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Tag: career in investment banking

Is Online Financial Modeling Training in Advanced Excel Beneficial?

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Is Online Financial Modeling Training in Advanced Excel Beneficial?

Investment banks provide financial services to corporations, companies, and governments based on their expert knowledge of finance-related concepts. These services can include raising capital, facilitating mergers and acquisitions, and managing money markets. People who work at investment banks have to not only have a deep understanding of finance and accounting but should also be able to crunch large amounts of data in order to derive conclusions from improving financial portfolios.

One of the main tools used to crunch this data in Microsoft Excel. In order to have a career in investment banking, you will have to crunch huge amounts of data sets and work on large financial models. For such a scenario, Excel proves itself to be an invaluable financial data analysis tool.

Since the scope and range of the work are very large and varied, it is imperative to have an advanced understanding of how Excel works. This will allow you to use Excel effectively and efficiently while allowing you to manage the data. Knowing the right shortcuts will reduce the amount of time you will spend crunching numbers and having a good knowledge of Excel will also teach you how to sift through large data sets to glean the right information and patterns.

Excel is used to generate financial modeling which is a key element of investment banking. In fact, any investment banker will attest to the emphasis laid on Excel during their investment banking training. With Excel, you will be able to use your knowledge in finance, business metrics, and accounting to make forecasts of a company in the future. This allows the company to see their progress through hard numbers and will enable them to make decisions that are good for their company.

Financial modelling can be of many types, focusing on certain scenarios. Company A might be looking to increase its footprint in a new market. As an investment banker, you can propose to the company that acquiring Company B which has already made inroads into the said market will greatly benefit them. However, this claim will have to be backed by hard numbers. This is where Excel plays a role. Using the software, you can crunch large numbers of data related to Company B’s numbers, the cost of acquisition for Company A, and how and when the investment will pay off in the future.

Another scenario is when Company A is looking to raise capital but does not want to approach banks for a loan due to the high-interest rates. An investment bank can crunch numbers using Excel to suggest releasing an IPO.

There are many online advanced Excel courses available that are geared towards improving your skills in finance. Most of these courses are free and will help you gain an insight into the world of banking while also giving you important, time-saving tools that will prove essential in your finance career.

Do make sure that you look around the various courses and select one that fills in the gaps of knowledge you might have regarding Excel. You can learn how to use Excel at any stage in your education or career. An investment banking course might not focus on developing an understanding of Excel, and you might have to learn it elsewhere.

Main Differences Between ‘Operational Risk’ and ‘Operations Risk’

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The prospect of losing something due to operations or logistics in any business is daunting. However, for those conducting business, the main difference between operational and operations risks need to be understood. Here is how.

One of the biggest challenges that any company faces is its ability to understand and embrace risk. The risk could be associated with various aspects of the business including operation-based or operational risk or risk of changing.  Adapting and evolving to change can be the greatest asset of a company when it comes to dealing with risks. This is a difficult function for many and it is mainly since one does not understand fully what risks are involved when it comes to running a business.

Investment Banking analyst

To start with the basics let us try and understand the main risks in the field of investment banking. If one is pursuing a career in investment banking, they must be able to firstly function in a high risk, high return environment. So innately the job comes with its own set of challenges. Operational risk is defined as the risk of change in value which can cause actual losses which can be due to several factors such as loss of processes, people and systems or external events such as a legal risk. It is linked to good management and quality assurance as well, so it is an important aspect of any business process. Individuals who have investment banking training will be able to assess the operational risk and make appropriate forecasts.

Similarly, operations risk can be the ones associated with decision making and strategy. A plan may be formulated to conduct the business in a certain way and there may be naturally occurring operations risk which adds losses to the business. This can again be planned in such a way that the business minimizes or mitigates the risk associated with conducting the business.

Investment bankers who have completed an investment banking course are highly attuned to understanding the operational risks that come with the business. Hence, they are equipped to deal with the same in a manner that benefits the company in the long-run.

Here are the top ways banks deal with operational risk.

