Overview

The investment banking division (IBD) of these banks functions as the advisory and underwriting arm, covering two core areas:

1. Underwriting: This involves facilitating the raising of capital, both debt and equity, for various clients. Investment banks help companies issue securities and manage the process of offering them to investors.
2. Advisory: IBD provides strategic advice to clients on a range of financial matters, including mergers and acquisitions (M&A), leveraged buyouts (LBOs), and corporate restructuring.

Quite simply, they offer strategic advisory services while connecting and establishing deals between buyers and sellers.

Subdivisions

• Product Groups: Organized around specific financial instruments and services, these groups include M&A, Equity Capital Markets (ECM), Debt Capital Markets (DCM), Structured Finance, Leveraged Finance, and Restructuring among others.
• Industry Groups: These teams are organized by the industries they cover, such as healthcare, technology, media, and telecommunications (TMT), financial institutions group (FIG), real estate, industrials, and more. Industry-focused bankers possess specialized knowledge relevant to their sector.

Contrary to a common misconception, investment bankers do not invest their own money in the financial markets. Due to their access to confidential and market-sensitive information, they are often subject to strict investment and trading restrictions. Instead, their core activities typically involve:

• Conducting Industry Research: Staying informed about industry trends, market conditions, and the competitive landscape to provide informed advice to clients.
• Developing Financial Valuation Models: Creating models like comparables, precedent transactions, and discounted cash flow (DCF) analyses to assess the financial worth of companies and transactions.
• Building Pitchbooks: Preparing presentation materials to pitch potential clients on the bank's services, highlighting their expertise and proposed solutions.
• Structuring and Executing Transactions: Overseeing the intricate process of structuring and executing various private and public market transactions, such as IPOs, mergers, acquisitions, and debt offerings.

Investment banking is renowned for its demanding workload, often requiring bankers to put in long hours. The intensity of the work can vary widely depending on the level of deal activity. It's not uncommon for investment bankers to work anywhere from 60 to 100 hours per week, depending on if it is a peak period with a live deal.

Resources

Guides

• **BIWS 400 Question Guide:** Holy grail for brushing up on behavioral and technical questions for investment banking interviews