Do you have a
passion for numbers? A business background? You may be interested in working at
a commercial bank. For those of you graduating soon, or simply wishing to
change jobs, you probably know that perseverance and diligence go a long way.
It's no different with finding a job at a commercial bank. You must put in time
and effort into the job search, especially in the financial services industry,
which is even more competitive in today's market environment.
Showing posts with label Interview TIPs. Show all posts
Showing posts with label Interview TIPs. Show all posts
How to get a banking and investment graduate job: the basics
Everything you need to know about graduate jobs with investment banks and related organisations. Whether you want to know how much you could expect to earn, or what areas you could work in, you can find answers to key questions here.
A career in banking and investment is all about making money. Graduate recruiters in banking and investment provide financial services to clients at the top end of the market, such as corporations, institutions and governments. Amongst other services, clients are assisted to raise loans, invest surplus cash, take over and merge with other business or float shares on the stock exchange.
Top 10 Investment Banking Job Interview Questions
An investment banking career provides great challenge, a chance to learn the ins and outs of corporate finance, and develop analytic skills that are useful in any business field. Investment bankers, with firms such as Goldman Sachs, Blackstone Group and Morgan Stanley, act as a link between the corporate world and the investor, whether an individual or an investment fund. This sector offers excellent job opportunities for hard working finance students and professionals who are ready to face the challenges provided by globalization and consolidation.
Before going for an investment banking jobs interview, be sure that you have done your homework and can respond to the toughest questions that aim to judge your analytical and other skills and your attitude towards risk. Count on the standard questions like, your greatest strengths and weaknesses and “tell me about yourself.” Beyond those types of question, there are some questions commonly asked in an interview for an investment banking job.
Wanna Be A Bigwig? Try Investment Banking
Are you the right type of person for this career path? Read on to find out what it takes to get into and succeed in this often stressful world of investment banking.
What Is Investment Banking?Investment banks provide a myriad of finance-related services, including underwriting, raising capital for companies by issuing equity or debt securities and facilitating mergers. When raising capital for a firm, an investment bank is acting as an intermediary between investors and the issuer. Capital raised can come from private investors (each of whom often has a high net worth), or from pools of capital obtained within the public markets. Capital obtained from public markets is normally through an initial public offering (IPO); however, special purpose acquisition companies (SPACs) are another alternative.
Investment banks also provide merger and acquisition (M&A) services, both on the buyand sell side of a deal. The buy side involves identifying and facilitating the acquisition of a target company, while the sell side involves taking a client company to market at auction and identifying and facilitating the sale to a high bidder or acquirer with a strong strategic fit. Alternatively, investment bankers may also help a company restructure its equity or debt, often to ease financial distress.
Do You Have What It Takes?There are several core skills required to excel in an investment banking career. These include:
- The ability to provide valuation estimations (and logically back up those calculations)
- Work stamina
- Mental and emotional horsepower
- Personal interaction skills
Determining Future Cash FlowsVarious external and internal factors drive expectations of short and long-term future cash flows going in and out of an organization. In order to do this, a team of analysts working for an investment bank will:
- Study the entire industry
- Conduct competitive analysis
- Assess alternative future business scenarios
- Analyze business models, organizational structure, financial statements, go-forward plans and risk
- Computations of cost of equity and cost of debt in order to determine the cost of capital
- A comparison of estimates with actual rates of return
- An evaluation of stock versus asset purchases
- Tax ramifications for acquirers, targets and lenders
Communication Is KeyInvestment bankers need to be effective team players with excellent communication skills in order to avoid disconnects and wasted effort. Investment banks communicate with external parties such as clients, accountants, consultants and lawyers. Furthermore, many client representatives tend to be extremely scrutinizing, well-respected and often short-tempered, and you'll need to know how to deal with them.
Not Your Average Nine to FiveDue to the long hours involved, work stamina is required. When deadlines approach for deals, consecutive all nighters are a frequent occurrence.
The late-night hours, client demands and finite number-crunching lead to relatively high attrition and burn-out rates. In many circumstances, analysts will stockpile several bonuses and move on to another career after a few years. The intellectual stimulation and challenging rigors of high-level corporate finance and executive level analyses, however, do provide a context where those who seek to exert themselves can find comfort and satisfaction in a prestigious and lucrative career. The classes of top business schools are dotted with former investment bankers wanting to go back to school to earn master's degrees. The low- to mid-six-figure compensation packages piled up over the years provide ample cash supplies for graduate school. Alternatively, there is an opposing and convincing view that experience counts for more when compared to a graduate degree.
