How To Get Into Investment Banking Top 6 Strategies

How to Get Into Investment Banking?

Considering that only footballers and celebrities get paid more than investment bankers, the investment banking industry is a tough nut to crack. However, there are some prerequisites, steps, and protocols to crack every tough nut. In investment banking, you also need to follow a step-by-step approach to getting in.

Let’s get right into it and see how to get into investment banking.

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#1 – Understanding how Investment Banks Recruits

The prime strategy for investment banking is to know the industry in depth.

To know your industry, you must research (if you are completely naive). Then, refer to investment banking to get an update on what is happening in the investment banking industry. And also know about the recruitment process (in detail).

Let us dig in and see a brief overview of how the investment banking industry works: –

Be ready for a strict recruitment process: Banks are very tough about their recruitment processes, which is why it is hard for a newbie to get through. So, if you want to be part of the investment banking industry, you need to be good (on the certificate and in the practical application of knowledge).Know that banks prefer newbies: Banks prefer fresh graduates with no expectations or ideas about working hours. To work in investment banks, you need to work 100+ hours a week, and hiring students who have no idea is always helpful.Top-notch university graduates are always ahead of the curve: Banks prefer students from top-notch universities like Wharton, Harvard, Oxford, Stanford, etc. So, if you are planning to go into investment banking, make sure you are from a first-tier university; otherwise, it would be difficult to break in. You can also take the CFA ExamCFA ExamThe Chartered Financial Analyst (CFA®) Program offers a graduate-level curriculum and examination program designed to expand your working knowledge and practical skills related to investment decision-making. read more to better your chances of getting a shortlist.Banks prefer interns: You can take a different route if you are not part of a top-notch university. You can land an internship with a top-notch bank. A couple of great internships can help you get into the holy grail of investment banking, and you will also be able to experience the industry directly. These internships will get you the analyst role, the entry point to investment banking. Also, read Investment Banking Internship.Investment Banking Internship.Many investment banks offer internships in investment banking, with durations ranging from 3 months to 2 years depending on the profile you choose as an intern. And if you complete your internship successfully, you will undoubtedly see yourself as an investment banker in the near future.read more

#2 – Entry points – Knowing where you can begin

The second strategy for getting into investment banking is knowing the entry points.

There are primarily two entry-level positions you should aim for if you want to go for M&A profiles. You have another audit, accounting, sales, and other options. But, if you talk about a lucrative career in investment bankingCareer In Investment BankingAn investment banking personnel is a motivated professional who aims to help their clients reach their financial goals and objectives. The top four investment banking careers are - Analyst, Associate, Vice president, Managing director. read more, it is M&A. Let us have a look at the two entry points of M&A profiles in investment banking: –

Analysts

It is the junior-most position in investment banking. Normally, undergraduate students or master’s degree holders are selected for this position directly. However, banks also consider people with 1-2 years of experience in a few cases. Analysts are hard workers in the industry. After working 3-4 years in the industry, they switch to private equity, hedge fundsHedge FundsA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques.read more, or other bigger banks.

Associates

Associates are selected from top-notch MBA universities in most cases. Sometimes they are selected from the talent pool of analysts. They supervise analysts and directly work with high-profiles like partners and managing directors. Usually, associates do not leave and switch within a few years; they stay and aim for promotion in the long run. One of the reasons it becomes difficult for them to change is barriers to entry in other domainsBarriers To Entry In Other DomainsBarriers to entry are the economic hurdles that a new entrant must face in order to enter a market. For example, new entrants must pay fixed costs regardless of production or sales that would not have been incurred if the participant had not been a new entrant.read more. Do have a look at Investment Banking Associates.

Here is the list of top investment banks:

Bulge Bracket Investment BanksBulge Bracket Investment BanksTop 10 bulge bracket investment banks are - Blackstone, Goldman Sach & co, Morgan Stanley, J.P Morgan Chase & co, Bank of America Merrill Lynch, Credit Suisse, Citi, Deutsche Bank, HSBC, UBS.read moreMiddle Market Investment BanksMiddle Market Investment BanksThe deals of a mid-tier investment bank range from USD 50 million to USD 500 million. They offer the same services as the bigwigs, i.e. bulge bracket banks, but are not as geographically present internationally as they are.read moreTop Boutique Investment BanksTop Boutique Investment BanksThe top boutique investment banks are - Perella Weinberg Partners (Global M&A Advisory – Boutique), Lazard (Global M&A Advisory), Rothschild (Global M&A Advisory – Boutique), Evercore Partners (Global M&A Advisory – Boutique), Greenhill & Co. (Global M&A Advisory – Boutique, Blackstone (Global M&A Advisory).read more

#3 – Preparing yourself – Setting up the strategy to get in

The third strategy to get into investment banking is to prepare yourself.