Capital buffer
Operational risks can sometimes have disastrous effects on the company.  It can be due to errors made by employees or processes while dealing with the clients or a function. In order to manage this kind of a risk, companies keep a contingency plan or a capital buffer to ensure that the impact can be managed. This is like a Plan B for the company in case things go wrong. Investment bankers recommend putting away a certain percentage of the capital for such scenarios while assessing the business proposition.

Becoming more Digital
As the world moves towards digital transformation, many organizations are considering artificial intelligence and machine learning to reduce operational risk. This is proving to be effective to a large degree as machines can perform the tasks required in a seamless fashion with zero errors.

Conclusion
While risk is an unavoidable reality of conducting business, when one can distinguish between the various types of risk, they are in a better position to take a decision which will impact the growth and success of the company.

How Much Money Do Investment Bankers Make?

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How Much Money Do Investment Bankers Make?

Investment banking is a lucrative, yet demanding career path which requires hard work, good attitude and excellent communication skills. Read onto find out the biggest perks of this career.
Investment banking is an envied coveted industry that many aspire for.  It holds a status symbol in the society and investment bankers earn the respect of their peers and neighbors.  You may be wondering why this job is so valued. This is mainly since it is a high risk, high return kind of an opportunity. A career in investment banking is lucrative from the start and builds up to ensure that individuals in the field can lead a luxurious lifestyle.
Many companies also provide their employees in finance with an opportunity to learn and understand the field of investment banking better by pursuing investment banking training.  This, in turn, will also help the company evaluate the decisions made by bankers to raise funds for their business. Individuals who work in their field need to have qualities such as charisma, grit and quick thinking.  Investment banking also requires dedication and ability to cope with a high-pressure work environment.

Even beginners who have completed an investment banking course can expect salaries of 50,000 dollars in the U.S. making it a big career for many. On the downside though, there is a huge demand to invest long working hours to achieve success in the field.
While the hours are long, the base fee that investment bankers start at ranges between 25-35$ per hour but it also entirely depends on the firm that they work for on Wall Street. Read onto to find out the different elements of the money that investment bankers make.
In their 20s
If an individual has started their career in investment banking in their early 20s, this is the time that requires the most amount of time and dedication to learning the tricks of the trade. Typically, investment bankers spend between 60-100 hours per week at work and can earn up to 100,000$ annually not counting the bonus depending on their work. The entry level role for an investment banker is that of an analyst and this predominantly deals with a lot of paperwork.
In their 30s 
As they progress, the next role in question for investment bankers in that of an Associate who can earn anywhere between 100,000-120,000$ per annum. A talented young analyst can also aspire for the role of an associate at the beginning of their career and earn a big pay cheque. The salaries are also completely dependent upon the ranking of the firm, the clients and size of the firm.
In their 40s 
Someone who has moved up the ladder in investment banking can aspire to be a Vice President or a Director in their late 30s to early 40s. Their pay cheques can range between 120,000 to 300,000 $ or for someone very senior it can be up to a million dollars. Investment bankers are well paid mainly since they are responsible for making or breaking a company and its business and their skill-set is very niche.
Conclusion
A lucrative career path, investment banking may demand long working hours, quick thinking in a stressful situation and more. However, the results can be deeply rewarding to individuals who pursue the same.

What Career Advice Would You Give To Someone Who Wants To Become an Investment Banker?

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What does an investment banker do?

Simply investments! An investment banker plays a pivotal role in an economy by offering valuable suggestions to corporations and governments. He is more of a financial advisor practicing in capital markets. The significant roles performed by an investment banker include helping clients to raise money by issuing bonds, arranging equity, purchasing securities and managing the risk associated with them.

The Career in investment banking 

The career in investment banking eventually became lucrative after the global financial crisis of 2007-08. The career begins from merely being an analyst to associate, account manager, director and the career reaches zenith ultimately at the stage of being a managing director (MD).

  • The analysts are usually given the task of preparing presentations and pitch books. They often have to deal with the analytical work in excel files and administrative jobs such as scheduling conferences and arranging excellent deals.
  •  The associates are responsible for the tasks same as those of an analyst. The only difference is that they often deal with the clients directly.
  • As the name says, an account manager maintains the accounts and is always in direct contact with the clients.
  • The senior bankers such as directors and MDs are the ones answerable for all deals and the success of investment bank.

