How to Be an Investment Banker, + Website

For undergraduates and MBA students, this book offers the perfect preparation for the demanding and rigorous investment banking recruitment process. It features an overview of investment banking and careers in the field, followed by chapters on the core accounting and finance skills that make up the necessary framework for success as a junior investment banker. The book then moves on to address the kind of specific technical interview and recruiting questions that students will encounter in the job search process, making this the ideal resource for anyone who wants to enter the field.

• The ideal test prep resource for undergraduates and MBA students trying to break into investment banking
• Based on author Andrew Gutmann's proprietary 24 to 30-hour course
• Features powerful learning tools, including sample interview questions and answers and online resources

For anyone who wants to break into investment banking, How to Be an Investment Banker is the perfect career-making guide.

Introduction xi

Overview of the Book xii

Who is the Book For? xiii

Structure of the Book xiii

Acknowledgments xix

Chapter 1 Introduction to Investment Banking 1

Overview of an Investment Bank 2

Overview of Investment Banking 7

The Life of an Investment Banker 22

Frequently Asked Questions 47

Chapter 2 Accounting Overview 55

Introduction to Accounting 56

The Income Statement 58

The Balance Sheet 69

The Statement of Cash Flows 83

Integrating the Three Financial Statements 88

End-of-Chapter Questions 99

Chapter 3 Finance Overview 101

The Financial System 102

Principles of Finance 107

Introduction to Corporate Finance 114

Valuing Securities 130

End-of-Chapter Questions 145

Chapter 4 Financial Statement Analysis 147

Sources of Financial Information 148

Financial Statement Analysis 158

Analyzing Different Time Periods 169

“Normalizing” the Financials 174

End-of-Chapter Questions 177

Chapter 5 Valuation 179

Introduction to Valuation 180

Comparable Company Methodology 194

Precedent Transaction Methodology 210

Discounted Cash Flow (DCF) Analysis 219

Valuation Conclusions 238

End-of-Chapter Questions 245

Chapter 6 Financial Modeling 247

Overview of an Integrated Cash Flow Model 248

Building an Integrated Cash Flow Model 262

End-of-Chapter Questions 292

Chapter 7 Mergers and Acquisitions 293

M&A Overview 293

The M&A Process 302

M&A Analysis 310

End-of-Chapter Questions 322

Chapter 8 Leveraged Buyouts 323

Overview of LBOs 324

LBO Modeling 331

LBO Conclusions: Do We Do the Deal? 347

End-of-Chapter Questions 348

Chapter 9 Recruiting, Interviewing, and Landing the Job 349

What are Investment Banks Looking For? 350

The Recruiting Process 354

Resumes and Cover Letters 360

Networking and Informational Interviews 368

Interviewing 375

Receiving an Offer and Being a Banker 398

Conclusions 403

Further Reading 405

About the Author 407

About the Website 409

Index 411

ANDREW GUTMANN is the creator of www.ibankingfaq.com, one of the most widely visited websites focused on the topic of investment banking. He has developed and taught finance and investment banking classes for a number of institutions, including the Institute for Finance, the firm that he founded. For the past five years, he has also been a career coach at Columbia Business School, where he advises and mentors MBA students interested in investment banking careers. Andrew is a former investment banker who has executed M&A and restructuring transactions for clients across a number of sectors. Andrew lives with his wife and daughter in New York City.

How to Be an Investment Banker

The competition for entry-level positions in the investment banking industry has never been more ferocious, or the recruitment process more rigorous. If you harbor a burning desire to break into the world of investment banking, you should know one thing up front: charm and a great GPA from a target school aren't enough to land you the job.

To attract the attention of recruiters and survive the gauntlet of the interview process, you'll need to be completely prepared to demonstrate a fine-grained knowledge of the investment banking industry. You'll need to be fully up on a range of core technical skills, from financial statement analysis to valuation and financial modeling. And you'll need to exhibit a firm grasp of the ins and outs of M&A and leveraged buyouts.

You'll also need to know exactly what to expect during the recruiting and interview process and how to present yourself as the kind of candidate they're looking for in every way.

It sounds like you need a friend in the business—somebody who's been there, done that, and is happy to share what he or she knows about getting in and getting ahead. Hopefully, that friend also will be a gifted teacher who knows exactly the kind of information you need to know and how to present it in a way that's easy to digest and hard to forget.

Good news: You have such a friend, and his name is Andrew Gutmann.

Creator of the popular website IBankingFAQ, and a veteran of the investment banking industry who's worked for some of the top shops on Wall Street, Andrew has spent the past several years as a career coach at Columbia Business School, where he helps prepare MBA students for the investment banking recruitment process, as well as for the job itself. Based on a course he developed for the Institute for Finance, and closely following its curriculum and format, How to Be an Investment Banker:

• Covers the full range of critical theoretical and practical knowledge
• Coaches you in the technical skills required of junior investment bankers
• Delivers priceless tips on how to prepare for an investment banking job search
• Fills you in on the fundamentals of accounting, finance, and financial statement analysis
• Gets you up to speed on valuation and financial modeling
• Provides detailed coverage of M&A and leveraged buyouts
• Walks you through the entire recruiting and interviewing process
• Contains over 150 real technical interview questions based on the content covered in the book to help readers prepare for their next investment banking interview. All answers are contained on a companion website

Don't assume that your personal charisma and your academic bona fides will be enough to wow the recruiters. Find out exactly what you need to know to prepare for and survive the rigors of the investment banking recruitment process, and let How to Be an Investment Banker be your ticket to a career in investment banking.