Could Freelancing be the Future of M&A?

M&A has historically been an old-fashioned industry characterized by large institutions and structured career tracks. However, a change is on the horizon.

For most M&A professionals, a career starts at investment banks, where thousands of analysts are hired each year and rigorously trained in financial analysis, Microsoft Excel, market research, and presentation building. While a few climb the ranks to become relationship-focused managing directors, the majority leave, switching to investment careers at private equity firms and hedge funds, strategy careers at large corporations, or abandoning the M&A world altogether.

This rigid structure is beginning to evolve as many entrepreneurial dealmakers choose to branch off and pursue freelance options or establish their own boutique shops. Technology, shifting industry dynamics in the M&A industry, and a generational shift towards freelancing are accelerating this trend.

Technology & Freelance

The power of technology-enabled freelancing can be seen in a variety of industries.

Many of the most familiar industries rely on freelancers to deliver services to customers, including software development, medicine, journalism and law. Nearly 33% of the entire U.S. workforce is made up of freelancers, and this number is expected to swell to 40% by 2020.

These days, professionals are using technology to build careers on established online work marketplaces like Elance and oDesk. They are finding customers through Angie’s List and ZocDoc, and using platforms such as Airbnb and Lyft to transform themselves into independent hotel operators and taxi drivers.  Even pedigreed ex-big firm lawyers are making lucrative careers as freelance corporate lawyers, finding short-term legal projects through platforms such as Axiom Law and UpCounsel. In many cases, these freelance lawyers are supporting M&A events for smaller companies who cannot afford the high cost associated with hiring a big firm.

Is M&A Next?

The investment world is no different. At SpareHire, we are seeing more and more M&A professionals choose freelancing as a career, driven by a few recent industry dynamics:

1. As is the case in the legal industry, training programs at large investment banks equip thousands of new professionals with robust skill sets every year, creating large pools of talent with valuable skills to offer.
2. Most banks have pyramidal organizational structures, forcing talented mid-level and junior professionals to leave in search of other careers while senior professionals stay in place.
3. Industry headwinds such as declining management fees have caused investment firms and transaction service providers (e.g. strategy consulting firms, accounting firms, advisory firms) to recalibrate their HR structures and work with less.
4. The industry’s demanding work schedule leads to a high churn rate, and many talented M&A professionals voluntarily leave the industry each year to raise families and pursue other passions.

The result is a large, experienced pool of talent looking for new opportunities.

While freelancing is by no means new to M&A – anyone from the industry knows at least a handful of former investment bankers turned independent brokers –these types of freelance roles have traditionally been limited to seasoned professionals with rolodexes.

Thankfully, technology is making it easier for these talented M&A professionals to function independently, and for younger professionals to gain experience and build their networks. Instead of relying solely on personal contacts, the modern deal professional leverages tools and networks to succeed.

In particular, people are becoming more comfortable engaging in large transactions online (not the case five years ago).  Rather than scrambling to source transactions through small personal networks, investment bankers, capital providers and companies are now connecting and engaging through a host of crowdfunding sites like AngelList or online business development platforms like Axial.  Online marketplaces like SpareHire make it easier for independent finance professionals to find short-term projects and for boutique investment firms and advisory shops to find and engage flexible talent.

All of this is made possible by the internet – small, closed networks are quickly being replaced with larger, more interconnected ones characterized by better information flow and increased interaction.

What’s Next?

The economy is becoming more entrepreneurial every day.  Whether you are an independent M&A professional who just left a big firm and is looking to freelance or an industry veteran seeking flexibility, new technology is making it easier and easier for you to create an independent career.  Harnessing this technology can help you promote your services, expand your network, engage with other M&A professionals, and find new work opportunities.