The DealMaker: The Business of Corporate Finance M&A, Private Equity

By Laurent Marliere

This best-selling guide equips professionals in corporate finance, advisory and investment sectors with advanced skills to excel in deal origination, business development and dealmaking. Crafted by Laurent Marliere, who has facilitated over $6.5 billion in deal origination, the book delivers a comprehensive methodology to master the entire trans

• Language: English
• Publisher: Amazon Direct Publishing
• Release date: Jan 9, 2025
• ISBN: 9798894064178

Book preview

Opening Note

Corporate finance, M&A, and private equity are typically examined from a technical perspective by most authors, with little focus on treating them as a business by itself. There are few, if any, references that provide a structured methodology for approaching and developing this market as a thri ving business.

I want to begin by expressing my heartfelt gratitude to you, the reader. In today’s world, attention is one of the most valuable assets—perhaps even more so in an age where digital innovation and disruption flow constantly. We live in what can be called the attention economy, where capturing and retaining someone’s focus is essential. Your attention, therefore, is precious, and I am privileged that you have chosen to spend it on this book.

I take this responsibility seriously. I have made it my mission to provide you with valuable insights that will enhance your professional skill set. My promise to you is simple: by the time you finish reading this book, your vision will be broader, your capabilities sharper, and most importantly, your potential to generate new revenue streams will be significantly enhanced.

The maturity and level of expertise of each reader differs, however, I am positive that you will find value from your own personal perspective.

Professionals already active in corporate finance will find here a refreshed, modern perspective on business development, equipping them with strategies to expand their pipelines and secure higher-quality deals.

Originally, the first edition of this book was written to train and educate my younger colleagues within our company. However, the vastness of the ‘blue ocean’ in corporate finance, M&A, and private equity inspired me to extend its readership to a global audience.

Let’s dive in and embark on this journey together.

Introduction

If you want to become rich, one smart way to achieve this is by selling someone else’s asset. This is the basic principle of Corporate Finance, M&A and Private Equity: you know a seller, you have information, you find a buyer, and you take a commission on th e transaction.

A principle as old as humanity, grounded in trade, buying, selling, and investing.

Corporate finance has evolved into a highly sophisticated discipline. Practitioners have become highly specialized, focusing on the sell-side, buy-side, or the transaction itself.

A large portion of the global economy is built on corporate finance, and many professionals participate in it, often consciously but sometimes unknowingly, as they may not realize that their practice is a key milestone in this exciting and dynamic segment of both global and local finance.

From Deal Origination to Dealmaking: The Essence of Corporate Finance

Corporate finance can only be a success when a deal is closed. The science of corporate finance is thus highly corelated to the art of Dealmaking.

Before deals are made, they must be originated. Unlike the mature process of deal making, deal origination often operates in an unstructured and intuitive manner among professionals. Few sources—whether textbooks, articles, or financial experts—delve deeply into how deals are actually originated. Yet, this is the essential foundation for all corporate transactions. Without deal origination, there can be no deal to close.

This book fills that gap, offering you a comprehensive framework to professionalize and structure your approach to deal origination. By mastering this critical phase, you will revolutionize your commercial strategy and unlock vast profitability for your firm and for yourself.

The equation is straightforward: deal origination leads to dealmaking, which enables corporate finance. It is a powerful yet simple formula that underpins nearly every transaction in the business world. In the chapters that follow, I will break down how you can master each element of this equation.

With over 25 years of experience advising regulated professionals—ranging from banks, funds, law firms, accountancy firms, to family offices, public agencies, and investment boards—I have witnessed first-hand the intricate balance between regulatory frameworks and business innovation. This unique dynamic creates what I call the professional paradox: on one hand, the conservative nature of these regulated sectors can slow down innovation and business development. On the other hand, it is precisely this strict regulatory environment that fosters trust, stability, and long-term client relationships, which are the foundation of success in corporate finance.

Corporate Finance: An industry by Itself

Corporate finance represents a vital segment of the global economy, embodying a vast network of professionals dedicated to managing, advising, and executing financial strategies that drive business growth. The federation of these experts—spanning private equity firms, investment banks, advisory roles, legal teams, and internal corporate finance departments—creates a robust industry in its own right. The sheer scale of activity, evidenced by the handling of trillions of dollars in assets under management and the facilitation of tens of thousands of M&A deals annually, highlights the sector’s substantial impact on global economic dynamics.

