What do Investment Banking Analysts do?
The faithful Investment Banking analyst. A lesson in punishment or key soldier? While researching Affinity to help launch their Investment Banking CRM, the analyst was a key target persona. What does an analyst really do, though? What are the pros and cons of the job, what are the pain points, and what should one expect the average day is like?
What do Investment Bankers do?
In a nutshell, they advise businesses on corporate-level transactions such as mergers and acquisitions (M&A) as well as equity and debt situations for companies.
They work with management teams to market and sell companies. I have always said that an investment banker has to sell twice. They sell themselves to a buyer and a seller with the hopes of helping deals convert. They also recommend the best terms and timing to raise new funds, and then they market that debt or equity to investors. The role is heavy on advice with marketing and sales — but let’s not forget the negotiation and deal-making skills.
In this world, the analyst is the workhorse, better known as the due diligent monkey. I wish I could say that was a joke, but the terminology is exact. They sit at the bottom of the hierarchy. Above summer interns. Sigh.
Job Description of Investment Banking Analyst
When you read a job description, you might find that an analyst is in charge of PowerPoint deliverables and excel spreadsheets. As glorious as that sounds, they also tackle administrative tasks and respond to requests from current clients and potential clients.
The real-world explanation is, as an analyst, you are charged with doing whatever it takes to support your senior bankers and help them close big deals. This certainly means you might be doing odd tasks with little to do with accounting or finance in general.
Pain Point: Analysts have to manage documents and keep data points organized and available to senior bankers. Like managing directors and VPs, analysts have a need for a single source of truth CRM. They typically are keeping notes in word documents or spreadsheets, and that data can become lost. Using a platform like DealCloud or 4Degrees is highly recommended to streamline the process.
It’s a bit funny and sad, but top students kill themselves to earn top marks in college to have a chance at landing that elusive investment banking role, only to find out that when they start working as an analyst, most of their time is spent revising pitch presentation or tracking buyers and seller. Basically doing the repetitive, mind-numbing work. And cue disappointment!
It is unlikely that you will spend even 50% of your time on financial modeling and valuation tasks, you know, the fun stuff you went to school for. But every job has its dues to pay; Investment banking is no different.
So what does your average day look like?
- Powerpoint for pitch books: 40%
- Other presentations: 10%
- Administrative tasks: 25%
- Excel-based financial modeling & valuation: 25%
Among less technical groups like equity cap markets, you can expect to spend less time in excel. In groups that are more technical, like restructuring, you might spend closer to 60% of your time on technical tasks. Again this is why I personally suggest that your firm utilize a platform like DealCloud or 4Degrees. Seriously, it will help every persona at your firm, from Managing Direct, VPs all the way down to the lowly Analysts and Associates. (Sorry folks, much love for your hard work)
Before I leave half disappointed, let me ruin it completely for you. While you might get some really cool jobs or tasks that take up a good portion of your time, at these stages, most of the work is not that interesting or challenging. But stick with it because it gets so much better as you progress. I’m talking about on-site visits, meeting finance teams, and brainstorming potential buyers and sellers.
What hours do Investment Banking Analysts work?
Okay, this one is hard to say. The hours are bad. On average, you will be in the office around 70–85 hours per week. You might not be working that entire time, though.
You will certainly be on call 24/7 with the expectation that you must respond to urgent emails all the time. It makes it hard to have a life or plan fun activities with your friends.
Recently banks have tried to make this easier to provide a better quality of life by enabling protected weekends and mandatory time off. This has been met with mixed results. However, it is much better to be an analyst than it was in the ’90s. But make no mistake, this job is a grind and requires sacrifice.
Why would anyone do this to themselves?
Well, a couple of reasons. First, it is not a long-term position. You might be giving up 2 or 3 years, and then you will move up to senior roles in investment banking—many move over to PE or hedge funds. Second, you do earn a nice chunk of cash. Typically IB has higher compensation packages than other jobs for new graduates. Comparing really only to tech jobs at large established companies. Finally, there are excellent exit opportunities that could see you winning much more interesting and lucrative roles in private equity, hedge funds, and venture capital.
Think of it like this, pain now, gain later.
An average day of Investment Banking Analyst.
9 AM — Arrive at the office, update your status reports on buyers in your M&A deals. Send it out, then jump into an update call with a client management team. Senior bankers will take the lead in these meetings, so your focus is on the pitch book for a different deal running in the background.
12 PM — Jump on several due diligence calls for other deals you are supporting. Potential buyers will ask probing questions to potential sellers about why they use their products and services. Your job here is to listen and make sure the potential buyer doesn't go too far with their line of questioning.
2:30 PM — Break time with your analyst friends. Starbucks anyone?
3:30 PM — A fire is burning as one of your managing directors is out. They are requesting materials for a pitch that is happening in the next hour. They need materials ASAP! So you scramble through tons of pages of research and assemble a document. Again, this paint point suggests the need for a centralized, trusted source of truth.
5 PM — A coworker connects with you to review some confidential information memorandum (CIM) from the client call you were on this morning. And you guessed it; now you are making changes to the financial summary and reevaluating research and market sections.
7 PM — Yep, you are still working at 7 PM. But your VPs are leaving. Before he or she leaves, they ask you to re-do a pitch book for a meeting or an IPO. And the project is due tomorrow morning. Lucky you! So now you connect with the equity capital markets (ECM) team, and you start updating the research, case studies, and pitch deck.
9:30 PM — You completed your task, but home is not yet in sight. A fellow associate signs off on your new slides. They leave, and you continue to tweak valuations and your excel spreadsheets.
12:30 PM — Since you are a stand-up person, you notice your fellow analyst is having some major problems, and you stay another hour or so to help.
1:30 AM — You leave for home. Not a terribly busy day but certainly long.
Some uncontrollable factors that might make this day harder would be multiple live deals. This might mean that the workload becomes more unpredictable, and you might get several requests during your day. Big pitches with moving deadlines could also be a factor in having a hard day at the office. And like every job, last-second emergencies. Like your managing director expressing a need for a meeting that is taking place in less than 2 hours. Be ready to scramble!
If you are wondering if this job is right for you, ask yourself these two questions.
- Is becoming an Investment Banking Analyst necessary if your final goal is more towards hedge funds or private equity?
- Is having a personal life outside of work important to you?
If you answer no to question 1 and yes to question 2, you might not need or want to start as an analyst. Go for a good offer at an established buy-side bank out of college.
Take into consideration how the role will change as technology becomes more present. You might want to look into programming skills, CRM management, and data visualization software other than Excel or Google Sheets.
If you are still unsure, jump in! You honestly can’t go wrong, and it offers you several options after you decide it sucks.
Scott Guttenberger
