What is Corporate Finance?
There is a great deal of confusion as to what “Corporate Finance” is and is not. Part of this confusion might stem from the fact that it is broad, but here I will attempt to break it down for you all!
At the highest level, it is the organization within a company that assures the financial success of the business. They drive business investment and operational decision making, ensure accurate financial reporting, secure funding and liquidity, face investors (public or private), acquire / divest of companies, and much more. At the top of food chain in Corporate Finance is the CFO. This position is often thought of as the #2 person at any company after only the CEO.
Here is how a finance organization might break down in at a typical company:
– Accounting / Controllership
– Financial Planning & Analysis / Reporting
– Internal / Corporate Audit
– Investor Relations
– Underwriting / Commercial Finance / Risk
– Capital Allocation / Management
– Business Unit / Strategic Finance
– Corporate Development / Business Development (Mergers & Acquisitions)
– Operational Finance / Cost Analyst (industrial/manufacturing businesses)
– Supply Chain / Sourcing
All Fortune 500 companies have very large finance departments (these would all be considered “corporate finance”, but it extends beyond just fortune 500 companies. Almost all small and medium sized companies have finance divisions. As a corporate finance person you could work at a company that is small enough that you personally own every finance task, or you could work at one of the biggest companies in the world where you have a small task in one division of a company.
The requirements for Corporate Finance
Every company has different requirements for their corporate finance department, but typically it is a pretty broad range of backgrounds and experience. Almost always an undergraduate degree is needed. Although, it doesn’t necessarily need to be a “finance” undergraduate degree. Typical degrees are finance, accounting, economics, or some other business-related field…. However, one of my mentors was a Biology major and another was an English major! Some companies do have GPA requirements.
Most big companies hire many employees right out of college or University, but almost all companies also hire mid-career and everything in between… Often the accounting and controllership hires in corporate finance come from accounting firms. Some companies prefer to develop home-grown executives; others will hire MBAs or consultants.