转帖Investment Banking

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收藏 2009-12-13

Investment Banking Career Overview
Requirements
Job Outlook
Career Tracks
Compensation

Career OverviewYou’veseen all the headlines, over the past few years, deriding Wall Streetfirms. You’ve seen the news photos of disgraced research analysts whorecommended certain stocks to the public even while they trashed themin e-mails to colleagues; you’ve heard about the nine-figure finesinvestment banks have had to pay for transgressions like conflicts ofinterest. Still, there’s something intriguing about the industry—thelegendary long hours and mega-bonuses—and you like to imagine yourselfa pinstripe-wearing, jet-setting investment banker. But suddenly itdawns on you. What the heck is investment banking? You panic. What doinvestment bankers do? What’s the difference between sales and tradingand corporate finance? More to the point, why do you want to be abanker?

What I-Banking Is
Traditionally, commercialbanks and investment banks performed completely distinct functions.When Joe on Main Street needed a loan to buy a car, he visited acommercial bank. When Sprint needed to raise cash to fund anacquisition or build its fiber-optic network, it called on itsinvestment bank. Paychecks and lifestyles reflected this division too,with investment bankers reveling in their large bonuses and glamorousways while commercial bankers worked nine-to-five and then went home totheir families. Today, as the laws requiring the separation ofinvestment and commercial banking are reformed, more and more firms aremaking sure they have a foot in both camps, thus blurring the lines andthe cultures.

Investment banking isn’t one specific service orfunction. It is an umbrella term for a range of activities:underwriting, selling, and trading securities (stocks and bonds);providing financial advisory services, such as mergers and acquisitionadvice; and managing assets. Investment banks offer these services tocompanies, governments, non-profit institutions, and individuals.

Theaction and players in investment banking are still centered in New YorkCity and a few other money centers around the world, but the list ofplayers is getting smaller as the industry consolidates. Today, leadingbanks include Merrill Lynch, Goldman Sachs, Morgan Stanley, Citigroup,Credit Suisse First Boston, and J.P. Morgan Chase. These and otherfirms are regular visitors to campus career centers.

What You'll Do
Theintensely competitive, action-oriented, profit-hungry world ofinvestment banking can seem like a larger-than-life place where dealsare done and fortunes are made. In fact, it’s a great place to learnthe ins and outs of corporate finance and pick up analytical skillsthat will remain useful throughout your business career. But investmentbanking has a very steep learning curve, and chances are you’ll startoff in a job whose duties are more Working Girl than Wall Street.

WallStreet is filled with high-energy, hardworking young hotshots. Some areinvestment bankers who spend hours hunched behind computers, poringover financial statements and churning out spreadsheets by the pound.Others are traders who keep one eye on their Bloomberg screen, a phoneover each ear, and a buyer or seller on hold every minute the market’sin session. Traders work hand in hand with the institutional salesgroup, whose members hop from airport to airport trying to sell biginstitutions a piece of the new stock offering they have coming downthe pipeline. Then there are the analytically minded research analysts,who read, write, live, and breathe whichever industry they follow,24/7.

Who Does Well
You shouldn’t go into bankingjust for the money—the lifestyle is too demanding. To survive ininvestment banking, much less to do well, you’ll need to like the workitself. And, quite honestly, even if you love the work, an investmentbanking career can still be a tough road. If the market or yourindustry group is in a slump (or if your firm suddenly decides to getout of a certain segment of the business), there’s always the chancethat you may find a pink slip on your desk Monday morning.

But,if you like fast-paced, deal-oriented work, are at ease with numbersand analysis, have a tolerance for risk, and don’t mind putting yourpersonal life on hold for the sake of your job, then investment bankingmay be a great career choice. But if this doesn’t sound like you, a jobin investment banking could turn out to be a bad dream come true.

RequirementsFirst,if you're an undergraduate, you'll want to try to get aninternship—it's the best way to secure an eventual offer. If you're anundergraduate from an Ivy League school with a great GPA, biddingrecruiting points is still a favorable option—however, collegerecruiters are usually sent from the prestigious bulge-bracket firms,and not the smaller, specialized niche firms, or boutiques. It'simportant to discern the type of bank for which you are best suited, soconduct your own independent research.

If you're not an IvyLeague graduate, and recruiters haven't been breaking down your door,networking is your best bet. Use your school's alumni and yourneighbors and acquaintances to get in touch with someone at the I-bankof your choice. If you're a good student who is truly interested,you've got a shot.

If you have an MBA or other advancedbusiness certification, you'll be paid more for a position than someonewith a fresh BA. But those with prior experience always get first shot,so be sure to get an internship. Industry expertise and prior corporatefinance work can also be a way in, but you'll have to be patient.

Ifyour degree isn't in business, take heart in the knowledge that banksare increasingly encouraging applications from candidates withspecialized resumes in order to better appeal to a growing client base.

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lp09o

2009-12-13 22:26:01

Job Outlook
Undergrads and MBAs from top schools are recruited for a number of openings that is small even in the best of times. Competition is fierce, so if you’re not from a top-tier school, you may need to be more resourceful and persistent than those who are. Doing an internship in investment banking is essential to breaking into the field in today’s business environment. Networking is key; make use of your alumni network.

