A Week In The Life Of An Investment Banking Analyst: Wednesday
A Week In The Life Of An Investment Banking Analyst continues today with Wednesday. This one is the closest to a “typical day” that I will get in this series.
8 AM - Join customer due diligence call for upcoming IPO for Client D. No way I’m at the office this early so I take this one from home.
Bankers conduct customer due diligence calls as part of any IPO process to “vet” the company, make sure its customers are happy, and make sure there are no major issues that investors need to know about. Sometimes with international customers, you get calls at 11 PM and 5 AM and such (another reason bankers work so much: to stay awake for these calls…).
8:20 AM - In the midst of the call, a fire drill erupts and one of our potential clients needs information pulled on potential acquisitions before a 9 AM Board Meeting. I have not left my apartment yet so panic sets in and I start calling every other Analyst in our office.
8:40 AM - I’m saved. The Star of our office gets back to me - as expected, he is there early to cover for me. He sends over the information.
9:30 AM - On my way to the office, Associate calls me to ask why I’m not there yet. He is about to call Client A (the one we’ve been working on the presentation and Offering Memorandum for) to discuss things. Explain that I will be there in 2 minutes.
10 AM - Call with Client A concludes and Associate and I review changes. This is revision #78 or so by now.
12 PM - Nothing immediate to do, so I run to Starbucks, the lifeblood of investment banking analysts everywhere. This is coffee #5 for the day, about par for the course. While I’m there, get Blackberry message that Client C (the private equity deal) has sent over further changes and materials for the buyers need to go out “today.”
3:30 PM - As I’m cranking through changes for Client C, a draft Purchase Agreement for Client B (the public company being acquired by a larger public company) arrives.
A Purchase Agreement (also called a Definitive Agreement or Stock Purchase Agreement, among others) defines the key terms of an acquisition. Beyond just the price per share the buyer is paying, other important terms are the representations and warranties (what the buyer/seller state is legally true about their businesses), the treatment of options (ignored, assumed, or cashed out) and the break-up fee (how much the buyer or seller pays if either cancels the deal after signing it).
That just scratches the surface and I could write a book on the topic (this will be one of my online courses for my upcoming prep service), but those are the basics.
5 PM - Finish off work for Client C and go through the Purchase Agreement with the Associate to summarize major points. Sometimes Analysts get little exposure to the legal aspect of a deal, but I was fortunate enough to learn about it here.
6 PM - Finish our summary and have the presentations department print presentations for a meeting between Client A and a potential buyer the next day.
6:30 PM - Passing in and out of consciousness due to (relative) lack of sleep the night before. Associate on Client C has a few changes and I make them quickly.
8 PM - Things slow to a crawl. No requests and I start looking online for new furniture to decorate my apartment (yes, that’s how bored I am). I’ve missed dinner with everyone else so I go outside to find something to eat.
8:55 PM - Contemplate “leaving early.” Decide it’s too risky.
9 PM - Good thing I didn’t leave early. Client A calls us and wants to change the wording on one slide of our presentation. The only problem: the Director in charge is already on his way to the airport, 20 copies in hand. His flight leaves at 10.
9:30 PM - Changes made and another 20 copies in hand, I rush to the airport to drop off the revised presentation. Director wonders why I’m out of breath when he sees me.
10:30 PM - Flood of emails from Client C. They do not want us to send materials out yet, despite the VP wanting to send them “today.” Sure enough, they have… more changes.
12 AM - Send the revised version to the Associate for inspection. Head home. Only bad TV re-runs are on so I fall asleep quickly.
As I wrote above, this is the closest example I have of a “typical day” in investment banking: periods of calm followed by periods of chaos. Despite all the work, I even had some downtime to shop online!
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Hey Dosk,
It’s a bit unrelated from your post above but it got me thinking of how analysts are placed in different categories as far as bonus compensation?
How are analysts chosen to be classified in “top, mid, or lower” buckets for bonuses?
It seems to me that either the work gets done or does not and would end up being a fairly subjective process.
The only differences I could summarize are that some are: more efficient than others, more consistent, produce better quality, more reliable and/or more available?
Zee: It’s pretty much exactly what you said. Reliability, quality, and consistency are the key factors for Analysts.
In general there is a lot more downside risk to how Analysts get ranked than there is upside…. if you screw up once that will do a lot more damage to you vs. the good that delivering a pitch or something early would bring.
It’s also highly dependent on who you work with - some people/groups are easier on Analysts than others.
I just read your week in the life of an analyst post, and I realized that there is hardly any DCF or LBO modelling involved. Given that your modelling skills are crucial in PE interviews, I was wondering how/when you learn to build such models.
Thanks!
PS: Your site is great!
First off, DCF modeling is not really “essential” for PE interviews. As far as learning LBO models, the best way is to practice on your own using models from friends or from training courses. I would go through a few yourself, then try to create them (very, very simply) from the ground up and verify that you know how to do everything. I would get started with this mid-way through your first year.