Author: Fmi_Online

Considering the lucrative prospects and growth possibilities involved, investment banking is a tough industry to crack. However, by following a few steps you can improve your odds. One such step is having done relevant finance and accounting courses. It will allow you to demonstrate better knowledge in the domain than your peers, which will set you apart from the crowd. Moreover, it might also help you secure a higher job role in a niche department. Let’s look at some of the must-grab investment banking courses for an aspiring investment banker. All the courses covered in the article can be completed online and offer certifications. 

Investment banking pathway

Duration: 60+ hours 

Designed to bridge the gap between theory and practice, the investment banking pathway provides students with the skills they need to forge a career in the field. The FMI Investment Banking pathway covers a wide range of career options, offered by top investment banks and helps you better understand what these roles are and the skills required to succeed. It also offers mentor services to boost your application process. 

The course is made up of 8 sub-courses including, Introduction to investment banking, Equities overview, Fixed income overview, Introduction to derivative markets, Financial analysis, Excel for finance, Maths for financial markets and M&A simulation. 

Advanced Valuation and Strategy – M&A, Private Equity, and Venture Capital

Duration: 16 – 20 hours.

With three levels of difficulty, Erasmus University’s course on Advanced Valuation and Strategy offers an excellent introduction to theory and practice. It goes beyond the use of standard company valuation and DCF calculations and covers expanded NPV, bringing together DCF, real options, and the concept of game theory. The course encourages you to think about strategic questions such as: how do you value a leveraged buyout? How can you value a high-tech venture with negative cash flows? It is helpful for both executives and students interested in the fundamentals of finance and strategy. 

International Mergers and Acquisitions Expert 

Duration: 30 hours (in-person) or 60 hours (fully online).

Cost: $2,990 (online); $4,990 (in-person).

The course is offered by the Institute of Mergers and Acquisitions (IMAA), which shares an impeccable reputation for producing successful investment bankers. The financial course dives deep into the entire M&A process, covering strategy, company valuation to execution and post-merger integration (PMI). This holistic approach towards M&A differentiates IM&A from other courses on investment banking. The program also includes best practices for cross-border deals, corporate inversions, earn-outs, spin-offs, restructurings, corporate governance, and more opportunities.

This investment banking course, however, has two major drawbacks, the high cost and the requirement of an academic degree as well as some knowledge of financial concepts. This course is more suitable for students coming from a finance-related background and want to break through in investment banking.

Investment Banking Certification from NYIF

Duration: 70 hours

Offered by the NY Institute of Finance, the course offers a comprehensive look at investment banking for interns, analysts and associate-level roles. It covers significant topics such as modelling and analysis of derivatives, company valuations, and deal structuring and execution. The course is well-suited for graduates or professionals who are looking to enter investment banking roles. You also get an opportunity to select a specialisation that prepares you for niche departments or specific roles. 

Diploma in Securities and Derivatives

The International Capital Market Association offers a diploma in Securities & Derivative, which includes training on the basic quantitative tools to the fundamentals of analysing fixed income securities to an in-depth analysis on the construction and management of a portfolio of fixed income assets. Students can build an understanding of fixed-income securities such sovereign bonds, investment-grade and high-yield corporate bonds, inflation-linked bonds, securitisations, and covered bonds and the relationship between cash bond and derivatives markets.

Conclusion 

If you are interested in a particular topic you can also choose from a bunch of electives to customise the course according to your specifications. Technical Analysis, Convertible Bonds, Behavioural Finance, and Subordinated Debt are some of the electives that you can choose.  

Investment banking offers limited job titles and functions on a strict hierarchy, common globally. A typical hierarchy starts with investment banking analysts, followed by IB Associates, Vice President, Senior Vice President, all the way to Managing Director and CEO. Global investment banks, functioning in multiple countries, often have different job titles, however, the job descriptions tend to be consistent in most banks. 

Investment banking analyst, the entry-level position, is the most popular job title in investment banking. However, with the growing popularity of summer internships, applicants prefer starting their careers with an investment banking internship and then moving to the position of analyst or in some cases directly as an associate. In this article, we will take a deeper look at the job role of an investment banking analyst.

Investment banking analyst

Most college graduates, from the best business schools around the globe, enter investment banking as analysts. They spend most of their time researching companies, the economy, macroeconomic factors, financial modelling, and creating PowerPoint presentations. On average, an analyst earns between $100,000 and $150,000 annually. After successfully completing a two-year period, the IB analyst rises to the rank of associate, in most investment banks.

