Introduction to Investment Banking

Investment banking is a rewarding and high-energy career where professionals advise company executives about the best times to make a public offering, sell a large company asset, or acquire another business. In doing so, they may also arrange financing for these transactions by providing guidance on raising money in capital markets.

Key Features of Investment Banking

Financial Analysis

Investment bankers conduct thorough financial research and due diligence to support their recommendations and strategic decisions.

Valuation

Investment bankers develop financial models to accurately value debt and equity for transactions, mergers, and acquisitions, ultimately assessing the worth of companies and assets.

Client-Facing Work

Investment bankers maintain regular communication with clients to understand their financial needs and deliver tailored solutions.

Fast-Paced Environment

Investment banking operates in a high-pressure, fast-paced environment with tight deadlines, demanding strong analytical and time management skills.

Industry Specialisation

Investment bankers often specialise in specific industries, such as technology, healthcare, or energy, as well as specific capital market products like equity and debt, to provide expert advice and insights.

Types of Investment Banks

Investment banks are categorised by size, region, status, and industry focus. The two main types of investment banks are:

Bulge bracket banks (e.g., J.P. Morgan, Goldman Sachs, Morgan Stanley)

The largest investment banks, working on the biggest deals and operating in all regions. These banks are the most well-known and have the widest brand recognition.

Boutique investment banks (e.g., Lazard, Barrenjoey, Jarden)

Boutique investment banks are small, specialised financial institutions that provide services to clients. They are often more agile and responsive than larger banks and can offer personalised attention and industry-specific expertise.

Common Investment Banking Services

An investment bank is typically comprised of three main areas: the Investment Banking Division (IBD), Sales and Trading (S&T), and Asset Management. Large global banks often offer all three services, while boutique banks usually focus more on the investment banking division, covering advisory and complex financial transactions. Focusing specifically on IBD, typical advisory services include:

Mergers and Acquisitions (M&A)

Advisory on the sale, merger, and purchase of companies.

Leveraged Finance (LevFin)

Issuance of high-yield debt to firms to finance acquisitions and other corporate activities.

Equity Capital Markets (ECM)

Advice on equity and equity-derived products, including IPOs, shares, capital raises, and secondary offerings

Debt Capital Markets (DCM)

Advice on raising and structuring debt to finance acquisitions and other corporate activities

Restructuring

Improving the structures of a company to make it more profitable or efficient

Why Choose Investment Banking?

Skill Development and Career Acceleration

Development of valuable corporate finance skills sought after in the industry, such as financial modeling, valuations, and analysis. Considered a ‘feeder’ into private equity positions.

Global Opportunities and Prestige

Exposure to high-profile transactions with market significance and the opportunity to collaborate with global teams.

Dynamic Work Environment

Fast-paced, constantly evolving work environment that keeps you engaged and challenged.

High Earning Potential

First-year investment banking analysts can earn between $120,000-$190,000, and their bonuses can add an additional 50-100% to base salary. Bankers’ financial compensation increases exponentially with seniority.

Investment banking is the right career for those who thrive in high-pressure situations, enjoy complex financial analysis, and seek impactful roles in the financial industry.