While exact figures are difficult to pinpoint, the combined number of professionals actively working in corporate finance, M&A, and private equity likely reaches several hundred thousand worldwide. This includes not only direct roles but also those in supporting functions like legal advisory, regulatory compliance, technology and post-merger integration.

These professionals not only execute transactions but also shape strategic decisions that influence capital flows across various industries, from technology and healthcare to energy and infrastructure. Their collective efforts drive corporate transformations, enable business expansions, and contribute to financial stability and economic growth worldwide. As a result, corporate finance is not merely a subset of the financial services industry; it is a fundamental pillar that underpins economic progress and innovation on a global scale.

Despite its critical role in shaping economic growth and capital markets, the corporate finance sector often lacks the recognition it deserves as a standalone industry, overshadowed by larger financial services categories like banking or investment management.

Navigating the Professional Paradox in a Fast-Changing World

Regulated professionals—those in advisory and investment roles—form the backbone of the global economy. Once you understand their specific needs and how to unlock their potential, you will gain access to powerful networks and opportunities. These professionals offer a unique mix of technical competence and client trust, which is essential in any corporate transaction. However, to truly leverage this opportunity, professionals need to rethink how they view their business in today’s rapidly changing financial environment.

This book presents a unique methodology that will help corporate finance professionals adapt to these changes. In a world where digital disruption, artificial intelligence, and heightened regulation are reshaping industries, those who can pivot quickly will not only survive but thrive. Whether you are a banker, fund manager, lawyer, auditor, M&A advisor, or student, this book provides you with the tools to renew your perspective, streamline your business approach, and unlock new revenue streams by mastering deal origination and dealmaking.

A Practical Guide for your Future

The corporate finance world is full of opportunities for those who can see beyond the traditional ways of doing business. This book is not just a theoretical discussion; it is a practical guide on how to enhance your position in this complex ecosystem. I will show you how to move from being a passive observer in transactions to becoming an active participant who not only facilitates deals but originates them.

The methodology presented here is the result of decades of experience and hundreds of transactions on a global scale. It will empower you to restructure and modernize your professional activities. You will learn how to not only add new services to your portfolio but to also build a thriving, lucrative practice based on the principles of smart deal origination and strategic dealmaking.

Corporate finance is at a turning point. The future belongs to those who can anticipate trends, foster key relationships, and close impactful deals. This book will equip you with the mindset and skills necessary to become an integral part of this evolving landscape. Together, we will explore how to navigate the complexities of today’s global markets and capitalize on the endless opportunities that corporate finance presents.

Chapter 1:

The Macro-Economics of Corporate Finance, M&A & Private Equity

1.1. Global Economic Trends and Their Impact on Dealmaking

The best Dealmaker has a helicopter view and masters the macro-economics. The global economy continues to play a central role in shaping the outlook for corporate finance, M&A, and private equity. A deep understanding of the evolving macroeconomic environment is critical for dealmakers to navigate the complexities of rising interest rates, inflation, and global trade dynamics, while also preparing for the forecasted economic shifts in the coming months.

1.1.1. Interest Rates and Capital Costs

Interest rates, a key driver of financing in M&A and private equity deals, are projected to remain a significant factor in the dealmaking landscape in the coming months. After several years of aggressive rate hikes by central banks, such as the Federal Reserve and the European Central Bank, the current economic environment is seeing a stabilization of interest rates. While inflation has begun to ease, borrowing costs remain high, particularly for leveraged buyouts (LBOs).

Morgan Stanley notes that in recent months, global M&A volumes fell sharply, primarily due to high borrowing costs that made debt financing less attractive for large-scale deals. However, from now on, interest rates gradually decline, with analysts observing a real easing. This will reinvigorate deal activity as borrowing becomes more affordable, especially in capital-intensive sectors like infrastructure and private equity.

In preparation for a potential rate cut, companies are already exploring more innovative financing methods, such as all-stock transactions and alternative capital structures. This has led to a notable rise in strategic M&A, with companies aiming to achieve both cost synergies and growth.

