One of the most common questions an interviewee asks is "What is the typical day for an investment banker like?" Truth be told, days spent in investment banking often vary widely, depending on what aspect of a deal you might be working on. But because deals are similar, you might be able to conjure up a typical week in the life of an analyst, associate, vice president, or managing director in corporate finance. We'll start with analysts.
Analysts
For I-banking analysts, it's all about the computer screen. Analysts, especially those in their first year, spend countless hours staring at their computer monitors and working until midnight or all night. Building models, creating "comps," (see sidebar) and editing pitchbooks fills the majority of their time. Many analysts do nothing but put together pitchbooks, and "never see the light of day." Hard working and talented analysts, however, tend to find their way out of the office within a few months and "get on a working group list," thus becoming involved on live transactions.
A typical week might involve the following:
Monday
Up at 8 a.m. Monday morning, the analyst makes it into the office by 9. Mornings often move at a snail's pace, so the analyst builds a set of comparable company analysis (a.k.a. comps) and then updates the latest league table data, which track how many deals I-banks have completed. Lunch is a leisurely hour spent with other analysts at a deli a few blocks away. The afternoon includes a conference call with a company considering an IPO, and at 5, a meeting with a VP - who drops a big model on the analyst's lap. Dinner is delivered at 8 and paid for by the firm, but this is no great joy - it is going to be a late night because of the model. It 11:30, the analyst has reached a stopping point and calls a car to give him a free ride home.
Tuesday
The next day is similar, but the analyst spends all day working on a pitchbook for a meeting on Wednesday that a banker has set up. Of course, the banker waited until the day before the meeting to tell the analyst about it. After working all night and into the morning, the analyst finally gets home at 5 a.m., which gives him enough time for a two-hour nap, a shower, and a change of clothes.
Wednesday
Unfortunately, there is a scheduled drafting session out of town on Wednesday relating to another transaction, and the flight is at 8 a.m. Having slept only two hours, the analyst reads his draft of the prospectus on the plane, and arrives with a VP at the lawyer's office at 11 a.m., armed with some comments to point out to the group. Many hours and coffees later, the VP and analyst get back on the plane, where the analyst falls deep asleep.
After the flight touches down, the analyst returns to the office at 8 p.m. - and continues modeling for a few hours. At midnight, the analyst heads home.
Thursday
The analyst is roped into doing another pitchbook, this one for a merger deal. He frantically works to complete a "merger model": gathering information, keying in data, and working with an associate looking over his shoulder. By the time he and the associate have finished the analysis, it is 1 a.m.
Friday
Friday is even worse. The merger model is delivered to the hands of the senior VP overseeing the work, but returned covered in red ink. There are no scratch n' sniff stickers or smiley faces here. Changes take the better part of the day, and progress is slow. Projections have to be refigured, more research found, and new companies added to the list of comps. At 7 p.m. on Friday, the analyst calls his friends to tell them he won't make it out tonight - again. At 11 p.m., he heads home.
Saturday
Even Saturday requires nearly 10 hours of work, but much of the afternoon the analyst waits by the phone to hear from the VP who is looking at the latest version of the models.
Sunday
No rest on Sunday. This day involves checking some numbers, but the afternoon, thankfully, is completely free for some napping and downtime.
The analyst adds up a total of maybe 90 hours this week. Either fortunately or unfortunately, it could have been much worse. In fact, at some firms, analysts typically work more than 100 hours per week.
What exactly are comps? You may have heard of comps, or comparable company analysis - and the fact that after two years, analysts never want to do comps. analysis ever again.
In short, comps summarize financial market measures of companies within an industry group. For example, suppose we wanted to compare a software company (our client, Company C) to other software companies, Companies A and B. Comps usually are many pages long, but often begin with something like the following.
Here we begin to summarize income statement data, including sales and EPS and build up to market valuation measures and, finally, a few ratios. From this illustration, we could interpret the numbers above as: "Our client (Company C) is the biggest firm in terms of sales, has the most cash flow, and the highest P/E ratio. The high P/E ratio makes Company C the most expensive stock, trading at 42 times earnings." Note that EBITDA is often used as a proxy for cash flow.
Comps are useful for valuing companies going public as well as valuing companies that are acquisition targets. Keep in mind that this is a very simplified version of what true comps look like.
Associates
With a role similar to analysts, associates are primarily responsible for financial models and pitchbooks. A week for an associate (especially a first-year associate) might resemble closely the scenario painted above, with oversight duties over analysts working on models for the associate. In addition, the associate may be more involved in dealing with the MDs and in checking pitchbooks before they are sent out.
A more experienced associate will sit down more frequently with an MD, going over details of potential deals or discussing numbers. In contrast to analysts, who work as generalists, associates typically focus on one specific industry. One week for an analyst might include deals for a steel company, a high-tech company, and a restaurant company; an associate will focus on an industry like high tech or health care. However, like analysts, associates must work carefully and thoughtfully and put in long hours to gain the respect of their supervisors.
Vice Presidents and MDs (a.k.a. "Bankers")
As one becomes a "banker," one begins to shift from modeling and number crunching to relationship molding. This gradual transition happens during the senior associate phase as the associate begins with interfering with existing clients. Ultimately, VPs and MDs spend most of their time and energy finding new clients and servicing existing clients. VPs spend more time managing associates and analysts and the pitchbook creation process than MDs, but their responsibilities begin to resemble those of MDs at the SVP level. The typical week for a banker, then, looks quite different than that of an analyst/associate.
