What an Investment Banker Does
The investment banker profession deals with helping corporate clients manage mergers and acquisitions (M&A), or the buying, selling, and joining of companies. When working for a company that’s trying to sell, the investment banker’s job is to make the business look as appealing as possible to sellers and get top dollar for it. When working for a buyer, the role tends to involve helping the company get the funding it needs and follow the necessary steps to secure a successful deal.
Investment bankers are in demand on a global scale, with skills and experience readily transferring from one region to the next. Salaries tend to be greatest in international hubs, such as London, Paris, New York, and Milan, though the career offers comfortable living almost anywhere. As with any profession, there is a series of positions one might hold in mergers and acquisitions, beginning with entry-level positions which those straight out of university might obtain, all the way through attaining the illustrious position of Managing Director.
Who would enjoy a career in Investment Banking?
Investment banking is a high-powered career, ideal for those with a keen eye for detail, a fanatical obsession with numbers, excellent interpersonal skills, and an immense amount of stamina.
Who mightn't like the career?
The career may not be the right career choice for those who aren’t prepared to work extensive hours, including nights and weekends, or perform copious amounts of financial analysis.
Most people begin their careers as an analyst after completing a four-year degree in a field such as accounting, finance, or mathematics.
The small number of spots available can also make it challenging for anyone to break into the field, so coming to an interview fully prepared is crucial. Candidates must be primed to sell themselves by telling their story, explaining why they have the necessary experience, showcasing why they’re a good fit for a particular firm, and more.
Moving into Investment Banking from another career
Although sometimes difficult, it may also be possible to transition into mergers and acquisitions from law, accounting, strategy consulting, or a career with a regulatory agency, through networking with professionals in M&A is essential in order to get in the door.
Role: An analyst will typically hold the title for about three years and will spend his time supporting the more tenured investment bankers. Job duties often include administrative work, tracking and gathering data, researching, and assisting with the creation of “pitch books,” or books of information given to prospective buyers and investors of a company. Because of this, analysts must be very skilled in programs like PowerPoint and Excel.
Role: Those who perform well as an analyst are generally offered positions as an associate by the bank they begin with. Associates support the people in higher positions and put together pitch books, though they spend more time on the financial models, versus gathering information and researching.
They are also generally responsible for ensuring the work that analysts complete is accurate. Larger banks will often promote their associates to VPs after a set amount of time, perhaps three years, though those who work for smaller banks may have to wait for a VP position to become available.
Role: Most VPs are promoted internally based on a bank’s schedule or need. M&A VPs oversee everything that associates do and are usually responsible for guiding the process of pitch book creation. They also communicate directly with clients on a daily basis and keep them informed about the progress of their venture.
Director & Managing Director
Roles: Most directors are internally promoted after working for about three years as a VP. The goal of a director or managing director is to bring in new clients and keep the established ones happy, so they spend much of their days meeting with people. It’s common for a managing director to spend a week or more out of the office traveling. Hours of Work: 50-60 per week, though M&A directors and managing directors have more freedom to schedule their days in a way that works for them.
Opportunities for travel vary based on the role and bank. Entry-level employees will likely not travel at all and executives may travel extensively all over the world.
Analyst: According to Glassdoor, the average national base salary presently sits at USD$76,969, though an incoming analyst can probably anticipate something in the USD$50k-60k range, depending on the strength of his resume and size of the bank. PayScale puts the rate at £34,587 in the UK, AU$76,536 in Australia, and CAD$58,859 in Canada.
Associate: Associates presently earn an average of USD$111,562, £50,726, AU$87,262, and CAD$68,784.
Vice President: An average base salary is USD$145,791, £82,196, AU$113,440, CAD$82,541.
Directors and Managing Directors: Salaries for directors average USD$170,143, £156,458, AU$130,450, CAD$100,383.
Bonuses are awarded at the close of successful deals and vary based on the size of the deal and bank. When a deal goes through, an MD can receive as much as a 40% success fee. This brings the real earnings to somewhere between USD$700k-USD$2m or USD$650k-USD$1.9m for someone who works for a smaller firm.
Why an Investment Banker moves on
Due to the pressure and number of hours people in investment banking put in, not everyone makes it to directorship roles, or even a VP position for that matter.