How to Become an Investment Banker?
- January 6, 2020
- Posted by: admin
- Category: Blog
In order to become an investment banker, you first want to clarify whether you want to work on the sell-side for a few years and then move to the buy-side or pursue a career in investment banking. The skills needed to be successful as an analyst/associate at an investment bank are different than those needed to be successful as a VP or higher. The position transforms from one that is research and financial modeling & valuation based to one that is focused on M&A coverage/origination, mandate/target matching and deal structuring. If you want to simply work on the sell-side for a few years and move onto something else, simply take a financial modeling & valuation course at WSP or IBI. If you are serious about a career in investment banking, you are going to know about M&A coverage/origination, mandate/target matching and deal structuring.
Since M&A (Mergers & Acquisitions) is the core product of investment banking, discussions around investment banking typically relate to M&A. M&A is the selling of a perpetuity in the form of a corporation to either a financial or strategic buyer. Financial and strategic buyers have what is known as investment/corporate M&A mandates which detail the size and industry of prospective targets for acquisition. The investment banker takes these mandates and matches them with targets and takes a fee for doing so. Investment bankers typically focus on one industry and provide what is known as coverage by building an index of public companies and tracking changes in targets relative to the index in terms of:
The investment banker monitors trends in these variables and determines the optimal time to sell (when multiples are strong) or acquire (when multiples are weak) and advises target management accordingly. When a target agrees to sell via an investment banker, this relationship is known as a sell-side mandate and an M&A process will be led by the investment banker. During the M&A process, there are definite steps and deliverables including a teaser, CIM, and management presentation. The M&A process can include many prospective buyers (broad auction) or few prospective buyers (targeted or negotiated sale).