Rising To The TopIt is common for a rising star to specialize in a particular industry, whether it is in real estate, health care, energy, retail, transportation or infrastructure. As an investment banker progresses throughout his or her career and becomes involved in a multitude of projects, he or she becomes able to quickly apply industry norms, ratios, trends, forecasts and typical performance benchmarks.
During the first few years, the analyst/associate conducts financial and operational grunt work. An associate's progression to a principal or director role, however, requires a higher level of responsibility in business development, and the ability to generate revenue for the department or firm. Assuming a supervisory role for a project, and becoming the primary contact for clients, along with training and recruiting, are appropriate adjuncts to business development and revenue generation.
Differentiating Yourself From The CrowdInvestment banks seek high academic achievement, involvement in campus leadership positions, stellar communication skills and internships at well-regarded companies andnonprofit organizations. The applicant needs to be able to convey raw mental and emotional horsepower, a solid sense of direction in terms of goals and objectives and credible step-by-step supporting actions that have been taken to arrive at those objectives.
Students and young professionals who possess broader or non-business academic curricula, or who worked at nonprofits, traveled overseas, volunteered and who display a burning curiosity and desire to explore this field, should resolve to apply and reapply for investment banking roles. There is a minimum requirement for a basic understanding of finance for your chances to be enhanced. But as long as the applicant conveys authenticity in his or her endeavors and possesses the passion and determination to explore investment banking as a career, an opportunity will often open up. Do not underestimate people's respect and admiration for someone who follows his or her conscience and dreams. Remind yourself that many of the world's most successful business leaders did not study finance or accounting - if they even received a college diploma at all.
The Bottom Line Applicants with a true passion for finance, market and organizational analysis should apply and reapply for investment banking roles, conduct self-study on finance, business, management and leadership. They should also secure impressive standardized test scores, differentiate themselves by volunteering or leading groups, and network with current or former investment bankers. If you're an energetic professional with strong valuation skills and the ability to interact with others, this challenging and rewarding job may be just what you're looking for.
Top Skills You Need On Your Resume
The job market has improved, but is still very tight and highly competitive. Because of this, it is imperative that you do all you can to set yourself above and apart from the competition, by honing and highlighting your skills that are in high demand by employers. To help you on this path, we covered the six skills and qualities most desired by employers.
SEE: The 7 Most Universal Job Skills
In their Job Outlook 2012 report, the National Association of Colleges and Employers (NACE) included the results of a 2011 survey in which it asked employers which of the skills and qualities they value most in candidates. The following are six of the most important, listed in the order of importance based on the results of the survey.
Ability to Work in a Team StructureMore often than not, your job will require you to work with others in order to get tasks and projects completed. This means that potential employers will want to be sure that you take kindly to sharing ideas, that you are open to ideas and input from others and that you are willing to put the team and the company's interests ahead of your own.
Ability to Verbally Communicate with Persons Inside and Outside the OrganizationIn order to get work done, you may need to communicate with multiple departments in the organization. This can come in handy when you need to get something expedited for a customer, or if you need to understand how a function or process works. You will also need to effectively communicate with customers and vendors. An effective communicator is often a good motivator, which means you can get others to do their jobs.
Ability to Make Decisions and Solve ProblemsProblems will eventually arise in every organization, but how you respond to these problems will determine how much damage they will cause. Making decisions that are in the best interest of the company, and solving problems with the most efficiency and limiting damages are traits of a good candidate. (For new skills you may want to learn, check out 6 High-Value Skills That Will Supplement Your Career.)
Ability to Obtain and Process InformationAs a new employee, you will have a steep learning curve. How quickly you are able to understand the requirements of your job, will depend of your ability to understand or process the information that you receive. In some case, you will not be left on your own until the company is sure that you can do the job well. Someone who is unable to process information easily can easily become a liability to the company.
In addition, you will need to demonstrate that you can take initiative and obtain information that is necessary to perform your job, instead of waiting for someone else to provide you with that information.
Ability to Plan, Organize and Prioritize WorkEmployees are often assigned multiple tasks and projects. An effective and efficient employee should be able to categorize these assignments by due dates and level of priority, which is usually based on guidelines established by the company. Completing a task perfectly may mean nothing if it is late, or if it adversely affected another assignment.
Ability to Analyze Quantitative DataEvery company measures its success based on numbers. The numbers that apply to you may depend on the department in which you work. For example, if you are in customer service, you may need to understand why more customers call during a certain period. Your ability to understand the statistics as they relate to the company can help you to implement plans that help improve efficiency and help the company to make more money.
The Bottom Line
You should never forget that your resume is what will get you the interview, therefore it is up to you to sell yourself well enough so that when a potential employer see it, they know right away that you are a good candidate for them. Make sure that your resume is up to date and showcases all of your skills and qualities.
