The career of an investment banker progresses along a fairly standard path. Investment banking positions from junior to senior:
- Analyst (grunt)
- Associate (glorified grunt)
- VP (account manager)
- Director (senior account manager, rainmaker in training)
- Managing Director (rainmaker)
Some banks call certain investment banker positions different names or have added levels of hierarchy. For example, sometimes banks separate Senior Vice President from Vice President. Other times, Director is split up into Director and Executive Director (more senior). However, regardless of the names, the general job functions of each relative position tend to be consistent bank to bank.
If you are an undergraduate, you are applying to banks with the aim of landing an investment banking analyst position. Assuming you do well, have an interest in staying, and there is a need, some banks offer direct promotions from analyst to associate instead of requiring that you go back and get your MBA (typically called “A to A”). If you are an MBA student, you are applying to banks with the aim of landing an investment banking associate position and aspire to work up the ranks to Managing Director one day.
The Investment Banking Analyst
Investment banking analysts are typically men and women directly out of undergraduate institutions who join an investment bank for a two-year program.
After two years of working for the investment bank, top performing analysts are often offered the chance to stay for a third year, and the most successful analysts can be promoted after three years to investment banking associate. Analysts are the lowest in the hierarchy chain and therefore do the majority of the work. The work includes three primary tasks: presentations, analysis, and administrative.
Investment banking analysts spend a lot of time putting together PowerPoint presentations called pitch books (click here to see an example of a pitch book). These pitch books get printed in color and are bound with professional looking covers (usually in-house at the bulge brackets) for meetings with clients and prospective clients. The process is very formatting intensive, attention to detail is critical, and many analysts find this part of the job to be the most mundane and frustrating.
The second task of an analyst is analytical work. Pretty much anything done in Excel is considered “analytical work.” Examples include entering historic company data from public documents, financial statement modeling, valuation, credit analysis, etc. Interview questions often focus on this part of the job and Wall Street Prep’s training programs are focused on demystifying the analytical work that analysts are expected to perform.
The third main task is administrative work. Such a task involves scheduling, setting up conference calls and meetings, making travel arrangements and keeping an up-to-date working group list of deal team members. Lastly, if you are the sole analyst on the deal and it is sell-side (you’re advising a client on selling its business), you may have control of the virtual data room and will need to keep it organized so all parties have access to the information. It is an interesting experience in that there are several data room providers and many times they will try to win business by offering free sports tickets, etc. It gives you a chance to feel how your clients feel as you try to win their business.
The Investment Banking Associate
Investment banking associates are usually recruited directly out of MBA programs or analysts that have been promoted. Typically, bankers will be at the associate level for three and a half years before they are promoted to Vice President. Associates are also categorized into class years (i.e. First Year, Second Year and Third Year or say, Class of ‘05, ‘06 and ‘07). The number of years it takes for Associates to get promoted actually depends on the bank. Sometimes it could be more than three and a half years if there is not a need for another Vice President.
At that point, an associate should evaluate whether it makes sense to stay at the bank or try to move elsewhere to receive a promotion.
The investment banking associate’s role is similar to the analyst’s role, with the additional responsibility of serving as a liason between junior and senior bankers, and in some instances, to work directly with clients.
How Analysts and Associates Work Together
Analysts and associates work very closely together. Associates check the work of analysts and assign them tasks. Checks could be in-depth where the Associate literally looks through models and checks inputs with filings or it could be much more high level where the Associate looks at an output and determines whether the numbers make sense.
The Senior Bankers (VPs and MDs)
Senior bankers primarily source deals and maintain relationships. Senior bankers have a wide variety of past backgrounds ranging from investment banking to corporate executive management.
Aside from relationships, senior bankers often understand their industry landscape at a very detailed level and can anticipate deals in the sector. As economic environments shift, they anticipate when companies will need to raise capital or when strategic discussions (M&A, LBO) are necessary. By anticipating such needs, Managing Directors can start crafting appropriate pitches early-on to clients with the aim of turning these pitches into live deals.
Training's over, and you've just hit the new group. You're getting to know your bullpen-mates and you've picked up a few bullshit staffings. You're settled into your new apartment in Murray Hill (no roaches yet!) and you're loving the nightlife in NYC. You head out to the bars with your newfound work bros on Thursdays for happy hour. Life is good, and Joshua Tree fuckin rocks.
