If we make a list of the most lucrative career options, investment banking will certainly make it to the top few places in the list. Are you interested in becoming an investment banker? Are you ready to work long hours and beat deadlines while catapulting yourself to the next level financially? 

Let’s first understand what investment banking is. 

Investment banking is a type of financial service that involves helping corporations, Governments, and other organizations to raise capital by underwriting and selling securities. Other than raising capital at the most favourable terms for the above-mentioned entities, investment banks also provide a range of other financial advisory services such as mergers and acquisitions, corporate restructuring, and strategic planning.

What are the key roles of an investment banker?

Investment bankers are often employed in some of the most reputed global financial institutions such as Goldman Sachs, Morgan Stanley, JPMorgan Chase etc. 

Their primary role is to raise capital for the organizations that work with them. The two ways in which they raise capital are by distributing debts and by selling equity. 

The role of an investment banker depends on the size of the firm he works in. The larger investment banks have clearly defined roles for an investment banker. However, in smaller investment banks, the exposure for an investment banking professional could be much wider.

The key roles of an investment banker can be summarised as below: 

1. They must be extremely good at analysing financials of the company. They should be capable of developing financial models for mergers and acquisitions (M&A) along with funding
2. Investment bankers must be able to discover the fair valuation of the company. This is the first step and it precedes the capital raising round hence it is critical
3. An investment banker must be mathematically sound and must possess immense knowledge to understand the client’s requirements and recommend vehicles for capital raising including private equity and M&A 
4. While raising capital, an investment banker must be able to compile documents such as presentations, pitchbooks, and investment memoranda. Equipped with these, he must present the client’s company and proposition attractively to enable them to get the best value for the stake that they might partake in their company. 
5. They must be very good at staying in touch with the clients and managing relationships with them so that the client would come back to them for all their future needs of capital raising or for advice on strategic deals, M&A etc. 
6. An investment banker must possess good research skills so that he can do the requisite due diligence and analysis of companies before embarking on a capital raising activity for them 

A great investment banker can empower his clients with the best deals on the street while saving their valuable time and money. They can enable their clients to focus on their core competencies and running the operations of their companies while enabling them to raise capital at the best and most favourable terms. 

How do investment bankers make money?

Investment bankers typically make money through the fees charged for their services, such as underwriting fees, advisory fees, and transaction fees. These fees can be substantial, particularly for large or complex transactions. The fees could range anywhere between 3% to 10% of the total capital raised by the client. Investment bankers may also earn bonuses based on their performance and the profitability of the deals they work on.

A few tips to build a successful investment banking career

An investment banker needs a judicious blend of mathematical skills, presentation skills, networking and client management skills and so on. Let’s look at a few tips that can help you to build a very successful investment banking career: – 

Educational background: An aspiring investment banking professional must have a very strong educational background. They could graduate in finance, economics or related fields. Many engineering graduates with an MBA in finance are also well poised to step into investment banking because of their mathematical aptitude and financial modelling skills. 

Financial Acumen: In addition to a strong educational foundation, a successful investment banker must possess excellent analytical and communication skills. They must have an excellent understanding of financial markets and products. Investment banking is a high-pressure environment as clients are in a hurry to raise capital. Hence, investment bankers must thrive under tight deadlines and come up trumps. 

Networking Capabilities: Networking is a vital skill for building a career in investment banking. Investment banks typically recruit from the top business schools and universities, but having connections within the industry can be helpful in securing interviews and job offers. Also, an investment banker’s network can help him with good referrals to ensure that he often gets requests from more clients in need of raising capital. 

Additional Certifications: An investment banker must build a track record of successful deal closures. He must also ensure that he builds great relationships with entrepreneurs, founders, and the top management of the organization so that they think of him as the ‘go-to’ person for all capital raising needs. In addition to this, an investment banker’s repertoire can be further enhanced by successfully adding certifications such as a Chartered Financial Analyst (CFA) 

Industry Forums participation: An investment banker must become an active participant in relevant industry forums. For example: By becoming a CFA and being a part of the CFA societies, an investment banker can augment his network. He can thus ensure that he gets more connections and opportunities with clients that want to work with him for their capital raising or advisory needs.  

Do you want to become an investment banker?

An investment banker is a dream career choice for many budding students. The above tips and knowledge about investment banking would be a good start in terms of understanding what the job entails and if you are prepared for it. This article can also help you to channel your efforts in the right direction if you want to pursue a career in investment banking. 

In addition to the above, it is always good to start getting connected with people who have spent some time as investment bankers. A few interactions with such professionals can be extremely enriching in terms of getting a first-hand account of the roles and responsibilities, challenges and opportunities in investment banking. It could also enable you to accelerate your journey towards becoming an investment banker as you could learn from their career trajectory as well as their mistakes. 

Hope this article would have helped you to fast-track your journey towards becoming a very successful investment banker. Wish you all the best!