When applying for a job, do your research so that you know the skills required by that employer. The importance of skills may vary among different employers and will also depend on the job for which you are applying. Be sure to highlight the skills for the job you want on your resume. (To learn more, read The Best Careers For Your Skills.)
SEE: The 7 Most Universal Job Skills
In their Job Outlook 2012 report, the National Association of Colleges and Employers (NACE) included the results of a 2011 survey in which it asked employers which of the skills and qualities they value most in candidates. The following are six of the most important, listed in the order of importance based on the results of the survey.
Ability to Work in a Team StructureMore often than not, your job will require you to work with others in order to get tasks and projects completed. This means that potential employers will want to be sure that you take kindly to sharing ideas, that you are open to ideas and input from others and that you are willing to put the team and the company's interests ahead of your own.
Ability to Verbally Communicate with Persons Inside and Outside the OrganizationIn order to get work done, you may need to communicate with multiple departments in the organization. This can come in handy when you need to get something expedited for a customer, or if you need to understand how a function or process works. You will also need to effectively communicate with customers and vendors. An effective communicator is often a good motivator, which means you can get others to do their jobs.
Ability to Obtain and Process InformationAs a new employee, you will have a steep learning curve. How quickly you are able to understand the requirements of your job, will depend of your ability to understand or process the information that you receive. In some case, you will not be left on your own until the company is sure that you can do the job well. Someone who is unable to process information easily can easily become a liability to the company.
In addition, you will need to demonstrate that you can take initiative and obtain information that is necessary to perform your job, instead of waiting for someone else to provide you with that information.
Ability to Plan, Organize and Prioritize WorkEmployees are often assigned multiple tasks and projects. An effective and efficient employee should be able to categorize these assignments by due dates and level of priority, which is usually based on guidelines established by the company. Completing a task perfectly may mean nothing if it is late, or if it adversely affected another assignment.
Ability to Analyze Quantitative DataEvery company measures its success based on numbers. The numbers that apply to you may depend on the department in which you work. For example, if you are in customer service, you may need to understand why more customers call during a certain period. Your ability to understand the statistics as they relate to the company can help you to implement plans that help improve efficiency and help the company to make more money.
The Bottom Line
You should never forget that your resume is what will get you the interview, therefore it is up to you to sell yourself well enough so that when a potential employer see it, they know right away that you are a good candidate for them. Make sure that your resume is up to date and showcases all of your skills and qualities.
When applying for a job, do your research so that you know the skills required by that employer. The importance of skills may vary among different employers and will also depend on the job for which you are applying. Be sure to highlight the skills for the job you want on your resume. (To learn more, read The Best Careers For Your Skills.)
4 Keyword Tips For A Winning Resume
You know the basic tenets of resume requirements: be succinct, pick a clear layout and don't have typos. But in an economy where job competition is fierce, saying the "magic words" in your resume can mean the difference between whether it is tossed or moved to the top of the heap. Follow these four resume keyword steps to make sure it's written to perfection.(For what not to do, see the Top 8 Ways To Get Your Resume Thrown Out.)
IN PICTURES: 6 Hot Careers With Lots Of Jobs
1. Target Your ContentEstimates show that on average, employers spend about 10 seconds looking at your resume. Just as you would toss a piece of junk mail that doesn't fit your needs, so will an employer who doesn't clearly and quickly see how you fit the bill for their job. The good news is they've already told you exactly what they are looking for in the job description. Now it's up to you to use those terms to show employers why you are a fit for them.
This doesn't mean regurgitating the job description back to the employer. Read it thoroughly and digest the qualities and themes that appear often. Does it note that they are they looking for a leader or a team player? Does the position indicate a need for problem-solving, or someone who can take direction well? Is the job fast-paced or process-driven?
Make a list of the top five words that pop out on the job description. Then, find ways to integrate those buzz words onto your resume as you highlight your experience. You can even bold the words and phrases that are specifically relevant. This will not only clearly communicate your skills to the employer, but show that you've gone the extra mile to point out specifically how you will benefit them. Note that you will need to "bold" and "unbold" each time you apply for a new job, so that your keywords are relevant to each unique job description.
IN PICTURES: 8 Great Companies With Top-Notch Healthcare Benefits
2. Take ActionPassivity won't get you far in the workplace, nor will passive resume words score a job interview. Abandon the traditional noun-verb ("I completed") sentence structure on your resume, and cut to the chase with a powerful verb, or adverb ("Completed"). Below are some sample power verbs appropriate to the range of skill sets your resume will address.
