What are the Most Useful Things You Learn in Investment Banking?

AndyLouis's picture
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From quora.com, here's the top answer from user Ramon Simms. Thoughts monkeys? Anything you'd add?

I spent some time in banking (the debt side) before I switched over to trading and here is what I took with me:

Attention to Detail

Bankers are meticulous about details. It's derived by the size and importance of the deals, the highly competitive nature of the industry and the public consequences/embarrassment of getting things wrong. Mistakes are not tolerated. You'll learn this fast or have problems from the start.

The Discipline of Working Hard

You want to know what it's like to build your own startup or small business? Pulling an 80-100hr work week in investment banking is like wearing training wheels (because of course you're never off when you run a startup or small business) but the capacity to handle it never leaves.

Navigating Politics

Politics exist in smaller organizations, but the maturity and "efficiency" of the the power system in i-banking will teach you life long lessons ahead of the curve in how power works and if you're shrewd enough, how to work power - not just at the bullpen level but up higher as well.

The Nuances of Selling

Banking is all about selling:

  • selling your self/skills (+ b/sing)
  • selling your boss (+face time)
  • selling the client (+schmoozing)
  • selling the product (+pitching)

It's not as direct if you're not in sales, but the opportunity is there to learn these skills well. If you don't, you'll hit a ceiling pretty quickly.

Financial Modeling

Probably the most tangible tool set you take away with you is your ability to analyze the numbers in a deal top down or bottom up and the wizardry to manipulate things in excel (look ma, no mouse!)

Composure Under Pressure

I tend to associate this more with my trading days, but you definitely learn this in banking too. There's always a deadline, always a fire drill, everything's important, everyone's pulling/pushing - and so you learn to deal with the pressure and the unexpected or you're out or you burn out.

To be clear, it's not that one can't possess these skills already or learn them in most other jobs but looking back, being in banking really seemed to hone these particular skills for me.

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Comments (12)

Dec 5, 2012
AndyLouis:

Attention to Detail - Bankers are meticulous about details. It's derived by the size and importance of the deals, the highly competitive nature of the industry and the public consequences/embarrassment of getting things wrong. Mistakes are not tolerated. You'll learn this fast or have problems from the start.

The other thing that banker bros learn is irony! When the model is so precise because it doesn't overlook those 3 cents of restructuring costs that were only mentioned in the footnote of a footnote of an 8-K, but the final valuation is a complete fabrication stemming from a made up discount rate, a made up multiple, and made up synergies.

Dec 5, 2012
Going Concern:
AndyLouis:

Attention to Detail - Bankers are meticulous about details. It's derived by the size and importance of the deals, the highly competitive nature of the industry and the public consequences/embarrassment of getting things wrong. Mistakes are not tolerated. You'll learn this fast or have problems from the start.

The other thing that banker bros learn is irony! When the model is so precise because it doesn't overlook those 3 cents of restructuring costs that were only mentioned in the footnote of a footnote of an 8-K, but the final valuation is a complete fabrication stemming from a made up discount rate, a made up multiple, and made up synergies.

LOOOL NICE

Dec 5, 2012

Banking is all about false precision

Dec 5, 2012
SpacemanSpiff:

Banking is all about false precision

what do u mean?

WSO's COO (Chief Operating Orangutan) | My Linkedin

Dec 5, 2012

These seem like watered down answers to people not in the industry. To those who did go to IB route, what specifically did you learn about modeling/corporate valuation that was helpful? I'd imagine accounting tricks were things you picked up on as well (shenanigans to match non GAAP and GAAP earnings, depreciation charges, options and warrants, pricing contracts directly into earnings, etc...)

Dec 5, 2012

how to take 9 inches without even flinching

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Dec 5, 2012
iRX:

how to take 9 inches without even flinching

yes, this.

and how to be extremely organized. this helped a lot and - to my team at least - was a lot more valuable than great modeling skills.

Dec 5, 2012

Sales, sales and sales.

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.

Dec 5, 2012

The ability to never be phased by anything.

Example:
Oh, you need a model in 20 minutes for this random private co I am just hearing of? No biggie. I know that that's not possible, but it doesn't bother me. In 15 minutes, you'll start yelling at me no matter how much progress I make. For the next hour, which is probably about how long it will take, you'll harass me every 5 minutes to check how close to finished I am. Your input won't cause me to work any faster, because I don't want to have to deal with the drama that would go down if I make a mistake. Once I give you the model, you will yell at me about something you see and don't understand. I will explain, you will relax.

The next day you will praise me about how good the model was and completely disregard all the frustration and yelling as if it never happened.

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Dec 5, 2012
PuppyBackedSecurities:

The ability to never be phased by anything.

Example:
Oh, you need a model in 20 minutes for this random private co I am just hearing of? No biggie. I know that that's not possible, but it doesn't bother me. In 15 minutes, you'll start yelling at me no matter how much progress I make. For the next hour, which is probably about how long it will take, you'll harass me every 5 minutes to check how close to finished I am. Your input won't cause me to work any faster, because I don't want to have to deal with the drama that would go down if I make a mistake. Once I give you the model, you will yell at me about something you see and don't understand. I will explain, you will relax.

The next day you will praise me about how good the model was and completely disregard all the frustration and yelling as if it never happened.

Haha. On a seemingly unrelated note, it might be worth mentioning that "thx" is not praise.

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Dec 5, 2012
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