Investment banking deals with raising capital and managing funds for large corporates. It is one of the most challenging careers in finance. Given the compensation, perks, and glamorous lifestyle it offers, most graduates with a finance background choose to go for it. To be a good investment banker, one needs to have a strong analytical, numerical, and logical sense. Knowledge of business economics is crucial to gain a foothold in this domain.
Though b-school graduates are preferred by employers, many companies don’t hesitate to hire graduates with a strong analytical and mathematical background. Certified investment banker’s, people who pursue certification in investment banking are increasingly in demand by employers. Investment banking as a lucrative profession attracts people from varied areas of industry.
Let’s discuss investment banking in depth.
Investment banks help in several ways – raise capital, underwriting debt or equity securities. They are also involved in helping corporates manage merger & acquisition deals. Further, investment banks help with issuing stocks. Following are the major areas in which investment banks function–
- Mergers & Acquisitions (M&A): Merger and acquisitions tend to be extremely hectic function. Investment banks work with involved parties to carry out the whole process easily. Investment banks analyze the deal, prepare documentation, and do due diligence.
- Restructuring: Investment banks offer help to corporates to restructure and realign to increase profitability in the company.
- Equity Capital Market: Investment banks help large corporates initiate IPOs in which they sell shares of the company on behalf of the company. Selling of stocks and bonds are further facilitated by investment banks.
- Leveraged finance: Investment banks finance corporate activities by issuing high-yield debt.
Skills required for investment banking
First of all, as it is made out to be, everyone doesn’t work as an investment banker or facilitate an investment deal. There are multiple roles in investment banking including investment banking analyst.
Investment Analyst is an entry-level role where analysts perform multiple activities from analyzing potential investment opportunities for clients to booking the deal.
As an investment analyst, you need these skills –
- Good business acumen: Investment analysts are required to research extensively to find business opportunities for clients. It is necessary to have good understanding business acumen.
- Strong communication skills: Investment bankers are required to talk to HNI (high-net worth clients) and sometimes industry leaders, hence it is essential to have clear communication skills.
- Persuasiveness – Persuasion is an art, but investment bankers approach clients with the intent to persuade them. Hence, it is necessary for them to be convincing.
- Strong decision making – Investment bankers arerequired to take difficult decisions now and then, related to investment. Hence it is important for aspiring investment bankers to be a good decision maker.
Education required for investment banking
Most companies hire entry-level investment bankers from b-schools with a finance background. However, it is not mandatory eligibility. As long as a candidate has, knowledge of finance and strong analytical aptitude, the candidate can pursue a career in investment banking. People with finance background can also pursue investment banking certification’s to get their career rolling. Strong finance background or anything related to economics is mandatory. Companies today are also hiring computer science, mathematics, and statistics graduate for the role of an investment banker.
All in all, it comes down to having a strong analytical aptitude and business acumen to make a career in investment banking. Taking Internships also helps, but getting an internship is competitive.