Investment Banking Analyst

Who is an Investment Banking Analyst?

Investment Banking Analyst works with investment banking team and expertise in the area of Accounting, Financial Modeling, Project financing, Project Valuation, and Financial statement Analysis. These analyst has deep knowledge in Excel and they are good at VBA to analyze the market data and financial modeling. The analytic work consists of building a financial model for different projects like Infrastructure projects (i.e Power projects, real estate, etc).


Investment Banking Analyst Responsibilities


The key responsibilities of an Investment banking Analyst include the following –

  • Provide valuation analysis including Discounted Cash Flows, Relative Valuations, asset valuations, Comparable comps, Transaction Multiple.
  • Prepare Pitch-Book for client meetings including M&A and LBO PitchBook
  • Prepare financial models and perform financial analysis of companies relatively quickly.
  • Assist the Investment Banking Associate with the coverage initiatives.
  • Monitoring the industry for current events, valuations and important financial information
  • Mentor and supervise the junior analysts
  • Coordinate with clients for financial data and analysis
  • Travel for Client Meetings and Industry Research


Role of Investment Banking Analyst

#1 – Financial Modelling

What is Financial Modeling

Investment banking Analyst helps in developing a financial model from scratch. Financial Model has three general objectives that should be someone back of mind before start writing of any excel formulas or developing any assumptions These are

  1. Coming up with an expected value
  2. Assessing the Risk of the investment
  3. Developing financial structure

Effective assessment of Risk is the centerpiece of valuation and most fundamental reason for any financial model is created.

#2 – Project Financing

Break Even Point

The project finance is to finance a project in which the Lenders provide money to the developers for the development of a project by looking into the specific project’s risks and future cash flows.

The raising of on a limited-recourse or nonrecourse basis to finance an economically separable capital investment projects in which the providers of the funds look primarily to the cash flow from the project as the source of funds to service their loans and provide the return of and a return on their equity investment in the project.

#3 – Merger and Acquisition

Pro forma Mergers and Acquisitions

Investment banking analyst would help the Company in the process of decision making during the process of Merger & Acquisition by analyzing the Facts

  • Know what you’re buying – this often occurs in within industries or with a target that can leverage an existing business
  • The buyer is acquiring from a position of strength, not weakness. Strength can be defined in terms of performance, management expertise, systems, culture, market leadership, etc.
  • The worst deals occur in “hot” M&A markets or competitive bid situations (overpayment)
  • A discipline of cash vs. stock

#4 – Leveraged Buyout (LBO)

Investment Bankers are expected to be great at LBO Modeling.

LBO Scenario 2

Steps to create LBO Model –

  • Analyze the Market value of a company
  • Deterring the Equity return through IRR calculation
  • Determining the Cash Flow of the company
  • Determining the Debt service Limitation of a Company
  • Analyzing the Risk for the financial buyer.

#5 – Financial Statement Analysis

Ratio Analysis Framework 2

As an investment banking Analyst one should have the technical skills to analyze the Financial statement and the financial statement analysis include

  • Net Operating Cash Flow
  • Financing Expenditure
  • Discretionary Expenditure
  • External Financing
  • Net Movements in Cash
  • Short-Term Debt
  • Dividend Payable
  • Tax Paid
  • Bank Debt
  • Equity Structure
  • Depreciation
  • Interest Rate


Investment Banking Analyst Qualifications


The qualifications of an Investment Banking analysts are rigorous and you must have most of the skills listed below –

  • Strong Analytical Skills
  • Excellent in verbal and written communication
  • Awesome in Powerpoint skills
  • Excel, Advanced Excel & VBA skills
  • Bachelors Degree in finance or accounting is preferable
  • Ability to work under extreme pressure and tight deadlines.
  • Passed CFA Exams (or at least cleared CFA Level 1).

Recommended Articles

This has been a guide to Investment Banking Analysts. Here we discuss roles of an IB Analyst along with their responsibilities, skills, and qualifications. You can also have a look at these articles below to learn more about Investment Banking –