Front Office Investment Banking Methodology

There are many investment banking texts out there that claim that financial modeling and valuation is the core work of the investment banker. This is simply not the truth. The core work of the investment banker is origination, mandate/target matching, deal structuring & closing. It should follow that a text/course on investment banking should be based upon the same thing. It is the good fortune that the reader has encountered such a book/course. Front Office Investment Banking explains origination, mandate/target matching, deal structuring & closing (i.e. how investment bankers actually make their money).

For those new to investment banking, you are first going to want to clarify whether you would like to work on the sell side for a few years or actually pursue a career in investment banking. The skills that you will need to get started in investment banking (data science & analytics) are different than those that you will need to have a long and successful career in investment banking. The role in investment banking transforms from one that is research, financial modeling & valuation based into one focused on origination and the facilitation of the M&A process. M&A (Mergers & Acquisitions) is the core product of investment banking, and the other products, advisory & capital-raising, simply support this. We founded Investment Banking University (www.InvestmentBankingU.com) to prepare students for bulge bracket & middle market investment banking career opportunities as well independent M&A groups.

We see a paradigm shift occurring in the field of investment banking. The idea that you need to spend three years of your life as an analyst doing 80+ hour workweeks building financial models to become an investment banker is a faulty paradigm. The real value add of an investment banker is not financial modeling & valuation, but rather origination, mandate/target matching, and deal structuring & closing. You don’t need Goldman Sachs’ permission to be an investment banker just like you don’t need McKinsey’s permission to be a consultant. Investment banking for private companies in the lower middle market and middle market is a great way to build your initial coverage and career as an investment banker without sacrificing a family life or your health.

If there is anything that I want you to get from this book, it’s the development of a Managing Director (MD) mindset. I want you to think in terms of dealmaking and begin to proactively research where an investment banker’s services can add value to a corporation’s strategic goals. The ability to conceptualize and model this value concept will serve you well in whatever investment banking role you decide to pursue.

I wish that I was armed with this book when I was first getting started with AltQuest Group in graduate school at Texas A&M University. I remember going to the campus library to read finance textbooks & do IBI and Wall Street Prep trainings in my off time and then applying the concepts in team meetings after B-school classes. The path that I took was not traditional, I realize that. But it was one I was passionate about and it allowed me to develop an MD mindset. The ability to think at a higher level and have conversations with other high level strategic & financial executives is an invaluable skillset.

Ultimately, I ended up writing the book I could only have dreamed of when I initially first started building out the advisory firm. As such, the book represents almost a decade of trial, error, learning and success. May the lessons contained in these pages save you time, energy & resources and allow you to build a long & successful career in investment banking.

THE ULTIMATE TAKEAWAYS OF THIS BOOK ARE:

The development of an MD Mindset

Understanding the strategic intent of coverage companies and where potential gaps that need to be filled with capital, M&A, or growth advisory

What sort of capabilities & functionality are the markets rewarding with a higher multiple/lower multiple as this may present an entry/exit opportunity for clients

Understanding the entirety of the front office investment banking process rather than simply having a deal support project focus of an analyst/associate

Data Science as the Context for Financial Analysis

Understanding context of the analyst role by learning Data Science & Analytics at a higher level

Markets & Valuation as Dynamic

What makes line items, margins & multiples expand or contract

What are the trends in said line items, margins, and multiples and what are the implications for these trends on the products you sell (M&A, capital, growth advisory) and clients you serve