Scan professional organizations and ad postings within your industry for the most commonly mentioned keywords. Then, make sure you incorporate those words into your resume. This will not only indicate that you understand the insider within your industry, but will increase the rate that your resume is included in search results when employers scan their existing candidate databases for job opportunities that you may not even know exist. (Learn more in 10 Phrases You Should Ban From Your Resume.)
4. Toot Your Own HornPower verbs will get prospective employers' attention, but you also need to keep them reading. You do this by being confident in your achievements, and providing scale and results to your activities. Scale addresses the size of your achievement, and will tell the reader exactly what you did. If you lead a team, how many people were on it? Did you deliver a project under a tight deadline? Include the details around how much time you had, compared to how long it would typically take. Every job task has a number associated with it. For example, a coffee barista might serve 40 customers a day. An account manager might make 60 cold calls each week.
Every action has a reaction, and every job function produces some kind of result. Results are a chance to toot your own horn, and support your claims with facts. In the example of the barista above, what does serving 40 customers a day mean in specific results? Maybe you up-sell a muffin to half of those customers, capturing an additional $40 in revenue for the company each day. Employers want to know your concrete achievements. Obviously, the bigger the win, the more impressive, but don't discount the added value. Providing measurable results also demonstrates to employers that you are analytical, and big-picture oriented.
The Bottom LineMaking these simple tweaks to your resume can amount to time well-spent in your job seeking endeavors. Perhaps the best part is that you can test the fruits of your labor by the amounts of interview invitations you receive, and easily adjust if needed. (For more job-hunting tips, see The 10 Commandments Of Resume Writing.)
IN PICTURES: 6 Hot Careers With Lots Of Jobs
1. Target Your ContentEstimates show that on average, employers spend about 10 seconds looking at your resume. Just as you would toss a piece of junk mail that doesn't fit your needs, so will an employer who doesn't clearly and quickly see how you fit the bill for their job. The good news is they've already told you exactly what they are looking for in the job description. Now it's up to you to use those terms to show employers why you are a fit for them.
This doesn't mean regurgitating the job description back to the employer. Read it thoroughly and digest the qualities and themes that appear often. Does it note that they are they looking for a leader or a team player? Does the position indicate a need for problem-solving, or someone who can take direction well? Is the job fast-paced or process-driven?
Make a list of the top five words that pop out on the job description. Then, find ways to integrate those buzz words onto your resume as you highlight your experience. You can even bold the words and phrases that are specifically relevant. This will not only clearly communicate your skills to the employer, but show that you've gone the extra mile to point out specifically how you will benefit them. Note that you will need to "bold" and "unbold" each time you apply for a new job, so that your keywords are relevant to each unique job description.
IN PICTURES: 8 Great Companies With Top-Notch Healthcare Benefits
- Achievement: achieved, completed, increased, improved, accomplished, performed, expanded
- Problem-solving: reduced, corrected, evaluated, utilized, simplified, analyzed, investigated
- Leadership: developed, managed, inspired, organized, guided, directed, revitalized
- Initiative: designed, launched, conceived, created, established, initiated, started, formulated
Scan professional organizations and ad postings within your industry for the most commonly mentioned keywords. Then, make sure you incorporate those words into your resume. This will not only indicate that you understand the insider within your industry, but will increase the rate that your resume is included in search results when employers scan their existing candidate databases for job opportunities that you may not even know exist. (Learn more in 10 Phrases You Should Ban From Your Resume.)
4. Toot Your Own HornPower verbs will get prospective employers' attention, but you also need to keep them reading. You do this by being confident in your achievements, and providing scale and results to your activities. Scale addresses the size of your achievement, and will tell the reader exactly what you did. If you lead a team, how many people were on it? Did you deliver a project under a tight deadline? Include the details around how much time you had, compared to how long it would typically take. Every job task has a number associated with it. For example, a coffee barista might serve 40 customers a day. An account manager might make 60 cold calls each week.
Every action has a reaction, and every job function produces some kind of result. Results are a chance to toot your own horn, and support your claims with facts. In the example of the barista above, what does serving 40 customers a day mean in specific results? Maybe you up-sell a muffin to half of those customers, capturing an additional $40 in revenue for the company each day. Employers want to know your concrete achievements. Obviously, the bigger the win, the more impressive, but don't discount the added value. Providing measurable results also demonstrates to employers that you are analytical, and big-picture oriented.
The Bottom LineMaking these simple tweaks to your resume can amount to time well-spent in your job seeking endeavors. Perhaps the best part is that you can test the fruits of your labor by the amounts of interview invitations you receive, and easily adjust if needed. (For more job-hunting tips, see The 10 Commandments Of Resume Writing.)
5 Ways To Make Your Resume Stand Out
All those resumes you sent out may have been a waste of time. Chances are, if you only received a canned email reply or no acknowledgment at all, nobody even read your resume.
