Job Description

Investment Bankers 

When most people think of banking, they think of bank tellers at their local credit union who give or take dollar bills. Unfortunately, investment bankers don’t do either of those jobs and sadly, they don’t get the lollipops that somehow every local bank has. Even though investment banking isn’t as easy to explain as bank telling, I finally feel qualified to talk about the job after working long hours in it over the summer. This summer, I was an investment banking intern at Wells Fargo, which is one of the major banks in the United States. 

An investment banker is someone who helps businesses buy other companies, sell themselves, or raise money. They give advice on how these businesses should reach their financial goals. This might sound completely different than what you think banking is, but that’s because the public never sees investment bankers - they only connect with the people who run these large companies. Their main goals are to help large businesses grow as big as possible.

These roles help explain the main responsibilities of an investment banker:

• Realtor
• Fundraiser
• Therapist

Realtor

An investment banker is basically a realtor for big companies. Here is how:

1. Helping companies find the right business to buy based on certain checklists
2. Helping companies who want to sell themselves find the right buyer at the highest price possible
3. Helping the buyer and seller negotiate price and terms of the deal

Following the numbered list from above, here are a few examples of when these situations happen:

1.      When Chipotle wants to buy a business, they first reach out to investment bankers to start the search. Chipotle tells the bankers what requirements they have; this can be what industry the business is in, where they’re located, and how much sales they have. The investment bankers then pick companies based on stock market information, company websites, and their own financial opinions. They go back to Amazon with a list of best companies.

2.      La Barca, the restaurant next to USC, has money troubles. If investment bankers help La Barca sell itself, then the owners can take the money from the sale to solve their money problems. Investment bankers would use their direct relationship with La Barca to create slide decks (like real estate listings) that show why La Barca is a good business to buy. This could include their close location to USC, loyal customers, and secret recipes.

3.      Chipotle decides it wants to buy La Barca because they have similar customers, and both are Mexican restaurants. The problem is that the two companies don’t agree on the purchase price. Chipotle’s investment bankers send their price offer to La Barca’s investment bankers, who send back a counteroffer. Once the two sides agree on the price, they have to agree on how Chipotle pays La Barca. La Barca wants Chipotle to pay in all cash, but Chipotle wants to pay using debt because they don’t have to pay taxes on it. Investment bankers would then help reach another agreement.

Fundraiser

An investment banker acts like a fundraiser when it helps companies raise money so they can stay in business. Investment bankers help them get that money by marketing the company to investors so investors will buy stock in the company. Investment bankers follow the same steps that fundraisers do when organizing a fundraising campaign:

 

1.      Investment bankers learn why the company needs to raise money and get a basic view of whether or not there is interest for this.

2.      Investment bankers find investors that have enough money and interest to help the company. They find out if these investors have experiences with similar companies.

3.      Investment bankers then come up with the terms of the fundraise. This includes how much money they need to raise, what type of fundraise it is, and what the ideal investor looks like.

Therapist

Investment bankers act like therapists for big companies. Here is how:

1. Helping companies solve their financial problems
2. Helping companies deal with outside challenges, like a bad economy
3. Helping companies find new strategies to become better in their roles

Following the numbered list from above, here are a few examples of when these situations happen:

1.      Companies often go to investment bankers with worries about their financial problems. This can include why they’re not growing fast enough and why they’re losing money. Investment bankers then use their financial background to go over how these companies could solve these problems.  

2.      Walmart is not doing well with money this year because of rising costs and customers having less money to spend. They go to investment bankers to get their knowledge on how other companies are dealing with these problems. Investment bankers can also give advice based on how businesses dealt with this situation in the past.

3.      Ralph’s, a grocery store, needs help because it feels like it’s losing business to Trader Joe’s in the USC area. It wants to buy Trader Joe’s to get rid of the competition but isn’t sure if this is a good idea. Investment bankers would analyze the situation and look at whether this cost is worth it or not for Ralph’s. 

Flesch Reading Ease: 60.5

Flesch-Kincaid Grade Level: 9.1

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