The broad industry of investment banking serves to evaluate investment opportunities, raise capital, trade securities, and advise on corporate mergers and acquisitions for a diverse clientele. Serving anywhere from individual investors to billionaires, large corporations, and even governments, investment bankers act as advisors and deliver products and services to investing and issuing (corporations and governments) clients. Investment banks act as intermediaries to help organizations and governments raise money while assisting investors with profitable returns.

Work within the industry frequently occurs in small teams (4-6) comprised of junior (analyst, associate) through senior staff (vice president, lead managing director). Advanced-degree graduates are commonly hired as associates to manage projects; evaluate economic and business trends affecting specific industries, regions, or products; and to make daily execution decisions to move projects toward successful completion.

Investment banks generally fall into one of the following categories of firms:

Bulge bracket

Global firms offering a full range of I-banking services for large-cap and mid-cap deals. Examples include Morgan Stanley, Goldman Sachs, and Citigroup.

Middle market

Regional banks generally work on small deals and are focused on a more specific class of services (e.g. mergers and acquisitions) in a specific geographical area. Elites are more comparable in size with bulge-bracket business and hold a more national or international presence. They are, however, similar to regionals in their service focus. There are hundreds of these boutique firms, including Alderwood Capital, Lufkin Advisors LLC, Evercore, and Greenhill.

Private Equity, Hedge Funds, and Venture Capital

Considered "alternative investments" (to mutual funds), investments within private equity, hedge funds, and venture capital each offer different opportunities for large-cap investors to earn considerable financial returns. While all three require significant financial commitments on behalf of their investors, the differences lie mainly in the stage, size, and nature of the types of organizations.

Private-equity firms

Private-equity firms invest in established-yet-under-performing companies in order to reorganize the structure, management, and business model of the company and eventually turn struggling companies into profitable ones. PE investments are generally made for longer terms, such as 3-7 years. Some private equity firms include Silver Lake Partners, Hellman and Friedman, and Bain Capital.

Hedge Funds

Hedge funds invest in a wide variety of assets that are held for short durations (sometimes minutes or seconds). Due to the liquid nature of the investment, hedge funds typically do not alter the direction of the investment. These companies may be organized by specialties, such as equity, arbitrage, macro, distressed companies and debt, multistrategy big-bank funds, and funds of hedgefunds. Examples of hedge funds organizations are D.E. Shaw & Co. and Angelo, Gordon & Co.

Venture-capital investments

Venture-capital investments are usually made in early-stage (pre-revenue) or startup companies, primarily in high-growth industries like high tech or biomedicine. In order to assist fledgling companies, VCs may sit on the board of directors or serve in an advisory capacity. Return on investment (ROI) generally occurs when the company is merged or completes its initial public offering (IPO). Some examples of venture capital firms include Sofinnova Ventures, Sutter Hill Ventures, Venrock Associates, and Woodside Capital Partners.

Desired Skills for Banking and Finance

  • Content skills: Companies are typically looking for people familiar with economic and investment principles as well as current trends in local and national markets. Further, an understanding of company development and structure is useful, especially in high start-up areas. While having an MBA is not imperative, it is highly advantageous to have one in these fields, or to at least garner similar education and practice.
  • Analytical skills: Ability to analyze the needs of customers; design appropriate short-, middle-, and long-term strategies; and assist areas for potential growth and risk.
  • Communication skills: Ability to listen to and seek other's ideas and clients' goals, and to incorporate them into the problem-solving process. One must also express oneself clearly in writing, quantitative analysis, and presentations.
  • Team Player: Contribute individual skill sets to come up with a proposed plan of action or solution.
  • High risk tolerance: Those interested in these fields as a way to "get rich" may find this is not as easy as they thought because of the significant fluctuation in global, national, and local financial markets. Jobs in these areas mimic this fluctuation.

Typical Job Titles

  • Analyst
  • Financial Analyst
  • Associate
  • Portfolio Manager
  • Fund Manager
  • Ratings Analyst
  • Risk Analyst
  • VP
  • Hedge Fund Manager
  • Venture Capitalist
  • Partner

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