Research for Job Search
I recommend reading What Color is Your Parachute?
as your first book when you start job hunting your Junior/Senior summer. This book is an
excellent guide to all aspects of choosing a career and job hunting. It is a refreshing
look that matches your life's goals to a career and shows you how to land a job in that
STRUCTURE OF ANALYST PROGRAMS
You are typically hired as an investment banking analyst
and then placed into a specific group after the first month or so of training. Training is
usually four to six weeks long and consists of classroom sessions punctuated by nightly
social events. The idea is to get you used to being at the investment bank, allows you to
mix and mingle with co-workers with whom you will later spend copious amounts of time, and
gives you a fighting chance to understand the financial analyses and models used in daily
investment banking work. Placement into some groups, such as Merchant Banking or
High-Yield, is extremely competitive. Your score on an accounting exam may be used to help
determine if you get first or second pick.
Since there is so much training and expense for each investment banking analyst,
each interviewer and HR personnel will not only be checking out your skills and background
but will also be determining if you are a "long haul" player.
IN INVESTMENT BANKING
Basically, there are investment banks (sell-side) and
clients (buy-side). Investment banks create products in their corporate finance
departments to meet the financial needs of their client firms. Institutions, such as
mutual and pension funds, are buy-side.
A good starting place to learn more about investment banks and their clients is in
financial management books. Chapters dealing with stock offerings, mergers and
acquisitions, leveraged buyouts, and investment banking should provide you with some
background information. Read the annual reports and mission statements of investment banks
to get a better understanding of their place in the financial world.
The following two books have received rave reviews regarding their look at investment
banking as a career. You should probably read one of these books before reading any
books on valuation techniques just to make sure investment banking is really what you want
Investment Banking: The Vault.com Career Guide to
Investment Banking by Tom Lott
The Business of Investment Banking by K. Thomas
As a fair disclosure, I have not actually read either of
the above books.
It is essential to your success that you read the
Wall Street Journal daily. The Bruno Business Library and Gorgas Library
both subscribe to the Wall Street Journal. You can even get your own subscription
at the discounted student rates. Nobody actually reads the Wall Street Journal
from cover to cover, but you should spend time on major world events, major business
stories, investment banking activity, and the industry sector that interests you most.
Specific industry magazines or papers would also help you get a grasp of the issues
encountered by investment banking analysts in those industry groups.
VALUATION AND ANALYSIS METHODOLOGIES
The following books are especially helpful in understanding
the tools behind M&A and investment valuation (I have read these books).
Mergers and Acquisitions: A Valuation Handbook
by Joseph H. Marren
Security Analysis on Wall Street: A Comprehensive
Guide to Today's Valuation Methods by Jeffrey C. Hooke
M&A: The Art of Doing the Deal by
Jeffrey C. Hooke
Investment Valuation: Tools and Techniques for
Determining the Value of Any Asset by Aswath Damodaran is a standard textbook in a
most business schools. However, the editing in both the text and calculations is so sloppy
that following Dr. Damodaran's work is extremely tedious. Obviously, Dr. Damodaran's work
ethic would be quickly corrected in an investment banking setting where millions or
billions of dollars are on the line ;-)
Reading and analyzing 10-K and 10-Q reports is a core skill
of investment banking analysts. I don't really have a quick reference to help you in
this area. Your goal should be to have an intuitive feel for the general layout and
interaction of the balance, income, and cash flow statements with one another. One
excellent reference is an "end all - be all" guide to the analysis of financial
statements. It is called
The Analysis and Use of Financial Statements by White, et al. If you
had a firm grasp of all the knowledge in this twelve-hundred page monster, you would be
worth your weight in gold. This book goes into detail about even obscure
concepts. It's a great investment in yourself to purchase this book. Besides,
if you decide to pursue a CFA designation, this book is required reading.
The ability to use a Bloomberg machine to look up quotes, news releases, 5-year
CAGRs, yield on debt issues, and other common information is extremely helpful in both the
interviewing process and when you actually begin work as an analyst. However, as a fair
warning, do not put "expert at using Bloomberg" on your resume
unless you can do the key strokes in your sleep. "Basic familiarity with
Bloomberg" or the equivalent will reflect your knowledge but avoid exposing an issue
about which any analyst or associate could easily rip into you.
Finally, familiarity with searching for financial reports in SEC's EDGAR database and understanding Value Line and
S&P reports are other helpful notches to have in your belt.
OTHER SITES SIMILAR TO THIS ONE
I felt that I needed to address a site I recently came
across on the web because you would probably find it anyway. The site is called
InvesmentBanking.Net and for $73 a copy sells a smaller subset of the information that I
am giving away for free. Judging by the content of their published excerpts and the length
of the booklet (only 57 pages), you would probably find it of questionable value to your
job search. Between the information in this site, the books listed above,
and the resources listed elsewhere in this site you should have ample information to
understand the investment banking industry, understand the investment banking analyst
position, and land a job offer.
The site also lists a guide for financial modeling and pitchbooks. Honestly,
investment banks are simply looking for smart, driven people they can train (usually for a
month or more). As long as you have a general idea of what pitchbooks are and understand
the accounting behind financial statements you will succeed. Sure, the first few months
may be a little rough with so much to learn but other analysts in your class will be in
the exact same situation.