Duties of an investment banking analyst

  1. Research: analysts are required to evaluate financial information and present it in the form of reports, to help a bank determine whether they should buy, sell, or hold a particular business. These reports are also used by bank clients which are looking for M&A opportunities or are planning to raise funds. IB analysts are categorised on the basis of industries, such as healthcare, manufacturing, consumer goods etc, or on the basis of geography.  
  2. Prepare an argument: Developing arguments for or against investments in companies or specific industries by interacting with company executives and other investors.
  3. Financial modelling: gathered information must be converted into numbers to reach a company valuation. Moreover, by tracking the financial performance of a business, an investment banking analyst forecasts the profits of a business in the future. 
  4. Presentation: gathered information, derived inferences and financial data to back it up is presented in the form of a research report or Powerpoint Presentation to the clients or senior executives.

What are investment banks looking for in an analyst?

Financial institutes, such as investment banks, prefer candidates with certain attributes:

  1. Financial skills include the fundamental knowledge of corporate finance, company valuation, risk management, and securities analysis.
  2. A willingness and passion to learn. 
  3. A clear understanding of the current banking business model and its working.  
  4. Expertise in statistics, quantitative analysis, and financial modelling.

Prerequisites for becoming an investment banking analyst

Investment banking analysts from top investment banks share similar backgrounds. The first and most important commonality is their educational background. You must demonstrate relevant education. In addition to being a graduate or postgraduate from a tier 1 university, the majority of analysts have an educational background in business, accountancy or finance. 

Analysts can also be enrolled in courses related to investment banking or finance. For example, a bridge course in algorithmic trading, statistical analysis, bond valuations, or valuation of distressed assets can be highly useful to demonstrate in your resume. 

Moreover, you should also showcase relevant work experience such as investment banking internships (summer internships) from top investment banks.

Apart from your educational background and hard skills, networking is an extremely important piece of the puzzle. This is doubly important if you did not graduate from an Ivy League or have a family member or close friend working in the industry.

Investment banking internships 

The barrier to entering investment banking has slightly reduced, thanks to investment banking internships. Graduates with a bachelor’s degree can directly apply for an investment banking internship or go with the traditional path of applying for a full-time position. 

According to an ex-banker, investment banking internships are an extended form of interviews. It allows the banks to separate worthy candidates, who are willing to put in the effort and learn from those who pretend to have these qualities in order to grab a lucrative job. It is easy for a candidate to prepare for investment banking interviews if they have relevant financial knowledge, however very few can put in the daily work required, deliver work on time, and do it consistently for over two months.  

As part of the investment banking internship, you are required to assist full-time analysts or associates with everything that they do, ranging from tasks such as making copies, correcting presentations or collecting and evaluating data. 

You can apply for most investment banking internships through the official website of investment banks, by submitting an online application and going through a series of interviews and assessments, depending on the region. However, due to the intense competition, the most effective way to get an internship is through your own network. 

Conclusion 

Investment banking analyst is one of the most competitive positions in the world, however, if you are successful in landing the position, it could be your gateway into a very lucrative career. As an analyst, you would be expected to work hard, follow instructions well, and continuously learn. Investment banking internships and networking vastly increase your chances of landing a job in the world of finance. 

With consolidation in global markets and alterations in the supply chain, businesses are exploring the path of M&A to exploit synergies with their global counterparts and achieve efficiency. This has led to an increase in corporate transactions, fuelling the demand for investment bankers. The size of the global investment banking industry is estimated to be over $155 billion and reach over $230 billion by 2026, growing at a CAGR of 10.4%. 

Being one of the top career choices for graduates, investment banking tends to attract many applications globally. The allure of a six-figure salary and the prestige of being associated with one of the world’s oldest business institutions can be enticing. This makes breaking into the industry challenging, even if you possess a unique combination of education, experience, and passion. However, you can enhance your chances of becoming a successful investment banker by pursuing the right investment banking course. Let’s see how an such a fundamental finance course can help you land a job in 2023. 

Getting the fundamentals right!

According to an ex-investment banker from Merrill Lynch, for any investment banking aspirant, accounting, corporate finance, and investment banking fundamentals as well as valuation methods are extremely important. You must be familiar with: the cost of capital, beta calculation, company valuation, Excel basics, LBOs, DCF Modelling, the formula of WACC, etc. 

When you are trying to brush up on the basics, online courses can be a convenient option as they make learning more interactive and engaging. Corporate finance and accounting courses, financial modelling courses, and MS Excel courses can be a valuable starting point for an investment banking applicant. Further, the experiential investment banking courses also offer real-life case studies which not only improve the understanding of the concept but can also be helpful during interviews. 

