As mentioned in Part 1 of “Types of Investment Banking Positions,“ because investment banking experience is traditionally seen as critical to positions in private equity or business development, we should spend some time discussing certain aspects that any candidate should know before pursing a position in this industry.  Part 1 of this discussion focused on the different position levels in investment banks.  Part 2 will focus on the common groups found in investment banks.  Although some investment banks may include additional groups, this list focuses on those groups that traditionally lead to M&A positions in private equity or business development.

  • § Corporate Finance—A corporate finance position would allow candidates to assist companies in raising capital for new investments and ordinary business operations. Candidates in this group would determine the amount and structure of capital raising, including whether the client should use equity, debt, convertible securities or preferred securities.
  • § Mergers and Acquisition—A position in this group would allow candidates to gain experience in structuring deals directly related to M&A and other strategic transactions. Candidates who work in this group would create valuation models, determine optimal deal structures and negotiate deal terms on behalf of their transactions.
  • § Leveraged Finance—In the leveraged finance group, a candidate would assist in the structuring and execution of leveraged debt financing for corporate and private equity clients.  To the extent a client decides to pursue debt financing, the leveraged finance group would assist in finding investors who would like to participate in the debt financing.

The reason why employers look for candidates with experience in these investment banking groups is because they all have one thing in common: each provide valuable experience in a key phase of an M&A transactions.  The Corporate Finance and Leveraged Finance groups both focus on raising the necessary capital to finance the purchase of assets.  It is very important to understand how to obtain and structure capital financing.  It goes without saying that the Mergers and Acquisition group focuses on the same types of transactions one would see in a private equity or business development position.

Lastly, one should also note that investment banks usually require its bankers to focus on specific industries.  As a result, to the extent a candidate hopes to land an M&A position that focuses on a specific industry, it would be prudent to target a specific industry group when attempting to enter the investment banking industry.