If you do what everyone does to get into investment banking, your application may end up in the heaps of rejected files! So, it would help if you made an effort to stand out from the crowd. Here’s what you should do to get into investment banking: –

Plan ahead: If you ever dream of getting into investment banking, you must act earlier. If you think of an investment career after getting into employment elsewhere, it would be difficult for you to break in. So, plan early and take the following steps.Concentrate on the knowledge and marks: Only understanding will not count. You need to have proof of it. People with great GPAs will easily impress the top banks and will be the first preference for interviewers.Do an MBA from a top-notch institute: It is difficult to score high in investment banking without an MBA from a top-notch institute. Top-tier banks usually hire MBAs because of the following reasons:
When you get into the top-notch MBA institute, pre-screening is already done. Otherwise, it would not have chosen you in the first place. It saves banks time to screen top-class candidates from general ones.During your MBA days, you learn a lot about the complexities of financial models. So you are always on your toes to submit the project, write a detailed analytical report and build the toughest economic models. That saves banks the cost of training you.After MBA, you directly join as an associate (in most cases), are given a lot of responsibilities, and do not need to do all the work (you can delegate the most to analysts under you). As a result, the attrition rate at banks gets reduced.Build networks: Online applications do not work. How can online applications beat-up face to face relationships? Instead of submitting applications, call the top bankers directly and ask for advice or suggestions about getting into investment banking. They will suggest to you and help you understand how to get in. Moreover, you will have a relationship built up with them instantly. During your MBA, build a network as much as you can. Talk to people who have already passed out of the institute. Build rapport with the professors. And also with students with different backgrounds and things to share. Building networks will always triumph over online applications.

#4 – Master Investment Banking Technical Skills

The fourth strategy to get into investment banking is to master technical skills.

According to research, it takes 6 seconds for a recruiter to slide through a resume before she selects or rejects a resume. For investment bankers, it would take even less time. So, take the time to build a resume that will help you stand out in the crowd. Make the resume shorter and also make sure that you answer this question in your resume – “Why are you the best person for an analyst/associate position in investment banking?” Then, one should easily scan the resume in under 10 seconds.

As mentioned earlier, you need to be the best to crack the job in M&A profiles in investment banking. You should have the ability to work harder than anyone in the room. Also, you need to be top-notch in your skills, e.g., financial modeling, accounting, valuation, Excel, and writing skills.

Be proficient in financial statement analysis – Financial statement analysis is used here. It means you are expected to be skilled in the vertical analysis, horizontal analysis, and ratio analysis cash conversion cyclesCash Conversion CyclesThe Cash Conversion Cycle (CCC) is a ratio analysis measure to evaluate the number of days or time a company converts its inventory and other inputs into cash. It considers the days inventory outstanding, days sales outstanding and days payable outstanding for computation.read more, ROEsROEsReturn on Equity (ROE) represents financial performance of a company. It is calculated as the net income divided by the shareholders equity. ROE signifies the efficiency in which the company is using assets to make profit.read more, ROCE, etc.Master valuation skills – Equity Valuation is estimating the potential market value of a financial assetFinancial AssetFinancial assets are investment assets whose value derives from a contractual claim on what they represent. These are liquid assets because the economic resources or ownership can be converted into a valuable asset such as cash.read more or liability. Valuations are required in many contexts, including investment analysisInvestment AnalysisInvestment analysis is the method adopted by analysts to evaluate the investment opportunities, profitability, and associated risks in their portfolios. In addition, it helps them to determine whether the investment is worth it or not.read more, capital budgeting, merger and acquisition transactions Merger And Acquisition TransactionsMergers and acquisitions (M&A) are collaborations between two or more firms. In a merger, two or more companies functioning at the same level combine to create a new business entity. In an acquisition, a larger organization buys a smaller business entity for expansion.read more, financial reportingFinancial ReportingFinancial reporting is a systematic process of recording and representing a company’s financial data. The reports reflect a firm’s financial health and performance in a given period. Management, investors, shareholders, financiers, government, and regulatory agencies rely on financial reports for decision-making.read more, taxable events to determine the proper tax liability, and litigation.Become a financial modeling ninja – Financial modeling means forecasting the company’s future or an asset using an Excel model that is easy to understand and performing scenario analysis. What if your boss calls you at 1:00 a.m. and asks you to come to the office to build a complex model? Can you do it? Financial modeling ninjas can do it. And you need to aim for that level if you want to get a promotion quickly. You should be so good at financial modeling that you can craft a complex economic model without much hassle, no matter your mental state. Also, have a look at these Top 20 Financial Modeling Interview QuestionsTop 20 Financial Modeling Interview QuestionsIf you’re looking for a job in financial modeling, you’ll need to prepare for questions like “What is financial modeling?” What is the benefit of it? , What is the best way to create a financial model?, What method do you use to forecast revenue? and so on.read moreBecome awesome in Excel – Investment Banking AnalystInvestment Banking AnalystInvestment Banking Analyst works with investment banking team and expertise in the area of Accounting, Financial Modeling, Project financing, Project Valuation, and Financial statement Analysis. These analyst has deep knowledge in Excel and they are good at VBA to analyze the market data and financial modeling. The analytic work consists of building a financial model for different projects like Infrastructure projects (i.e. Power projects, real estate, etc.).read more spends around 10-12-14-16 hours each day working on Excel doing financial modeling, valuations, making pitch books, and financial statement analysis. So make sure to become an Excel expert.

