Investment banks are important financial institutions that act as intermediaries between investors who have capital and companies who need financing. The key functions of investment banks include underwriting, mergers and acquisitions, sales and trading, equity research, etc. Equity and global investment banking divisions are responsible for helping companies raise capital through IPOs, follow-on offerings, convertible bonds, etc. This article will introduce the organizational structure, key functions, required skills and career development paths in equity and global investment banking divisions of major investment banks.
Equity capital markets team raises capital for corporate clients
The equity capital markets (ECM) team within the investment banking division is responsible for helping companies raise equity capital through initial public offerings (IPOs), follow-on offerings, convertible bonds, rights issues, etc. ECM bankers work on pitching and winning mandates from corporate clients who need to raise capital. They advise on optimal deal structuring, help produce the prospectus, liaise with regulators, market the offering to institutional investors, coordinate legal and accounting due diligence, and execute the transaction. ECM provides excellent deal execution experience and client interaction opportunities for junior bankers.
M&A advisory team advises on mergers, acquisitions and divestitures
The mergers & acquisitions (M&A) advisory team provides buy-side and sell-side advisory services on acquisitions, mergers, divestitures, takeovers, leveraged buyouts, joint ventures, spin-offs, etc. M&A bankers evaluate potential targets, conduct due diligence, structure deals, negotiate transaction terms, arrange financing and work closely with external lawyers to execute transactions. M&A advisory offers junior bankers the opportunity to evaluate companies, build complex financial models, interact with C-suite executives and develop negotiation skills.
Financial modeling, valuation, communication and interpersonal skills are key
Investment banking associates and analysts need to be excellent financial modelers and valuers. Building complex models for LBO analysis, merger consequences, discounted cash flow valuation, trading comps, precedent transactions, etc. is a key skill. Communication and interpersonal skills are critical as junior bankers interact extensively with clients, lawyers, regulators, and investors. Taking ownership and accountability, working collaboratively in teams, demonstrating intellectual curiosity and structured thinking are also valued.
Career paths lead to private equity, corporate finance, startups
After 2-3 years as an analyst and associate in investment banking, common exit opportunities include private equity, corporate development, equity research, portfolio management, venture capital and starting one’s own business. The skills learned and networks developed during the intense investment banking stint help accelerate career trajectories in multiple directions.
Equity and global investment banking divisions in major investment banks focus on raising capital for corporate clients and advising on M&A transactions. Developing financial modeling, valuation, communication and interpersonal skills provides a strong foundation for future career opportunities.