Valuations and Investment Banking is one of the most fancy careers specially in developing economies such as India. There is a sense of glory and satisfaction as a professional when you are able to work on the entire live deal. The giant investment banks usually provide a good exposure, however the processes and procedures make them more streamlined thereby restricting an investment bankers’ thought process. On the contrary, some of the specialized boutique investment banks provide an immense exposure of working on live deals. However, both of them differ in size and scale.
Here we tried to capture in this post what is investment banking all about, what are the requisite skills one can work on to get an entry into an investment bank and which are the effective tools you need to be aware as an investment banker?
What is Investment Banking all about?
Practically, it is nothing but representing a company, which requires funds or which is looking out for a strategic partner in front of an investor or buyer. This needs to be aptly strategized as both have strikingly opposite requirements. Financial investor is not much concerned about the business model, he is more focused on the return or yield he would generate when he exits. While strategic investor would be able to dive better as he would focus more on synergies with the target company.
To become an effective investment banker, you need to know everything about the business model you are trying to sell or get investment in. Every meeting with a potential investor is an opportunity which you gained, therefore research well before you land up in a meeting. Sending a quick teaser before the meeting will make investors more learned and the discussions put forth will be more effective than otherwise. The better and crisp the teaser, the higher would be the potential interest of the investors. It is usually a 5-6 pager impactful presentation covering the USP of the company. There are several online tools available in the market to curate beautiful presentations. Therefore, it is not really important for an investment banker specially the boutique ones to put in lots of efforts in designing a teaser or pitchbook. The tools range from Spark Adobe, Canva, Visme, Zoho and others.
#Sharing the Pitchbook: Post receiving a positive reponse, you would be required to send a detailed pitchbook running into 40-50 slide which covers the company evolution, management background, technology details, clientele, peer group positioning (focus here on the vision of the founders) and other details. It is usually been experienced that investment banks create teasers and start circulating widely to all the investors, without focusing on the target investors. Additionally, at that point the pitchbook is under progress. This is a No No!. It is highly important that as a professional you need to be ready with your pitchbook and financial model. Teaser is a by-product of pitchbook and not vice versa.
#Shortlist the investors wisely so as to save the time and efforts. It is critical to duly understand the sector in which an investor is keen to invest. There are several forums to get connected with angel investors such as LetsVenture, Chandigarh Angels, Mumbai Angels Network, Venture Catalyst, among others.
#Realistic Financial Model: Financial model is not merely an excel working, it is a platform to set a future expectations of investors or buyers apart from diluting a stake. You could include some fancy numbers however everything boils down to how well you negotiate and present your case.
#Requisite skills to become an investment banker
Based on the practical experience and survey conducted of 50+ investment bankers, it is analyzed that qualification does not hold water in current economy vis-a-vis experience. Whether you are a CFA, an MBA, Graduate or an IITian. All you should focus is an entry into the first door of investment bank where you could work on live deals. You might have an impressive personality and a confidence, however it is extremely useful to know how to sell apart from understanding different business models.
#Good Drafting skills: It is effective to use powerful words and frame a story while sending a pitchbook. It is utmost important to feel the need of the business model by deep diving into the company and getting all required information for you to sell effectively. At the end of the day you cannot become an industry expert, however all you need is to connect to an industry expert, who could further facilitate you in providing right direction.
#Build a good network and reputation: An added advantage with entry in investment banking is it lets you build an extensive valuable network of investors as well as sector experts globally. Therefore, a tool here is interact and make informal connections with these people. Let them recognize you as an individual and not as a part of the company. You may do this by sending texts on specific occasions, sending some of your social media articles and most effective way is to call than texts or email (as per a research, a phone call is 6 times more effective than an email or text).
#Work-life balance: The flip side of working with top investment banks is majority of them globally are making their employees work 18 hours every day, which in turn take toll on their personal life. You may opt to work for a boutique investment banks Vs bigger players.
To conclude the entire article, we have tried to share some effective and implementable tools to adopt in real life in order to crack that entry in an investment bank.
