Well, Investment banking in the real world is unlike the movies and shows. It is a hustle. The field pays very well to those who can work hard and build trust with their dedication, investment banking skills, and work ethic. And again, unlike the movies a career as an Investment Banker won’t become a multi-millionaire overnight. But, with consistent hard work, learning the right skills, and relevant experience, investment banking can prove to be a profession with abundant opportunities and high salaries and payments in commissions.
From depictions in movies like “Wolf of Wall Street” to the hustle and bustle in real places like the stock market in Mumbai also known as “Dalal Street”, Investment Banking and an Investment Banker’s life has attracted much attention. This is because of the vast opportunities and growth this sector has the potential to provide.
In this article, we discuss the right skills you need to learn for a successful career as an investment banker, how and where you can learn them and much more about the work and responsibilities involved world of Investment Banking.
What is an Investment Bank?
An Investment Bank is a company or institution that provides financial and advisory services to its clients. An Investment Bank can be a part of a division of a commercial bank that offers to help their clients with investments or it can be a separate institution providing dedicated services.
What is the Scope of Investment Banking?
Though Investment banking is a competitive industry, it is a thriving field and has a bright future. As it looks in the present, investment banking has a very broad reach and is predicted to expand dramatically over the next few years. Investment banking is continually moving towards a better future as a result of technological breakthroughs, shifting consumer expectations, and new business models.
Investment banking organizations are anticipated to benefit from new opportunities in the coming years to grow their client base and offer innovative financial solutions. Career opportunities as Investment Bankers can provide impressive results in the long term.
Who Are Investment Bankers and What Do They Do?
Investment Bankers are professionals in the field of investment and finance. They are experts in market analysis and effective communicators. Investment bankers provide several financial services to their institutional clients. They help the clients of the firm in raising and handling capital and provide sound financial advice.
They assist their client firms’ financial needs by facilitating transactions like as mergers and acquisitions, initial public offers (IPOs), equity raises, debt issuance, restructuring, and stock trading. The range of clients at an Investment Bank goes from big MNCs, and government organizations to average investors and traders.
They act as the ‘middlemen’ or intermediaries between investors and companies offering underwriting services. Investors are people who are looking to invest their money in ventures that can potentially provide them with profits. Companies might need money in the form of capital to run or expand their business. In this case, they act as brokers connecting the two.
Investment bankers try to understand the investor’s needs and expectations and assist them in investing in suitable shares. Similarly, When working with corporations, they try to understand the volume and amount of investment required and the term of the investment among other factors. They then carefully analyze relevant information, which helps them connect the company to investors that match those needs.
Apart from this, they also provide start-to-finish assistance for a company looking to acquire another company and its assets or two companies looking to merge and provide valuable advice on financial matters. Further, firms hire them for investment and market research. The investment bank provides these services for flat fees or profits through commissions on successful deals.
How Do I Become an Investment Banker?
In order to become an investment banker, you should have a strong knowledge of the market and current financial trends and knowledge of accounts and mathematics. Knowing the principles of economics can be very beneficial in predicting, handling, and making the most out of the ever-changing and unpredictable financial market. Along with this, there are certain skill sets that can help you make your work more efficient and yield maximum results in this field. Below we have mentioned the Top 11 Investment Banking Skills that you need to learn to grow in this field.
Top 11 Skills to Boost Your Career in Investment Banking:
1. Financial Skills
The investment banker’s job involves carrying out complex financial transactions smoothly on a large scale. Company Mergers & Acquisitions, and Initial Public Offering involve big numbers, various elements, and complex transactions. Hence, strong knowledge of subjects like accounting, economics, maths, and current economic and market conditions is crucial to success in this field. Expertise in them can take you much further.
2. Financial Modeling and Valuation
Business valuation is the process of analyzing the past and present of the company’s resources and performance and creating a financial model. A Financial Model is a monetary representation of many factors like the company’s assets, liabilities, investments, and current resources. In simple words, it is an estimate of the company’s present value.
A financial model uses the present representation of the company with the objective of predicting the future of the company. This prediction or forecast of the future can help the business make crucial decisions in the present. Hence, expertise in business valuation and financial modeling is one of the prerequisite investment banking skills.
Some important financial modeling methods include the 3-statement model, DCF model, IPO model, Merger model, and LBO model. Financial modeling involves creating financial statements and accounts. However, you will also need to make documents of many transactions which are explained in detail below.
3. Preparing Transactional Documents.
Learning to create and maintain transactional documents is an important part of investment banking skills.
Transactional documents include
- A Confidential Information Memorandum(CIM): This is a document involved in Mergers and Acquisitions, which is used to deliver important and sensitive information about a company’s operations, management, financial statements, and other information during its sale to potential buyers.).
