What is Investment Banking?
Investment banking is the business of providing financial and legal advice to organizations in the securities industry. This can include issuing new debt or equity, providing underwriting and mergers and acquisitions (M&A) services, and acting as a financial advisor to clients. Investment bankers are typically divided into two main categories: corporate finance and capital markets.
Corporate finance investment bankers work with companies to raise money by issuing and selling securities. This can be done through initial public offerings (IPOs), secondary market offerings, or private placements. On the other hand, in capital markets, investment bankers work with large institutional investors to trade securities.
Investment banking is a challenging profession, but it may pay well. You have a hand in real-time financial market activity and assist businesses, government agencies, and other clients in achieving their financial goals. You also have excellent chances for continued career development and fulfillment; investment banking is a wonderful springboard to more prominent finance jobs. Continue reading to learn more about investment bank careers and how to become an investment banking analyst.
The Role of an Investment Banking Analyst
Investment banking analysts are junior-level employees who support the work of senior bankers. They conduct market research, build financial models, and write pitch books used to sell securities to potential investors. In return for their hard work, analysts can earn a six-figure salary straight out of college.
What Does an Investment Banking Analyst Do?
Analyst roles vary depending on the size of the bank and the team they are assigned to. Still, most analysts have three main responsibilities: market research, financial modeling, and pitch book preparation.
- Market Research: Analysts conduct extensive research on potential investments and present their findings to senior bankers. This research includes reading industry reports, financial filings, news articles, etc.
- Financial Modeling: Analysts build valuation models senior bankers use to price securities being offered for sale. These models must accurately reflect all known risks associated with the security being priced.
- PitchBook Preparation: An important part of any investment banker’s job is marketing securities to potential investors. Analysts play a key role in this process by preparing so-called “pitch books” to sell these securities. A pitch book is a comprehensive presentation that tells the story of the security being offered for sale and why it is a good investment opportunity.
Conclusion: While investment banking is a demanding career, it can be immensely rewarding— professionally and financially. If you are interested in pursuing an investment banking career, the first step is understanding what investment bankers do and what role you would like to play within the industry. You can succeed as an investment banker with hard work and dedication!