Welcome back to another issue of ‘Career Guides Weekly’ by Career Guides.

Today we’re covering some of the specific areas of an investment banker’s job description and the type of work you can expect to do should you ever land an investment banking role.

Let us know which role you’d like us to cover next by replying or emailing [email protected].

With that, let’s get straight into it!

What Does An Investment Banker Do?

Just as you and I might expect to take out a loan and borrow some money from a high street bank, an investment banker offers a similar service but to companies, governments and large institutions.

The key difference is, an investment bankers clients are a lot larger and more complex than a high street banks clients i.e. the every day person.

An investment banker is kind of like a financial matchmaker. They help companies raise money, restructure their finances (equity and debt within the business), and advise on big financial decisions, like merging with, or acquiring other companies.

Different types of bankers do different things, and so it’s important to have some sort of an idea of what these ‘things’ are in order to make an informed decision when doing your applications or interviews. The more you know about the different roles and jobs that an investment banker does, the better you’ll be at expressing your interests or dislikes in each of the roles.

Here’s a brief overview of the key roles of an investment bankers day-to-day work and what you can expect to be doing if you successfully secure an offer in this prestigious field:

1. Raising Capital

Investment bankers help companies raise funds through various means like issuing stocks (equity) or selling bonds (debt).

‘Issuing stock’ just means selling pieces of your company (equity) in the stock market. It’s a way of raising capital i.e. making money via equity.

‘Selling bonds’ just means borrowing money or taking out a loan. A bond is essentially a debt instrument that says ‘I owe you’ and states “if you give me X pounds or dollars, I’ll owe you that money back and I’ll give you some interest payments on top for your inconvenience”.

The investment bankers that raise capital will analyse the company's financial statements and position, structure the offering i.e. identify if it’s best to raise capital via the equity markets or the debt markets, and then get to work finding suitable investors.

2. Mergers and Acquisitions (M&A)

Sometimes, companies might want to acquire a competitor or merge with another company because they’re struggling to survive.

In such situations, investment bankers are brought in to advise these companies on the best approach to buying or merging with other businesses.

Once again, the investment bankers will assess the financials of the companies, negotiate deals, and handle complex transactions in order to ensure a smooth process.

3. Financial Advisory

Sometimes companies need expert financial advice ahead of big decisions that’ll have a major impact on the given company.

As such, they might reach out to investment bankers to provide expert financial advice in order to help them make strategic decisions.

This advice could be related to restructuring (moving to or away from debt or equity), divestitures (selling parts of the business), and capital allocation (allocating finances towards specific parts of the organisation).

4. Underwriting Services

In IPOs (Initial Public Offerings) or bond issuances, investment bankers act as underwriters (a process whereby they take on the risk for the company, often in exchange for a fee).

They purchase securities from the bond issuer (the company) and sell them to the public, taking on the risk of selling them at a profit.

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Introduction To Investment Banking

5. Research and Analysis

Investment bankers conduct in-depth market and industry research to identify investment opportunities, potential risks, and trends that can impact their clients.

Different investment bankers cover different industries. Examples include healthcare, technology, media, consumer and retail, energy, financial institutions, real estate, industrials, media and entertainment, telecommunications, etc.

As such, it’s imperative to stay up-to-date on what’s going on in the world surrounding the industry you cover as an investment banker.

6. Client Relationship Management

Building and maintaining strong relationships with clients is vital. The longer you’re an investment banker, the more relationships you build which typically enhances your ability to bring in business.

This is why having an extensive list of industry contacts is a must if you want to become a Managing Directors. A big portion of a Managing Directors role is to bring in new business by leveraging their existing network of contacts.

To add, investment bankers need to understand their clients' needs, objectives, and risk tolerance in order to provide tailored financial solutions.

7. Negotiation and Deal Making

Investment bankers negotiate with clients, investors, and other parties involved in financial transactions to secure the best terms and outcomes for their clients.

Oftentimes, a better negotiation by the banker could result in an increase in the fee that their investment bank receives. This could easily add tens of thousands, or even hundreds of thousands or dollars or pounds to an investment bankers end of year bonus.

8. Due Diligence

Before any major financial transaction, investment bankers perform due diligence. Whenever you see the term ‘due diligence’ just think ‘extremely in-depth research’.

They scrutinise the company's financials, legal issues, and other critical factors to assess its financial health and identify potential risks.

Think of it like this - if you were tasked to identify all of the potential strengths, weaknesses, opportunities and threats (SWOT analysis) that could arise from company X taking over company Y what type of research would you go an do? This, in essence, is due diligence.

9. Valuation Analysis

Investment bankers assess the value of companies or assets, helping clients understand their worth in the market.

Investment bankers need to be able to build complex financial and valuation models in Excel. These models take into consideration existing financial details of the companies in question and try to predict what the companies’ future would look like if it acquired another company, merged with another company, or did anything else that the investment bankers advised them to do.

If you’re interested in learning financial modelling you can get a massive 25% OFF all of Financial Edge’s online courses by using the code AFZAL25 at checkout. It’s worth pointing out, they train the top 4 global investment banks’ analysts and associates so you’re in safe hands.

Overall, investment bankers act as financial experts and intermediaries, helping clients achieve their financial goals, make strategic decisions, and navigate the complexities of the financial markets.

Learn the above and you'll be miles ahead of other candidates when it comes to spring-week, internship and graduate scheme applications and interviews.

Thanks for reading and I hope you found this information useful.

I’d love it if you could let me know what you thought of this email using the poll in the green box below. Thanks!

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