How to become an investment banker?

While pursuing an undergraduate course, students can expose themselves to the job profile through internships in investment banks. This serves as a baby step for the future career. After graduating, one can join a firm and begin a career as an analyst. Usually, in 2-3 years, promotion is made to the position of an associate. Students having an MBA or a masters degree are often recruited directly to the post of investment associate. Degrees in commerce, banking and finance are what recruiters usually demand.

Other pre-requisites which add feathers in the cap of an investment banker are certain certifications. For instance, the designation of a chartered financial analyst (CFA) can result in a boom in the career of an investment banker. The essentials include excellent communication skills, multi-tasking skills, ability to churn brain for longer hours, problem-solving and analytical skills.

Investment banking course in Mumbai

  1. School of investment banking in Mumbai provides investment banking courses such as mastering in financial statement analysis, financial modelling etc. which serve as the building blocks in the career of a successful investment banker. It provides placements in firms such as Bank of America and Citi bank.
  2. IMS Proschool offers multiple courses to candidates preparing for candidates willing to enter the world of investment banks. Mention can be made of pot graduate program in investment banking and equity capital market, equity research analyst and financial modelling.

Investment banking courses in India

There are a plethora of institutes in India offering courses for an excellent career in investment banking.

  1. National stock exchange (NSE) of India provides certification in financial management. The candidate has to appear for an online test popularly known as NCFM. The modules for preparation are readily available on the website of NSE.
  2. FLIP certifications are handy in preparing for mergers and acquisitions and private equity.
  3. The wall street school(TWSS), Delhi has turned out to be the most preferred choice of students in the recent past.

There are certain other certifications in addition to CFA which if obtained lead to a glorious career. These include financial risk manager(FRM), certified financial planner( CFP) and chartered global management accountant( CGMA).

This is the ultimate guide for you to be an investment banker.

Also Read: Investment Banking Career Path

What Is An Investment Bank?

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Believe it or not, even investment bankers find it difficult to describe what exactly investment banks do! This has to do with the sheer complexity and enormity of the financial transactions involved.

In simple words, an investment bank is an intermediary between organizations such as ABC Steel that need money and individuals and institutions that need to invest. Broadly speaking, an investment bank is an institution that:

– Helps organizations or governments to raise money by issuing and selling securities such as stocks and bonds

– Provides a range of advisory services on complex transactions such as mergers and acquisitions

– Offers a range of structured products and services to institutional and individual investors to help them manage their assets and wealth

Role of an Investment Bank

Investment banks could play different roles in a financial transaction. Some of the most common roles played by them are:

– Underwriter
– Principal Trader
– Broker or Agent
– Prime Broker
– Advisor

Underwriter

As an underwriter, an investment bank purchases all new securities of a company and resells them to the public. For example, ABC issues 20,000,000 shares for $10 each. An investment bank directly purchases all these shares from ABC and sells it to the public at a higher price, say $15 each. The investment bank also bears the cost of the sale.

Principal Trader

As a principal trader, an investment bank buys shares from other investment banks and investors and keeps them in its inventory. It may sell these shares at a higher price in the future. The term ‘principal trading’ simply means that the trader of securities is also its owner or principal.
For example, after ABC Steel’s shares are sold to the public, an investment bank may purchase some of these shares from the market. It may sell these shares later when the price rises.

Broker or Agent

As an agent or broker, an investment bank buys and sells securities on behalf of a company. The key here is that the investment bank does not own these securities. It only trades in them for a commission.
The important thing to remember here is that the brokerage or agency represents buyers or sellers who are the principals or owners of the securities.

Prime Broker

A prime broker offers a range of services to professional investors, including:
– Administrative and operational support for trading
– Lending of securities
– Management and safeguarding of securities
– Financing
Without a prime broker, it would be difficult for professional investors to trade with several different brokers and manage their cash and securities from one centralized account.

