Investment Banking Analyst Final

An Investment Bank is a financial service company that acts as a middle man between people who want to invest money, and entrepreneurs who want to use this money to carry out their business plans. Our job is to help companies make decisions, and help them get from point A to point B.

In its most simple form, here are bullet points of what Investment Banks actually do:

1. Help companies raise money for their future plans.

- We can issue Debt (borrowing money from regular citizens/government/institutions).

- We can issue Equity (selling shares of the company, to investors, in exchange for cash)

2. Help companies buy other companies.

- Known as Merges & Acquisitions (M&A) where we advise a firm when it is deciding who to buy.

3. Help companies understand what they are worth.

- The term for this is Valuation, and it is an integral part of investment banking. One major method is a DCF (Discounted Cash Flow model).

"What on earth is a DCF?" is a question we get all the time, and I have provided a very basic explanation as to what it is below:

A company is worth the total amount of cash it can make in its life time. A DCF simply projects the cash flows of a company in the future, adds these cash flows all together, and comes up with a valuation of the business based on this. We then compare this value to the market price of the firm, to identify if the general public has over/under valued the business. This is the type of work we do.

What is expected from an analyst?

1. High levels of energy. This industry is brutal and highly demanding, particularly for junior roles. Having a smile on your face, and being able to work through long hours, and maintain a positive mindset is extremely valuable, and something we look for in our positions.

2. Crystal clear communication. Often times, there are multiple analysts on a deal with a client. If an analyst is unable to communicate her opinions and thoughts clearly, the deal could go sour and the analysis could fault and end up being incorrect.

3. Excellent Microsoft Office skills and technical skills. Analysts live with excel, some may say it is their best friend. Being able to effectively use excel, in a time efficient way, is invaluable for this job and will make the analysts life a lot easier.

4. The client is the number one priority. We strive on prioritising our clients needs, and whenever they need something, we have to give it to them in the shortest amount of time possible, with excellent quality. This can be quite stressful, but provides junior roles with responsibility, enhancing their growth as young professionals.

My experience 

I am an analyst. We spend all of our time coming up with valuations for companies, and summarising heaps of data into a presentable power point that we can take to investors and our clients. Most of our time is spent at a desk in an office, drinking an absurd amount of coffee. In simple terms, we do all of the dirty, nitty-gritty work to make the lives of our clients more fruitful when they are making a financial decision. The job can be highly frustrating, tiring, and even annoying at times. However, I have never grown more as a person, and I have never had the opportunity to be exposed to some of the most impressive entrepreneurs. My understanding of companies, from a financial perspective, is far better than it used to be, and my ability to work under pressure has improved drastically.