Investment Banking Fundamentals

What is Investment Banking?

• Investment banking is a specialized banking service that assists individuals, corporations, and governments in raising capital, advising on strategic decisions, and facilitating financial transactions.
• It acts as an intermediary between investors and corporations, helping to facilitate transactions and provide advice on mergers and acquisitions, restructuring, and other financial deals.

Types of Investment Banking Services

• Advisory services: Providing strategic advice on mergers and acquisitions, divestitures, and other corporate finance transactions.
• Capital markets services: Helping clients raise capital through initial public offerings (IPOs), follow-on offerings, and debt issuances.
• Trading and sales services: Buying and selling securities, currencies, and commodities on behalf of clients.
• Research services: Providing research and analysis on companies, industries, and markets to help clients make informed investment decisions.

Key Players in Investment Banking

• Bulge bracket banks: Large, full-service investment banks that provide a wide range of services, such as Goldman Sachs, Morgan Stanley, and J.P. Morgan.
• Middle market banks: Smaller, specialized banks that focus on specific industries or regions, such as William Blair and Raymond James.
• Boutique banks: Small, specialized banks that focus on specific areas, such as mergers and acquisitions or restructuring.

Investment Banking Process

• Pitch book: A document prepared by investment bankers to pitch their services to potential clients.
• Due diligence: The process of verifying the accuracy of a company's financial information and assessing its value.
• Deal execution: The process of completing a transaction, including negotiating terms, drafting documents, and closing the deal.

Career Paths in Investment Banking

• Analyst: An entry-level position responsible for financial modeling, data analysis, and research.
• Associate: A mid-level position responsible for deal execution, client relationships, and pitching for new business.
• Vice President: A senior-level position responsible for leading deal teams, managing client relationships, and generating new business.

Skills Required in Investment Banking

• Financial modeling: The ability to build complex financial models to analyze company performance and forecast future results.
• Communication: The ability to communicate complex financial information to clients and stakeholders.
• Analytical skills: The ability to analyze large amounts of data and draw meaningful conclusions.