Advisor

Investment banks provide a range of advisory services on complex transactions such as mergers and acquisitions. They also advise companies on the different options to raise capital. They provide high net-worth individuals with customized wealth management services.
Learn about Careers in Investment Banking by attending one of our complimentary counseling sessions.

Blockchain: The Possible Answer to Trade Finance Modernization

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Recently, a study was conducted by the capital financial technology giant, C2FO, regarding European treasures. Herein, it was found that 75% of these treasurers are supposedly focussing on investing in trade finance technology, in the following year of 2017.
Colin Sharp, who holds the position of senior vice-president, EMEA at C2FO, is of the opinion that the shifts within the microeconomic environment, are resulting in the pressuring of corporates, in order to refocus their efforts to trade finance. He further goes ahead to say, “Treasurers are facing a lot of uncertainty, both from the United States of America and as result of the on goings around Brexit. This is putting immense pressure over the supply chain, and with the demand increasing and decreasing. Treasurers want the ability to use their assets to make returns and give some certainty.”
There have been more and more efforts, which are offering insight into, finding out how blockchain can supposedly be used, in order to benefit small as well as medium size ventures. Any said digital trade chain, supposedly wants to achieve a perfect balance, between identification of opportunities and connecting them with each other and their banking partners. This would be made even simpler, when banks would bring in their own client bases herein, thus eliminating rigorous on-boarding.
Anne Claire Gorge, who holds the position of the head of the product management department, trade services, and finance of Societe Generale, is of the opinion that, treasurers believe that more control over trade finances, can help them greatly in the other areas of business. She says, “Better use of trade finance helps theses treasurers, to have a greater overview of their working capital positions. Offering financial solutions to suppliers, for instance, in order to improve the terms of payments, helps greatly in guaranteeing cash flow.” She is of the firm thought that the deployment of latest technology will definitely end up simplifying the process. In her words, “Trade happens to be very heavy on letters of credit or invoicing solutions, making it complicated to finance receivables and payables. Doing all this, as a part of a digital solution, has great potential of making it easier”.
trade finance marketThe experts believe that a little rocking, cannot cause any harm to the ship, in financial jargon, they are basically hinting at the climate of uncertainty. Especially when it comes to Banks, a little uncertainty does not seem to be a negative thing. This actually makes for a rather encouraging temperature for the requirement of trade finance tools, in order to offer stronger guarantees. The solution for the entire thing can finally come from block chain, is the combined belief of all the trade finance gurus. But for this concept to see the light of the day, there needs to be a rigorous industry wide effort, in the direction of implementation.
As many changes take place, in order to develop and strengthen the field of Trade Finance, the number of aspirants herein also multiplies. This is why professional training institutes like Imarticus Learning seem to be getting popular by the day.

The Most Bizarre Questions That Investment Banks Asked This Year

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We are all aware about the road to a great career in Investment Banking isn’t complete without the biggest roadblock, which is the interviews. For any freshly minted candidate, there always is a string of common run of the mill questions revolving mainly around their weaknesses, the 5 year plans that they intend to work on and so on. But, what usually catches the candidate off guard, is the list of weird questions. While these questions may be weird and a tad bit scary, they are the absolute crucial determinants, of whether you get that coveted position, or not.
Here’s a list of freakishly weird questions, which some of the top-notch banks asked in the year of 2016:
1. “How would you value a cow using a discounted cash flow (DCF) analysis?”
The above question, as out of the blue as they come, was asked to a potential candidate in an interview round, in London Based Firm last year. While any DCF question, is extremely inevitable in corporate finance interviews, there are those Bovine DCF questions, which are not.
2. “How many pairs of shoes do you expect to wear over your lifetime?”
An interview is absolutely incomplete, without any brain teaser questions, which ensure that your analytical skills undergo a rigorous jog. This was most expectantly one of them. While the internet service engine, Google, might deem such questions as a tad bit irrelevant, all the to banks out there just cannot get enough of these. The above question was reportedly asked in an interview for risk management at Nomura.
3. “What would you do if we gave you 10,000 Euros now?”
If you are a finance aspirant looking to get into the field of investment banking, you would surely be expected to know all there is about Investments. Any bank, regardless of its position, expects the candidates to have some very solid investment ideas in response to questions like these. The above question was asked during an interview wit ICAP.
4. “Who is your best friend?”
This question was asked during the final round of an interview, conducted by Credit Suisse. In their attempt to go beyond the technicalities and mundane aspects, many HR managers try to ask unconventional questions. The above question was asked in a similar vein, in order to know about the candidate, through the eyes of someone, who is close to them.
5. “How would you manage the portfolio of an astronaut that will be isolated from earth for the next 10 years?”
This is another question, in the line of most out-of-the-context yet, relevant questions. This one in particular was asked during an interview about securities at Goldman Sachs and the student who was asked all of these questions said it was the best interview of all times.
As the popularity of Investment Banking, as a field grows, the number of professionals wanting to be a part of this field also multiplies. In order to look for the perfect candidates, these top banks usually end up asking very out of the box questions. To become thoroughly industry endorsed, professionals usually pursue certification training programs, Join Imarticus Learning, here we offer proper training to crack such interviews.