#5 – Master Investment Banking Soft Skills

The fifth strategy to learn to get into investment banking is to master communication.

Start with this checklist: Investment banking is not something everyone is made of. With just 20,000 entry-level jobs globally, it would be impossible for you to get in if you do not tick “yes” for most of the following checklist: –You know the field through and through.You are the hardest worker in the room (read 100 hours a week).You are a person who has the gift of connecting with people personally.You are always presentable and very well-dressed.You ask outstanding questions during a conversation.You are a voracious reader and always try to improve your knowledge base.You are a great salesman. Become a great salesman: Most candidates neglect this skill. But this is the most important skill if you choose to earn havoc in investment banking. You will handle small and big deals regularly, but one thing is always familiar: your ability to make sales. The better your ability to sell, the better your compensation will be at the end of the month. Work on your communication: Of course, when you are aiming to get into investment banking profiles, you must be a great communicator. But we are talking about an extraordinary communicator who can deliver great presentations whenever required and make sales calls so well that the customer feels he is the best guy to buy from. If you are great, that will not cut. You need to be the best communicator of all.

#6 – Finally – Investment Banking 101

The sixth way to learn to get into investment banking is to create your own story.

You know the field through and through.You are the hardest worker in the room (read 100 hours a week).You are a person who has the gift of connecting with people personally.You are always presentable and very well-dressed.You ask outstanding questions during a conversation.You are a voracious reader and always try to improve your knowledge base.You are a great salesman.

You know what you need to do to get into investment banking. If you follow the above steps and build the skills, you will certainly get into the analyst role. But the hard part is taking action.

Structure your story: You need to tell a story that sells. And for that, you need to be proactive. Structure your story in the following manner: –
First, create a beginning. Talk about where you are from, what you did, and how you have come here.Next, talk about your financial intelligence. You need to tell briefly how you got to know about M&A advisory in investment banking.Then, talk about how you grew your interest in investment banking. Talk about your internships (if any) and any professional training you took. You may enroll in an investment banking course and demonstrate your investment banking skills.Finally, talk about what future you hold before your eyes, the deals you want to close, the funds you want to work on, and the value you want to add.Share your story everywhere: Whenever you are networking or cold calling a banker, share your story. The story will highlight all your strong points (and why you should be the most preferred candidate for M&A advisory) and make it as brief as possible.Gather contacts, and cold-call them: Go to social media websites and investment banking networking events to network and gather references. Then sort out all the connections, and cold call them. Cold calling will help you get an internship (if not an analyst position) in an investment bank.Prepare for interview questions: Preparing for interviews in advance will help you ace more interviews. So, look at different interview questions that are asked in investment bankingInterview Questions That Are Asked In Investment BankingThe purpose of this Investment Banking Interview Questions and Answers is simply to help you learn about the investment banking interview topics.read more and prepare them in your own way. Better preparation always yields better results.Remember three things: First, there is no time to sleep when work is there. Second, do not make mistakes; don’t ever. Third, the greed for better pay, compensation, salary, profit, bonus, and benefits is good. If you do not have these or do not want to develop these three traits, an investment banking career is not for you.

Conclusion

Finally, investment banking profiles are not for everybody. Earning $100,000 to $150,000 annually with a bonus is not for everybody. You need to work 100+ hours per week, leaving you only 68 hours to take care of your family’s health, do your chores, and fix other things. It would be best to prioritize putting your work first before anything else. You need to make the trade-off if you want to get into investment banking.

Next, talk about your financial intelligence. You need to tell briefly how you got to know about M&A advisory in investment banking.Then, talk about how you grew your interest in investment banking. Talk about your internships (if any) and any professional training you took. You may enroll in an investment banking course and demonstrate your investment banking skills.Finally, talk about what future you hold before your eyes, the deals you want to close, the funds you want to work on, and the value you want to add.

If you want to get into investment banking, don’t think; take the first step immediately.