How to Get Into Investment Banking?

The Investment Banking industry is a tough nut to crack because only footballers and celebrities get paid more than investment bankers. Considering that only footballers and celebrities get paid more than investment bankers, the investment banking industry is a tough nut to crack. However, some prerequisites, steps, and protocols are necessary there are some prerequisites, steps, and protocols to crack every tough nut. In investment banking, youthere is also a need to follow a step-by-step approach if it is to be taken up as a career option. to getting in.

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Source: How to Get Into Investment Banking (wallstreetmojo.com)

Certain qualities and skills like number crunching ability and an inclination and mindset to work hard is extremely important. The job comes with a huge set of responsibilities that require great commitment. These profiles are not for everybody. It would be best to prioritize putting work first before anything else. There is a need to make the trade-off if it is taken up as a profession.

Recruitment Process

The prime strategy for investment banking is to know the industry in depth.

To know the industry, it is necessary to research. Then, refer to investment banking to get an update on what is happening in the investment banking industry. And also know about the recruitment process (in detail) to know how to break into investment banking.

Let us dig in and see a brief overview of how the investment banking industry works: –

• Be ready for a strict recruitment process: Banks are very tough about their recruitment processes, which is why it is hard for a newbie to get through. So, if someone wants to be part of the investment banking industry, both theoretical and practical knowledge is necessary.
• Know that banks prefer newbies: Banks prefer fresh graduates with no expectations or ideas about working hours. To work in investment banks, candidates need to work 100+ hours a week, and hiring students who have no idea is always helpful. This clarifies how to get into investment banking without experience.
• Top-notch university graduates are always ahead of the curve: Banks prefer students from top-notch universities like Wharton, Harvard, Oxford, Stanford, etc. otherwise, it would be difficult to break in. It is a good idea to take the CFA ExamCFA ExamThe Chartered Financial Analyst (CFA®) Program offers a graduate-level curriculum and examination program designed to expand your working knowledge and practical skills related to investment decision-making. read more to better chances of getting a shortlist.
• Banks prefer interns: If someone is not part of a top-notch university, then land d an internship with a top-notch bank. A couple of great internships can help get into the holy grail of investment banking, and the industry directly. From this we can understand how to get into investment banking without experience.
• These internships will get the analyst role, the entry point to investment banking. Also, read Investment Banking Internship.Investment Banking Internship.Many investment banks offer internships in investment banking, with durations ranging from 3 months to 2 years depending on the profile you choose as an intern. And if you complete your internship successfully, you will undoubtedly see yourself as an investment banker in the near future.read more

Entry Points

The second strategy is knowing the entry points to understand how to get a job in investment banking.

There are primarily two entry-level positions to aim for in case of M&A profiles. There are also audit, accounting, sales, and other options. But, a lucrative career in investment bankingCareer In Investment BankingAn investment banking personnel is a motivated professional who aims to help their clients reach their financial goals and objectives. The top four investment banking careers are - Analyst, Associate, Vice president, Managing director. read more, is M&A. Let us have a look at the two entry points of M&A profiles in investment banking: –

Analysts

It is the junior-most position in investment banking. Normally, undergraduate students or master’s degree holders are selected for this position directly. However, banks also consider people with 1-2 years of experience in a few cases. Analysts are hard workers in the industry. After working 3-4 years in the industry, they switch to private equity, hedge fundsHedge FundsA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques.read more, or other bigger banks.

Associates

Associates are selected from top-notch MBA universities in most cases. Sometimes they are selected from the talent pool of analysts. They supervise analysts and directly work with high-profiles like partners and managing directors. Usually, associates do not leave and switch within a few years; they stay and aim for promotion in the long run. One of the reasons it becomes difficult for them to change is barriers to entry in other domainsBarriers To Entry In Other DomainsBarriers to entry are the economic hurdles that a new entrant must face in order to enter a market. For example, new entrants must pay fixed costs regardless of production or sales that would not have been incurred if the participant had not been a new entrant.read more. Do have a look at Investment Banking Associates.

