As mentioned in prior discussions, in order to obtain a position relating to Private Equity or Business Development, many employers will require candidates have investment banking experience.  Although many reasons for this requirement exist, the primary reasons for this requirement are the following: (i) experience as an investment banker develops the skills needed to perform two of the three key functions in M&A (i.e., locating potential investments and performing due diligence) and (ii) experience as an investment banker ensures that a candidate as been exposed to very sophisticated transactions.  Because investment banking experience has traditionally been seen as critical to M&A positions the following two discussions will provide a general overview of this area.  Part 1 will focus on the position levels in investment banks typically open to undergraduate or MBA students (i.e., Analyst, Associate and Vice President) and Part 2 will focus on the different divisions.

  • Analyst—Analysts are usually candidates recently out of an undergraduate program who join an investment bank for a two-year program.  After the two-year program, many pursue an MBA before coming back to investment banking or attempting to break into private equity.  In general, analyst perform three functions: (i) preparing presentations and marketing documents, (ii) analyzing company information for financial projection and valuation purposes and (iii) general administrative work.
  • Associate—Associates are usually candidates recently out of an MBA programs, or possibly an analyst that has been promoted.  Associates will typically be at this level for approximately three years before they are promoted to vice president.  The primary role of the associate is to monitor the performance of the analysts.  In addition, associate will (i) assist in preparing presentations and the analysis of company information and (ii) have substantial continuing interactions with clients.
  • Vice President—Vice Presidents are essentially project managers.  With respect to marketing activities, Vice Presidents usually decide on the structure and approach used in pitch books and presentations. With respect to transactions, Vice Presidents usually coordinate the daily activities associated with the deal (i.e., manage the clients and the Analysts and Associates.  It is at this point that an investment banker would start developing relationships with clients and/or participate in client development.

It is critical for any candidate to assess his or her current experience level before considering which level they should pursue.  For example, while analyst and associate positions may not require a specific type of work experience, vice president positions typically require some prior experience in investment banking or some similar function.  In addition, depending on the specific division in which a candidate is pursuing, the position levels mentioned above may be modified.