I've worked in Finance Technology for 15 years. For banks, broker-dealers, etc. Doing mainly Incident Management and Operations type stuff. I've supported traders and worked on a ton of financial applications, but for the most part I've always been completely removed from the business side.
That being said, I've always been fascinated by banking. You're not going to get any posturing out of me. You guys are definitely the cool kids. But I admittedly have no idea what you really do. I'm looking for an understanding. Nothing long and arduous. Maybe a couple of paragraphs at most.
A few questions:
The Blackstones and Apollos of the world. These are strictly private equity firms? What do they do in relation to what you all do? How do they pair with a Baird or a BofA and then what happens?
When I watch Wall Street, what does Gordon Gecko do? The same thing you do?
When I watch American Psycho, what do those guys do? The same thing you do?
What kinds of roles do the different workers have at a bank, from Analyst to Managing Director? Is one level basically just an assistant to the level above? Do you all work on the exact same stuff or do you all specialize in different aspects of the deal-making process?
Is it as wild as it was back in the 80s? Do you go absolutely ballistic after work? Coke binges and tearing up the city? Or do you just stare at screens all night, drinking hot chocolate, in your fuzzy bunny slippers?
I guess that's it. Really just looking for an IB ELI5 for someone who's always been on the outside looking in.
Thx :-)
Investment Banking (IB) is a fascinating world, and here's a concise breakdown to help you understand it better:
What Investment Bankers Do
At its core, investment banking is about advising companies on major financial transactions. This includes: - Mergers & Acquisitions (M&A): Helping companies buy, sell, or merge with other companies. - Raising Capital: Assisting companies in raising money through debt (bonds) or equity (stocks). - Advisory Services: Offering strategic advice on financial decisions, restructuring, or market entry.
Think of investment bankers as the architects of the financial world, structuring deals and connecting buyers and sellers of capital.
Blackstone, Apollo, and Their Relationship to IB
Blackstone and Apollo are private equity (PE) firms, which means they invest in companies, often buying them outright, improving their operations, and selling them for a profit. They rely on investment banks like Baird or BofA for: - Advisory Services: Banks help PE firms identify acquisition targets or sell portfolio companies. - Financing: Banks arrange loans or issue bonds to fund PE deals.
In short, PE firms are the clients, and investment banks are the service providers.
Gordon Gekko vs. Patrick Bateman
Roles in IB: Analyst to Managing Director
Each level has distinct responsibilities, and it’s not just about being an assistant to the level above. Analysts and associates handle the technical work, while VPs and MDs focus on strategy and client interaction.
The Culture: 80s vs. Now
The 80s were wild, with stories of excess, but today’s IB culture is more subdued. While the hours are still brutal (think 80-100 hours a week), the focus is on work rather than partying. After work, you’re more likely to find bankers catching up on sleep than tearing up the city.
In summary, investment banking is about facilitating big financial moves for companies, with a clear hierarchy of roles and responsibilities. It’s not as glamorous or wild as Hollywood portrays, but it’s still a high-stakes, high-reward career.
Sources: Breakdown of Post-IB Exit Opportunities, https://www.wallstreetoasis.com/forum/private-equity/where-is-the-industry-going-for-young-professionals?customgpt=1, Private Funds Group (CS/UBS etc), UG Recruiting Part II: The first round interview, What are the Roles within Real Estate Private Equity?
Banking is not that deep
From what I’ve heard, the life is just some excel, a lot of power point, and waiting around for comments. But for 90+ hours a week.
Investment bankers help companies sell or buy other companies. That includes giving advice on valuation, negotiation, evaluating alternatives, coordinating lawyers and consultants in due diligence, etc.
Blackstone, Apollo are private equity but they have other “strategies” as well. They manage money. Limited partners like sovereign wealth funds, pensions, etc. invest money into a “fund” raised by the PE shop. PE shop takes the funds and buys out another company with the hope of selling it later for a return.
Unlike them, investment bankers aren’t buying out other companies, only giving the advice and being the broker to find a counterparty. Bankers can advise private equity on acquisitions, or they can also be selling a company to private equity.
Gordon Gecko: Activist Fund (mix of public and private equity with a hostile takeover approach)
American Psycho: Investment Banker
It’s definitely nothing like the movies lmao. Anything resembling the debauchery of the movies largely died with the financial crisis and subsequent regulations.
As for roles, varies a lot but generally: Analysts do the Excel/PPT work. Associates outline presentations and check analyst work / coordinate with lower level managers on deals. VPs take point on the deal managing day-to-day communications, also outlining presentations/to-dos and checking work, but VP is heavier on the coordination side. Director is similar, sometimes interchangeable (deal will sometimes have either or). MD doesn’t really check the numbers in detail. They mostly deal with directly advising the client and give high level commands on what needs to get done, then the director/VP figures out how to get it done.
This was excellent. Thanks : )
No movie or show represents investment banking well because it is quite frankly boring with a lot of hours. How do you make turning slide decks and financial models after midnight, random late night calls or a MD on a plane for a pitch into something exciting? Add some chainsaw murder, well that is more entertaining...
Think of traditional IB as a real estate broker but for companies and not houses. It's really as simple as that. Trading on/off balance sheet, etc. are somewhat different but also fall under the umbrella as an IB.
Barbarians at the Gate is a good one to see how a long ago hostile take over went down, but again that's not really how life is. IB is largely a processing and project management role but with a lot of (often unnecessary) deadlines and market driven timing aspects. The reasons IB analysts get paid well is for repeatability and consistency of product on short timelines. They want to understand that you will hit deadlines and not need that much coaching if you've seen it before, and are they willing to put you in front of the client?
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