Jobs in the

Investments Industry I:
Investment Banking

Bryan Sudweeks
Fall 2008

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 Jobs in the Investments Industry

 I. Investment Banking
• Investment banking, Sales and Trading, Research
 II. Investment Management
• Asset Management
 III. Financial Planning
• Investment advising, Insurance, and Estate planning
 IV. Corporate Finance
• Pension Fund Administration and Management
 V. Financial Consulting
• Pension Fund Consulting

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 I. Investment Banking

 Objectives
• A. Understand the purpose of Investment Banking
• B. Understand the structure of an Investment Bank
• C. Understand the interaction between divisions of
Investment Banking groups (and the recent
problems)
• D. Know where the potential jobs are in
Investment Banking
• E. Know how to prepare for a career in Investment
Banking

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 A. Purpose of Investment Banking

 An intermediary between the capital markets (investors) and

corporations (borrowers)
 Offers strategic advice and financial analysis on Mergers &
Acquisitions, Divestitures, and Capital Structure
 Offers Equity and Fixed Income Underwriting (e.g.. IPO’s,
High Yield Offerings)
 Provides asset management advice to high net worth
individuals and institutions
 Provides Sales and Trading of Equity (Stocks), Fixed
Income Securities (Bonds), Derivatives (Options).
 Offers research and advice on publicly listed stocks and
bonds to institutional and individual investors

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 B. Structure of Investment Banks
 Major investment banking divisions include:
• Investment Banking
• Intermediary between the capital markets
• Advice and analysis on M&A and Capital Structure
• Equity and Fixed Income Underwriting
• Asset Management
• Provide asset management services to investors and
institutions
• Sales and Trading
• Sales and Trading of Equity (Stocks), Fixed Income
Securities (Bonds), Derivatives (Options).
• Research
• Provide research on public stocks and bonds 5
 Structure of Investment Banks (continued)
Investment Bank

I-Banking Asset Sales &

Research
Division (IBD) Management Trading

Industry Groups Private Client Buy and Sell

Analyze all
Corporate Finance Services Financial
Public information
Product Groups • Work with High Securities
in order to give
M&A Net Worth Individuals and Derivatives
advice to
High Yield
investors and
Debt Capital Markets
sales and trading
Equity Capital Markets
group

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 Structure of Investment Banks (continued)
Investment Bank

I-Banking Asset Sales &

Research
Division Management Trading

Industry Manage funds

Product Private Client
Group for institutions
Group Services
(Corp Finance) and individuals

Equity Debt High

Fixed Fixed
Capital Capital Yield M&A Equity Derivatives Economic Equity
Income Income
Markets Markets Debt

Consumer Products
Technology Consumer Products
Telecommunications Technology
Real Estate Telecommunications
Utilities Real Estate
Health Care Utilities
Retail Health Care
Retail 7
 C. What is the Interaction between
Investment Banking Divisions?
 Investment banking meets the needs of
different clientele
• Companies wanting to list equity/debt
• Individuals/institutions wanting unbiased research
for investing
• Strategic and asset management advice for
companies/individuals
 How should it be structured to maintain no
semblance of “conflict of interest”?
• A “Chinese wall” was proposed and instituted
• Certain divisions are “inside” and others “outside”
the wall 8
 Interaction Between Divisions (continued)

“Inside the Wall” “Outside

Corporate Finance
the Wall”

Sales & Trading, Research,

IBD Corporate Finance
and Asset Management

Corporate Finance

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D. Potential Jobs in Investment Banking
 Where are the jobs in Investment Banking?
• Most investment banking jobs are in analysis
• Equity market analyst
• Debt market analyst
• High Yield analyst
• Mergers and Acquisitions
• Industry Analyst
• Consumer products, telecommunications,
real estate, finance, etc.

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 Jobs in Investment Banking (continued)

I-Banking
Asset Management
Division
Division

Research Analyst
Industry
Analyst Product
Group
Senior Analyst Group
(Corp Finance)
Portfolio Manager

Equity Debt High

Capital Capital Yield Mergers & Consumer Products
Markets Markets Debt Acquisitions Technology
Telecommunications
Real Estate
Assistant Analyst Utilities
Research Analyst Health Care
Assistant Analyst
Research Analyst
Analyst Retail Research Analyst
Analyst
Senior Analyst Analyst
Senior Analyst 11
Senior Analyst
 Jobs in Investment Banking (continued)
 What are the different types of analyst positions?
• Analysts position vary depending on who they are doing
research for, i.e., sell-side versus buy-side research
 What are sell-side analysts?
• Analysts whose work is used for selling securities to
investors, i.e. Research, Sales and Trading, etc. Analysts
prepare the research for potential investors in the hope that
investors will buy and sell companies through the I-bank
 What are buy-side analysts?
• Analysts whose work is used in the process of buying
securities for specific portfolios, i.e. Asset Management,
Private Wealth Management, etc. Analysts prepare the
research and then act on that research to buy companies.
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 The Analyst Position (continued)

 Why are Investment Banking analyst positions so hard to

get?
• They provide instant exposure to senior management teams of
the largest companies in the world
• They have the highest exposure, learning potential, and salary of
any job in the Financial Services Industry (out of college)
• They give opportunity to work in small teams, with learning
from senior partners
• After you have built experience in the field, it offers wonderful
opportunities at top business schools and companies

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 The Analyst Position (continued)

 What are the skills gained as an analyst?

• Financial modeling and strong quantitative work
• Solid Understanding of Corporate Capital Structure &
Capital Markets
• Solid understanding of companies and industry composition
and structure
• Professional presentation analysis

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 The Analyst Position (continued)
 What are the responsibilities of an analyst?
• Financial Analysis and Modeling
• Discounted cash flow and Free cash flow
analysis,
• Comparable company
• Precedent transactions, and
• Leveraged buyout
• Client Exhibits and Presentations
• Market research and competitive analysis
• Client interaction
• Roadshow execution management
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 The Analyst Position (continued)
 What type of work do Analysts do?
• Company Analysis (both buy and sell side)
• Financial forecasting
• Strategic analysis
• Industry Analysis (both buy and sell side)
• Strategic analysis
• Portfolio implementation, construction, and
reporting and attribution
• Investment policy statement
• Portfolio construction and management
• Portfolio reporting and attribution
• Whatever is needed to attain company goals and
objectives 16
 The Analyst Position (continued)

 What are the criteria used to select analysts?

• There is a record of achievement
• A strong academic record
• A balanced individual with extracurricular activities
• A good employment history
• Strong communication skills
• Evidence of being a team player
• A tireless work ethic
• Attention to detail
• A strong analytical capability (with examples)

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 E. How to Prepare for a Career in
Investment Banking
 Understand the industry, the positions, and the lifestyle
• This is a wonderful but crazy industry
• Are you suited for the lifestyle—very long hours
 Start building your contacts
• Meet with as many of the visiting speakers as possible
 Do well in your classes
• A strong GPA is important
• Have a good financial analysis project to leave with
potential employers as an example of your best work
 Look to beginning your CFA program
• It is looked on highly in the industry

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 A Career in Investment Banking
 Don’t get discouraged
• Understand yourself and your goals
• Work hard and be patient—Faith precedes the miracle
 Keep your priorities in order
• Obedience is the first law of Heaven--do what you
should
• He will help take care of the rest
 Follow the Spirit
• Stay worthy of the Spirit
• He is your competitive advantage--stay worthy of His
help
 Remember the Lord’s hand in your blessings
• Always be appreciative of his blessings
• Remember to share them with others 19