Here is the list of top investment banks:

• Bulge Bracket Investment BanksBulge Bracket Investment BanksTop 10 bulge bracket investment banks are - Blackstone, Goldman Sach & co, Morgan Stanley, J.P Morgan Chase & co, Bank of America Merrill Lynch, Credit Suisse, Citi, Deutsche Bank, HSBC, UBS.read more
• Middle Market Investment BanksMiddle Market Investment BanksThe deals of a mid-tier investment bank range from USD 50 million to USD 500 million. They offer the same services as the bigwigs, i.e. bulge bracket banks, but are not as geographically present internationally as they are.read more
• Top Boutique Investment BanksTop Boutique Investment BanksThe top boutique investment banks are - Perella Weinberg Partners (Global M&A Advisory – Boutique), Lazard (Global M&A Advisory), Rothschild (Global M&A Advisory – Boutique), Evercore Partners (Global M&A Advisory – Boutique), Greenhill & Co. (Global M&A Advisory – Boutique, Blackstone (Global M&A Advisory).read more

Strategy

Next, a good strategy is required to understand how to break into investment banking.

It is necessary to make an effort to stand out from the crowd. Here’s what the candidate should do to get into investment banking: –

• Plan ahead: To get into this field, it is better to act fast. It Is difficult to get back to this field if someone is already doing some other type of job. So, it is important to plan early and take the following steps, even if the candidate wants to know how to get into investment banking after graduation.
• Concentrate on the knowledge and marks: Only understanding will not count. People with great GPAs will easily impress the top banks and will be the first preference for interviewers.
• Do an MBA from a top-notch institute: It is difficult to score high in investment banking without an MBA from a top-notch institute. Top-tier banks usually hire MBAs because of the following reasons:

• Getting into the top-notch MBA institute means pre-screening is already done. Otherwise, it would not have chosen the candidate in the first place. It saves banks time to screen top-class candidates from general ones.
• During MBA days, students learn a lot about the complexities of financial models. So there is a learning through submitting the project, writing a detailed analytical report and building the toughest economic models. That saves banks the cost of training.
• After MBA, candidate directly joins as an associate (in most cases), are given a lot of responsibilities, and they delegate the most to analysts. As a result, the attrition rate at banks gets reduced.
• Build networks: Online applications do not work. How can online applications beat-up face to face relationships? Instead of submitting applications, candidates should call the top bankers directly and ask for advice or suggestions about getting into investment banking. They will suggest and help understand how to get in. Moreover, a relationship is built up with them instantly. During MBA, build a network as much as possible. Talk to people who have already passed out of the institute. Build rapport with the professors. And also with students with different backgrounds and things to share. Building networks will always triumph over online applications.

Technical Skills

The fourth strategy to get into investment banking is to master technical skills and research on how to get a job in investment banking.

According to research, it takes 6 seconds for a recruiter to slide through a resume before she selects or rejects a resume. For investment bankers, it would take even less time. So, take the time to build a resume. Make the resume shorter and also make sure to answer this question in the resume – “Why are you the best person for an analyst/associate position in investment banking?” Then, one should easily scan the resume in under 10 seconds.

As mentioned earlier, it is best to crack the job in M&A profiles in investment banking. Also, top-notch in your skills are needed, e.g., financial modeling, accounting, valuation, Excel, and writing skills.