So, what should you do to get noticed? You have to be creative if you want to get an interview these days. Here are a few ideas designed to get you a call back from recruiters: (Be a viable candidate, not a working resume. Learn how in Business Grads: Land Your Dream Job.)
#1 - Advertisement for YourselfProfessionals agree that each individual needs a personal brand. If you're going to have a brand, you may as well advertise it. Create a one page highlight of what you could do if hired. Just like any ad, use well thought-out tag lines that quickly get the recruiter's attention. Don't tell everything, as you want the reader to call you for additional information. Post the ad everywhere your future employer may be looking; hand them out at industry conferences, and mail them directly to the hiring manager at perspective companies.
#2 - Business CardsBusiness cards were designed to be simple references that people use to contact you. In addition to your name, phone number and e-mail address, include a short phrase that describes your expertise. The job title should be the same as the one you're interested in interviewing for. Use the back to list keywords, certifications and accomplishments. Mail the business card with a note card referencing the job title you're interested in, and a short paragraph requesting an interview. (Learn to land on your feet when leaving a job inPreparing For Unemployment.)
#3 - Professional WebsiteYour professional website should highlight your professional accomplishments. Include the web address on resumes and all correspondence including emails. Don't include too much personal information (remember, it is posted for the world to see). Provide a contact email address. Link your professional website to industry organization websites, alumni organization websites and blogs related to your profession.
#4 - Presentation on a DVDCreate a presentation complete with highlights of what you could do for the company if hired. Include examples of your accomplishments and awards. The DVD method works best for creative type employment because it allows you to showcase your skills.
#5 - Pre-Interview "Thank You" NoteThank the recruiter for taking the time to read your resume and schedule an interview. Include the times and dates you are available, and contact information. The note should reference the job title you wish to interview for and the date your resume was sent.
Don't keep sending out that old non-response resume, hoping to someday receive a call back. Getting hired during a recession requires a much more more savvy approach.
So, what should you do to get noticed? You have to be creative if you want to get an interview these days. Here are a few ideas designed to get you a call back from recruiters: (Be a viable candidate, not a working resume. Learn how in Business Grads: Land Your Dream Job.)
#1 - Advertisement for YourselfProfessionals agree that each individual needs a personal brand. If you're going to have a brand, you may as well advertise it. Create a one page highlight of what you could do if hired. Just like any ad, use well thought-out tag lines that quickly get the recruiter's attention. Don't tell everything, as you want the reader to call you for additional information. Post the ad everywhere your future employer may be looking; hand them out at industry conferences, and mail them directly to the hiring manager at perspective companies.
#2 - Business CardsBusiness cards were designed to be simple references that people use to contact you. In addition to your name, phone number and e-mail address, include a short phrase that describes your expertise. The job title should be the same as the one you're interested in interviewing for. Use the back to list keywords, certifications and accomplishments. Mail the business card with a note card referencing the job title you're interested in, and a short paragraph requesting an interview. (Learn to land on your feet when leaving a job inPreparing For Unemployment.)
#4 - Presentation on a DVDCreate a presentation complete with highlights of what you could do for the company if hired. Include examples of your accomplishments and awards. The DVD method works best for creative type employment because it allows you to showcase your skills.
#5 - Pre-Interview "Thank You" NoteThank the recruiter for taking the time to read your resume and schedule an interview. Include the times and dates you are available, and contact information. The note should reference the job title you wish to interview for and the date your resume was sent.
Don't keep sending out that old non-response resume, hoping to someday receive a call back. Getting hired during a recession requires a much more more savvy approach.
How To Write An Effective Investment Banking Resume
Investment banking is a fast-moving, high-stress, ferociously competitive business that requires specialized knowledge and experience – not to mention commitment, focus, and the physical and mental stamina required to work long hours. Career opportunities in investment banking are always available, although in boom years they’re more abundant and in lean economic times they’re scarce. Read on for tips on how to build a killer investment banking resume. Obtaining a job in this potentially lucrative occupation usually requires a few key skills and qualities – although a strong recommendation from someone of influence may trump all of them.
Building Your Resume
Although there is no perfect format and no infallible content for a resume, the suggestions below have proved effective in securing jobs in the finance sector, including investment banking.
Keep in mind that there is a difference between a resume in application for an investment banking job and an accounting job. The investment banking candidate may have accounting experience, but beyond that a background in financial analysis, mergers and acquisitions, initial public offerings, valuations, or experience in both buy side and sell side research tends to be much more important. And, of course, a candidate must be able to demonstrate a willingness to put in the demanding hours the job requires.