Monday
The banker gets a courier package delivered at 6 a.m. at her house, and carries this with her to the airport. The package contains several copies of an M&A pitch that she intends to make that day. Her team put the finishing touches on the analysis just a few hours before, while she slept at home. Her schedule that day includes three meetings in Houston and one important pitch in the afternoon. As an oil and gas banker, the banker finds she spend two-thirds of her time flying to Texas and Louisiana, where her clients are clustered. In her morning sales calls, the banker visits with a couple CEOs of different companies, gives them an "updated" general pitchbook and discusses their businesses. The third meeting of the day is a lunch meeting with a CFO from a company she "did a deal for" last year.
The banker's cell phone seems glued to her head as she drives from meeting to meeting, but she turns it off for her final meeting - an M&A pitch to a CEO of an oilfield service company. Afterward, the banker grabs dinner with another top manager at the company, and finds her way to her hotel around 9 p.m.
Tuesday
The next day the banker heads to a drafting session at the offices of a law firm downtown. She had gotten up early to read through and review the draft of the prospectus, and made comments in the margins. As her firm is only the co-manager on the deal, she merely brings up issues for the group to consider, and does not lead the discussion. After the drafting session, the banker catches an early afternoon flight home, leaving a VP to cover for her.
Wednesday
Back in the office, the banker spends all day on the phone. Flooded with calls, the banker has no time to look at any of the models dropped off in her in-box. Finally, around 6 p.m., she calls the associate and analyst team building an IPO model into her office. For an hour, they "go through the numbers", with the banker pointing out problems and missing data items. The associate and analyst leave with a full plate of work ahead. The banker heads home at 8 p.m.
Thursday
The banker is back in the office in the morning to review more models and take some phone calls, but she leaves around noon to catch a flight to make it to a "closing dinner." It is time to celebrate one of her successfully managed transactions (it was a follow-on) with the working group. As the lead manager, the banker makes sure that she has plenty of gag gifts for the management team and jokes to tell the group.
Friday
The banker plans on staying in town to make a few sales visits in the morning. Armed again with pitchbooks, the banker spends a few hours wooing potential clients by discussing merger ideas, financing alternatives and any other relevant transaction that could lead to a fee. Heading home, the banker touches base with her favorite associate to discuss a few models that need work, and what she needs for Monday.
Weekend
Over the weekend, the banker has models couriered to her home, where she goes over the numbers and calls her comments and changes in to the associate.
The Formula for Success
The formula for succeeding in banking depends on your role, but some generalizations can be made. The expected qualities of hard work, confidence and dedication ring true in every job, but corporate finance takes these expectations to the nth degree.
Analysts
For the analyst, it is all about keeping your head in the computer, working long hours, and double-checking your work before showing it to bankers. Nothing angers a time-constrained VP more than a young naive analyst who puts together subpar work. Quality of work is key to establishing respect early on, and bankers respect number crunchers who make few mistakes and are not afraid to ask smart and to-the-point questions pertaining to a particular assignment. And, while "face time" is officially poo-poo'ed at every bank, bankers tend to frown upon analysts gone before dinner time. A new analyst's best move is to ease into a stressful environment by working hard, learning the ropes as quickly as possible, and representing oneself as eager and willing to put in the effort required of them.
Generally, analyst programs last two years. Then, "graduating" analysts often leave to attend graduate school or to find another job. The experience is not all gloom and doom, as analysts receive a fast-track learning experience on Wall Street, top bonuses, and admission to some of the best business schools in the count y. Also, analysts able to stand the long hours and stress will stay on for a third year in order to gain more experience, more money, and a better shot at getting in a top MBA program. Depending on the firm, Wall Street analysts either join a specific industry or product group, or fall into a category called generalists, which means that they work on deals and pitchbooks for a variety of industry groups and hence learn about a variety of companies in a range of industries. Only a small handful of the brightest analysts are promoted to the associate level without an MBA.
Associates
The associate excels by demonstrating an aptitude to learn quickly, work hard, and establish himself as herself early on as a dedicated group member. At the associate level, placement into an industry group typically occurs soon after the training program ends, although some firms such as Salomon Smith Barney offer generalist programs for an extended period. Impressions can form quickly, and a new group member who shows willingness to work hard and late for a group will create a positive impression. Associates are more involved than analysts in client meetings, due diligence meetings, drafting sessions and roadshows. So, associates must be able to socialize with clients well.
Over time, associates spend more time on the road, and supervisors keep an eye on their manner and carriage in front of clients. Sharp comments, confidence and poise in front of clients will at this point do more for an associate than all-nighters and face time. Typically, associates move up to the senior associate level in two years and to VP within three to four years.
Vice Presidents
Depending on the firm, VPs often succeed by showing good managerial skills over deals and transactions, as well as over analysts and associates. VPs ultimately are responsible for pitchbooks, transaction details and therefore become managers both in and out of the office. Most important however, is a demonstration of leadership. VPs must win business, convince clients to go ahead with certain deals, handle meetings effectively, and over for MDs at all times.
Managing Directors
Success for an MD comes with industry knowledge, an ability to handle clients, and an ability to find new ones. The MD's most important task includes schmoozing in the industry, finding potential deals, and pitching them with confidence and poise. Public speaking skills, industry awareness, demonstrated experience and an ability to sell combine to create the best bankers. Importantly however, MDs must still be able to grasp the numbers side of the business and be able to explain them to clients. The progression from associate to MD is typically an eight- to 10-year track.