Helps you stand out from the crowd

Top investment banks – the likes of JP Morgan Chase and Goldman Sachs attract over 250,000 student applications every year, out of which only 2% of the applicants are selected. Elementary investment banking courses such as investment banking pathways, financial modelling courses, and accounting courses can improve your understanding of theoretical concepts and help you stand out from the crowd. Pursuing additional corporate finance courses will also highlight your passion towards the field and your willingness to learn, placing you higher than your peers. Thus, improving your chances of landing a job in an investment bank. 

Moreover, opting for an online IB course gives you a platform to interact with a diverse group of individuals from the industry with different backgrounds and helps you expand your professional network, which can open new doors for you. 

Acquiring a broader skill set

With rising globalisation and ever-increasing digitisation, business models are evolving across industries. Finance is no different as algorithms, data analysis, and forecasting are more valuable than ever before. The rise of Algo-trading is a prime example of this shift. Investment banks are increasingly interested in hiring individuals who have a strong technology background so that they can gel well with their existing trading set-up. 

Applicants can exploit this opportunity by upskilling themselves, learning in-demand skills and staying relevant. Online investment banking courses on equity research, application of big data in investing, and data forecasting can offer significant value to both fresh graduates and working professionals who are looking to switch careers. 

Conclusion 

With the rising demand for investment banking, brutal competition and a dynamic business environment, an applicant must acquire a broader skill set while having a strong hold on corporate finance fundamentals. Online investment banking courses can provide you with an opportunity to gain an edge over your peers and advance in specific areas such DCF calculation and company valuation. As a result, you will have a better chance of landing a job in investment banking in 2023. This is also relevant to fields like asset management and global markets. 

Over the past few months, experts have predicted the possibility of a global recession. A recession is defined as a period of economic downturn, marked by a decline in GDP for two successive quarters. One of the most prevalent indicators of a slowdown has been the stock market. Investors across the world have witnessed a significant drop in market indexes over the last few months. The American stock market witnessed a correction of more than 20%, in mid-2022, another key indicator of economic slowdown. 

As a result of the slowdown, businesses often resort to layoffs as a cost-cutting initiative or as a result of bankruptcy. So far, from tech companies alone, more than 217,000 employees have been laid off. Since investment banking is primarily focused on economic activity and corporate transactions, (IPOs, M&As, asset management) a recession can severely affect jobs in the investment banking industries. The top five American investment banks saw their revenue decline by nearly 50%, around $19 billion during the last three quarters of 2022. Let’s explore how a global recession could affect jobs in investment banking.

Job cuts and lower bonuses

The financial sector may be experiencing a downturn but it may not always lead to job cuts. According to Bloomberg, top investment banks, the likes of JPMorgan, Bank of America, and Citigroup are considering cutting bonuses by up to 30%, along with job cuts. Johnson Associates, a compensation consulting firm, has reported that investment banks’ incentive pay may fall by more than 45% while the poor performers might end up receiving no bonus payout. 

Citigroup and Barclays among others have laid off underperforming bankers. JPMorgan is expected to start downsizing in the current quarter, resulting in attrition without replacement and lower bonus payouts. Similarly, Morgan Stanley said that the bank plans to enact light cuts, along with lower bonuses.

However, this may not be the case at all banks. Credit Suisse has recently been experiencing tough times due to poor risk management and a subdued demand outlook. It is expecting a massive loss of $1.6 billion dollars in the last quarter of 2022. According to Bloomberg, the bank has already started laying off people, as part of a plan to cut costs and aims to reduce about 9,000 positions by 2025. 

Increased work hours

In 2021, global markets boomed with IPOs, mergers and acquisitions and SPACs. Due to this increase in business activity, investment banks hired additional employees and paid generous bonuses. Top-tier investment banks paid around $142 billion as employee benefit expenses in 2021. With changing demand outlooks, banks made job cuts and attempted to increase efficiency with the leftover staff, resulting in an increased workload. This can impact the number of working hours and the quality of work-life balance. 

Reduced hiring

What does the global recession mean to all those who are planning to enter the industry in the near future? 

With these potential economic issues, large investment banks have pulled back their hiring of finance professionals and are aiming for maximum utilisation from their existing employees. On the other hand, boutique investment banks are hiring new employees but at a much smaller scale. They often limit their search to ex-bankers from large institutions with experience and relevant networks. 

