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).

Responsibilities

Investment Banking Analyst Responsibilities

source: indeed.co.uk

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

Skills

Investment Banking Analyst

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Source: Investment Banking Analyst (wallstreetmojo.com)

#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 valueExpected ValueExpected value refers to the anticipation of an investment's for a future period considering the various probabilities. It is evaluated as the product of probability distribution and outcomes.read more
  2. Assessing the Risk of the investment
  3. Developing financial structureFinancial StructureThe financial structure refers to the sources of capital and the proportion of financing that comes from short term liabilities, short term debt, long term debt, and equity to fund the company's long term and short term working capital requirements.read more

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

Qualifications

Investment Banking Analyst Qualifications

source: indeed.co.uk

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

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 –