Corporate Finance Qualification

About corporate finance

Vicky Woods, Head of Corporate Finance qualification training at BPP, answers some key questions about the corporate finance industry.

What is corporate finance?

Corporate finance involves the raising and deployment of capital within a business and devising appropriate funding structures.  The aim of a corporate financier is to advise on strategies that minimise the overall cost of raising financing for the company and thus maximise the overall value of the business. 

Why do organisations need corporate finance?

Companies require capital to fund start up of new businesses, expansion of existing operations, acquisitions or reorganisations.   Capital is available from the companies own retained resources but only in finite amounts.  Thereafter, companies must look externally - from shareholders as equity, and lenders as debt providers.  Corporate financiers are able to advise on which of the possible financing options are appropriate in the particular scenario and then also see through the practicalities of getting the deal done.

Capital raising can be accompanied by a change of control. This can involve mergers and acquisitions; divestments; strategic partnerships or buyouts.  Here, the priorities will be in securing a deal structure, namely advising as to how the transaction can be achieved.  This will involve consideration of the legal structure, valuation, finance, strategic rationale and tactics behind the deal.  Transactions sometimes involve publicly quoted companies which involves an understanding of the relevant regulations, in particular the Financial Services Authority’s Listing Rules and the Takeover Panel’s Takeover Code.

Even companies not wanting to raise capital can still seek corporate finance advice, to reduce their overall cost of capital via capital restructuring.  Recent years have seen many examples in the corporate world of share buybacks and recapitalisations prompted by the aim of boosting value and rates of return for shareholders.

As such, corporate finance encompasses a wide array of disciplines and increasingly also is deemed to include disparate areas such as project finance and private equity. 

Finally, corporate finance is about team work.  The areas discussed here require a huge array of expertise and thus transactions can only be achieved by combining the efforts of different groups of individuals: the company itself and the advisers – bankers, corporate finance houses, accountants, lawyers, public relations, consultants, industry experts. 

What skills does a corporate financier need?

Numeracy is undoubtedly an essential skill.  Corporate financiers need to be comfortable grappling with sets of accounts and identifying underlying trends in the numbers.  Valuing businesses takes a confidence with financial maths as well as the ability to stand back and derive sensible and supported conclusions.  It is important to be able to think strategically and consider pros and cons of different financing options and communicate this clearly to clients.  Negotiation skills and empathy in understanding the view points of representatives from different sides of the transaction is crucial.  And finally an ability to work under pressure and deliver to tight deadlines – resilience is a must!