Opportunity in fintech and distressed asset funds

If you are looking to enter the world of finance you shouldn’t get disheartened. Segments such as distressed asset funds and hedge funds thrive after a fallout. They aim to make a profit from bankrupt companies or companies that are facing temporary problems due to the economic cycle. Moreover, you can also consider starting your career with a fintech company. You can also equip yourself with specialised knowledge on investment banking through in-depth resources like FMI’s Investment Banking course. 

Conclusion

With a global recession, investment banks would experience a fall in earnings and subdued demand, which would slow down expansion and fresh hiring. Moreover, as banks have already increased their workforce in the previous year, there is also a possibility of restructuring. On the positive side, small segments of the industry such as distressed funds often thrive in this environment and may expand their operations. With increasing growth in emerging countries, investment banking aspirants can also find job opportunities in indigenous boutique investment/consultancy firms in the country.  

Unless you were betting on the short side of the market, the year 2022 has been a disappointing year for most investors. There are several contributors to this, the two most significant being a short-lived recession caused by the two-year-long covid-19 pandemic and Russia’s invasion of Ukraine. Our focus in this article will be on the stock market (equity) and bond market, even though financial markets contain a broad range of financial securities and derivatives. 

We entered 2022 with excess liquidity resulting from large stimulus packages announced by federal governments around the world, a higher percentage of household savings, a tight labour market, and low or in some cases negative interest rates. A lot of excess capital was channelled into financial assets, which caused the stock market to reach new highs. The rush of excess liquidity was also observed in digital assets, the likes of cryptocurrency (bitcoin and Ethereum) and NFTs. As an industry, digital assets were valued at $3 trillion at its peak, which now rests at $900 billion.

With high expectations and easy money flowing in, financial assets were at a lifetime high. It changed when Russia invaded Ukraine, as both of these countries contribute significantly to global commodity markets (metals, wheat, agrochemicals, etc.) Due to this war, there was a severe impact on the global supply of these commodities, coupled with environmental and covid restrictions in China. 

On the other hand, the demand for commodities, like copper and steel was also rising due to large infrastructure spending and the growing popularity of EVs. Commodity prices skyrocketed, resulting in high inflation – the highest in 40 years. To counter inflation, central banks around the world went on a spree of rate hikes (interest rates), which is still going on. These factors combined caused a sharp drop in equity markets around the world, barring some emerging markets like India and Brazil.   

Impact on Equity Markets 

At the end of 2022, S&P 500 has seen a slow recovery post the sharp correction of mid-2022, a drop of more than 25% from its peak. As of December, the S&P 500 is down more than 16% and is expected to close the year with a double-digit fall. The Energy sector has been a standout and has delivered positive returns to investors, thanks to the crisis in Ukraine and soaring energy prices. Technology is one of the most negatively impacted sectors, with stocks like Meta (Facebook) losing more than 2/3rds of their value. 

Impact on Bond Market

Bond investors have also experienced negative gains in 2022. With inflation above the target levels, central banks continue raising interest rates which have in turn put downward pressure on bond prices. However, it’s the first time in more than a decade that bond yields are near desirable levels, with US 5-year bonds yielding almost 4%.    

Relative to stocks, bond investors find themselves in a more favourable environment, despite all the uncertainties. In the past, when interest rates were near zero, investors were forced to buy riskier bonds (junk bonds) to earn a reasonable return on their capital. The recent rate hikes have made that easier as investors can stay with the bonds issued by the US government and get a decent yield of 4%, even on short-term bonds. However, this still results in a negative real return, due to high inflation. Moreover, investors expect better bond prices in the near future as they expect interest rate hikes to peak in the first quarter of 2023. This would result in a fall in interest rates and better bond prices. 

Conclusion

At the end of 2022, financial markets appear to be on a path of recovery, however, the extent of the recovery would depend on macroeconomic conditions. There are multiple sectors, such as consumer services, financials, and technology, which have gone through severe corrections in the past year. These sectors could deliver positive returns from here on with stable macroeconomic conditions and a positive demand outlook. Moreover, a drop in interest rates would result in both bond and stock prices being revalued. 

Performance 2022: World Index.

After a job interview is over, you will have some time to reflect how your interview went. You might feel confident about certain parts and nervous about others. You desperately want to understand if the interview went well or not. Are there cues that can help you analyse how you performed? To some extent, yes. Here are four of them. 

  1. The length of your interview 

If your interview went longer than it was scheduled for, that’s usually a positive sign. When a conversation runs longer than expected, it’s usually because your interviewer was keen to know more about you and had an interest in your answers. 