- An Investment Teaser: This is the first professional document about a company that is given to potential clients who are interested in acquiring or investing in a business. It is quite important because it is the first impression of the company that is delivered to the buyers and we all know how important first impressions are.
- A Term Sheet: A term sheet is a document containing all the terms and conditions of both the parties involved in a financial deal. This document involves what both the parties have agreed to and what they have not and the terms and conditions and serves as the preliminary document before preparing the final contract which is official and enforced by law.
- Confidentiality Agreement: A confidentiality agreement is a document containing confidential information and material that the business owners and management would like to share with one another but restrict others and the public from accessing the information.
- Other transactional documents are also prepared and thorough knowledge and cautiousness as well as a strong work ethic are important while working with such information.
4. Building Interpersonal Relationships
Building strong relationships with clients, proprietors and management of the business is a key element of investment banking skills. Proper assistance and personal guidance help clients to close the deal. Ensuring timely communication along with the carrying out of transactions smoothly and the exchange of important documents can help build trust in the banker and his firm.
This establishes the goodwill of the firm and the investment banker in the market which can turn out to be a valuable tool during profitable opportunities with big firms as a good market reputation helps you beat the competition and ensure that they hire your firm for their investment needs. Further, trustworthy handling of sensitive information, efficient work, and a positive and optimistic attitude can help create long-lasting relationships with clients who return to your firm for their future needs.
5. Microsoft Office Suite
A majority of complex transactional documents, financial accounts, and analyses are processed in Microsoft Excel and Microsoft Word. Both these tools allow faster and more efficient handling of documents which could otherwise be time-consuming and ultimately help you meet deadlines on time. Further, information that is presented to the relevant parties is presented through Microsoft applications like Powerpoint and some others. It also helps the banker turn complex data into charts, graphs, and presentations that are easy to understand.
This ensures smooth communication of important information and goals. Also, other tools in the suite help the banker in planning and organizing events and deadlines. All of these benefits make Microsoft Office a boon for the business world. Hence, one of the most important investment banking skills is proficiency in the applications of Microsoft Office Suite. The software can make your work easier, more organized, and efficient.
Negotiations are an everyday part of an investment banker’s career. Therefore having the ability to negotiate smoothly through deals, agreements, and conflicts can help you reach a successful and profitable venture. Negotiating involves discussing fees, terms and conditions, client expectations, and promising achievable results. Negotiation can effectively make or break a deal for your firm and hence it is one of the essential investment banking skills, the knowledge of which can help your growth within the firm and the industry.
Teamwork makes the dream work! Investment bankers work with large-scale financial data which is quite complex. Efficient distribution of work is important as well as communicating with your team about your work. Collaborating in such a way can help turn complex problems and data into achievable results. Teamwork and collaboration as a whole is an inseparable part of investment banking skills.
8. Attention to Detail
The complexity of the data and the analysis of large and complicated numbers in investment banking make it one of the most crucial investment banking skills in the business. This is because one mistake or ignorance in considering a certain variable in valuing the business and preparing documents can affect the accuracy of the results. Further, communicating insufficient or incomplete details to the clients can create problems in the future. It can also affect your goodwill.
As businesses that plan to utilize a significant amount of their capital and rely on the banker’s assistance for some of their most important decisions like mergers, acquisitions, and investments, carefully paying attention to the smallest details minimizes risks and makes sure that your client has an experience which is as smooth and efficient as possible.
9. Analytical Skills and Problem-solving.
Analytical skills involve analyzing complex financial data and variables and coming up with acceptable solutions. It also involves navigating complex situations through analytical and quick thinking and preparing documents while keeping the terms of both parties in mind so that the deal is mutually beneficial to them. Problems may arise from time to time, so a problem-solving mindset can prove to be a beneficial tool in the arsenal of the investment banker.
10. Discipline and Work Ethic.
It is important to keep utmost discipline in your work. An investment banker needs to communicate in a truthful and unbiased way. He is trusted with some of the most important data of the business and therefore he needs to ensure that he utilizes it properly. He is also trusted with confidential and sensitive information about the business that could prove disastrous in the wrong hands.
Hence, he has to make sure he handles any of such data safely, protects it from harm, and keeps it undisclosed to others. He needs to create healthy expectations with clients and parties. Unrealistic expectations in anticipation of closing a deal can lead to subsequent disappointment which can ultimately damage the firm’s market reputation. A strong work ethic is not only a part of investment banking skills but it also contributes to your reputation and growth in the industry and helps you climb the ladder.