Undergrads vie for 2-year positions as analysts. If you do well, depending on the firm, you may get to stay for a third year, perhaps even abroad.

MBAs compete for fast-track associate slots, and international assignments may be available for those who want them.

Midcareer people are recruited by headhunters or hired on an ad hoc basis for positions at various levels. Though relatively few people come into the industry from other fields, it can be done, especially by those who have a technical background in a specific industry and an aptitude for and interest in finance. Otherwise, expect to start at the bottom.

Career Tracks
While the various groups within an investment bank support each other, the work and responsibilities in each group vary.

Corporate Finance
Investment bankers are like financial consultants for corporations—which is precisely where the Corporate Finance Group comes into play. As a member of Banking or CorpFin, you serve the sellers of securities—Fortune 1000 companies in need of cash to fund growth, and private companies that are looking to complete an IPO—by buying all the shares or all the bonds a company has for sale, which are then resold by your firm's sales force to investors on the market.

Many investment banks divide their corporate finance departments into industry subgroups, such as technology, financial institutions, health care, communications, entertainment, utilities, and insurance, or into product groups such as high-yield, private equity, and investment-grade debt.

As an investment banker in corporate finance, you will underwrite equity and debt (bond) offerings, help firms devise and implement financial strategies, analyze their financial needs (such as how to structure balance sheets and when and how to proceed with funding initiatives), and work with the sales and trading departments to determine valuations for new offerings.

Mergers and Acquisitions
The mergers and acquisitions group (known as M&A) provides advice to companies that are buying another company or are themselves being acquired. M&A work can seem very glamorous and high-profile. At the same time, the work leading up to the headline-grabbing multibillion-dollar acquisition can involve a herculean effort to crunch all the numbers, perform the necessary due diligence, and work out the complicated structure of the deal. As one insider puts it, "You have to really like spending time in front of your computer with Excel." Often, the M&A team will also work with a CorpFin industry group to arrange the appropriate financing for the transaction (usually a debt or equity offering). In many cases, all this may happen on a very tight timeline and under extreme secrecy. M&A is often a subgroup within corporate finance; but in some firms, it is a stand-alone department. M&A can be one of the most demanding groups to work for.

Public Finance
Public finance is similar to corporate finance except that instead of dealing with corporations, it works with public entities such as city and state governments and agencies, bridge and airport authorities, housing authorities, hospitals, and the like. Although the basic services (financial advisory and underwriting) and the financial tools (bonds and swaps, but no equity) are similar to those used for private-sector clients, numerous political and regulatory considerations must be assessed in the structuring of each deal. A particular key issue involves how to get and maintain tax-exempt status for the financial instruments the client will use.

Research
Research departments are generally divided into two main groups: fixed-income research and equity research. Both types of research can incorporate several different efforts, including quantitative research (corporate-financing strategies, specific product development, and pricing models), economic research (economic analysis and forecasts of U.S. and international economic trends, interest rates, and currency movement), and individual company research. It’s important to understand that these are "sell-side" analysts (because they in effect "sell" or market stocks to investors), rather than the "buy-side" analysts who work for the institutional investors themselves.

As a researcher, you'll meet with company management and analyze a company's financial statements and operations, provide written and oral updates on market trends and company performance, attend or organize industry conferences, speak with the sales force, traders, and investment bankers about company or industry trends, develop proprietary pricing models for financial products, make presentations to clients on relevant market trends and economic data, offer forecasts and recommendations, and watch emerging companies.

Compensation
All right, like any good banker, you want the bottom line. Exactly how much are these guys going to pay you to sign your life away? Salaries at investment banks, even for nonprofessional staff, almost always consist of a base salary plus a fiscal year-end bonus. Bonuses are determined at the end of each year and are based on the performance of Wall Street, as well as the performances of your firm and department and your contribution to them. Base salaries tend to be relatively low at the entry level (well, let’s say moderate), and bonuses are discretionary. While the real money in investment banking comes from bonuses, your take-home pay from year to year can go through swings of more than 100 percent, especially when you move up in seniority.

Because of the tremendous decline in investment banking revenues over the past few years, bonuses have plummeted. Indeed, investment banks have cut bonuses by as much as 60 percent over the last several years.

* Undergraduates: $45,000 to $55,000 at bulge-bracket firms, plus an annual bonus contingent on market success; in the late 1990s boom, year-end bonuses for undergrads would usually fall between $10,000 and $20,000, but are much smaller these days
* MBAs: $85,000 at bulge-bracket firms, plus a $20,000 to $25,000 signing bonus, and first-year annual bonus contingent on market success; again, bonuses are significantly smaller than a few years ago
* Summer interns: up to $1,200 per week

A final note: Investment banking opportunities, of course, exist outside the bulge bracket and outside New York. If you go to work for a boutique or regional bank, don’t be surprised if your compensation is not as hefty as that of your bulge-bracket peers.