I am a first year student at the University of Nottingham and I am studying economics. I need to start thinking about what careers I would be interested in so I can look into internships, work experience etc. Investment banking seems like a very interesting career choice but I do not know much about it - does anybody have any websites or youtube videos that could teach me about it?
I want to learn about investment banking watch
- Thread Starter
- 25-10-2017 22:57
- 29-10-2017 00:21
You need to be applying for Spring Weeks bro
- 02-11-2017 10:07
It's ****. Look up videos by Anton Kreil on YouTube, he's ex Goldman trader. Then look up buy side (IB is sell side) and you'll see how much better it is.
- 02-11-2017 12:45
I prepared a document on what is investment banking when I was applying to Spring weeks, feel free to read the summary below. Its a bit simple, but its good to start off with.
What is investment banking?
Investment banking (IBD) is responsible for corporate finance and advisory. It is split into two sectors: Products and Industries. The purpose of both IBD sectors is to provide advisory on transactions, M&A and to arrange financing for these transactions.
IBD is split into the following product groups:
This division deals with the advisory on sale, merger and purchase of companies. The role falls into one of either two buckets: seller representation or buyer representation. (target vs acquirer). One of the main objectives in M&A for the bank is to establish fair value for the companies involved in the transaction. As they have expertise in business valuation, investment banks can also provide arbitrage opportunities for their clients. For example, valuation has shown that market value is less than the actual business worth. The bank may facilitate a merger or acquisition of this target company for its client.
However, they do not rely on buyers/sellers approaching them. They can source deals by conducting market analysis and approaching companies with ideas. A suggestion such as merging two companies or one company acquires/sells another.
When advising sellers, the IB’s work is complete once the other party purchases the business or assets.
However, representing a buyer is not always as simple. Proposals to buy often do not workout. Few firms or owners are willing to readily sell their business.
If a company wishes to finance a purchase, they may raise equity/debt. Once again, the IB can make this happen. They can determine the best price for new issues (equity/debt) but they can also make a market for those issues.
Remember, the distinction: Buy/Sell side. In the sell side, IB wants to sell the client’s firm assets to targeted buyers or in an auction to the highest bidder. E.g if there is a sell side-action you would meet with the client and develop ‘marketing materials’ for the prospective buyers.
In the buy side, the IB is representing the buyer. Buy-side deals are close to useless as seller has the leverage. The true role is to provide financing. Consequently, the analyst will value the company, come up with negotiation terms as well as how the financing would look like. In the background, there will be a lot of communication with the LevFin team to see what debt they can provide.
In LevFin – structure and execute leveraged debt financings for corporate and private equity clients and then seek to source investors for those debt financings.
Let’s say that a Chemical Company is looking to acquire another company, and they want to explore financing options.
Ideally, the company is an existing client and IB has a regular dialogue with it. In this scenario, different alternatives are presented:
- Different types of debt (bank, high yield)
- How each option would impact their existing capital structure
If they decide to go through the deal (Chem company) and raise debt, the debt would be marketed to investors and help the Chemical company to raise capital.
Similar to the IPO process but deals can be done faster as debt offerings can be quickly sold to qualified institutional investors.
The basic differences are that more senior debt typically has lower interest rates, a higher claim to the company’s assets, and maintenance covenants rather than incurrence covenants.
Maintenance covenants – These require the borrower to ‘maintain’ a certain credit profile at all times through compliance with certain financial ratios or tests. For example, Debt / EBITDA should be at 5.0x or lower.
Incurrence covenants only prevent the issue from taking certain actions, like incurring additional debt or making certain investments.
Senior debt is usually also secured against collateral.
Equity Capital Markets
Usually involves more than just IPOs. For example, underwriting equity derivatives, convertible debt and hybrid instruments may full under ECM.
Bulge bracket investment banks will provide ECM services that are comprised of many activities such as marketing, distribution and allocation of new issues, IPOs, private placements, buying and selling of stocks, special warrants and transactions in derivative instruments such as futures and options. Sometimes, businesses may take the help of private financial institutions to raise capital in the equity market as well.
Debt Capital Markets
DCM is responsible for providing advice on raising debt for acquisitions, refinancing of existing debt. DCM will work with a client to organize borrowing and to help provide access to a global pool of investors who are looking for opportunities. Debt is often is cheaper than equity.Last edited by midgetspinner; 02-11-2017 at 12:47.
- 19-11-2017 12:06
Are you looking to land an internship or full-time offer in IBD?
I am one of the founders of The Investment Banking Guide, which is the first app to guide applicants through the investment banking application process for internships and full time offers. The app is created by former bankers from GS, MS and JPM who have been through the process themselves and have interviewed hundreds of applicants.
The app describes in a step-by-step guide how to prepare for a video interview, immersive assessment, assessment centre, how to write a winning CV / cover letter and explains all of the important valuation and accounting concepts that you need to know. The app is packed with 600 common interview questions with detailed model answers.
We have also recently launched our latest app, The Aptitude Reasoning Tests Bible, which has >1,000 numerical-, logical- and verbal reasoning questions to prepare for the aptitude test that banks use to screen candidates. As a bonus, the app has all of the common brain teasers with explanations so that you can impress the interviewer!
Good luck with your application!