Investment Banking – Understanding the Deal – The Deal Process (III)

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As we discussed in
Investment Banking- Why do Sellers use an Investment Banker (I)
Investment Banking- Understanding the Deal: The Pitch Process (II)
So now that the banks have pitched for the deal by showcasing their industry knowledge, negotiation and deal prowess and asset valuation, one bank is chosen to exclusively market the asset and execute the deal. The business of developing relationship and signing mandates by going to meetings, researching the industry and pitching is called origination. It is often done by the business development team in large bulge bracket investment banks like Goldman Sachs and JP Morgan. Once the deal has been mandated and a Client Agreement has been signed, the execution team takes over. In a boutique bank like Avendus or Mape, same teams often specializing in an industry handle both origination and execution.
The deal process for buying and selling are slightly different and today we will be focusing on selling an asset. A typical advisory structure.

This is the usual process of a deal
1. Preparation –Diagnostics and Consolidation of information- this is where the execution team visits the site and spends time understanding deal nuances, strategic considerations like potential valuation and transaction process once they look at all the information.
•Review The Business, Financial Results & Prospects
•Develop & Refine Financial Forecast
•Gather Financial & Legal Due Diligence Material
•Analyze Structural Considerations, Including Tax & Accounting Issues
•Review Tactical & Strategic Considerations
•Analyze Structural & Timing Considerations
• Create deal Collateral including Information Memorandum, Financial Model and Teaser
2. Planning– Establish Valuation Based On Standard Valuation Techniques
a. Review Strategic Options In Light Of Valuation & Structural Goals
b. Analyze Transaction Structure Alternatives
c. Assist In Development Of Appropriate Acquisition Contract
3. Marketing– Use deal collateral and contacts to
a. Position Company To Appeal To Specific Buyers
b. Identify & Screen Potential Buyers
c. Prepare Management Presentation
d. Develop Data Room and coordinate site visits
e. Conduct Marketing Process With Strict Time Guidelines
f. Minimize Business Disruption
4. Due Diligence and Bid Evaluation–
a. Compare & Analyze Bids & Considerations
b. Evaluate Company’s Options
c. Due Diligence by Buyers
d. Analyze Tax & Structural Impact Of Proposed Transaction
5. Negotiation- Negotiate pricing through auction rounds. There are different ways in which you sell or buy a company (See box below) but all of it involves a fair amount of negotiation and many rounds of it. A couple before the due diligence and a few after.

a. Negotiate Price
b. Negotiate terms of sale or SHA and SPA terms
c. Negotiate R & W terms
6. Documentation and closure- A primary legal process but also important for bankers as they coordinate everything. This is one of the reasons why bankers wear many hats. A salesperson, a lawyer, an accountant and sometimes even the local errand boy.
Every part of this process is delved into in detail in FMVC and Diploma in Corporate Finance, India’s leading programs in Financial Modelling and Corporate Finance.