According to Muse career coach Emily Liou, a former recruiter, if she knew that the candidate wasn’t a fit, she wouldn’t prefer to waste her time. Instead, she would wrap up the interview right at the scheduled time. On the contrary, when she found a stellar candidate, she said she would try to spend additional time gathering the information she would need to make an informed decision.

On the other hand, if an interview ended before the stipulated time, it may not be a great sign. However, there can be exceptions such as when the recruiter has evaluated you quickly to progress to the next round. 

  1. Were there follow-up questions?

Interviewers are also human, and they will ask you follow-up questions if they are eager to know more about you. These could be about your career trajectory, your interests outside of work, and so on.

However, you must be able to differentiate if a follow up question is stemming from an answer that you did not clearly or satisfactorily. Keep your calm and answer any questions, no matter how detailed they get, with ease, confidence, and poise.

  1. You got a timeline for the next steps

Employers should share a timeline of the next steps as general protocol. Depending on the bank you are interviewing for, you can still have some steps left before you get that offer letter such as internal checks, approvals, or even another round of interview. If the recruiter shared the hiring timeline, the next steps, and what you can expect, it can mean that they were interested. This could also mean that they were giving you an idea of what could come next. If they don’t give any information about the next steps, you should not hesitate to ask the interviewer. There is a chance that they forgot. You can also use this as a way to understand the culture of the company you might be about to work for. Sharing information in advance shows that the organisation is transparent, and has a clear and structured process for their candidates.

  1. Interviewer’s Body Language

Body language is a major way to gauge what a person is thinking. According to Eliot Kaplan, a former recruiter, it is imperative to observe if the recruiter seems engaged in the conversation. Signs like leaning forward when you are talking, smiling, and staying focused during the conversation are all positive signs.

You may be too occupied answering questions to notice some of these cues but you can make a mental note before the interview starts. For example, remember to notice if the interviewer maintains frequent eye contact because that’s a positive sign.

On the other hand, if the interviewer appeared to be distracted, did not maintain eye contact and focus and was doing something else during the interviews, they might be disengaged in the conversation.

Conclusion

Regardless of how your interview turned out, you must remember that you need not be harsh on yourself and you must have learned something. You can make the most of it and use that experience to improve your chances for the next interview. To improve your interview prep, you can refer to FMI’s detailed guide. It is generally considered favourable when the interviewer asks questions and shows positive body language clues during a lengthy conversation. It’s even better if they share the timeline of the hiring process. If you observe opposite characteristics in your next interview, you can take that as a hint and try to make the conversation more engaging. On your end, you should send a thank you or follow up email and always maintain professionalism. 

The traditional corporate structure has evolved as a result of technological advancements, process innovation, and cost-saving initiatives. While departments like HR have consolidated, technology plays a much wider role today. With increasing environmental concerns we can also observe the development of new departments like ESG, which requires interdisciplinary expertise from management, law, finance, etc.   

As a result, today, career paths are not nearly as straightforward as a decade ago. Starting your career with an entry-level position and working your way towards the top by the time you retire is only one of many ways to look at your career. You can try moving diagonally to a related department, move sideways and shift to another company, or step down and start all over again with a different career. Global markets, which are responsible for providing services like sales & trading, hedging strategies and industry insights to institutional clients, is no different to this phenomenon. In this article, we will explore the top 3 strategies that you require to navigate a successful career in global markets. 

Upskilling

Upskilling is the most effective strategy to progress in your career. A low-cost online course, book, and other resources from an institution like FMI, Skillshare, or Linkedin can help you enhance or develop a skill set.

As part of global markets, one of the skills that you can start working on is learning a new language. While working with institutions across countries with deals involving millions of dollars, the importance of communication can’t be overstated. Being able to communicate in more than one language will not only allow you to develop better relationships with your clients but will also help you communicate effectively with your counterparts from different countries. If you are already fluent in English, you can consider giving one of the Asian languages a try, such as Mandarin, given the rise of HNI from these countries. 

Moreover, you might consider working on your soft skills, like communication, persuasion, collaboration, creativity, emotional intelligence, etc. This will not only help you in your existing roles but can also come in handy when planning to switch your career path.  

Networking 

Whether it’s working with company CFOs or dealing with dealers from the floor of stock exchanges, global markets rely heavily on human interactions. There are various ways your connections can help you take the next step in your career. If you are looking for a promotion, maintaining good relationships with senior bankers goes a long way. If you’re looking to move diagonally and transition into a different role, you can reach out to your peers from those departments and learn what they do. Moreover, a wide network could also provide you with new opportunities, a job with a better salary or an offer for a better position. For example, if you are connected with HR, they can recommend your name for a new opening when it comes up before they start with the formal process. 

