Most of you might be having queries relating to the work done by an Investment Banker and why this profile is considered to be a high analytical profile which brings back to the same question of the tasks performed by an Investment Banker.

Due to the high standards of profile, there are a number of skills which are required to become a successful Investment Banker which are mentioned in my previous blog (link provided below)

A Sneak peek into daily life of an investment Banker

Typically an Investment Bankers works for more than 80 hours a week and they spend a lot of time working on Power-point and Excel. Investment Bankers’ work varies as per their job profile which is typically divided into Front Office and Back Office. Their work and salary varies as per the profile.

Furthermore, the positions are divided as Analysts, Associates, Vice Presidents and Partners. Typically Vice Presidents and Partners perform the front end part and Analysts and Associates do majorly the Back end work.


Tasks Performed by an Investment Banker

(I) Front End Office Tasks

Front office tasks are typically performed by the senior management of an Investment Banking company and it includes all the precision and qualitative work relating to handling and managing relations with clients and investors.

1. Client/ Investor’s Interaction:

One of the major tasks performed by the Investment Bankers is to interact and engage with clients who are the main sources of revenue. In order to out light on the client Interaction part, one has to understand the overall objective of Investment Banking, which is to provide a smooth path to the companies in their fund raising/ M&A process.

As fund raising and M&A requires a lot of work, analysis and investor’s interaction, clients always look for experienced professionals who have the right knowledge in the space. Hence, it is imperative for the Investment Bankers to use the right skills and build the right confidence in client so that the client will be able to engage with them.

In some cases, the client can be even fund who is taking to raise funds from FoFs (Fund of Funds). Investment Bankers are also required to engage with the investors and they pitch the company to the investors on behalf on their clients.

2. Strategy Formulation/ Management Consultancy:

Another important role of being a Front End Investment Banker is to strategize and advice management on their business’s operations, finance and other divisions.

Management Consultancy at times becomes important as most of the companies are not investment ready since beginning; hence, it is the work of an Investment Banker to help company for taking corrective steps in order to make them capable for raising funds.

The advice can be relating to various company management decisions including entering into new markets or new geographies, cutting expenses or jobs, venturing in a different line of business, growth through organic or inorganic means etc.

3. Closing Engagement Terms (EL) and signing an Mandate:

Mandate is an engagement Letter signed between the Client and the Investment Banker and lists the objective of the agreement, limitations of the work performed and the commercials part.

Investment Bankers need to follow a rigorous process for closing the mandate and the process includes meeting the clients several times and pitching about themselves to sign the mandate with them and not their competitors.

4. Traveling and attending live conferences:

Another role but not major role of an Investment Banker is to travel and meet clients across the Country/ Globe. For them to be able to find new clients, it is important to attend live entrepreneurship & startups conferences and meet the clients on regular basis.

Front end role is considered to be a 75% traveling role which requires them to meet clients and these conferences solve the purpose of an introductory meeting.

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(II) Back End Office Tasks

Back end office work is performed by the Analysts and Associates and it includes majorly working on Power point, Excel and Databases of 3rd parties.

1. Collaterals Building:

One of the key important tasks of a Back end office Investment Banker is to build collaterals of any company which serves as the main documents which are listing/ incorporating all the information of a client. These collaterals are built for the purpose of sharing with the investors and based on the information mentioned in the collaterals, investors take a judgment.

There are predominantly three types of collaterals which are built by any Investment Banker and they are as follows:

  • (a) Teaser:
    Teaser is a one (1) to two (2) slider document built on a power point, which gives brief information on any company. Usually the teaser is prepared to circulate with infinite number of investors and investors decide on the company based on the preliminary information shared.
    Teaser is majorly prepared on a no name basis (it doesn’t mention the name of the company but the business and other details). Once investors get an interest in the company, they ask for further details and this is time when an Information Memorandum (IM) is shared with them.

  • (b) Information Memorandum:
    IM is a detailed document again built on a power point presentation of around 50+ slides (Length of the slides varies as per companies). It mentions all the important information of a company including Business Model, Product or Service details, Marketing & Distribution Strategies, Management profile, operational & financial metrics etc.

  • (c) Financial Model:
    Financial Model is a document prepared on excel which incorporates financial information of a company including its past performance and future projections.
    The model highlights all the three projected financial statement (Statement of Profit & Loss, Balance Sheet & Cash Flow Statement) in detail with the assumptions and management’s growth plans.

2. Conducting Research:

The other main key work of an Investment Banker is to conduct Industry research and competitor’s research using various databases platforms including; Bloomberg, Capital IQ, Factset, Thomas Reuters etc.

Analysts and Interns spend a lot of time in extracting information through these databases and find conduct multiple analysis on database extracted. For any client, Investment Bankers are required to do Industry and competitors study in detail.

3. Performing Valuations:

Another task of an Investment Banker is to do valuations on behalf of their clients. In most of the big IB firms, they tend to have a separate division dedicated towards performing valuations of their client and this division serves as an integral division of the firm.

Valuation is typically divided into two parts; Relative Valuation and Absolute Valuation. Investment Bankers also use databases support while performing Relative Valuation (Relative Valuation required studying the valuation of the competitors through their trading multiples and past transaction multiples).

4. Doing Data Analysis:

 Another work is to analyze the data captured by the company and to find out key metrics from the pool of data provided. Companies give a bunch of data to the Investment Bankers which is usually captured on day to day basis in MIS, CRM tools.

It is Analyst’s or Intern’s job to analyze and find out key results from the same which will be highlighted in the IM for showing better understanding of the company.

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By Himanshu Jain

Director at The WallStreet School