The resume format sample suggested below is a standard and widely used arrangement, but you may also want to research other resume formats online or in the many books available on this subject. Also note that the information included in the sample is for illustrative purposes only. Your own resume will, of course, reflect your own education, experience and other pertinent information.
Education
Cite the college or university where you studied, list degrees, honors and achievements and cite special courses relevant to investment banking. For example, computer science, statistical analysis, contract law, management or business administration courses, and business writing may all be worth mentioning in this section.
Employment Background
Include the title of your current and previous jobs, along with the name and location of the company and your duties and accomplishments in a paragraph.
For example:
2008 to Present
Junior Accountant, Business Loans Department,
Branch of Major Bank, New York, NY
Junior Accountant, Business Loans Department,
Branch of Major Bank, New York, NY
Audited books of small business loan applicants to determine cash flow, debt levels and risk factors to assess credit worthiness. Reported directly to VP and chairman of small business loan committee.
Cite previous employment in the same manner as the sample above.
Skills
Cite your relevant skills beneath this heading. For example, beyond your talent as an accountant, you may have written and verbal skills, a knowledge of tax law, managerial abilities and a sharper-than-average understanding of human nature. Focus on the skills with the most relevance and give reasonable proof that you posses these skills.
If you are short on specific skills, you may also cite personal skills. For example, you might say that you are highly motivated, energetic, enthusiastic, detail-oriented and so on. Many of these things will be implied in your investment banking skill set – that is, accounting skills generally suggests a detail-oriented personality – so you can omit overlap for the sake of brevity.
Qualifications
Potential employers in the field of investment banking will look for candidates with the following qualifications in education and work experience.
College or university degrees in any of the following:
- Accounting
- Banking
- Business Administration
- Business Law
- Computer Science
- Economics
- Finance
- Human Resources
- Information Technology
- Tax Law
This is not set in stone, as potential employers will consider and other business, law and technology related disciplines not listed here. Basically, employers want to see that you can bring something to their team.
Unique Qualifications
Employers with special needs may look for candidates with education and experience in government relations, international relations and/or public policy, depending on the type of banking that the office specializes in.
PAGE 2 OF 2
Work experience in the areas cited above, plus any aspect of accounting, banking, finance and mid-level to senior management positions – especially in finance – are particularly attractive to potential employers.
Another area in which investment banks may be hiring is in government compliance. With new banking and financial regulatory laws now in place, there is more demand for compliance personnel. Another critical aspect of investment banking involves raising capital to fund investments. This job requires the talents of a salesperson as well as knowledge in finance.
Entry-Level Qualifications
For junior-level positions, trainee positions or internships in investment banking, qualifications may not be confined to the areas cited above. Education and experience that is less focused on finance may be acceptable to potential employers with a view toward training new hires in investment banking specialties.
Personal Qualifications
The personal qualifications that employers find attractive in a job candidate may include the following:
- Strategic thinking
- Communication skills
- People skills – collaboration, management ability, personality, etc.
Again, you will have to back these up with a short statement in your resume and, assuming you get through, further evidence in the interview.
Your Purpose
Finally, be sure to state your passion for banking and finance and convey your energy and enthusiasm for the business. Often, these qualities help younger and less experienced applicants secure the desired job.
Phrasing Your Experience and Accomplishments
You should try to list all your relevant experience and achievements in succinct, bullet-point format. Use active verbs and phrases such as: managed, supervised, developed, created, invented, organized, assisted, analyzed, raised funds, sold products, wrote, designed and similar words that reflect your specific achievements. This can be integrated within each entry to the employment history section of the resume.
For example:
- Supervised a team of internal auditors
- Created and implemented a new debt-tracking software program
- Raised $5 million in investment capital through cold calling and direct mail advertising, working in collaboration with an advertising agency.
The Applicant’s Edge
If replying to a job opening advertisement, the applicant should repeat some key words found in the ad in his or her cover letter. For example, if a job advertisement states that candidates should have marketing and management skills, be sure to include these key phrases somewhere near the top of your cover letter and in your resume.
The Reference Advantage
Positive letters of reference from previous employers are a plus. However, if you don’t secure letters of reference and still cite previous employers as references, be sure to obtain their permission in advance. Again, if you have a large pool to pull from, you’ll want the references from the posts you’ve held that are most relevant to investment banking qualifications.
For job seekers currently employed, asking your employer for a reference may not be a good idea.
The Bottom Line
In a competitive job market, a persuasive resume will give the applicant a definite edge among the many who may apply for the position. Relevance should always be your guide in deciding what to include and expand upon in your investment banking resume. Following the suggestions above in drafting your resume may not guarantee that you’ll be hired, but if you’re qualified, you’ll be in the running.