11. Time Management
Time and tide wait for no man! This quote applies quite a lot in the business world as it is full of uncertainties, unexpected developments, and ups and downs. Seizing any opportunity that comes up big or small in time can decide your firm’s success. Keeping a timely eye on the market condition and taking advantage of conditions is one of the investment banking skills a student needs to learn before and during his career as an investment banker.
Meeting deadlines on time with efficient work can make both the investment banking process and the client’s experience, smoother and more efficient. Updating the clients with any changes in the market and presenting developments in important information can help them and you to stay on track and make any improvisations.
1. Which positions and career prospects become available to Investment Bankers?
The positions for which Investment banking firms hire employees are:
● Financial Analysts.
● Investment Managers
● Financial Advisors
● Risk Managers.
2. What salary can I expect after becoming an Investment Banker?
The salaries of Investment bankers vary with their profile, skills, and experience. An investment banker’s salary in an average firm would be around Rs 4.5 lacs per annum according to GlassDoor. However, with 5 to 9 years of experience, the prospects and salaries can go up to 20 lacs per annum. Job opportunities in the top international firms are very competitive but have higher salaries. Investment bankers working for International Banking Firms like JP Morgan Chase and Morgan Stanley can earn up to 30-35 lacs in a year.
3. What are the criteria to be eligible to start a career in Investment Banking?
Working knowledge of accounts and finance can be considered as the basic criteria for an investment banker. It can be a fruitful career prospect for graduates in commerce, economics, or finance-related fields as they already have academic experience in some of the skills required.
4. Who should learn investment banking skills?
Anyone with prior academic or professional experience in Finance can benefit from this course. Graduates and postgraduates in Economics, Commerce, or Management related fields would be ideal candidates. Having a Bachelor’s or a Master’s degree in Management with a specialization in finance can enter the field of investment banking. Chartered Accountants, Certified Public Accountants, Certified Financial Analysts, and Finance professionals working for private firms and government organizations can also learn Investment Banking Skills to find job and business opportunities in the Investment Banking Sector.
5. Where do I learn Investment Banking Skills to start my career as an investment banker?
Success in investment banking is like climbing a ladder. It takes experience and expertise which is built with time and practice. However, you can kickstart your investment banking career by learning the right skills and their applications at the Certified Investment Banking Master Course by IIM SKILLS.
IIM SKILLS is a premier educational institute in India providing highly sought-after educational courses worldwide. The institute has an alumni of over 35000 students, has trained over 18500 students in Investment banking, and is one of the leading educational institutes in Asia. IIM SKILLS can be the best place to learn and master your Investment banking skills and launch your Investment banking career.
The Certified Investment Banking Master Course by IIM SKILLS includes 3 months of live training which is led by the IIMSkills expert faculty who has many years of experience in the investment banking sector. The course consists of:
- Over 70 hours of learning of which 50 hours include live and intense training to help you prepare for the competitive world of investment banking and the other 20 hours are spent to solve student doubts to ensure that every concept is crystal clear in theory and practice.
- Students will also be solving over 100 assignments through which they will get the opportunity to apply what they learned and develop expertise in IB skills.
- Students will go through 5 case studies from real-life scenarios to get a better understanding of how investment banking works in the real world.
- After the course, students are guaranteed an internship through which they will gather further experience, build their LinkedIn profile to make it competent and job-ready, and prepare for mock interviews which will help them understand how to prepare for applying to investment banking firms and what do the firms look for in their ideal candidate.
- IIM SKILLS also provides job assistance which helps you prepare and apply for the top Investment Banking companies.
- After the completion of the course, you get a recognized certificate in Investment Banking from IIM SKILLS.
- The institute has trained over 18500 students in investment banking skills.
- The highest CTC received by students of this course was 25 Lacs per annum.
- The average CTC of students after the completion of the course is known to range from 8-10 Lacs per annum.
- Students are hired at top MNCs like Goldman Sachs, JP Morgan, Accenture, and Tata Consultancy Services.
- They also provide 24×7 online support.
If you are wondering about how to start a career in investment banking or are looking to upgrade your existing skills with a recognized certification program, the Certified Investment Banking Course at IIM SKILLS might be your answer.
Investment banking is one of the best career options available right now. But, hard work brings good results. An investment banker’s life can also be very busy. As mentioned earlier, success in this field or any other cannot be achieved in a day. But, consistent and sustained efforts along with using the right skills can help you climb the ladder. The skills mentioned above can prove extra beneficial to grow within this industry. If you do not inherit these skills, it is never too late to learn them if you wish to pursue this career.
Apart from that, some organizations like the one mentioned above provide courses for students eager to learn such skills and apply them to launch or expand their careers. If you think you like this career path and are ready to fully invest time and attention to it, you can expect good results in the long term. We hope you enjoyed reading the article and have understood more about investment banking and the skills required in this field.