Despite current challenges, firms that are flexible and can adapt to these financing conditions are positioning themselves for a rebound in dealmaking.

1.1.2. Inflation and Valuation Uncertainty

Inflation remains a persistent concern for businesses, and its impact on dealmaking is profound. As companies grapple with rising input costs, many have found it difficult to agree on appropriate valuations, creating friction between buyers and sellers. This trend was particularly evident after the Covid years, where inflation affected multiple sectors, especially those with lower pricing power, such as consumer goods.

Looking ahead to the coming months, inflation is expected to moderate, but core inflation may still linger near 3%.

This stabilization will help reduce valuation uncertainty and may restore confidence in deal pricing. According to Bain & Company, companies are increasingly incorporating flexible deal structures, such as earn-outs or deferred payments, to mitigate the risks associated with valuation discrepancies.

Moreover, sectors that are more resilient to inflation—such as technology, healthcare, and energy—remain attractive targets for M&A. These industries have been able to pass on rising costs to consumers, maintaining healthy profit margins despite the broader inflationary pressures.

1.1.3. Global Trade Dynamics and Geopolitical Risks

The interplay between global trade dynamics and geopolitical events continues to reshape the M&A and private equity landscape. For example, the ongoing trade tensions between the U.S. and China, combined with the economic fallout from the war in Ukraine and tensions around Israel in the Middle East, have disrupted supply chains and significantly impacted cross-border deal flow.

In corporate finance, the U.S. market is the heavyweight, both for its internal activity and its influence on cross-border transactions. The fact that the U.S. is led by Donald J. Trump, a self-proclaimed dealmaker, is likely to impact global markets significantly. His administration’s policies are expected to stimulate M&A activity and private sector investments, potentially raising them to higher levels than those seen under the previous administration.

While these geopolitical risks have tempered deal activity in some regions, others have emerged as bright spots. India, for instance, has become an attractive destination for M&A, thanks to its relative political stability and growing economic strength. We see traditionally conservative investment funds put India and other emerging markets in their radar.

Meanwhile, the U.S. continues to see high levels of M&A activity in key sectors like energy and technology, despite regulatory scrutiny and political uncertainty. The Trump administration supports the crypto markets, this will impact favorably the Web 3.0 sector.

As firms look to manage these risks, strategic risk mitigation techniques—such as currency hedging and geopolitical risk assessments—are becoming essential tools. The energy sector, in particular, has shown resilience, with many companies consolidating their positions through acquisitions that prioritize both scale and growth.

1.1.4. The Role of Currency Fluctuations

Currency fluctuations have always been a significant consideration in cross-border M&A deals, but their impact has become more pronounced in recent years. Since 2024, the strong U.S. dollar made American assets more expensive for foreign buyers, while making overseas assets more attractive for U.S. firms. We have observed a growing interest from US corporations to buy European assets. This dynamic is expected to continue in 2025 and beyond, although a potential moderation in dollar strength could ease some of these pressures.

For dealmakers, managing currency risk through hedging strategies has become more critical than ever. The ability to time acquisitions in response to favorable exchange rates has provided U.S. firms with an edge in acquiring undervalued European and Asian assets. As central banks globally begin to adjust their monetary policies, particularly in Europe and emerging markets, currency fluctuations will remain a key consideration in cross-border M&A.

Conclusion

The global economic outlook suggests that dealmaking will experience a rebound, driven by easing interest rates, stabilizing inflation, and growing opportunities in resilient sectors like technology and energy. While much of the market focus remains on large-scale transactions involving mega-corporations, it is crucial to recognize the significant role small and medium-sized enterprises (SMEs) play in the global economy.

In regions such as Europe, Asia, and Latin America, where SMEs form the backbone of the economy, M&A activity in this segment is likely to surge. According to recent reports, SMEs account for over 90% of global businesses and contribute significantly to employment and GDP growth.

These companies often represent untapped opportunities for private equity firms and investors seeking growth through innovation, regional expansion, or sectoral consolidation.

