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Investment banking career overview
The investment banking divisionInvestment BankingInvestment banking is the division of a bank that serves governments, corporations & institutions, providing underwriting (capital raising) and mergers and acquisitions (M&A) advisory services. (IBD) of an investment bankList of Top Investment BanksList of the top 100 investment banks in the world sorted alphabetically. Top investment banks on the list are Goldman Sachs, Morgan Stanley, BAML, JP Morgan, Blackstone, Rothschild, Scotiabank, RBC, UBS, Wells Fargo, Deutsche Bank, Citi, Macquarie, HSBC, ICBC, Credit Suisse, Bank of America Merril Lynch helps governments, corporations, and institutions raise capital and complete mergers and acquisitions (M&A). An investment banking career is extremely demanding with analysts frequently working 100 hour weeks. The competition for positions is intense, compensation is very high, and the work is very high profile. The tradeoff, however, is long hours, a military-like culture and a lot of grunt work.
The IBD of the bank is further divided into industry groups, such as the TMT investment banking groupTMT Investment BankingTMT stands for Technology, Media, and Telecommunications, so the TMT investment banking group covers clients in those industries. Investment banking services provided to these clients include equity and debt capital raising, mergers, acquisitions, divestitures, risk management, and other advisory mandates..
Personality in investment banking
The personality of someone suited to work as an analystGuide to Becoming a Financial AnalystHow to become a financial analyst. Follow CFI's guide on becoming a financial analyst - networking, resume, interviews, financial modeling skills and more. We've seen thousands of people become financial analysts over the years and know precisely what it takes. or associate in the IBD of an investment bankInvestment BankingInvestment banking is the division of a bank that serves governments, corporations & institutions, providing underwriting (capital raising) and mergers and acquisitions (M&A) advisory services. has the following character traits:
- Highly ambitious
- Competitive
- Detail oriented
- Quantitative
- Polished and presentable
See how the equity researchEquity Research vs Investment BankingEquity research vs Investment banking. When looking at a career in the capital markets it’s important to understand if you’re a better fit for investment banking or equity research. Both offer excellent work experience and great pay, but choosing one over the other really comes down to personality field contrasts with IB.
Interview prep
Interview preparation is essential for landing an investment banking career. We’ve outlined several important steps to prepare for an interview in our guide to getting a job in IBHow to get a job in investment bankingThis guide will outline how to get a job in investment banking using out top three tactics: networking and resume, interview prep, and technical skills. This guide is based on my firsthand experience of what is the most effective way of how to get a job in investment banking., and have also provided an example of a real interview formInvestment Banking Interview Questions & AnswersInvestment banking interview questions and answers. This real form was used by a bank to hire a new analyst or associate. IB interview insights & strategies. Questions are sorted into: bank and industry overview, employment history (resume), technical questions (finance, accounting, valuation), and behavioral (fit) used by an investment bank to hire analysts. Common questions include how would you value a business, walk me through the three financial statements, and how would you build a DCF model? It’s also common to be asked why you want to work in investment bankingWhy Investment Banking?Almost every investment banking interviewer will ask the question: why investment banking? I want to work in investment banking because it's the fastest way to learn financial modeling, valuation, Excel, and understand the nature of large corporate transactions. I'm aware the job has a strict hierarchy, very long hours.
Entry point
There are two main entry points into investment banking: analyst and associate.
Analysts are recruited from undergraduate (B.ComCourses After BComWhat are the most popular courses after BCom for business graduates? Here is a list of the best courses, exams, jobs and careers after your BCom is done - We've outlined for you the most common courses to set you on the right track for your career. or B.A.) programs at target schoolsList of Target SchoolsA list of the top target schools for investment banking recruiting and hiring. This list includes top targets, second targets, and MBA targets. The reason they are called a target is that the banks actively "target" their students by holding information sessions on campus and traveling to the school to conduct first-round interviews., or other highly regarded universities. An analyst is typically expected to stay for 2 to 3 years at which point they will either be promoted, go back to business school, or move on to something else.
Associates are recruited from MBACFA® vs MBACFA vs MBA. Which one is better for a career in corporate finance? There are many pros and cons to doing a CFA or MBA depending on your career path. Both are highly sought after, and both have a long list of successful alumni. There are, however, some very important differences to consider, depending on your career goals and/or other graduate student programs. Strong analysts can be promoted to associate roles, but typically analysts will be required to go back to school before being promoted. Associates have similar responsibilities as analysts but take on more responsibility quickly and are on the fast track for promotion. Both roles require extensive financial modelingWhat is Financial ModelingFinancial modeling is performed in Excel to forecast a company's financial performance. Overview of what is financial modeling, how & why to build a model. A 3 statement model links income statement, balance sheet, and cash flow statement. More advanced types of financial models are built for valuation, plannnig, and and presentation building skills.
Exit strategy
Analysts or associates typically go on to work in private equityPrivate Equity Career ProfilePrivate equity analysts & associates perform similar work as in investment banking. The job includes financial modeling, valuation, long hours & high pay. Private equity (PE) is a common career progression for investment bankers (IB). Analysts in IB often dream of “graduating” to the buy side, (“PE”), equity researchEquity Research AnalystAn equity research analyst provides research coverage of public companies and distributes that research to clients. We cover analyst salary, job description, in-house at a corporate, or do something entirely different. Most investment bankers dream of “graduating” to PE, and the banks are natural feeder systems for these firms. Corporate developmentCorporate Development Career PathCorporate Development jobs include executing mergers, acquisitions, divestitures & capital raising in-house for a corporation. Corporate development ("corp dev") is responsible for executing mergers, acquisitions, divestitures and capital raising in-house for a corporation. Explore the career path. (“corp dev”) is a pleasant stepping stone from IB and provides exposure to similar transactions, on the client side.
Financial Modeling Skills
Analysts and associates working in the IBD of a bank will spend a lot of time building financial models in Excel. Common examples of the types of financial modelsTypes of Financial ModelsThe most common types of financial models include: 3 statement model, DCF model, M&A model, LBO model, budget model. Discover the top 10 types of Excel models in this detailed guide, including images and examples of each. Financial modeling is performed for many reasons including to value a business, raise money include three statement models, DCF models, M&A models, LBO models, and more.
The image above is from CFI’s Financial Modeling Courses.
Investment banking compensation
Below is a guideline of how much you can earn in IB. It should be noted that there can be a wide range based on the bank, the year, and the city you’re working in.
- Analyst: $100,000 to $150,000 (base salary plus bonus)
- Associate: $150,000 to $300,000 (base salary plus bonus)
- VP/Director/MD: $300,000 to $1,000,000+
For more information we have published a separate page on investment banking salariesInvestment Banker SalaryAn investment banker salary is among the highest in the world. They are paid a base salary and a bonus for their compensation. Find out how much they make. An analyst straight out of university can expect to earn over USD $100,000, but per hour it could be as low as $20-35 when working 100 hr/wk.
Career prep for investment banking
Taking investment banking courses can be an invaluable way to learn what’s required on the job, before you get hired.
It’s important to start with a solid understanding of accounting fundamentals. Next, you should have a solid Excel crash course under your belt, which will teach you the basics including shortcuts, formulas, and functions. From there you can progress to financial modeling courses, which will be the basis of your day to day job in IB. By taking a few courses you’ll learn about various industries and see different types of model. If you want to save money, your best bet is CFI’s Full Access Bundle.
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