Career in Investment Banking
Presented to Econ 4751
December 12, 2006
Adam Ahern
(modified with permission)
What is an Investment Bank
Three functions
1. I-banking (corporate finance)
2. Trading
3. Research
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Functions are mutually reinforcing
What an i-bank does
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Raises money
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IPO
Debt offerings (distressed debt)
Equity (private placement and follow-on offerings)
Provides advisory services
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Valuations
M&A
I-bank Products and Industries
Product
 Distressed debt
 Corporate bonds
 Private placements
 Follow on offerings
 M&A
 LBO
 Divestitures
Industry
 Financial Services (FIG)
 Consumer
 Energy
 Technology
 Healthcare
Examples of Investment Banks
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Bulge Bracket (BB) – Transactions typically >$500MM
 Goldman Sachs
 Morgan Stanley
 Lehman Brothers
Middle Market (MM) – Transactions typically $50MM - $500MM
 RBC (Royal Bank of Canada) Capital Markets
 Piper Jaffray
 Houlihan, Lokey, Howard, & Zukin
 Goldsmith Agio Helms
 Bank of America
Different culture, work experience, and prestige
Compare performance with League Tables from Thomson
Financial
Positions
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Analyst – 2 year program
Associate – 3 years (after MBA)
Vice President – 3 to 5 years
Director
Role of an Analyst
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100 hours per week average (6-7 days)
No guaranteed vacation or holiday
Responsibilities
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Valuations in excel
“Comps”/”spreads” (industry research)
Create pitchbooks (www.investopedia.com) and
presentations
Grunt work
Benefits
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Excellent pay
Great exit ops (PE, B-school, industry)
Admittance to top B-schools
Types of Skills Required
Skills
 Excel skills
 Accounting
 Finance concepts
 Willingness to work 100+ hour
weeks
No skills required!
Attributes
 Hardworking
 Responsible
 Dependable
 Team Player
 Team Orientated
 Well Read
 Productivity
 Handle pressure
 Desires financial security
 Meets deadlines
 Problem solving ability
 Analytical
 Confidence
Getting Hired
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Know the recruiting process and have a strategy
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Network early
September – Information sessions and networking
October – First round interviews (super day)
November – Second and third round interviews
December – Offers!
Internship interviews January-February
Harder from a non-target school
Getting a interview is the hardest part
Build your resume with finance and leadership
experience
Getting Hired (cont.)
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Must be more ambitious going after position
GPA > 3.5 because it is used for screening
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GPA > 3.0 you still have a chance with lots of
networking
Have internships (preferably in banking or
finance)
Have a good story
Demonstrate fit
Attitude more important than technical skills
Networking
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Do your research and be prepared!
Keep a log of all contacts
Start with people closest and expand outward
Identify contacts
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Internet
Friends/relatives
Informational interviews
Student organizations and campus involvement
Networking (cont.)
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Steps for contacting your network
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Email request (who you are, what you want, and
your availability)
Follow-up if no reply
Set time to talk on the phone
Send thank you note
Pass along your resume
Interview preparation
Learn insider information
Typical Interview Format
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First-round on campus
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1-2 interviews with two people in each
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First-round “super day”
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Why i-banking, technical questions
6 interviews in the AM
Lunch
Either sent home or 6 interviews in PM
Second-round
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8 interviews with 1-2 people in each
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All questions fair game
Fit Questions
Common I-banking Interview Questions
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Tell me about yourself?
Walk me through your resume?
Why do you want to work in investment banking?
What does an analyst do?
Why do you want to work for our company?
Tell me about a deal you follow?
Why should I hire you?
How can you compete with someone who has i-banking experience or is from
Ivy?
What are your strengths/weaknesses?
Can you handle the long hours and stress?
Where else are you interviewing?
How are your analytical skills?
Why did you choose the University of Minnesota
It’s 8pm and you have a date with your girlfriend and the Director gives you a
valuation that has to be completed by morning, what would you do?
Why should I hire you?
Common Technical I-banking Interview
Questions
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Walk me through the financial statements?
What happens to the financial statements if
depreciation increases by $10, assuming a tax rate
of 30%?
How do you value a company?
Walk me through a DCF analysis?
How do you calculate WACC?
What is free cash flow (FCF)?
What is an LBO and when is it attractive?
What is in a pitchbook?
Reading List
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Wall Street Journal
Financial Times
Liar’s Poker
Monkey Business
The Accidental Investment banker
Barbarians at the Gate
Other People’s Money
Measuring and managing the value of
businesses
Career Resources
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Your network (cedars, facebook, myspace)
The Vault (www.vault.com) -insider
information
www.efinancialcareers.hk or
students.efinancialcareers.hk (you should
sign up for news and job alerts)