 

Top 5 Best Paying Jobs in 2016

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by Zenobia Sethna

High pay continues to be tied to in-demand skills, a higher education, and working in jobs that are shielded from competition or automation. In this article, we will explore the top paying jobs in the Finance field. Further, to compare apples to apples, we will look at the average salaries for entry level positions at these jobs.
Investment Banking
Some of the most glamorous careers in Finance are those in investment banking. Investment-banking jobs deal with enabling the issuance of corporate securities and making these securities available for investors to purchase, all while trading securities and giving financial advice to both corporations and wealthy individual investors.
The salary of an Investment Banker at an entry level Analyst role ranges from $70k – $150k, with the average salary being $102,000 per year as of April 2016, according to Indeed.com. An Associate typically earns in the range of $150K – $350K. As you move further up the ladder, salaries sky rocket. Vice Presidents earn between $350K – $1.5MM, while Managing Directors/Partners could pocket anywhere between  $500K – $20MM+.
Be aware, though, that these jobs are also very intense and demand a lot of hours – especially if you are starting out. From analysts to managing directors, the pay is traditionally heavily weighted toward the investment banking bonus portion of the compensation which is part of the reason for such long hours.
Hedge Funds
Hedge funds are largely unregulated private investment funds whose managers can buy or sell a wide range of financial assets and products. Basically, a hedge fund is a pooling of investments from high net worth individuals. In India, we have hedge funds like Karma Capital Management, Atyant Capital, and Atlantis India Opportunities Fund. A certain enigma does surround
this type of entity, and likewise, hedge-fund jobs are considered by many to be somewhat glamorous.
Typical hedge-fund jobs include Financial analyst, Trader, Regulatory compliance officer, Quantitative analyst, Marketing manager, and Portfolio manager.
The average entry level pay (combination of base and performance bonus) for a “Fund Accountant” in this category is $90,000 in the United States. In London, the pay for the same post would be GBP 35,000 and in India it is Rs. 600,000.
Private Equity
Private equity is an asset class consisting of equity securities and debt in operating companies that are not publicly traded on a stock exchange. Private-equity professionals help businesses find capital for both expansion and current operations. They also finance a number of corporate business transactions, such as managed buyouts and restructurings.
The average salary of a Private Equity Analyst in the US is $79,000 per year as of April 2016, according to Indeed.com. This could rise to the range of $150K – $300K for a second year Analyst /Associate or between $170 K and $ 350K for a third year Analyst/Associate. Vice Presidents at a PE firm could take home anywhere between $300K – $ 800K, while Managing Directors/Partners could pocket $ 500K – $ 10MM+.
The private equity compensation for Vice Presidents, Directors and Managing Directors is much more variable at PE firms, but the salary and bonus is much more of a function of the fund’s performance since a lot of the compensation is tied up in Carry.
Venture Capital
Venture-capital professionals (VCs) spend most of their time scouting start-ups or small, fast-growth companies. Venture-capital firms evaluate pitches by founders and small-company leaders to determine if the firm will make an investment. Venture capital is a toug
h business where the failure rates are high. On the flip side, the rewards, when they are realized, are huge!
Annual salary and bonuses differ broadly in this field depending on the size of the VC firm and specialization. In general, pre-MBA VC associates can expect an annual salary of $80,000 -$130,000. With a bonus, which is typically a percentage of salary, this can be boosted to $86,000-$250,000 with a median of $170,000.
Financial Analysis
Financial analysis involves an assessment of the viability, stability and profitability of a business, sub-business or project. The skills that increase pay for this job the most are Valuation, Risk Management / Risk Control, Financial Modeling, SAS, and SAP Financial Accounting and Controlling (SAP FICO).
The average salary of a Financial Analyst in the US is $73000 per year in April 2016, according to Indeed.com. A Financial Analyst in India earns between Rs. 187,810 and Rs. 879,047, with an average salary of Rs. 354,687 per year, according to Payscale.com.
 
Finally, if you’re not an Investment Banker or working at a VC firm though, despair not! The size of your pay check isn’t always tied to long-term satisfaction in your job. Rather, the biggest drivers of happiness are company culture, advancement opportunities, and trust in senior leadership.