The most effective way to build your network is by first tapping into your existing network. You can try reconnecting with your batch mates who are in similar professions, and with the bankers who you met during your job hunt. They may lead you to doors you didn’t even know existed. Professional exhibitions and trade organisations are another way to develop your network, along with common gatherings, such as office parties, economic conclaves, etc. You can also add new connections via platforms like LinkedIn and Coffee Mug. 

Open-mindedness

In today’s dynamic business environment, employers prefer employees who are digitally equipped, open to learning new things, loyal, and multi-skilled. Throughout your career, you’ll require constant upskilling, learning and adapting to new ways of doing business. You must see things with an open mind, anticipate change and prepare for it accordingly. This will not only help you grow but will also enable you to see new opportunities.

Conclusion

While in the last two decades technology and globalisation have brought unprecedented change to investment banking, it has also created opportunities. To navigate a successful career in these changing, uncertain times, you must be open-minded, willing to adapt, and willing to learn. The ability to network will enable you to take advantage of upcoming opportunities and progress in your career. Be patient and proactive, understand what you want, set realistic goals, and make sure your contributions are visible.

Asset management is the practice of studying, acquiring, and trading investments with an aim of increasing total wealth over time. The sector offers lucrative opportunities with sizable salaries for you to pursue. Asset managers are often referred as portfolio managers or financial advisors as they perform this service for their clients. Asset management companies are often a division within investment banks or other financial institutions such as banks. For this article, we will focus on financial asset management. 

Asset management interviews are generally based on three skills: market knowledge, technical knowledge, and the compatibility of the candidate with the bank’s culture. In this article, we will discuss how to ace the technical aspects of an asset management interview by identifying the required skills and preparing you for common interview questions.

Technical background required for asset management role

An asset management role requires you to have strong fundamental knowledge about corporate finance, valuation, financial modelling and above all sound analytical skills. You must know the basics, such as calculating WACC, choosing the right beta, selecting growth rate, etc. Your quantitative and analytical skills will enable you to evaluate financial statements and financial models, draw insights from them, and determine what is the best investment for your clients. Fine capital allocation strategy allows you to maximise value for your clients. 

Common interview questions

In order to improve the likelihood of acing the technical interview, you can prepare by going through well-established questions and preparing answers in advance. Please note that the sample answers are standard and are commonly used. We do not recommend you to use the exact answer in your interview, they must be used as a reference for you to design your own answers. Further, the sample questions are limited to technical questions as behavioural answers vary greatly from person to person. 

  1. How do you go about valuing a company?

Recruiters want to see that you can accurately value a firm by evaluating financial statements and making appropriate assumptions. Providing an in-depth analysis of a sample company during the interview can be helpful. You may also get a case study from the recruiter. You can also carry one of your investments to demonstrate how you value a company.

Sample answer:  “Referring to the material provided, I conducted a discounted cash flow study of this firm to establish its long-term prospects and terminal value. This, together with macro-economic analysis, showed that this firm would be an excellent investment for at least the next 10 years. I also did a brief technical analysis of the company to establish a suitable entry price. This is a long-term bet, therefore, we may not realise significant movement in price for a year or so, however I am confident that the value would appreciate significantly in a duration of three to four years.”

  1. What are the different methods of valuing a company, and how would you value this business (case study provided or your selection of a company)?

This question centres around the different valuation techniques that you must be familiar with and your knowledge of the company and its industry. Your ability to decide a valuation technique for a business may help the interviewer determine how you can evaluate both the company and its competitors.

Sample answer: “You can value a company using methods like asset valuation, liquidation value, earnings multiple or relative valuation method and through discount cash flows.

Since this is a loss making company, rather than using relative valuation or earnings based valuation, I would go for asset based valuation or liquidation value. Alternatively, since there is sustainability in earnings, I would use discounted cash flow for this business.”

  1. If we purchase an asset, what would be its impact on our various financial statements?

This question is aimed at testing your knowledge of financial statements. Answer this question in a crisp manner using simple language.

Sample Answer: “The purchase of an asset will increase the assets on the balance sheet, and simultaneously, would increase equity or long-term liabilities on the other side, depending on the mode of financing. As far as the income statement is concerned, at year end, depreciation would be higher due to the rise in asset base. In the cash flow statement, we can see this purchase under investment activities, and this would affect the value of free cash flow.”

  1. What are the advantages of funding operations by issuing equity rather than debt for a company?

The recruiter might ask this question to evaluate your understanding of corporate structure,  and funding activities. Different ways of equity financing and debt financing are used to fund business operations and expansion.

