Investment Banking basically refers to that stream of banking, which primarily focuses on capital financing for every type of organization out there. Then may it be a global or a local business, any private individual run firm as well as governments. This field is said to cater to a number of diversified financial requirements, like equity or debt, bonds, mergers and acquisitions, portfolio management and so on. This field is considered to be one of the most dignified and challenging fields to make a career out of. This is exactly the reason why so many finance aspirants have their heart, set on becoming an investment banking professional. To achieve their goal, many individuals try to get an edge for themselves by taking up various esteemed certification courses that are offered by the sterling institute, Imarticus Learning.
Every Investment Banker as well as any aspiring professional wishes to work in one of the top Investment Banks all over the world. While there are a number of criteria, which put an Investment Bank in the coveted big league. Various factors like the revenue numbers, global reach, employee headcount, income etc prove to be most decisive when it comes to determining whether a bank fits in as one of the Top Investment Banks.
Here’s a list of the top 6 full-service investment banks on the global scale.
1. Goldman Sachs
Apart from being one of the oldest banking firms, founded in 1869, this prestigious bank, offers a wide range of services, which are spread across four divisions, which include investment banking, institutional client services, investing and investment management. It also has a reported revenue of around $34.210 billion, which probably could be more today.
2.JP Morgan Chase
It is said to be one of the largest, investment banks and has reported net revenues, up to around $96,606 million. This organization has branches in around 60 countries and has about 260,000 employees working under them, offering a varied set of services.
This UK based bank was founded in around 1896 in London and has recorded earnings, of around 28,444 million Euros. This banking organization has a strong presence in retail and commercial banking, in addition to being a key player in the field of investment banking.
4. Bank Of America Merrill Lynch
This entity recently took over the erstwhile Merrill Lynch, following the economic crisis in America. It offers a wide array of services which include, investment banking, mortgage, trading, brokerage as well as card services.
5. Morgan Stanley
Since its inception in the year 1935, this global firm has employed about 55,794 employees, spread across multiple countries. Apart from offering the usual services,
it is also known to offer diversified services like prime brokerage, custodian, settlement and clearing and so on.
This erstwhile organization has reported revenue of around, EUR 31,915 million and is also known to be one of the largest financial services firms in Europe. This bank is very well known for its global presence and ongoing operations in around 71 countries as well as its omnipresence on the international trade and finance market.
Investments are subject to market risk, this is one statement that we’ve all heard or read an umpteen number of times. In spite of that, there would be only a select few, who’d be confident enough to talk about the same in detail. The field of investments is considered by most as a daunting one and many believe that it takes a brave person, to venture into this field full of risks and uncertainties.
Those who are true blue investment enthusiasts, would let you know that this field is way more interesting than it comes across as. A lay person would think, nothing but number crunching takes place here, but it is believed that empires can fall and rise daily, where numbers do the talking. While the less experienced people would have a lot of apprehensions towards investments, the seasoned professionals find it to be nothing more than just a cakewalk. The world has admired and revered quite a number of investment pundits, whose words have taken over the ability of being timeless.
Here’s a list of 5 really inspiring investment quotes that you must read.
“The Stock Market is filled with individuals who know the price of everything, but the value of nothing” – Phillip Fisher
Any individual with a background in economics can tell you that, price and value are two very different, contrasting concepts. While you can climb up the ladder by just relying on popular opinion, lack of research on your part, never bodes well.
“In Investing, what is comfortable is rarely profitable.” – Robert Arnott
This is one investment advice, that can be applied to all the other fields of life. Great benefits were never reaped out of staying in the comfort zone. Similarly when it comes to investments, it is important to know the market as well as the back of your hand. Self analysis plays a crucial role, when it comes to taking major decisions, because even the best of decisions wouldn’t fall through if you don’t have the will to persevere.
“How many millionaires do you know who have becomes wealthy by investing in savings accounts? I rest my case.” – Robert G. Allen
When it comes to investments, this is one of the most raging debates that takes place. More than the majority of economists have been of the opinion that investing in a savings account, does not lead you anywhere on the economic ladder. If one is looking to reap higher benefits, savings account is a definite no no, as it can be nothing more than a source for emergencies.
“Invest in yourself. Your career is the engine of your wealth”- Paul Clitheroe
Another all purpose investment advice, this holds true regardless of the age you are at. To achieve great heights and success, one can only rely on their own skills and talents. Advance yourself by getting educated, reading books, talking to intellectuals; because this is one investment that will surely reward you.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas” – Paul Samuelson
Investments are risky, sometimes everything you have can be at stake, but that does not mean that they are similar to gambling. This is one of those fields which require a lot of patience, self-control and perseverance. The rewards of which are ultimately exemplary.
Imarticus Learning is premium education institute, providing various industry endorsed courses in the field of Finance and Analytics.
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In our last post we looked at why companies use investment bankers to sell or buy assets. In this post we try and understand what happens once a company decides to use an Investment Banker. What happens next?
