When companies, organizations, or government entities need to raise capital, one of the best ways to do so is to turn to the services of an investment banker. Investment bankers are the highly skilled professionals at financial institutions who examine an entity's financial health, capital needs, and goals. Then they recommend a strategy to improve or manifest them. The investment banker then acts as a go-between for the organization looking to raise money and those looking to make financial investments.
In the first part of his or her general responsibilities, an investment banker will examine the goals and needs of an organization seeking to raise capital through investment, typically through a retainer. The investment banker will usually be granted access to all financial information the company has, even that of a proprietary or sensitive nature. The investment banker then helps formulate a strategy that may involve selling bonds, issuing and selling stocks, taking on loan debt, or a combination of any and all of those. Once the organization has signed off on a strategy to raise money through investments, the banker then is entrusted to find and work with prospective investors who match the risk/reward profile of the entity attempting to raise capital. In this area of work, the investment banker may act largely as a salesperson, helping to create interest and offering encouragement to invest.
An investment banker must possess a variety of skills. He or she must be detail-oriented and able to analyze financial data down to the smallest minutae. He or she must also possess strong statistical analysis skills to help forecast the best method to secure investment for a company, as well as forecast risk and reward to potential investors. Finally, the banker must possess excellent interpersonal skills, as much of the work here does involve a modicum of salesmanship. Most investment bankers will have a four-year degree in business or finance, but MBAs are typically preferred in this field. These bankers typically work 50 hours per week or more in an office environment.
Investment Banker Tasks
Conduct industry and company research to engage clients and develop new business.
Participate and manage all stages of the transaction process from opening pitch to closing investment contract(s).
Perform valuation analyses using various methodologies such as trading and transaction comparisons (comps), discounted cash flow and leveraged buyout (LBOs).
Assist companies, organizations, governments and their agencies in raising public or private money through debt and/or equity.
Construct fully integrated, detailed financial models to support Merger and Acquisitions (M&A) transactions and Financial Planning and Analysis (FP&A) communications.