Overview of Investment Banking in Los Angeles
The investment banking industry for the US market has been generating revenue of approximately $133 bn. The industry, globally, has generated revenue in excess of $200 bn. The lion’s share of this revenue was generated by the top four companies in 2017. Since the global financial crises of 2008, the level of concentration with selected few companies has substantially increased. In this article, we discuss Investment bankingDiscuss Investment BankingInvestment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, etc. in Los Angeles in detail.
Investment Banking Services Offered in Los Angeles
Investment banking services in Los Angeles are broadly classified into the “sell-side” and “buy-side”. As the name suggests, the sell-side of services refers to trading securities for cash or other financial securities in exchange. The buy-side of servicesBuy-side Of ServicesThe term "buy-side" refers to entities that advise their clients like individual investors and institutional buyers on investments and securities purchases. Private equity firms, mutual fund companies, life insurance companies, unit trusts, hedge fund companies, and pension fund entities are examples of buy-side firms. pertains to mergers and acquisitions, Institutional investorsInstitutional InvestorsInstitutional investors are entities that pool money from a variety of investors and individuals to create a large sum that is then handed to investment managers who invest it in a variety of assets, shares, and securities. Banks, NBFCs, mutual funds, pension funds, and hedge funds are all examples., private equity fund houses, mutual fund houses, and hedge funds. Unlike conventional commercial banksCommercial BanksA commercial bank refers to a financial institution that provides various financial solutions to the individual customers or small business clients. It facilitates bank deposits, locker service, loans, checking accounts, and different financial products like savings accounts, bank overdrafts, and certificates of deposits., investment banks don’t take deposits from their creditors.
Another way of classifying investment banking activity is based on the type of operations, namely the front office, middle office, and back office.
- The front office is mainly responsible for generating revenue for the bank. It is done by investment advising, sales and trading, and market research.
- The middle office is responsible for treasury management, internal corporate strategy, and maintaining internal controls on the bank.
- The back office keeps a check on requests for transactions initiated and subsequently processes them. In most of the cases, investment bank outsources this job to third parties as it increases their efficiency.
List of Top Investment Banks in Los Angeles
Mentioned below are some of the top companies in investment banking in Los Angeles:
- BCC Capital Partners
- Global Capital Markets Incorporated
- NewCap Partners Inc
- WestPark Capital
- Boustead Securities, LLC
- Peter A Sokoloff & Co.
- DelMorgan & Co.
- FocalPoint Partners, LLC.
- DealSource Partners, LLC
- 41 North LLC
Getting a job at an investment bank in Los Angeles is definitely a tough nut to crack. Most of the work starts during graduation years and the first step for someone wanting to land up with a job at an investment bankJob At An Investment BankThe investment banking job description is a formal narrative that lists out the essential qualification, basic skills and technical skills required in a candidate to fill in the vacant investment banker position. It also explains the roles and responsibilities to be performed in this job position. would be to get themselves enrolled in events run by the companies. Many banks offer live talks, on-campus dinner, and insight days wherein they keep an eye on promising candidates.
Many of these events lead to students landing up with internships at these firms which is the next best thing to getting a job there.
Applying for a job commonly consists of an application form but the biggest investment bank, Goldman Sachs have always preferred a CV along with a cover letter. So, highlighting once inclination in a cover letter becomes highly critical as recruiters put in a lot of weight to it.
The process doesn’t end here. Next one can surely expect themselves to go through a psychometric test. The main objective of conducting these tests is to assess the candidate’s personality and making sure that the stressed behavior of a candidate is in line with the company’s tolerance bands.
Followed by the psychometric test, one can expect a call for a telephonic or video interview wherein pre-recorded questions are asked to candidates. Investment banks use the computer algorithm to analyze the answers and score them accordingly, but that shouldn’t be the reason for giving pre-prepared answers or an attempt to rig the interview. A scripted answer won’t give much leverage to a candidate.
Following the telephonic/video interview, successful candidates receive invite for a second interview. In the industry, this interview is termed as a “super day interview” wherein a candidate is supposed to meet five to six people within the bank in a span of one to two hours. These interviews are more rigorous in nature and are aimed at analyzing the character of the candidate.
Investment Banking is definitely the most rewarding industry across the world and across any time zone. While the same lucrative remuneration often becomes the cause for criticism, it surely is in appropriation with the amount of strenuous hours investment bankers put inHours Investment Bankers Put InInvestment banking hours vary based on investment bankers' position; however, they work 80 hours a week on average. At the peak time, the working duration may even reach upto 100 hours a week. in order to make the profit for their respective clients.
If we look at the average starting salaries of analysts or junior analysts, the ballpark figure in Los Angeles will be around $75000. This excludes the joining bonuses. The joining bonus is variable and is dependent on the company for which one is employed and also on the position of the job. But on average, the typical bonus is around 20 % of salary and falls in the range of $15000 to $20000.
As one can see, there are basically two parts of salary for an investment banker: base salary and bonus.
The bonus component of one’s salary is usually the lion’s share, more so on senior levels where the same can be many folds of the base salary.
- The salary figures for a vice president of an investment bank in Los Angeles falls usually in the range of $120k to $150k. Add to that, the bonus is most of the same level with average bonuses falling in the range of $100k to $150k.
- For the management level, base salary figures for the managing director can range from $300k to $1M, excluding the bonus. The bonus component averages to $200k to $10M+.
As it is evident, the sky is the limit, and bonuses are what make the investment banking industry in the best-paid industry.
A job as an investment banker in Los Angeles can be taxing, both physically and mentally. One is required to work for 100+ hours per week on a consistent basis and the error for margin is almost next to zero. Many bankers look to exit Investment BanksExit Investment BanksAmong the several exit options available to investment bankers are: 1.Private Equity 2.Hedge Funds 3.Strategy Consulting 4.Fin-Tech 5.Advisory for large corporates. after a successful run for a few years. Some of the conventional exit options include strategy consulting where banks employ consultants to increase their efficiency and improve the bottom lineBottom LineThe bottom line refers to the net earnings or profit a company generates from its business operations in a particular accounting period that appears at the end of the income statement. A company adopts strategies to reduce costs or raise income to improve its bottom line. .
The fin-tech industry is another popular shift where the technical abilities acquired during investment banking takes the front role. One is expected to leverage the use of technology to make businesses more profitable.
Roles as regulatory compliance officer and advisory also appeals to masses as a switch where companies going for mergersMergersA merger is a voluntary fusion of two existing entities equal in size, operations, and customers deciding to amalgamate to form a new entity, expand its reach into new territories, lower operational costs, increase revenues, and earn greater control over market share. or buyoutBuyoutA buyout is a process of acquiring a controlling interest in a company, either via out-and-out purchase or through the purchase of controlling equity interest. The underlying principle is that the acquirer believes that the target company’s assets are undervalued. seek advice and guidance on regulatory compliances.
This has been a guide to Investment Banking in Los Angeles, their services offered, recruitment process, their culture, top Investment banks in Los Angeles, salaries, and exit opportunities. You may also have a look at the following article for learning more about Investment Banking –