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Top Things To Know For An Investment Banking Interview
Many business students want to work in investment banking, but they freeze during the interview when asked some of the more common technical questions. Getting the first interview is often a difficult task all on its own, so you need to be ready to answer whatever questions the interviewer throws at you. For example, could you answer the following common questions?
1. What are the ways of valuing a company?
2. What are the advantages of raising funds through bonds rather than equity?
3. What happens to various figures in the financial statements, if $100 is added to the current depreciation account? (To learn more, read Wanna Be A Bigwig? Try Investment Banking.)
If you don't have a ready answer for questions like these, you need to do more preparation before your job interview. Read on to learn the answers to these common questions, and what you need to know before you arrive. Know the Job
Nothing is more offensive to an interviewer than a candidate who comes in not knowing anything about the position. Showing that you understand not only the general practices of investment banking, but also your specific duties should provide a competitive edge. First-year analysts do not pitch deals to CEOs or publish research reports about hot stocks/sectors. An entry-level position mainly involves creating PowerPoint presentations, compiling comp tables and making pitch books. Although financial modeling and financial statement analysis are the bread and butter of the investment banking profession, don't go into an interview with the presumption that you will perform such tasks on your first day on the job. (Learn more in Getting An Investment Bank Job During A Recession.)
Financial KnowledgeThe Basics Basic knowledge of financial statements and a general understanding of how the balance sheet, income statement and cash flow statement are interrelated is another common technical skill-testing question of the investment banking interview. Familiarize yourself with how changes made to one section alter the figures in the other sections. It is important to understand, not just memorize, the connections between the statements.
Here is a typical example: Assuming a tax rate of 30%, if depreciation increases by $100 and pretax income decreases by $100, taxes will decrease by $30 ($100 * 30%), net income (NI) will decrease by $70 ($100 * (1 – 30%)) and cash flow from operations will increase by the amount of the tax deduction. This causes a $30 increase of cash on the balance sheet, a $100 reduction in PP&E due to the depreciation and a $70 reduction in retained earnings. Make sure you can easily follow this example and track the effects of any such similar adjustments. (Check out our Financial Statements Tutorial for a step-by-step look at financial statements.)
Corporate Valuation - DCFQuestions regarding company valuation are essential to the interview process, as this task is the basis of a banker's everyday activities. There are three basic techniques to value a company: discounted cash flows (DCF), the multiples approach and comparable transactions. Only the first two are likely to be discussed.
Discounted cash flows, as the name suggests, involves creating a forecast of the free cash flows (FCF) of a company and then discounting them by the weighted average cost of capital (WACC). Free cash flows are calculated as:
1. What are the ways of valuing a company?
2. What are the advantages of raising funds through bonds rather than equity?
3. What happens to various figures in the financial statements, if $100 is added to the current depreciation account? (To learn more, read Wanna Be A Bigwig? Try Investment Banking.)
If you don't have a ready answer for questions like these, you need to do more preparation before your job interview. Read on to learn the answers to these common questions, and what you need to know before you arrive. Know the Job
Nothing is more offensive to an interviewer than a candidate who comes in not knowing anything about the position. Showing that you understand not only the general practices of investment banking, but also your specific duties should provide a competitive edge. First-year analysts do not pitch deals to CEOs or publish research reports about hot stocks/sectors. An entry-level position mainly involves creating PowerPoint presentations, compiling comp tables and making pitch books. Although financial modeling and financial statement analysis are the bread and butter of the investment banking profession, don't go into an interview with the presumption that you will perform such tasks on your first day on the job. (Learn more in Getting An Investment Bank Job During A Recession.)
Financial KnowledgeThe Basics Basic knowledge of financial statements and a general understanding of how the balance sheet, income statement and cash flow statement are interrelated is another common technical skill-testing question of the investment banking interview. Familiarize yourself with how changes made to one section alter the figures in the other sections. It is important to understand, not just memorize, the connections between the statements.
Here is a typical example: Assuming a tax rate of 30%, if depreciation increases by $100 and pretax income decreases by $100, taxes will decrease by $30 ($100 * 30%), net income (NI) will decrease by $70 ($100 * (1 – 30%)) and cash flow from operations will increase by the amount of the tax deduction. This causes a $30 increase of cash on the balance sheet, a $100 reduction in PP&E due to the depreciation and a $70 reduction in retained earnings. Make sure you can easily follow this example and track the effects of any such similar adjustments. (Check out our Financial Statements Tutorial for a step-by-step look at financial statements.)
Corporate Valuation - DCFQuestions regarding company valuation are essential to the interview process, as this task is the basis of a banker's everyday activities. There are three basic techniques to value a company: discounted cash flows (DCF), the multiples approach and comparable transactions. Only the first two are likely to be discussed.