Sample answer: “Equity financing is less risky compared to debt financing, so a company might issue equity to reduce its risk factor. Issuing equity can help a company gain valuable stability giving it an opportunity to plan for the future. Moreover, equity might be preferred over debt when there is uncertainty regarding the future prospects of the business.”

Conclusion 

Technical interview preparation takes time – the asset management case study questions involve various aspects. It is crucial to have a clear understanding of corporate finance fundamentals, along with passion for finance, understanding of valuation, and how you can leverage that knowledge to select investments. In addition, you should go through multiple case studies on valuation in order to improve your skills and demonstrate how you used this knowledge in the real world.

Due to its lucrative salaries and promising growth prospects, investment banking attracts thousands of candidates with similar backgrounds. Hence, simply submitting a resume will not guarantee you an interview. However, a referral from a banker at your target investment banks will make you stand out from the crowd. A candidate might have to invest plenty of time developing these relationships with bankers to obtain the required referrals. This becomes even more important if you are not from a top tier school, which are generally targeted by investment bankers, or are in off-cycle recruiting. As a candidate, the purpose of networking for you should be securing entry-level internships, investment banking interviews, and job offers. Let’s explore the steps to network effectively and land your dream investment banking job. 

Step 1: Selection 

You must start with a top down approach and make a comprehensive list of bankers that you could reach out to. After researching, you must be able to narrow down your list to 80-100 names of bankers with whom you want to connect. It’s important to reach out to a broader set of bankers to improve your odds. Make sure that your list is even broader if you are a student from a non-target school.

Step 2: Getting contact information

Once you are ready with your list of names, you must find a way to convey your message to them. The best way to reach out to the banker is through LinkedIn. You can send them a connect request along with a brief message stating the purpose of reaching out. Moreover, you can also use the ‘Inmail’ feature to convey your message. Another way of reaching out could be via email. However, it is possible that your email would be blocked by the company firewall if you are using their corporate email address. If the email ends up in their inbox, these bankers will also be targeted by other candidates, so you must contact them in a way that differentiates you and makes them want to respond to you. 

Step 3: Coming up with a professional and brief email

In order to receive a response, your email must have a compelling subject line and a concise body. The purpose of writing this email is to secure a meeting with the banker. So, you need to ask them to take a moment to talk on the phone or in person at their convenience. To increase the chances of setting up the meeting and making it easy for them, you can show your flexibility in terms of when and where to conduct the meeting. 

Step 4: Preparation 

If you get a positive response, you must prepare for the meeting. Start by researching about the bank, the banker, department, role, etc. and repeat this for each of your meetings/conversations. Thoughtful questions will help you stand out among other candidates and thus, would increase your chances of getting a referral. It is common for candidates to feel nervous before these conversations but keep in mind that they are equally passionate about the job and the industry as you are and happen to have more experience than you. Most importantly, you must show that you are open and willing to learn more about the industry. 

Step 5: Stay in touch

The ultimate goal of every interaction is to get a referral for an interview. Once you’ve established a connection, you must follow up and make sure your good conversations translate into referrals. You should also stay in touch periodically to make sure you come across as genuine and keen to work in the industry. 

Networking Strategies

There are three main strategies for networking in investment banking:

  1. Attending networking events or conducting informational interviews to build connections over time. 
  2. Cold emailing/messaging where you directly ask about open positions or strike up a conversation with an intention to get a referral. 
  3. Cold calling, same as cold emailing, but on the phone.

Conclusion

Networking is one of the key tools that many people use to start their careers in investment banking. You will be able to stand out and increase your chances of getting an interview if you make a good impression on people who can recommend you to recruiters or hire you. Along with getting a referral or an interview, you get to know other investment bankers on a more personal level. Keeping a positive and friendly tone, asking for what you want directly, and being proactive will ensure that your networking efforts reap benefits. 

As a result of the predicted global recession, the business environment continues to remain volatile and is more dynamic than ever. As a result, finance professionals who work efficiently, think strategically and can take quick decisions, can pivot as needed. To thrive, professionals must accept and adapt to changing circumstances while responding to opportunities and threats. These are among many of the essential skills that every top finance professional needs to succeed. Here are 10 of them:

Strategic thinking

Strategic thinking is about understanding who you are and how to adapt to the ever-evolving world around you. Top finance professionals can form a long-term view of a particular deal or investment while tracking day-to-day progress. This includes using specific metrics and adjusting those as and when needed. Connecting variables such as the condition of the economy, consumer demand, benefits from synergy and corporate culture becomes the basis of estimating value. One of the prime examples of this could be observed in the evaluation of tech companies. Today, metrics like ‘active users’ and ‘cost per customer acquisition’ are vital but they were hardly relevant decades ago.

