Investment banking jobs are available with several different types of organizations. Many jobs are to be found at the large global investment banks such as Goldman Sachs and Morgan Stanley or in the investment banking department of large commercial banks such as Citigroup or Deutsche Bank. Other jobs are available at smaller, regional or boutique investment banks such as Lazard, Jefferies, or Greenhill. Another, increasingly popular place to find an investment banking job is at alternative asset management companies such as private equity firms or venture capital firms. Finally, investment banking functions can be found at some large companies that might have an in-house staff evaluating strategic opportunities and corporate mergers, General Electric is a good example of such a company.
Investment banking has a reputation for being a blueblood profession, and historically many people have entered the industry following a prestigious academic background at an Ivy League or comparable university. The most common career path is for an individual to leave University and serve a two or three-year stint at one of the large global banks. Following this, many individuals will return to graduate school to get a MBA degree before returning to either their previous employer or a new firm at a higher level. While professional certifications such as the Series 7 or CFA designation are not unheard of, they're not as common in investment banking as they are in some other finance fields. Nevertheless, competition for jobs is fierce and many employers essentially have their pick of qualified candidates. Therefore, if you are interested in a career as an investment banker, the best way to prepare is to do exceptionally well in school so as to make yourself appear an attractive candidate.
M&A bankers specialize in providing strategic advice to corporations seeking to merge with a competitor or buy a smaller company. These bankers need to have solid financial modeling skills in order to make sure that deals make strategic and financial sense. Bankers also require client facing skills, particularly at senior levels, where they will be interacting with many high-profile executives and need to be able to convince these executives that their ideas are sound. Many M&A bankers work extremely long hours, but they can be very well compensated for this. Senior-level bankers (managing director level and higher) can easily pull in seven-figure compensation during a good year. Some mergers and acquisitions bankers eventually attain near legendary status for their ability to initiate and complete large deals.
One of the primary traditional functions of investment banks has been to assist corporations and governments in raising capital. This function falls upon the underwriting department. Bankers in the underwriting department usually specialize either in debt or equity and may also specialize by industry. These bankers need to be able to liaison with their clients in order to determine their capital needs while also working closely with traders and security salespeople in order to determine what sort of demand there might be in the marketplace and what kind of pricing any securities would receive. While traditionally this field has been dominated by investment banks, over the past decade large universal banks have used their balance sheets to gain market share relative to their smaller rivals, particularly in debt underwriting. As with most investment bankers, underwriters can wind up working long hours, particularly when working on a deal.
Private equity jobs are among the most prestigious positions in all of finance today. Some of these positions can be found within an investment bank but most are found at specialist firms. Some of the largest and most well-known private equity firms include Blackstone, KKR and TPG, but there are also a host of smaller firms. As with most investment banking jobs, the hours and work load at a private equity firm can be brutal, but the compensation can be massive. Because private equity firms traditionally keep a portion of any profits they generate on deals, successful firms can bestow great wealth upon senior employees. As such, competition for jobs at the premier private equity firms is intense, and most successful applicants either have prior experience at a large investment bank or superior academic credentials
While private equity firms invest in established companies, venture capital firms specialize in providing capital to new or startup companies. Generally these companies are still relatively small and have not yet accessed the stock market. Many of these companies will fail, but because venture capitalists get in at such an early stage of development, the ability to produce outsized gains on the few winners theoretically outweighs a large number of losers. Many venture capital firms focus upon rapidly changing industries such as technology, biotech, or green technology. For these reasons, individuals that not only enjoy crunching numbers and deal making but also have an aptitude for new technologies will generally do best in a venture capital firm. Venture capital also has the ability to provide the thrill of seeking "the next new thing" which may appeal to some individuals. As with similar jobs, the workload can be heavy but successful venture capitalists can do extremely well for themselves, particularly during times when technology is thriving.
Many of these jobs require individuals to work extremely long hours but the compensation can be tremendous. Because of the potentially large paydays, competition for these jobs is fierce and it can be difficult for many individuals to break into the profession. However, even though many investment bankers come to their career from a prestigious university and eventually get an MBA as well, that does not mean that there are not exceptions. If you are committed to working as an investment banker and believe that you have the prerequisite skills, you should explore these careers in greater depth regardless of your background.