Discounted cash flows, as the name suggests, involves creating a forecast of the free cash flows (FCF) of a company and then discounting them by the weighted average cost of capital (WACC). Free cash flows are calculated as:
| EBIT*(1-Tax Rate) + Depreciation and Amortization – Capital Expenditures – Increases in Net Working Capital (NWC) |
WACC is calculated by taking the percentage of debt, equity and preferred shares of total firm value and multiplying the individual components by the required rate of return on that security. The terminal value of the project must also be determined and discounted accordingly.
The WACC DCF approach assumes that the firm is levered, with the cost of debt being reflected in the denominator of the calculation. The adjusted present value (APV) approach of valuation is somewhat similar, but calculates the value of an all-equity (unlevered) firm and then adds the effects of debt at the end. This type of methodology is implemented when the company adopts a complex debt structure such as a leveraged buyout (LBO), or when the financing conditions change throughout the life of the project.
First, cash flows are discounted by the cost of equity, followed by determining the tax benefits of debt by discounting the after-tax interest payments by the fixed income required rate of return.
First, cash flows are discounted by the cost of equity, followed by determining the tax benefits of debt by discounting the after-tax interest payments by the fixed income required rate of return.
| NPV = Value of All-Equity Firm + Present Value of Financing Effects |
Theoretically, the NPV for the WACC and APV methods should produce the same final result. (For more, see Investors Need A Good WACC.)
Corporate Valuation - MultiplesThe multiples method of valuation involves metrics similar to the P/E ratio. Basically, to perform a multiples analysis, one would have to determine the average multiples for the specific industry and multiply this value by the denominator for that multiple for the company under consideration. Using the P/E ratio as an example, if an investment banker is trying to perform a valuation of a firm in the grocery store business, the first step would be to determine the average P/E ratio in that sector. This can be done by looking at comp tables, which are easily available through the Bloomberg terminal.
Next, the average value should be multiplied by the company's EPS. If the average price-to-earnings ratio in the sector is 12, and the EPS for the particular company is $2, then the shares are worth $24 each. Taking the product of this value and the total number of shares outstanding provides the firm's market capitalization.
The preceding example used the P/E ratio to illustrate the general premise because most people are familiar with such a measure. However, using this ratio to perform the valuation is actually incorrect; the resulting figure gives the value of the equity of the firm, ignoring debt. Although different sectors have industry specific multiples, which should be researched prior to the interview, one of the most common multiples is the enterprise multiple (EV/EBITDA).
Enterprise value is calculated as:
| Market Cap + Debt + Minority Interests + Preferred Shares – Total Cash & Cash Equivalents |
This value reflects the entire value of the firm. Since the acquirer in a merger would assume the debt and other financial positions of the target, EV captures the full comprehensive value of the corporation. Furthermore, EBITDA is used in the calculation rather than just earnings for similar reasons. EV/EBITDA provides a comprehensive measure of the real value of the entire firm, which P/E fails to capture. However, it should be noted that revenue multiples are usually not a preferred method of valuation, because revenue can often be easily manipulated through accounting practices. (For more, seeInvestment Valuation Ratios: Enterprise Value Multiple.)
Debt or Equity?Since investment banking involves helping companies issue equity and debt, familiarity with these concepts is fairly important. Increasing the level of debt in a firm's capital structure presents many benefits. Most importantly, since interest payments are tax deductible debt is considered the cheaper form of financing (you should commit this to memory). Issuing bonds has further advantages in that the equity positions of current shareholders does not become diluted and because debt holders have first dibs on the firm's assets in case of bankruptcy. This is also why bondholders require a smaller return on their investments.
On the other hand, increasing the amount of leverage entails higher interest payments, which could push the company toward bankruptcy during poor economic times. In contrast to dividends, which are not guaranteed, corporations are required to meet their debt agreements. Also, as suggested by the second proposition of the Modigliani-Miller theorem, as the debt-to-equity ratio (D/E) of a firm increases, so does the cost of equity and additional debt. An optimal capital structure must be reached which maximizes the total value of the firm. (Learn more in Evaluating A Company's Capital Structure.)
Conclusion Most candidates selected for an interview should be very familiar with the presented material. Being able to discuss this information will not make you stand out as a candidate, but will merely exhibit that you understand the basics of the job. Before going into an interview, research the particular bank, familiarize yourself with the deals it has done in the past, or is currently working on, and be prepared to talk about the economy and financial markets. Rest assured that other candidates will be equally prepared, and that sometimes determining who gets the job comes down to the smallest differences between candidates. In such a competitive environment, preparation and confidence are the keys to getting the job. (For more tips, see Taking The Lead In The Interview Dance.)
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