The SME market offers an attractive playing field for dealmakers, as many of these businesses are family-owned or managed and are now seeking succession solutions or partnerships to expand their reach. With the right financing and operational support, SMEs can deliver substantial returns, often outpacing larger, more established corporations in growth.

This presents a lucrative area of focus for dealmakers who are adept at managing smaller, more flexible deals and willing to engage in markets where agility is key.

Thus, while mega-deals tend to dominate headlines, the thriving SME segment presents an abundance of deal opportunities. Professionals who can tailor their approach to this dynamic and increasingly relevant part of the market are likely to find robust deal flow and significant value creation. However, they must remain vigilant in managing geopolitical risks, currency fluctuations, and the evolving regulatory landscape to maximize the full potential of these transactions in an ever-evolving economic environment.

1.2. The Continuous Growth of Non-Listed and Alternative Investments

In recent years, the global investment landscape has seen a significant shift toward non-listed and alternative assets, driven by the saturation of traditional public equity markets and the desire for portfolio diversification. Institutions such as private equity funds, banks, and family offices are increasingly allocating a larger percentage of their portfolios to these alternative assets, recognizing their potential for higher returns and lower volatility compared to traditional listed investments. We explore here the forces driving this shift, the role of key players like private equity funds and family offices, and how dealmakers can capitalize on these emerging trends.

1.2.1. A Shift in Institutional Investments: From Listed to Non-Listed Assets

Historically, institutional investors focused primarily on listed equities and bonds. However, as the public markets have become more volatile and saturated, these investors have turned their attention to non-listed investments, which offer attractive returns and diversification benefits. Christian Sewing, CEO of Deutsche Bank, emphasized recently that a well-balanced bank should invest in both listed and non-listed assets, recognizing the value of private markets for risk mitigation and long-term growth.

This shift is driven in part by the limitations of the public markets, including regulatory burdens and fluctuating valuations. By contrast, non-listed assets—such as private equity, real estate, and infrastructure—offer investors greater flexibility and control over their investments.

As non-listed investments grow in prominence, many institutions are striking a balance between listed and non-listed assets. Christian Sewing’s perspective reflects the broader industry shift towards diversification. Listed markets remain essential for liquidity and shorter-term gains, but non-listed assets provide the stability and growth potential that investors seek in a volatile economic environment.

This new balance allows investors to hedge against market fluctuations while benefiting from the higher returns offered by private equity, real estate, and other alternative assets. As public markets face increasing saturation, non-listed investments will continue to be a crucial component of institutional and family office portfolios, offering growth opportunities across various sectors and geographies.

1.2.2. The Rise of Private Equity and Alternative Assets

Private equity has emerged as a dominant player in the global financial markets, with assets under management (AUM) surpassing $8 trillion in recent years.

This growth is fueled by the ability of private equity funds to deliver alpha through long-term investments in companies that are not subject to the same short-term pressures as publicly traded firms.

The appeal of private equity lies in its capacity to generate returns that often exceed those of public markets. Family offices have increased their exposure to private equity, recognizing the opportunities to co-invest in high-growth sectors such as technology and healthcare. For dealmakers, this shift represents a significant opportunity to assist investors in structuring and executing private equity deals that align with their long-term investment goals.

1.2.3. Structuring Non-Listed Investment Deals

Non-listed investments offer unique structuring opportunities compared to public market transactions. Dealmakers must be adept at designing flexible deal structures that meet the needs of both investors and companies. This often includes the use of performance-based payouts, earn-outs, and tailored financing solutions that mitigate risk and align the interests of all parties involved. Private equity is based on a deal. A deal feeds and please to a certain extend two or more parties.

As more family offices and institutional investors turn to non-listed assets, the demand for innovative deal structures is increasing. For example, co-investment opportunities are becoming more common, allowing investors to share risks and benefits while maintaining control over the terms of the deal. This shift highlights the importance of dealmakers who can navigate the complexities of structuring and executing non-listed investments.

1.2.4. How Private Equity Makes Money

Understanding how private equity firms make money is essential for dealmakers who aim to navigate the complex world of alternative investments.

Private equity funds are known for generating substantial returns, often outperforming traditional asset classes like stocks and bonds. Let us delve into the various methods private equity firms use to generate revenue, covering the main sources of income, strategies for increasing portfolio company value, and the different ways in which returns are realized over time.

