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HOW TO GET STARTED IN CORPORATE FINANCE
A world of opportunities
If you are looking for a role that gives to access to many types of industries, challenges your planning and communication skills, and plays a key part in funding companies and helping them grow, then a career in corporate finance might be for you.
What is corporate finance?
Corporate finance is about using existing capital within an organisation as well as raising new capital for projects, acquisitions and growth. It deals with the external sources of funding, effective use of existing capital, creation of shareholder value for investors, and the analysis of the return on investment of that capital.
As a corporate financier you’ll be working on strategies to maximise the value of the business, using different types of debt, equity and capital structures. The composition of a company’s capital structure also plays a key part on how investors view its risk profile. For example, a heavily indebted company carries a greater investment risk, but a potential investor might accept that risk if there is a prospect of greater returns. You may also be involved in helping a company to reschedule its debt, either to reduce risk and costs, or deploy new funding for expansion and growth.
What is it like to work in corporate finance?
Expect a career that is exciting, varied, fast-paced and demanding. The role often requires long hours, but the rewards are high too. You’ll have a deep understanding of what makes businesses work, and you’ll be looking to help increase the value of a business through planning, risk assessment and forecasting. The decisions you make will have a direct impact on the success of the company going forward.
What are the different roles within corporate finance?
There is a huge variety of roles within corporate finance, including Mergers and Acquisitions (M&A), financial planning and analysis, treasury, investor relations and internal audit. You will look at debt ratios and cashflow to improve the health of the company and make investment decisions on how to help the business grow most effectively.
There are three key areas where your expertise will be used:
1. Budgeting and investment
Corporate financiers look at how to deploy existing capital in order to maximise returns. They analyse where investment might be used most effectively, assess expenditure and cashflow, and model the financial implications of projects and ventures including mergers and buying other companies.
2. Raising and using capital
There are different ways of raising money for investment and new projects, and each method has pros and cons. Your role will be to assess the most effective use of existing capital, whether to raise money for the company through borrowing, and the type of debt which would be most suitable over what timescale. You might decide to negotiate loans with banks, open the company to external ownership via the issue of shares, or create debt instruments in the market. This requires a deep understanding of the risk and reward ratios involved in each of the strategies.
3. Providing value for shareholders
Investors in the company will expect returns, and your job will be to balance the accounts so that there is sufficient cashflow and investment returns to pay earnings or dividends to shareholders, allocate capital for future projects and manage debt repayments and cashflow. This is a critical role that will determine the future success and risk profile of the company.
What are the key skills needed to succeed in corporate finance?
Amanda McCulloch, chief executive of TMM Recruitment, says success in a corporate finance role is a combination of technical knowledge with strong communication skills. You’ll need to have an eye for detail, and an ability to assess and manage risk, as well as soft skills, such as communication, critical thinking, relationship management, accuracy, risk assessment and project management.
How do accountants work in corporate finance?
Simon Denye, corporate tax partner at DSG Chartered Accountants, one of the leading independent accountancy and advisory firms in the North West, says accountants play crucial roles in corporate finance, involving various responsibilities such as:
• Advising on mergers and acquisitions (M&A): Accountants working for firms provide strategic advice to clients on M&A transactions to ensure financial viability, as well as assisting to structure the transactions. This may include deferred consideration in a tax efficient manner, taking into account the particular circumstances of the parties.
• Consulting and brokering company sales: As consultant accountants, they facilitate the sale of companies by evaluating financial health and negotiating deal terms to maximise value.
• Private equity investments: Accountants in private equity firms identify potential investment opportunities, conduct financial due diligence, and manage portfolios to enhance returns.
• Corporate finance brokerage: These professionals market companies for sale, leveraging their financial expertise to attract suitable buyers and negotiate favourable deals.
• Insurance brokering: In the insurance sector, accountants offer Warranty & Indemnity (W&I) insurance, safeguarding transactions by uncovering unforeseen liabilities.
• Financing acquisitions: Working for banks or alternative lenders, accountants structure and provide financing solutions for company acquisitions, ensuring optimal financial outcomes.
A qualification, such as ACA, ACCA, or CIMA will provide the necessary background in accounting
How to get started in corporate finance
Once you have completed AAT Level 4, you can think about moving on to chartered status. Amanda says training within the audit team of a practice firm and studying chartered qualifications is a good path to follow in corporate finance. Other options include studying for a masters qualification, undertaking an MBA or completing the Certificate followed by the Diploma in corporate finance.
Simon Denye says a qualification, such as ACA, ACCA, or CIMA (which you can study for after your AAT Level 4) will provide the necessary background in accounting, which is a fundamental building block in a career in corporate finance. After that, you can begin to explore areas such as mergers and acquisitions, financial analysis, investment banking, or corporate restructuring.
“With a strong accounting background, individuals can confidently navigate the complexities of financial transactions, assess investment opportunities, and provide strategic advice, ultimately driving business growth and success,” he says.
How to progress your career in corporate finance
“Practical work experience is crucial in financial analysis, reporting, forecasting and modelling,” says Amanda McCulloch. “Then you should be aiming to progressively gain responsibility that exposes you to more complex financial activities and consolidates a strong grasp of GAAP and IFRS principles.
“While there are clear pathways for career progression from audit to CFO, it’s also possible for professionals to smoothly transition into corporate finance from other roles in accountancy and finance.”
Once in corporate finance, there’s high transferability across industries, opening your career to explore different fields and a wide range of jobs across M&A, financial planning and analysis, treasury, investor relations and internal audit.
TOP TIPS
How to succeed in corporate finance
1
Be open to continual learning, developing your skills in each role
2
Keep up to date with the growing influence of technology
3
Put effort into networking and continuously building your professional network
4
Ensure your technical knowledge is up to date and that you always employ a studious attention to detailBecome an AAT member and show enthusiasm for further qualifications
5
Decide on your study route and timescale
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