As a college student that still is not sure of what I would do when I “grow up”, I recently gained an interest in the finance industry. More specifically, I became interested in Investment Banking. However, not wanting to limit myself, I decided to explore all facets of the finance services industry. This four part series will feature career information in: Corporate Finance, Investment Banking, Investment Management and Capital Venture. Stay tuned to read all of these articles so that it may help you to make an informed decision on what career to pursue or to switch to.
You hear about the highly paid superstars of the finance industry. The hobnobbing with the rich and the powerful. The Forbes 500 and the Forbes wealthiest men. The exciting mergers and acquisitions of companies. The strategic maneuvers of companies to remain competitive in trying times. These are some of the reasons why I want to venture into financial services.
Working in Corporate Finance means working for a corporation or company to help it raise money to continue operating, expand business, takeover an existing business, manage existing money on hand and provide strategy and advice on how to continue to expand business. In the context of this article, we are not talking about Corporate Finance in terms of a third party helping a private company raise funds. Corporate finance in those terms is the responsibility of an Investment Bank. Top investment firms include JP Morgan, Goldman Sachs and Smith Barney. Corporate finance in this article is referring to the corporate finance within a private company.
A person working in corporate finance has the goal of increasing the value of the company by carrying out any of the functions listed above.
Generally, people in corporate finance enter a company fresh from college. They start as a junior financial analyst. If you enter the company with a Masters in Business Administration (MBA) you are referred to as a financial analyst. A financial analyst’s job is to analyze and determine financial needs and analyzing the company’s budget. They may be researching possible acquisitions and the benefits of the acquisitions. They can analyze their competitors to try to stay ahead or catch up to the level of business that the competitor is doing. They are responsible for marketing the “market price” of the company. Generally, analysts are assigned to even more specific functions such as finding funding to generate capital for a project. They may be assigned to set targets for profits and sales or to evaluate future performance so that management can make informed business decisions.
Progression within corporate finance field leads a financial analyst into more specialized fields which include:
Corporate Development and Strategic Planning in which you become an expert on evaluating companies to acquire or merge with.
Cash Management is in charge of ensuring that the company has enough money for daily operations.
Treasury works with outside investment banking firms to raise money through public offerings, bonds and loans. Also manages pension funds and the company’s investments in other companies.
Divisional Financial Services help subdivisions in the company with financial plans, forecasts and compare financial forecast with actual performance. Then you go to to analyze consequences of other business plans. You are constantly analyzing and evaluating methods cut costs, evaluate better business plans and help managers in deciding on the most profitable business strategy.
Compensation depends on the size of the company that you work for and where it is located. However, general starting salary for financial analyst starts at $40,000 per year and bonuses. Here are some figures from Wetfeet.com.
Ã¢Â?Â¢ Chief financial officer: $85,000 to $350,000
Ã¢Â?Â¢ Treasurer: $85,000 to $200,000
Ã¢Â?Â¢ Controller/finance director: $60,000 to $190,000
Ã¢Â?Â¢ Cash manager: $50,000 to $90,000
Ã¢Â?Â¢ Financial analyst: $35,000 to $110,000
Ã¢Â?Â¢ Accounts payable manager: $40,000 to $75,000
Ã¢Â?Â¢ Accountant: $40,000 to $65,000
Ã¢Â?Â¢ Credit analyst: $25,000 to $70,000
Ã¢Â?Â¢ Bookkeeping manager: $25,000 to $80,000
Qualifications and Skills
Working in corporate finance requires that you have great attention to detail as you start out crunching numbers that have to be correct. A mistake in the numbers or figures could lose the business millions of dollars.
You also need to think analytically and be able to evaluate different scenarios and options. You have to weigh consequences and benefits by utilizing numbers from financial forecasts and reports.
In order to move up the ladder of corporate finance, a more advanced degree is generally necessary. These include and MBA or CFA, depending on which specialty you go into.
Most large companies hire undergraduates straight out of college as junior analysts. You should have demonstrated an interest in finance from courses and activities taken in the 4 years of undergraduate schooling. Having experience in financial industries through internships is looked at closely by companies. Degrees in Business Administration and Economics are looked for. However, there are many people who have degrees in other areas that are successful in the field.
My Take on Corporate Finance
The money is good and the hours worked are not as crazy as those worked by investment bankers. However, as you move on in the career track, Investment bankers make much more money than corporate finance employees. At the same time, investment bankers have very high rates of turnover as the hours and stress becomes unbearable for many. People in the field generally testify that corporate finance is just a little bit less unbearable. The pluses of working in corporate finance are that you are the ones determining the direction of the company. You interact with high powered executives to help make important decisions. However, I can not make a solid decision on what to think of corporate finance until the other articles of this multi part series is done. One thing is certain though, these jobs require too much time and commitment such that you have to enjoy what you are doing. You have to be able to like your job in capacity that is for reasons more than just money. Stay tuned for next week’s article on “Investment Management”. Please note that there is also an accounting aspect of Corporate Finance that I completely left out because this series is not focused on accounting. For more information about accounting within corporate finance refer to www.wetfeet.com.