I don't understand the IB process
Hello everyone,
I am an analyst at a boutique. I had no really formal training before I started but I do come from a finance major. I have a lot of questions about the IB process that I am afraid to ask at this point.
Things such as, what does it mean to be engaged/mandated? What is the process from pitch to closed deal? what is a CIM for? what is a management presentation and a lenders presentation?
I use these materials all the time but I dont understand exactly where they fall in the whole IB process.
Are there any materials that someone could send me so that I can finally understand wtf is going on. I feel like an idiot not knowing.
Thanks WSO
One word of advice - ask these questions now and not in a years time. No one expect you to know everything. Apart from that, scan M&I for their articles which covers a few of the things you have mentioned.
Jeez...
i highly suggest you read this book asap...
http://www.amazon.com/Investment-Banking-Valuation-Leveraged-Acquisitio…
surprised you will get anything out of your experiences if you don't know what the hell you are doing so get up to speed quickly.
This is absolutely the best book to clear up your questions. Not a penny wasted.
Aside from that, I never feel stupid asking questions. Even if I should know the answer. Just don't ask your main boss--go for someone you are on a more casual basis with and say "maybe a dumb question, but where does a CIM really fall in the whole process"
Ask tons of questions, but never ask the same question twice.
Find a more senior analyst, and ask them if you can have a private sit down (outside of the bull pen). Tell them that you've got questions, and I'm guessing that they are going to be more than happy to help. If you haven't been formally trained, the people can only expect so much....
You have to take the FINRA Series 79, right? The 79 does a very good job explaining the M&A process. Most would advise you to skip reading the material, but in your case, it sounds like you need it.
Make sure you get Knopman Financial Training, they are the best.
But to give you a brief overview, sell-side M&A is as follows:
Pitch --> If mandate is won --> Engagement letter (fees, legal, etc) --> Teaser (shortened version of the CIM) / CA distribution --> sign/return of CA --> CIM distribution --> Mgmt presentation --> Due diligence --> Closing dinner
Of course this is very simplified but it captures the essence of a M&A sale. You can also have an auction where you hold first and final round of bids.
What do you learn in your finance major anyways?
Seriously, thank you Comp. Very helpful.
New question for anyone. What is a bank book?
Get Rosenbaum & pearl's book on investment banking..it is amazing.
Agreed.
OP - how long have you been on the job? In general, there's a sort of 'window of opportunity' for when you can ask a lot of beginner questions and no one will judge you - in fact, they like it that you are being good about asking questions to learn more.
If some time has passed, you may want to answer a few of your questions yourself (and the M&I and the book above are good for that). But even if some time has passed, you can still ask questions about why certain things are done. Just find people when they have a free moment and they'll teach you if they're good bosses that have an interest in your growth.
http://www.wallst-training.com/WST_M_and_A_Process_and_Timetable.pdf
http://www.whitehawkadvisory.com/sites/default/files/users/AlexKlingelb…
Don't be ashamed to ask these questions to other people you work with. They can't reasonably expect you to come in just knowing these things and it shows initiative. I always told junior analysts that its important to ask questions even if I seem frustrated or distracted and the only time you ask a stupid question is when you've asked it twice - so make sure to take COPIOUS notes!
Investment Bank process (Originally Posted: 08/06/2010)
Just got an email from a top IB and it says my application has been progressed to the next stage of the recruitment process. I have to take a numerical test. Is this standard or am I really special and actually got past the first stage?
ur super special. basically u got the job already, along with instant associate promote.
^ boutique, why do you even post? self involved douche if you ask me
Ahahah, well, in all honesty OP is either a troll or so naive that he totally deserved it.
In the off-chance that it's not true, then: no, you have not passed the first stage. To my knowledge, everyone who applies online gets invited to take a numerical test, even before a recruiter takes a look at his or her resume.
I'm neither a "troll" nor naive. That was my attempt at humor while asking a legit question. Being a rising senior in college, I'm not used to numerical tests of this sort, so bare with me.
For the person that asked, the bank in question is Deutsche Bank. I asked an IB friend of mine what to expect and he said his for his small-cap firm was net-debt, how you calculate it. Know financial statements and go over debt ratios.
If anyone here has some additional info, please feel free to share as it would help tremendously.
