unknow4871

"Investment bankers do a lot of different things, but one thing they do is help companies access the capital markets, to borrow money (float bond issues) or to issue stock. Their familiarity with the market for a company's stock puts them in a position to analyze and assist with mergers and acquisitions, so they are in these businesses as well."

Monydad, forgive my lack of knowledge regarding economics, but can you or someone else, please define more precisely what these duties: "access the capital markets, to borrow money (float bond issues) or to issue stock" actually involve. To a political science major, these terms are a bit confusing. Thanks!

Untilted

alright let me make this clear

u are some company, u need money, but u cant generate enough revenue through ur products. so where can u get $?
u call up all the big name investment banks, u r like, sup losers, I need $$, show me the $$!!!
investment banks will find people/corporation/companies with large amount of capitol, sometimes pension fund, hedge fund..., the ibankers will say, listen, *****es, my investment bank (example: lizard) is never wrong, according to our analysis (which is a bunch of bull s****), if you guys invest $ in that company, I assure you that you will benefit from it. The investors will be like, mmm, show me ur proof! ibanks will be like, here're all the test/analysis done by our associates and analysts, Please invest money!! PLeASE! so the investors get convinced and start to invest their money by buying bonds/stocks......

Untilted

when it comes to "mergers and acquisitions" cases, the ibanks basically research and help companies decide on which companies they should buy and how much is a good price.

a good price= the min. price that makes the target company wanna sell itself.

in turn, ibanks get some $ for being a good third party

Cardinal

Eloquently stated.

unknow4871

thanks. that actually cleared things up a lot.

wingardiumLeviosa

Awesome. Talk about putting it in layman's terms. But I'm curious; how the hell do i-bankers analyze the company before presenting the case to their investers? For example, let's say company X needs money and you recommend it invest in hedge fund L and bank Z.

How the hell does the investment banker find out all that information about hedge fund L and bank Z before making a thorough analysis and presenting that analysis to company X?

I mean you can't just go online and get all that info. can you?

Untilted

right

you need a pitchbook, a big fat old ass-ugly pitchbook, a bunch of Bull***** made up by associate, it usually include the following sections:

Section 1: why company X is a such a wonderful company, our ibank is the premier ibank on the wall street, we are the best u can find to do this deal, trust me, we are renowned and we're gonna make miracles happen! including graphs and charts that show the ibank is the leading ibank (ex: for deals related to fast food, our ibank generated the most revenue in the last 200 days excluding ibanks which have more than *insert a number* employees and excluding deals that are worth more than *insert a number* million bucks.)

Section 2: The outlook of the financial market: it consists of 2 parts
part 1: the financial market is absolutely awesome! it's at its zenith! dont be afraid to invest!
part 2: however, here's the minor downside of the current market. (so if ibanks f**k it up, they can easily blame the failures on the market)

Section 3: The real *****....charts, forms, analyses, this is the heart and soul, the solution ibanks gives the company...smart negotiators skip bull***** and only read this part

Section 4: conclusion

all these pitchbooks require a lot of research, they are done by mostly analysts (ex: wharton undergrads) and associate (ex: HBS MBA grads)......

CanadianEh

Quick question... i've read several times now that while the vast majority of ibank recruits come from backgrounds such as engineering and economics, i've also read things about people with degrees in english or history getting Ibank jobs. My question is, how vital is math in ibanking? because while i'm not terribly weak in math, it certainly isnt my area of expertise either.

Untilted

math is a very, very important subject. it doesn't matter if you want to work in banks or not, math is always important.

it'd help if you are really good at math...

ForeverZero

Finance jobs are very quantitative, so math skills and analytical thinking skills in general are very important for investment banking. If your major is not highly quantitative, you will have to prove your math competency, which usually means that a lot of mental math problems will be thrown at you during the interview process.

uc_benz

I will assume that the OP was talking about the M&A side of I-Banking which is usually referred to by the term "I-Banker."

With that said, let's be honest here. Mergers & Acquisitions does not require complex math at all. As an analyst you will be slaving over Excel models and getting yelled at by an associate who is even more over-worked than you are. To the well-rested outsider the mistakes may be obvious in the formula, but after 10 hours of sitting around the office waiting for the pitchbook, it is hard to distinguish between a duck and a llama. The ones that do survive, however, are the ones who are quick on the draw on simple little math problems. You're not going to have to do double integrals and difficult stuff like that. Just know your algebra inside and out and be ready to compute that $h!t fast. I mean FAST. Unless you want an associate yelling at you for forgetting the decimal point on page 57, paragraph 3, line 7 of the pitchbook.

Now if you are going into other areas of investment banking then math is another story (such as Sales & Trading).

pelican112

big wasted of effort most of the time... Presentations And Pitchbooks: Dreaded By Many, Masturbated To By A Few, Ignored By Most