The Beginner’s Guide to Working in Investment

by A Guest Author

A field or aspect of banking that helps companies acquire funds, investment banking also assists by offering expert advice on various financial transactions and other economical aspects of a company. Investment banking allows companies to create capital in two ways - the first one is through the selling of company stock and thereby drawing public funds through the capital market. The second is by way of exchanging stakes in the company in lieu of private equity or venture capital.

An investment banker is a person who represents a financial institution working in the business of generating capital for municipalities and companies. Along with giving advice on acquisitions and mergers, an investment banker also monitors and tracks the market to advise companies on the best time to announce public offerings and how to manage the assets of the corporation.

Investment banks work on three main areas:

1. Raising Debt Capital – Investment banks work closely with financial companies, agencies and institutions, both private and public, to garner support for addressing issues relating to their client’s debt. The activities in this role include refinancing and restructuring of existing debts, as well as raising new ones.

2. Equity Capital Market – Investment banking institutions offer and solicit the client on how and when to raise capital along with the amount that needs to be raised.

3. Mergers and Acquisitions – Investment banks assist companies in increasing their profits, while protecting their market position and reputation by way of mergers and acquisitions. While managing the entire process involved in such transactions, investment bankers assess and analyse the impact of the transaction, and also keep a close watch on the target organisation.

Role of an Investment Banker

Apart from contributing towards the bigger picture of an investment banking institution, the typical day-to-day activities of an investment banker include:

- A regular and thorough research of market conditions
- Identification of new business opportunities
- Liaison with CEO and CFO of large companies and organisations
- Implementing financial modelling for organisations, followed by development and presentation of financial solutions in the company’s interest.
- Working closely with accountants, PR consultants, lawyers, and other professionals.

Culture of the Industry

The culture of the investment banking industry is marked with long working hours, enormous salaries and bonuses, and the adrenalin rush you get on seeing the results of your hard work on major newspapers and business tabloids. Investment bankers usually get to enjoy a lavish lifestyle with high salaries and a well-connected social life and status at fairly young age. Graduates from top-notch technical and management schools are usually in the mix of things at an investment bank.

However, all these things do not come easy. One has to toil hard and prove their abilities to reap the sweet fruits of success. Mental alertness and physical fitness are the prerequisites, and you should be willing to make some sacrifices on the personal and social front, as the long working hours will make it difficult to catch up with other aspects of life.

Career in Investment Banking

The two entry-level positions in this field are that of analysts and associates. Both these positions require an individual to hold a relevant graduate or Master’s degree. While analysts are usually graduates straight out of college, associates hold Master’s degree in management or are promoted from a pool of analysts. Associates manage analysts along with working more closely with senior banking professionals and clients.

A lucrative career option, investment banking is a much sought-after field. It has a swim-or-sink culture and if you are able to prove that you have it in you, you are sure to go places as an investment banker.

About the Author

This article was brought to you on behalf on Emanuel Arbib of Intergrated Asset Management - read his blog for more.

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This post was written by A Guest Author

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