What type of questions are asked on this numerical test??
being invited to the online numerical test means that you passed the first stage of the application process.
the first stage of the application process is the resume screening. this means that they screened your resume and thought you were interesting/capable enough to proceed to the next stage, the online numerical assessment.
if you are successful with the online test, you will be invited to either a first round phone/in person interview and then an assessment center (2nd round)
i'm assuming you are applying for a position in europe or with a european bank, since these are the only positions that have online numerical assessments as part of the application process.
good luck
actually, merrill used to have them too... not sure now after the acquisition
If you dont mind me asking, what bank is it? I didnt realize recruiting begun this early.
dont banks have accellerated recruiting too?
Most investment banks in Europe don't accept applications until September. I think Goldman Sachs may have started accepting applications though, so it's either GS or maybe MS Asia Pacific.
online numerical assessments will NOT ask finance-specific questions
its reading graphs and analyzing data under time pressure
The online tests have nothing to do with your knowledge of financial markets or accounting. They test your ability to read and interpret basic numerical information such as pie charts, graphs, tables etc. For a good indication of what to expect, visit http://www.shldirect.com/numerical. Deutsche also provides you with a practice test before you start the real thing so I recommend using it.
Good luck.
Thanks for the help guys. Much appreciated. (that link doesn't work 222, is there a letter missing?)
Never mind, I found it on their page. Thanks again!
Also, this is for a euro position even though I'm based in the USA.
After checking out practice problems from that website as well as the firms website, I felt really confident. I think I did ok. 20 minutes goes by fast....very fast.
For what its worth, the SHL tests are considerably easier than the real IB ones because they are targetting a broader pool of users.
Here's another site for you: http://students.efinancialcareers.co.uk/numerical_test.htm
There are 3 tests. Again, these are all a shitload easier than pure IB ones because they are appealing to all areas of finance (BO, MO and FO).
Good luck.
I should have asked this prior to taking the test, but do they expect everyone to finish it? I had 3 questions left with 10 seconds on the clock and guessed. I'm starting to think that they don't expect people to finish and that it would have been better to skip over some of the questions I had a little trouble with and go back if I had time. 1-minute/question is tough.
The golden rule is that you should always aim to finish the test as everyone's performance is assessed with respect to the whole 20 questions. As you do more tests you will learn to power through the early ones to save time for the more difficult ones at the end. The Deutsche tests are a bit of shock the first time you sit them so don't worry. Just use it as experience.
Thanks. If anyone else is requested to take the DB numerical test, know that they use PHL, not SHL. PHL is a bit more complex then SHL (from the practice problems I've done with both).
hey, i have heard that DB's tests are more difficult than average, hopefully went well for you
i've actually never heard of PHL tests, I googled it and nothing came up- could you elaborate?
The DB test was indeed difficult. There was some simple stuff like being given 2 pie charts with each broken up into 5 sectors of a company and one chart gives revenue in millions while the other is in percent of 5 mil. you basically just convert the % into millions based on 5 mil and compare YoY to see what sector improved the most/least and answer the question accordingly.
A difficult question was currency based and if I explain it, it'll sound easy but if you take the test, you'll realize that between the complexity of what seems like a simple task and the short amount of time, it's rather difficult.
And it's PSL, not PHL. My mistake.
http://www.psl.co.uk/practice/ is what DB uses. I wish it was SHL.
Excuse my off-topic question but how do you guys know the application deadline for this coming FT recruiting at banks like DB, CS etc in the US for non target schools? I check their websites pretty frequently to stay on top of things but haven't seen anything about the submission deadline. It hasn't started or what?
Pygmalion, it's really all over the place. Typically, recruitment starts in August or September. I know JP is in September because one of their reps told me on Facebook in their Facebook group. I started applying in June and July for a lot of jobs for after I graduate next May. Just apply to as many places as you can now. I did BBs and boutiques.
Also, be willing to move anywhere as it will increase your chances. I live in the US and am in the middle of this recruitment process for a job in London. Quite frankly, they could send me anywhere as long as I do IB work and am properly compensated.....okay maybe not Scottsdale, AZ or North Korea but other than that, I'm pretty flexible.
I should probably start applying for general finance positions soon though considering the slim chances with IB overall.
Investment Banking 101 (Originally Posted: 05/16/2009)
Where can I find a 3-5min quite entertaining video explaning what investment banking is. I'm looking to show it for an event I am hosting.
Try http://www.leveragedsellout.com/
Here.
I'm not looking for a joke video. I'm looking for a video that explains what Investment Banking is!
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