Well they first need to look for a banker. So let’s go back to our earlier example taking the government’s stake sale in its Stuuti companies. Before they decided to shortlist Citibank, ICICI and HDFC, they hold a beauty parade where every banker worth their salt ‘parades’ their wares and offerings during a ‘pitch.’
Quite often you’ll find Investment Banking analyst friends working late on Saturday evening. When you ask them why, it’s quite likely they’ll utter the dreaded words, ‘pitch document’. The Pitch Document is the bread of Investment Banking, it’s the pizza base of that great Margerita. Without a great pitch document, all you are left with are handful of deals you managed to wing through your bosses contacts and even then you’re going to have to pitch for the deal. So what is a pitch document? It is a meeting backed up by a document where a banker convinces you, the client, why they are the best team to sell your asset. How do they do it?
The easiest way to explain this is to liken it to selling a pencil. If I have to sell you a pencil, what would I say? I need to tell you why this pencil is better than all the other pencils out there. I also need to tell you why this pencil costs as much as it does. For that I need to know what goes inside the pencil, how much those cost etc. If I need to sell the pencil on your behalf because you are my ‘client’ I need to know everything YOU know about the pencil. The price I sell the pencil at is the ‘value’ of the pencil. I have to explain to you what that value is and how I arrived at that value. I need to convince you I know everything there is to know about pencils, pencil making, the pencil industry, competing pencils so I can sell this pencil better than anyone else out there. So a usual Pitch Document consists of five elements.
1. Establishing my credentials – how many pencils have I sold before and to whom. Whose pencils have I sold and my expertise in selling these pencils. Perhaps I have someone who used to work in pencil manufacturing, Steadler maybe or Apsara, and knows the nuances of pencil making, has the inside track if you will.
2. Company Overview– I tell you a little bit about your company to show you that I know about your pencils. It’s a little counterintuitive I know but it shows I’ve done my homework and know what makes your pencils tick. I might also use this opportunity to tell you any risks I foresee with selling this pencil. Perhaps the pencil has an eraser that’s of an older technology or uses too much wood etc
3. Industry Overview– Here I showcase how much I know about pencils in general, trends in pencil making, what drives pencils usage, opportunities and risks in pencils which will help me forecast the market for pencils and therefore my clients potential market which will flow down to profitability and cashflows
4. Valuation– Once I have cashflows and industry numbers I put together the pencil’s valuation using both cashflows (DCF) as well as the value multiples of other pencils (Comparable PE and EV/EBITDA, EV/Sales multiples )in the market along with the value of what other pencils have been sold at in the past (Transaction multiples)
5. Potential Buyers of your pencil. Using my considerable industry knowledge I tell you who would be most interested in buying your pencil.
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The great thing about short programs in Financial Services at Imarticus Learning is that you learn skills that can be ‘applied’ rather than just theory, or even cases that are general in nature. We offer one of the leading professional courses in Financial Modeling in Mumbai, which allows you to pursue multiple career opportunities.
Learning Financial Modeling and Valuation is extremely important when you are pursuing a career in both Financial Services and Corporate Finance. The ability to forecast financial statements and build a robust model that is dynamic and clearly reflects underlying assumptions is imperative. The more robust your model, the more accurate your analysis and therefore your company or asset valuations.
Financial Modelling and Valuation is a skill useful across careers like
- Investment Banking– A good investment banker is at heart a good modeler and someone who is able to fundamentally value a company. Both valuation and forecasting is both a science and an art, therefore you not only need a strong grasp of the fundamentals but an intuitive understanding of their limitations to be able to model and value effectively. Investment Bankers create Financial Models to help make Pitch Documents, Information Memorandums and create scenarios that will help them fine tune valuations. They need to forecast cash flows to be able to do a DCF as well as future Profitability numbers which they can apply multiples to.
- Private Equity and Venture Capital– As investors, Private Equity professionals need to be able to create financial models of prospective companies they want to invest in to be able to both value as well us understand future cashflows which will determine valuation at exit. Private Equity professionals also have to learn how to create specialized investment specific financial models like Leveraged Buy Out models which will also incorporate the debt into future cashflows to arrive at optimum valuation once you build in exit multiples etc.
- CEO’s– Financial models are prepared by CEO’s and controllers for both budgeting and funding purposes. Models help finance teams understand cashflow requirements which help them manage their treasury better. Financial Models are also critical to valuing mergers through building in synergy. We call this merger models. Merger models will involve combining the future cashflows of two companies to understand synergy potential that arises out of various economies of scale. This synergy calculation will help in valuation and calculation of control premium
- Equity Research- Financial Modeling and Valuation is a critical element in the Equity Research toolkit. Equity Research analysts do fundamental analysis to help recommend a ‘buy’ ‘sell’ or hold on a stock. They do this by understanding the industry fundamentals, doing porter’s analysis, and applying these dynamics to a Financial Model which will help them value the company down to the price of a share at any point in time. Their expertise in an industry helps them fine tune the model.
Financial Modelling and Valuation is also critical to project finance, corporate banking and essentially any role in Corporate Finance which makes FMVC the most career orientated financial modeling course in Mumbai and the most seful certification to help you enhance your resume and kick start your career.