop their external growth, i.e. growth through the acquisition of another company or through a merger with it. M&A mandates are therefore carried out on the side of the company that wishes to acquire another company, “buy-side”, or on the side of a company that wishes to be acquired, “sell-side”.
Therefore, an analyst in M&A with a Real Estate focus will only work on Real Estate-related topics. For example, clients may be property managers, real estate companies, property developers or hotel groups. By the same logic, the subjects encountered and studied in the M&A pitches will be centered around the real estate sector. These include shopping centers, entire housing estates, office towers, hotel chains and their hotel stock.
What does an analyst in M&A – Real Estate work on?
The tasks of an M&A analyst are diverse and include, for example, drawing up a business plan, modelling different scenarios and strategies in Excel, and drafting information memorandums (IMs) on the various deals in progress. With a real estate asset that you are trying to value for instance, the case scenarios that you will anticipate, will describe the possibility that you do not receive 100% of the rent, but perhaps only 30% for the first 6 months of the project.
All these skills on the real estate sector are cumulated to the ones you acquire as an M&A analyst and are then widely used for the mergers and acquisitions of companies, in the development of their external strategy, in their financial evaluation or in the analysis of databases.
Again, the financial analysis tools for the real estate sector are not the same and are specific to Real Estate. For example, analysts will focus on the possibility that rents for a property will not come in and will try to estimate whether the estimated average occupancy rate is realistic. When valuing by stock market or transactional comparables, the comparables used will be functions of the capitalization rate and not EBITDA or EBIT multiples.
What are the main exits for an M&A Analyst of the Real Estate sector?
There are a lot of opportunities, but of course largely limited to the real estate sector. This is because there are many different jobs and companies in the real estate world: asset managers, real estate companies, real estate management of a large company, etc. It is also possible to join the real estate teams of a private equity fund in order to move to the investor side.
Related posts on the SimTrade blog
▶ Ghali EL KOUHENE Asset valuation in the Real Estate sector
▶ Clément KEFALAS My experience of Account Manager in the office real estate market in Paris
▶ Louis DETALLE A quick presentation of the M&A field…
▶ Louis DETALLE A quick presentation of the Private Equity field……
Resources
Youtube Interview with a Deloitte Manager in M&A Real Estate
BNP Paribas Real Estate – Presentation of all Real Estate jobs
About the author
The article was written in December 2022 by Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023).