• Be proficient in financial statement analysis – Financial statement analysis is used here. It means skills should be in the vertical analysis, horizontal analysis, and ratio analysis cash conversion cyclesCash Conversion CyclesThe Cash Conversion Cycle (CCC) is a ratio analysis measure to evaluate the number of days or time a company converts its inventory and other inputs into cash. It considers the days inventory outstanding, days sales outstanding and days payable outstanding for computation.read more, ROEsROEsReturn on Equity (ROE) represents financial performance of a company. It is calculated as the net income divided by the shareholders equity. ROE signifies the efficiency in which the company is using assets to make profit.read more, ROCE, etc.
• Master valuation skills – Equity Valuation is estimating the potential market value of a financial assetFinancial AssetFinancial assets are investment assets whose value derives from a contractual claim on what they represent. These are liquid assets because the economic resources or ownership can be converted into a valuable asset such as cash.read more or liability. Valuations are required in many contexts, including investment analysisInvestment AnalysisInvestment analysis is the method adopted by analysts to evaluate the investment opportunities, profitability, and associated risks in their portfolios. In addition, it helps them to determine whether the investment is worth it or not.read more, capital budgeting, merger and acquisition transactions Merger And Acquisition TransactionsMergers and acquisitions (M&A) are collaborations between two or more firms. In a merger, two or more companies functioning at the same level combine to create a new business entity. In an acquisition, a larger organization buys a smaller business entity for expansion.read more, financial reportingFinancial ReportingFinancial reporting is a systematic process of recording and representing a company’s financial data. The reports reflect a firm’s financial health and performance in a given period. Management, investors, shareholders, financiers, government, and regulatory agencies rely on financial reports for decision-making.read more, taxable events to determine the proper tax liability, and litigation.
• Become a financial modeling ninja – Financial modeling means forecasting the company’s future or an asset using an Excel model that is easy to understand and performing scenario analysis.
• Become awesome in Excel – Investment Banking AnalystInvestment Banking AnalystInvestment Banking Analyst works with investment banking team and expertise in the area of Accounting, Financial Modeling, Project financing, Project Valuation, and Financial statement Analysis. These analyst has deep knowledge in Excel and they are good at VBA to analyze the market data and financial modeling. The analytic work consists of building a financial model for different projects like Infrastructure projects (i.e. Power projects, real estate, etc.).read more spends around 10-12-14-16 hours each day working on Excel doing financial modeling, valuations, making pitch books, and financial statement analysis. So make sure to become an Excel expert.

Soft Skills

The fifth strategy to learn to get into investment banking is to master communication.

• Start with this checklist: Investment banking is not something everyone is made of. With just 20,000 entry-level jobs globally, it would be impossible without the following checklist: –
  • Knowing the field through and through.
  • Being the hardest worker in the room (read 100 hours a week).
  • A gift of connecting with people personally.
  • Presentable and very well-dressed.
  • Ability to ask outstanding questions during a conversation.
  • A voracious reader and always try to improve your knowledge base.
  • A great salesman.
• Become a great salesman: Most candidates neglect this skill. But this is the most important skill to earn havoc in investment banking. The candidate must have the ability to make sales. The better the ability to sell, the better compensation will be at the end of the month even if the candidate thinks how to get into investment banking after graduation.
• Work on your communication: Of course, good communication skill is important. But we are talking about an extraordinary communicator who can deliver great presentations whenever required and make sales calls so well that the customer feels he is the best guy to buy from.

Investment Banking 101

The sixth way to learn to get into investment banking is to create your own story.

By following the above steps and building the skills, it is certainly possible to get into the analyst role. But the hard part is taking action. 

• Structure the story: There should be a story that sells. And for that, youone need to be proactive. Structure yourthe story in the following manner: –

• First, create a beginning. Talk about native place and work journey till date.
• • Next, talk about financial intelligence. Tell briefly about M&A advisory in investment banking.
  • Then, talk about the interest in investment banking. Talk about internships (if any) and any professional training.
  • Finally, talk about the future, the interesting deals, the interesting funds to work on, and the value to add.
• Share story everywhere: It is essential to share your story. The story will highlight all solid points and why the candidate should be the most preferred for M&A advisory) and make it as brief as possible.
• Gather contacts, and cold-call them: Go to social media websites and investment banking networking events to network and gather references. Then sort out all the connections and cold call them. Cold calling will help get an internship (if not an analyst position) in an investment bank.
• Prepare for interview questions: Preparing for interviews in advance will help ace more interviews. So, look at different interview questions that are asked in investment bankingInterview Questions That Are Asked In Investment BankingThe purpose of this Investment Banking Interview Questions and Answers is simply to help you learn about the investment banking interview topics.read more and prepare them. Better preparation always yields better results.
• Remember three things: First, there is no time to sleep when work is there. Second, do not make mistakes; don’t ever. Third, the greed for better pay, compensation, salary, profit, bonus, and benefits is good.

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This article has been a complete guide to How to Get Into Investment Banking. We explain the recruitment process, entry points, strategy, technical and soft skills.-

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