Investment Banking 101:

What Is Investment Banking?

What Is Investment Banking?

Contrary to popular belief, Investment Bankers are NOT stock brokers! Stock brokers deal with individuals and manage money Investment Bankers deal primarily with corporations

Investment Bankers provide financial advice to corporations and assist them with services, some of which include:
Mergers & Acquisitions (M&A) Financing (Equity and Debt) Restructurings and Divestitures General Advisory Services Examples of Investment Banks: Canada: RBC Capital Markets, BMO Nesbitt Burns, CIBC World Markets, TD Securities, Scotia Capital U.S.: Goldman Sachs, Merrill Lynch, Morgan Stanley, CSFB, JP Morgan Chase

Services Provided by an Investment Bank

Investment Bankers work with the different product groups within the broader Investment Bank to service our clients needs
Transaction Product Group
Equity Capital Markets (ECM)

Equity

Debt - Bonds

Debt Capital Markets (DCM)

Investment Bankers
Debt - Loans Corporate Bankers

Client

M&A, Restructuring, Divestiture

M&A Group

Other key resources: Equity and Debt Research, Merchant Bank, Sales & Trading (e.g. Derivative instruments)

The Day in the Life of an Analyst

There is no such thing as a typical day Each assignment you work on is either a live deal or a pitch

Things you could be doing on any given day:

Financial modeling and analysis Developing client presentations Prospectus / circular drafting Valuation analysis (DCFs, Comps, Precedents) Other analytical work Competitive strategic analysis for companies and industries Development of marketing materials Market analysis Maintaining databases

The Typical Term of an Analyst

Contract terms are typically two years in length but which can be extended for a third year based on performance After the three years, some potential outcomes include:

Promotion to Associate (based on performance)

Transfer to another product group or even a new city Pursue an MBA or other advanced degree Leave the industry to pursue other interests You can start as a Generalist (work for any industry group) and eventually funnel into one specific industry group or immediately be dedicated to a specific industry group (e.g. Real Estate, Power & Utilities, Mining, Technology, etc.)

Royal Bank, Bank of Montral and Scotiabank have Generalist programs

CIBC and TD have Analysts start in specific industry groups

Investment Banking Analyst Required Skills

Exceptional analytical and quantitative skills and attention to detail Excel and PowerPoint will become your best friend

Interpersonal and communication skills

Demonstrated teamwork and leadership abilities Proven track record of initiative, achievement and success Good academic record and involvement in extracurricular activities Focus on Finance and/or Accounting are assets but not necessarily required Excellent work ethic and time management skills Solid business acumen Knowledge of a specific industry is helpful, but not expected

What Is So Great About Investment Banking?

Incredible learning experience Develop an exceptional skill set that you can leverage to other positions

Learn many transferable skills in a short period of time

Most banks offer a 1-3 week training course before you start working Excellent networking opportunities both within the firm and with top executives at major corporations Fast-paced challenging environment with as much responsibility as you can handle Work hard, play hard

Money

The Downside of Investment Banking

Long, unpredictable hours In Canada, expect, on average, 80 hours per week which can easily top 100 hours when busy

Hours in the U.S. are significantly higher, especially at the bulge bracket U.S. Investment Banks
Exceptional sacrifices Must keep flexible as frequently required to work late nights and weekends (all-nighters are not unheard of) Usually non-existent social life Steep learning curve You are expected to learn concepts quicker than most other jobs

Useful Job Application and Rsum Tips

Keep it clean and simple!!! Cover letters should not be more than one page 3/4 of a page is ideal Highlight one (or more) relevant skills/achievements that makes you unique versus all the other applicants Rsums should be no more than 2 pages, ideally 1 page Include only relevant info Double check your spelling and grammar Ensure you have the correct company name and contact person

Job Interview Tips

DONT LIE!!!!! If you dont know the answer to a question, say I dont know but add that you would take the necessary steps to find the answer Investment Bankers are very good at knowing when you are lying Research the firm you are interviewing with E.g. know transactions that they recently worked/ advised on Keep answers short and concise Interviewers are looking for people they can work with so personality fit is a key criteria At the end of the interview, ask good and memorable questions demonstrating interest and a desire to work for that firm

Potential Job Interview Technical Questions

You will be asked the usual behavioural questions What does an investment banker (analyst) do? Why do you want to become an investment banker? Why do you want to work for us? How would you value a company? Discounted Cash Flow

Comparable Company Analysis

Precedent Transaction Analysis Discuss what has recently been going on in the capital markets Other finance theory-related questions

So You Got A Job Offer...Now What?

Some things you should consider before accepting an offer Corporate culture Meet with as many people as possible from every firm to see if you think you would fit in Ask yourself Can I see myself working with these people for 15 hours a day, everyday? Deal flow

Typically, the greater the deal flow, the better the learning experience
Location Branch vs. Head Office International offices

Useful Commerce Courses / Other Suggestions

Courses related to: Financial statement analysis Company and asset valuation Strategic management Finance-theory Accounting (e.g. corporate tax, consolidation) Chartered Financial Analyst (CFA) Program Read the Business section of the Globe & Mail and/or Financial Post (or other financial publications if available) EVERYDAY!

Who Should Consider Investment Banking?

People who are: Willing to focus on career first Willing to work however long it takes to get the job done right Looking for a great learning experience Looking for a challenge You have to want to be an Investment Banker to be able to survive!