Strategic thinking allows finance professionals to navigate complex and changing business landscapes and ensures that the organisation is efficiently moving in the right direction.

Data-driven decision making

As W. Edwards Deming would say “In God we trust. All others must bring data.” The old-fashioned method of using gut feeling or following what worked in the past is not enough in a changing environment. Today, finance professionals must be data-driven, measure progress against suitable metrics and pivot when required. This allows them to make quick, well-informed decisions based on hard facts. The importance of selecting and analysing the correct set of data to make decisions can’t be overstated. The acceptance of data-driven decision-making can be best observed by the spectacular rise of algorithmic trading. 

Time management

Managing time and being super productive are other skills which are required to succeed in the finance industry. In current times, time is the most valuable asset for any organisation and has a huge impact on a company’s profitability. Companies that have effective time management controls in practice are more efficient, which allows them to generate more revenue at a relatively lower cost. 

Using planners, notes, journals and reminders can help you keep track of time. You can follow these tips to start managing your time effectively:

Set goals: Establishing clear goals saves you from falling off track and motivates you to work towards them. You can also follow the SMART method of setting goals. 

Plan: Planning ahead saves you time and avoids unnecessary stress that follows. Ensure that you make to-do lists in the evening for the next day.

Prioritise: Prioritise each item on your to-do list. This helps you to stay focussed and accomplish things on deadlines.

People management

In the age of disruption, employees in a company are extremely valuable. Finance professionals, especially at a higher position, need to go basics to attract and retain top talent. Managing people is more than just hiring. This includes communicating a clear vision and mission, treating employees impartially, and setting fair goals. Apart from hiring compatible people, senior employees must ensure that they have everything they need to grow. 

Relationship-management 

A finance professional needs to understand different personalities, listen, ask the right questions, resolve conflicts, educate others, and counsel clients. With constant changes in the business environment, companies depend on acquisitions, mergers, IPOs, etc. to adapt and grow. What they need, therefore, is an unbiased advisor who can understand their needs and help them make sound financial decisions. This further helps build trust, which is vital for a long-term business association. 

Agility

With rapidly changing circumstances, financial professionals must set clear goals which allow them to be agile, flexible, and capable of adapting and taking the required measures in a situation. You have the freedom and flexibility to change course when needed, respond quickly to opportunities and obstacles, and operate freely. The current trend in VC funding illustrates this. Given the global uncertainty in demand, start-ups have witnessed a 50% YOY drop in VC funding. These funds have been allocated to other asset classes such as real estate, which has seen a surge in investment. 

Excellent communication 

The importance of effective communication in finance is often overlooked. However, as change brings uncertainty, a finance professional must be able to explain its impact to their client to establish trust and form a long-term relationship. Despite the financial industry being very hierarchical, finance professionals who want to succeed must communicate well with other stakeholders. You should be open to two-way communication and must welcome their team members to help them think through problems. Here are other non-technical skills you can benefit from learning. 

Technological proficiency

The finance industry is no stranger to technology. Being the largest contributor to the GDP, across most developed nations, it is the third most tech savvy industry, right behind media and technology itself. Finance professionals should be broad-minded and willing to learn and adapt to new technology. Regardless of the department you work in, you will need computer skills and the ability to pick up new programs quickly. You can’t imagine the finance industry without Excel and all the tools for financial modelling. 

A cross-functional skill set

Today, a finance professional needs to go beyond traditional practices. Cross-functional skills like emotional intelligence, critical thinking, knowledge from multiple disciplines, and advanced communication are key to succeed in a dynamic business environment. You will never work in silos and often rely extensively on collaboration, teamwork and delegation to achieve goals.

Problem-solving Skills

You will often encounter problems in meeting your targets, and being able to solve them creatively rather than cracking under pressure is essential. To get ahead, it can be helpful to look beyond your responsibilities. For instance, by helping your coworkers solve their problems rather than simply reporting them to upper management, you’ll be viewed as a team player.

Conclusion

Now more than ever, finance professionals need these skills and experienced co-workers to navigate the changing environment and thrive in a new normal. You must think strategically, make data-driven decisions, manage your time and people effectively and remain agile and productive in decision-making. You must also communicate your opinions, while respecting the culture of the organisation, clearly and effectively to your peers, seniors and clients. Practising these skills will help you to grow both personally and professionally.