After Labor Day, things start to pick up a bit...
You just joined Equinox (cuz you're a young stunner) but you haven't been back in awhile. No worries - your right shoulder is still jacked from the constant weekend fist-pumping. You pulled your first late night and spent a weekend in the office doing some internal drafting. You're picking up the modeling, but still making some mistakes. It's all good, because you're working with some understanding Associates. Ease into it.
Happy Halloween, motherfucker. That internal drafting you were slogging through last month has turned into a live deal, along with six other new projects you have. Your once-understanding Associate is running short on patience, 'cause for some goddamn reason you're still trying to wrap your head around purchase accounting and how it flows through the model. You haven't seen your roommate in a few weeks, and your girlfriend is probably seeing someone else.
Fuck Seamlessweb. You're 3 months in and you've already tried every type of sushi/barbecue/pasta/healthfood on the site, and you're tired of eating out of Styrofoam boxes. You spend Thanksgiving in the office preparing for a pitch that ends up getting postponed. You missed Homecoming and you're starting to wonder if you should've stayed in school for an extra year to get a master's or something.
Dirty gray snow lines the streets. The subway is constantly under construction. Cabs are monopolized by overweight tourists laden with Macy's bags. What the hell happened? New York was awesome in the summertime. Where did all the girls go? Where did the last four months go? What day of the week is it? The dark days of winter have set in.
You get your first headhunter call. Yes, oh god yes, take me away. Hedge fund. Private equity. Corp dev. I don't care, just give me some hope here. Didn't you fight like hell to get this job in the first place? Well, thank god you got a deal under your belt in Q4, so you can put that on your resume. Don't want to go into buyside recruiting season with an empty CV. Wait, didn't I just start my current job a few months ago?
Happy Valentine's day. Your girlfriend dumped you three months ago, and you haven't gotten laid since, but you've barely noticed - time flies when you're having fun, am I right? A handful of Associates got laid off, but the Analyst class is spared. You pretty numb to it, though - you've already had a few friends from training quit to start t-shirt companies or pursue a career in bongo drumming.
You hop out of the shower one day, dry yourself off and pull on a pair of pants. Rrrrrrriiiiiipppp. That's the pants seam giving out - worn from a combination of shifting your slouchy sitting posture and gaining 20 pounds from eating Seamless 7 days a week over the past few months. Your Equinox membership card is buried in the corner of your cubicle, under a pizza box and a stack of PIBs.
The sun is shining a little brighter. A wave of midmarket buyside firms call you for interviews, and you bomb all of them - but it's okay, because you're want to get into a megafund. You're not really sure why, but you just know it will be so fuckin awesome, man. Spring thaw has begun, and the sweet smell of rotting garbage is back in the streets.
You found that Equinox membership card and started getting up early to hit the gym. It's a New You. According to the math, you've paid approximately $50 per visit, but no matter - you're going to get in shape, dammit. All of the analyst bros are getting a Hamptons house this summer, and you're planning to be up there every weekend. Gotta get ready to flash the abs at Pink Elephant.
Summer analysts! No more PIBs!
The dog days are here. The line at Chop't is a mile long. Your feet smell bad from going sockless Monday-Sunday. You're a little irked that you haven't been getting your money's worth on the Hamptons timeshare (although you've slacked off on the New You movement and you're still pretty squishy - oops) but it's summertime nonetheless and the hours are getting better. You finally feel like you're in the zone and doing your job well. You're a veteran now and you're looking forward to some fresh faces to join the group, so you no longer get the shittiest work.
Your Analyst Countdown.xls file shows 50% to go. O happy day. New first years join the group, and you nonchalantly breeze them through model training, comps training, resource training. You look at them with a strange combination of nostalgia and regret. How long until the optimistic glow on those faces turns to dark cynicism? Which one will flip out after their first all-nighter and quit with an angry email blast? Who will be the ultra-intense kid who takes every staffing, works every weekend, and throws everyone else under the bus? Which one of these is the nepotism hire? Who will be the first to get a PE job and check out super hard?
Most importantly, what time are we getting the fuck out of here? First rounds on me at J Tree.