A. Management Fees

The first and most straightforward way private equity firms make money is through management fees. Typically, PE firms charge an annual fee to investors (known as limited partners or LPs) based on the total capital committed to the fund. This fee, which generally ranges from 1.5% to 2.5% of assets under management, is used to cover the operational costs of the firm, including salaries, due diligence expenses, and administrative overhead.

Management fees provide a steady income stream for the private equity firm regardless of the fund’s performance. They ensure that the firm can maintain its operations while pursuing its investment strategies, even during periods when returns may not yet be realized. However, since management fees alone are not enough to generate substantial wealth, the true potential for profit lies in the other methods private equity firms employ to make money.

B. Carried Interest

Carried interest is one of the primary ways private equity firms make significant profits. It represents a share of the profits generated by the fund and typically ranges from 15% to 30% of the returns above a certain hurdle rate, which is the minimum annual return that must be achieved before the firm can receive carried interest (often set at around 8%). Once this hurdle rate is met, the private equity firm receives a portion of the profits, providing substantial financial incentives for high performance.

The concept of carried interest aligns the interests of the private equity firm and its investors, as the firm benefits directly from the fund’s success. Carried interest becomes a major source of income for partners within the firm, who often receive a portion of these profits as part of their compensation.

C. Dividend Recapitalizations

Dividend recapitalizations are another common way private equity firms extract value from portfolio companies. In this strategy, the firm takes on additional debt in the portfolio company, using the borrowed funds to pay itself and its investors a dividend. This allows the firm to realize returns earlier in the investment cycle without having to sell the company.

While dividend recapitalizations can be a lucrative way to generate cash, they also increase the leverage on the company, potentially raising its financial risk. Therefore, the practice is usually employed in situations where the company has a strong cash flow and can support the additional debt.

D. Realizing Capital Gains through Exits

Exiting investments is the most significant way private equity firms generate profits. There are several exit strategies that firms use to realize capital gains, with the timing and method depending on market conditions and the performance of the portfolio company:

Initial Public Offerings (IPOs): By taking a portfolio company public, the private equity firm can sell its shares at a significant premium. IPOs are typically pursued when market conditions are favorable, allowing the firm to achieve higher valuations.

Strategic Sales: In some cases, the best exit strategy is to sell the portfolio company to another company, often a strategic buyer within the same industry. This type of buyer may be willing to pay a premium for the company due to the synergies or market position it offers.

Secondary Buyouts: When another private equity firm purchases the portfolio company, it is known as a secondary buyout. This method can be used when the original firm has achieved its initial value-creation goals but the company still has growth potential that a new owner can exploit.

Recapitalizations or Partial Sales: Sometimes, a firm may decide to sell a portion of its equity stake while retaining a minority interest, allowing it to realize some returns while still benefiting from future growth.

The choice of exit strategy is critical, as it determines the timing of the returns and the ultimate profitability of the investment.

E. Portfolio Company Operational Improvements

The central philosophy behind private equity is not merely to hold investments but to actively improve the performance of portfolio companies. This is done through a variety of operational strategies aimed at increasing revenues, reducing costs, and optimizing business processes:

Restructuring and Cost-Cutting: PE firms often identify areas where a company can reduce expenses, streamline operations, or renegotiate contracts. This focus on efficiency can lead to significant improvements in profitability.

Expanding Market Share: By implementing growth strategies, such as new product development, geographic expansion, or acquiring competitors, private equity firms can drive top-line revenue growth.

Management Changes: Bringing in new leadership with the skills and experience necessary to drive change is a common practice. A new CEO or management team can help implement the strategic vision that the PE firm has set for the company.

Leveraging Technology: Implementing technological improvements to increase productivity or enhance customer experiences can make portfolio companies more competitive. This may involve digital transformation initiatives, data analytics, or the adoption of new software.

F. Leverage

Private equity firms frequently use leverage, or borrowed capital, to enhance the potential return on their investments. In a leveraged buyout (LBO), for example, a significant portion of the acquisition is financed through debt, which allows the private equity firm to control a larger company than it could otherwise afford using equity