What is an Investment Banking Analyst?
Investment Banking Analyst is an entry-level position in investment banks. Analysts work as part of a team, or under a senior analyst’s supervision. The role of an investment banking analyst involves conducting financial research and analysis to support banking deals, including researching trends, valuations, and economic data to evaluate risk and assist in marketing. You can find all of the investment banking early-careers opportunities on our internship trackers.
What Does a First-year Investment Banking Analyst Do?
A job as an investment banking analyst is both challenging and rewarding. Analysts are often recruited directly from universities and typically start in a two-year entry-level analyst program beginning in late summer. This can extend to three years and lead to an associate position if performance is strong. Analysts are assigned to teams for 12 months based on the bank’s needs and their skill sets.
Analysts will usually work within product groups like mergers and acquisitions, leveraged finance, or equity capital markets. They might rotate between groups but will generally stay in one, taking on various roles. Some analysts focus on industry groups such as healthcare, financial institutions, industrials, technology, or oil and gas to build sector-specific knowledge.
Investment banking analysts support associates and bankers with tasks like equity and debt offerings, valuations, private placements, leveraged buyouts, M&A, and strategic advisory. Their workload includes building financial models, conducting financial analysis and due diligence, creating presentations, and researching. They gather and present data in Excel or PowerPoint, which their team uses to identify investment opportunities or predict future performance.
Responsibilities of Entry-level Analysts in Investment Banking
One of the most interesting and challenging parts of an investment banking analyst role is that no two days are the same. Common responsibilities of an analyst include:
Observe Market Trends
Analysts analyse stock market developments to provide timely, reliable information to clients and colleagues. This helps senior bankers respond to fluctuations and develop financial products.
Company Research
Investment banking analysts research companies and analyse earnings and profit. Analysts conduct research on company websites and other online sources to identify the main services and products offered by the company being examined. Additionally, when analysing public companies, analysts assess how other potential investors perceive the company.
Develop Analyses
Analysts research historical and current performance of stocks, bonds, and markets to evaluate opportunities. They create portfolios, transactions, and predictive reports using financial models.
Attend Meetings
Analysts sit in on meetings with senior bankers, investors, and capital-seeking companies. They use information gathered in these meetings to develop presentations and pitches.
Create Pitchbooks
Analysts develop pitchbooks and PowerPoint presentations to market deals to investors. Analysts spend the majority of their time formatting pitchbooks, meaning proficiency in PowerPoint is a significant advantage for analysts.
Essential Skills for First-year Investment Banking Analyst
Technical Skills
In investment banking, proficiency in accounting, financial modeling, valuation, and deal analysis is essential for several reasons. There are also a number of other key technical skills that first year analysts should master.
Excel Skills
Proficiency in Excel can enhance efficiency and help advance faster. Excel is a useful skill for investment banking. To get a head start, learn the same Excel skills taught at the top 4 global investment banks with Excel Efficiency for Financial Modelling and Data Analysis.
Accounting
A solid understanding of accounting principles enables investment bankers to accurately interpret financial statements, assess a company’s financial health, and ensure compliance with regulatory standards. This knowledge is crucial for evaluating potential investments and advising clients on financial strategies.
Financial Modelling
Financial modelling involves creating detailed representations of a company’s financial performance. These models are vital for forecasting future financial outcomes, assessing the impact of various scenarios, and supporting decision-making processes in mergers, acquisitions, and other financial transactions.
Valuation
Valuation skills allow investment bankers to determine the worth of a company or asset. Accurate valuations are critical for negotiating deals, advising on mergers and acquisitions, and providing insights into market opportunities.
Deal Analysis
Deal analysis encompasses evaluating the strategic and financial aspects of potential transactions. This includes assessing risks, benefits, and alignment with client objectives, ensuring that deals are structured effectively to meet the desired outcomes.
The Investment Banker course offered by Financial Edge Training covers these core areas, providing the same training that new hires receive at the top investment banks. The program includes modules on accounting, financial modelling, valuation (including discounted cash flow), mergers and acquisitions (M&A), and leveraged buyout (LBO) analysis. As well as a case study to work through crucial topics in context, and interview preparation. By mastering these disciplines, investment bankers are equipped to perform comprehensive financial analyses, develop strategic recommendations, and execute complex transactions, all of which are fundamental to their role in the financial industry.
Commercial Knowledge
Possessing good commercial knowledge is also valuable. While it isn’t necessary to be aware of every industry development, having a few notable news stories to discuss with managers and colleagues can be beneficial. This skill can be developed further with experience in the role; a better understanding of the market leads to easier application of knowledge practically in terms of current events.
Regulatory and Ethical Considerations
Understanding the regulatory landscape is essential for anyone entering the finance industry. Bankers must ensure their clients and/or their institutions operate according to laws, meaning they must maintain and implement their knowledge of financial regulations.
Technology Skills
The adoption of technological skills related to financial software, data analytics, and automation tools is increasingly important. Proficiency in these areas can enhance efficiency and decision-making capabilities across various finance roles.
Soft Skills
The investment banking analyst position requires a variety of skills, and soft skills like problem solving, effective communication, and resilience are really valued in the finance industry.
Problem Solving
Problem solving skills help analysts approach problems or deliver solutions in innovative ways. Investment bankers provide original financial solutions to their clients and need to be enthusiastic about new ideas. Contributing innovative ideas can make an analyst a valuable resource to an investment bank.
Analytical Thinking
Investment banking involves intellectual curiosity and the ability to quickly understand new information or concepts and apply them to work is essential. This is essential for absorbing new data, managing projects, or meeting clients. Effective pitching and planning are also crucial for career advancement in finance.
Communication and Presentation skills
Investment banking requires strong communication and public speaking skills, particularly for pitching to clients. Presentation skills are essential for analysts to convey financial information to teammates and clients. Analysts need to present in both formal and informal settings, adjusting their language and presentation style according to the audience.
Collaboration and Leadership Skills
Managing and leading others is important in banking and contributes to career advancement and efficient work processes. Entry-level roles may require analysts to seek help from internal departments and build relationships with external suppliers and partners.
Networking Skills
Strong interpersonal skills are essential for attracting and retaining clients. Investment banking analysts are responsible for profitably marketing their firm’s services. Networking with other professionals and building client relationships play significant roles in finance.
Resilience
Investment banking involves high pressure, long hours, tight deadlines, and high stakes. Resilience, or the ability to recover from challenges, is crucial for success.
Overall Planning Ability
Entry-level analysts receive various assignments from associates, vice presidents, and managing directors. The ability to prioritize tasks is essential. Administrative tasks such as arranging meetings, generating reports and other materials, and ensuring smooth team operations might also be part of the analyst role.
Conclusion
The role of a first-year investment banking analyst is both challenging and rewarding, requiring a diverse set of technical and soft skills. Mastering financial modelling, valuation, and deal analysis is crucial for performing comprehensive financial analyses and supporting complex transactions. Additionally, strong Excel and accounting skills enhance efficiency and accuracy in financial assessments.
Beyond technical expertise, analysts must also possess excellent problem-solving, analytical thinking, and communication skills to effectively convey financial information and collaborate with team members. Resilience and the ability to manage high-pressure situations are essential for thriving in the demanding environment of investment banking. By developing these essential skills, first-year analysts can significantly contribute to their teams and lay a strong foundation for a successful career in investment banking. To learn more about how we help students land roles in investment banking, view our ‘About‘ page.
