The main function of a corporate finance professional is to synergise the activities of the client so that he derives the maximum out of it. ``It is a value-added service where we fill for the client,'' says Arjun Sawhny, partner, corporate finance, KPMG.
Primarily, corporate finance focuses on three fronts. Explains Rajiv Memani, head-corporate finance, Ernst and Young. First is the transaction which may include all activities under it. To list a few, these are:
Raising funds from the secondary market
The second part of corporate finance involves the transaction support activities. Elaborates Memani: ``Support activities include valuation and preparation of business model. In valuation, we calculate the net worth of any of these, which may include either a company or a brand or a distribution network or any other asset. For arriving at the right business model, we prepare the right kind of structure or the right kind of financial instrument which is best suited for our client.''Finally, the advisory services. These include aspects such as due diligence and regulatory advisory services. Due diligence would mean a deep insight into the books of accounts of the clients to find out the lacunae, if any.
This is a step towards arriving at future projections for the client.But a stream like this certainly asks for a lot more responsibilities as it involves the risk of playing with theoperational ability of the clients.
Explains Sawhny: ``The basic requirement of the people best suited for corporate finance is that they should have a flair for numbers.''
And truly, as long as a person is systematic and smart in his approach, he has the potential to thrive in this line. ``In London we have doctors working in corporate finance,'' adds an enthusiastic Sawhny.
Far away from accounting where a person develops a conservative approach of thinking within a box, corporate finance forces a person to think laterally.Corporate finance is still in its early stages of development in India. So the openings are limited for fresh recruits. Adds Sawhny: ``At present we are taking only a few people as fresh recruits. Rest are those having experience in the relevant sectors like banking or other financial services.''
The professionals usually preferred are MBAs for the transaction part of the business and CAs for the transaction support business. And the reason for this is simple. As the transactionpart involves a lot of lateral thinking so MBAs are best suited for it. But of all the players of corporate finance in this country, only a few like KPMG and Coopers & Lybrand go to the campuses for recruitment. Most of them prefer taking people having one to two years of relevant experience. And those who have had international exposure have a better chance of getting a break in this field, says Memani.
Another reason for not favouring a fresher is explained by Satyawati Berera, partner, Price Waterhouse. She says: ``The cost of training the new recruits is very high. So we prefer experienced people.'' Some companies like Ernst and Young take top-rank fresh graduates from colleges as research staff.
For the transaction support part, the lock-box attitude of chartered accountants is more helpful as they are experts in analysing financial statements and other mathematical calculations.
At the work level, a corporate finance professional prefers working in groups. Explains Sawhny: ``We have managementgraduates and technocrats working together. It is a homogeneous mix.''
Initial level of joining varies, depending on the organisation. In KPMG, explains Sawhny, ``a professional can join as an assistant manager and rise to become a partner in 10-12 years.'' While in Coopers & Lybrand, explains its associate director, T K Khandari, ``a professional joins at the level of a consultant and can rise up to the level of the executive director.''At the entry level, the compensation package is in the range of Rs 2.5 lakh to Rs 3 lakh per annum.
Responsibilities begin with product capabilities. Here the team member is given one specified area to proceed with. Initially, the professional meets the client, analyses the ground situation and gives his analysis to the partner or the executive director. In this stage, it is the partner who takes the final decision and makes the report. Slowly he takes on the lead advisory role and finally full responsibility as a partner or executive director.
Recently, there has beena trend of having an industry specialist who possesses all the skills. Explains Khandari: ``With the telecom sector being de-regulated and privatisation taking place in a big way, this means a lot of work for us. But for this we will have to bank on the people with industry specific skills.'' And in this evolving trend, the organisations will have to bank on their area of specialisation. Khandari adds that Coopers & Lybrand are specialists in privatisation. But whatever it is, the direction in which the Indian economy has been set rolling, corporate finance will be a soaring area for the times to come.
