According to economic times, “Investment banking is a special segment of banking operation that helps individuals or organizations raise capital and provide financial consultancy services to them.”
They enable new firms to go public by acting as intermediaries between security issuers and investors. They buy available shares from the issuers, resell them to the public or sell shares on a commission basis.
In brief, investment banking deals with capital creation for other companies, governments or the related entities. The primary activities include underwriting new debt, equity securities, sale of securities, facilitate mergers and acquisitions, and broker trades for investors. They help corporates, governments, and other sectors to plan and manage financial aspects at large scale.
There are several large investment banks on the market. To mention a few, they are Goldman Sachs, Deutsche Bank, JPMorgan Chase, Morgan Stanley, Bank of America, Barclays Investment Bank, Merrill Lynch, Wells Fargo Securities, Citigroup, and so forth.
The role of investment bankers
The investment banking offer services revolving around financing, trading, advice, and research and make money by selling these services to customers. In turn, they earn fees and commissions from the work they do. Here comes the role of investment bankers.
Investment banks employ certified investment bankers who can help the clients plan, manage large projects by identifying the risks associated and thereby save time and money. The major roles played by them are:
Tailor client’s recommendations in accordance with the present state of economic affairs
Serve as middlemen between the company and investors while issuing bonds or stocks
Provide assistance to maximize revenue along with navigating regulatory requirements
Work on the buy-side or sell-side of the participating company as required
Determine the value of the company and settle deals by preparing necessary documents
Match buyers and sellers of the securities in the secondary market
Advise both buyers and sellers of businesses to manage merger and acquisitions from start to finish
Identify potential risks, possible earnings, and prepare documentation on behalf of the clients
Assist clients (companies, organizations, governments, or agencies) to raise public or private money through debt or equity
Valuation analysis using methodologies like trading and transaction comparisons or leveraged buyout
Investment banking as a career
If you have a strong inclination towards financing with a suitable educational background, the above- mentioned responsibilities will truly inspire you to become an investment banker.
To be an investment banker, you should have at least a graduation in financing or accounting. In addition, it is recommended to earn an investment banking certification from a recognized institution or certifying bodies.
Some of the skills you learn include financial modelling, business valuation, pitchbooks and presentations, transaction documents, relationship management, sales and business development, and negotiation.
You may start your career as an analyst and progress further as associates, then director or managing director. It is a lucrative career. According to PayScale, the average salary of an investment banker in New York is $108,043. In the US, the average starting salary for analysts ranges between $75,000 and $96,000.
Get certified and advance your career in investment banking.