Top 6 Investment Banking Skills – A Comprehensive Guide
So you reckon yourself a pretty smart guy, top of the class. You have impeccable analytical and mathematical skills required to excel in the field of investment banking. Do you think you are going to land a lucrative investment banking job based only on your academic credentials? Well! think again: it might surprise you, but getting a job isn’t about your grades. I mean, sure, they’re important, but you’re going to need some other skills, too. You may be the best investment banker with an incisive understanding of the market. But talent amounts to very little if you don’t work well with other people. Today we will discuss the top investment banking skills required to excel in the field. Some of the must-have professional qualities I discuss can be as important as exam qualifications.
Don’t panic! Everyone has some form of soft skills. There’s a growth mindset, resilience, communication, critical thinking, and emotional intelligence, to name a few. While hard skills are measurable abilities such as science, languages, or maths, soft skills are the important general qualities that make you a good employee. There are a combination of lots of things, including social skills and character. It’s no wonder employers put so much importance on soft skills. They won’t just help you land your first job, but wherever you want to work in the future, they’ll give you a head start.
Skills Required for Investment Banking Jobs
The skills are divided into three parts: hard skills you must know to get an investment banking job anywhere in this world. It would be best if you were very clear on your concepts, and soft skills are required for accelerated growth. Let’s discuss hard skills first.
Investment Banking Skills #1 – MS Excel:
Microsoft Excel is one of the most powerful yet very underrated software used by Windows. It is used across many companies, from manufacturing, sales, construction, consulting software, and banking. You could be an admin, HR, marketing, finance, engineering, or salesperson in any of these fields, and Excel would be helpful.
So, some of the main uses of Excel are listing and organizing the beta information: for example, marketing data, sales data, customer data, HR data, and presenting data. Excel is useful for converting numbers into tables, charts, and graphs, analyzing data, and making future predictions for marketing accounting and manufacturing. Some even use it for project planning and even invoicing. And here’s a very interesting point many companies don’t tell you beforehand. They need you to be good at Excel.
It’s assumed that you already know about Excel before joining the organization. It helps you know the more advanced techniques of Excel, for example, things that you can do in just half an hour, which sometimes takes one to three days to do without knowing the techniques. Excel can make you the go-to person in the office. You know, whenever people have any problems with Excel, they always will come looking for you.
In a nutshell, knowing and mastering Excel can bring about a higher salary in your job. In the beginning, Excel might feel a little bit difficult, but with a little bit of practice and good coaching, you can master it, and that’s why you should learn Excel.
Investment banking Skills # 2 – MS-Powerpoint:
We all know that advanced information communication technology is being utilized in offices, schools, and colleges as well. Teachers used to draw figures on the blackboard or illustrate charts in former days. When they explained everything early, today teachers can chill slides on computers.
When they explain topics, PowerPoint is a popular and easy-to-handle medium used to present any topic. To the point that teachers can present any subject effectively. Using PowerPoint, they can explain with the help of sound videos or illustrations.
PowerPoint is a good medium for explaining difficult subjects like science and history. We can show the process of science experiments or make exciting slides to teach history to students.
Tips to improve the presentation skill.
- The first tip is to go for mental outlining of the PowerPoint presentation. For example, how many slides do you require in the presentation for telling a story like PowerPoint? It helps you to sort out the whole context.
- The next tip is to use a colour palette for your presentation. So, once your outline is ready, you start preparing your slides. The first thing you need to do is choose a template for your presentation. One important aspect is the colour palette, so what is the colour palette? A colour palette is a combination of colours that go very well with each other and also make your presentations look beautiful. So, if you’re going for an inbuilt template of PowerPoint, then the colour palette usually comes along with it, but if you’re preparing your templates from scratch, something I like to do, then you should go for a colour palette. Now, many websites are available with beautiful colour palettes.
- Another suggestion when choosing a colour palette would be to go with the colours of the brand that you’re presenting. So, say, for example, you have a college presentation, and then you can use colours that are present in the logo of your college. Or, if you’re going for a company presentation, then you can pick colours that represent the brand or even represent the logo of your company. When you choose a colour palette, it gives a theme to your presentation and brings the whole presentation together.
- The next tip is to use the right font for your presentations. When it comes to fonts, I have seen most people using Times New Roman, but the problem is that it is a serif font. Serif fonts have different thicknesses at different parts of the letter, because of which they are tough to read on digital media. So, when going for digital display-like presentations, it’s always better to use sans-serif fonts. So, sans serif fonts have uniform thickness all around the letter, which is why they are much easier to read. My top recommendations for your presentations would be to go for category aerial or open sans fonts.
- Let’s talk about the content of your presentation, and here, my tip would be to use powerful headers for your presentation. Most of the time, I see people using very boring slide titles like introduction, data, and results. So, instead of that, what you should try to do is use titles that, in very few words, explain what your slide is all about. Let me take an example. Say you have a presentation on solar panels, so instead of using the title as an introduction, you could probably write what solar panels are. Using these kinds of headers captures the attention of your audience and makes them listen to your presentation. Also, remember them long after you’re finished presenting, so do try it out.
- The next tip concerns controlling the amount of text on your slide. I am sure that if you came across a slide full of text. You will never put any effort into reading it. So, how much text is enough text on a slide? Well, for that, you should follow the 7×7 principle. According to the 7×7 rule, you should not have more than seven words in a sentence and not more than seven sentences or seven lines in total in your presentation. My suggestion would be not to write information in paragraphs at all. Try to use bullet points on your slides, and even when writing information in bullet points, try to use only the phrases. You don’t have to write full sentences, only mentioning the key phrase your audience can understand. These simple steps of content writing will make your audience more engaged in your presentation, and they will also find your slides much more attractive.
- The next tip is about using powerful graphics on your slides. More than the text, the audience usually focuses on the visuals in your presentation, so you should put in some time to make them eye-catching. When it comes to data, my suggestion would be to use graphs like bar charts or pie charts instead of just putting up a boring table and fitting in all the information there. When it comes to pictures, avoid using clipart gifs or pictures that are of poor quality or have watermarks. Some of the websites where you can get good quality pictures for free would be Unsplash Pixabay. Also, if you’re obtaining these pictures from published sources and they are not your pictures, always credit them and mention the sources from where you have obtained them. This will improve the credibility of your work.
- Let’s discuss some tips on how to deliver these presentations. I know a lot of you feel very nervous when it comes to getting up on stage and delivering these presentations. Hopefully, these tips will help in improving your presentation skills and also take away some of your nervousness. When it comes to presentation delivery, try to adopt a delivery style that engages your audience. What I’ve noticed most people doing is that when they go on stage to speak, they either turn their back towards the audience and then read everything from the presentation. Some people would take a sheet of paper on the stage and read everything from there. Please don’t do that. Both these methods prevent you from making eye contact with your audience. After some time, your audience will lose interest and stop listening to you, so instead, what you need to do is go for a more engaging delivery style. Only have key points in your presentation, and then from there, elaborate upon those points. While making eye contact with your audience, this kind of delivery mode will help you connect better with the people who are listening to you and will keep them engaged throughout the presentation. This brings me to my next point, which is making eye contact during your presentation.
- Due to nervousness, a lot of people avoid making eye contact with their audience, and they either look down or look behind the audience at a wall or something. Please don’t do that to engage your audience in your presentation. You must maintain eye contact with them. So, if you’re feeling nervous, my suggestion would be that you start with some familiar or friendly faces in the audience, and then slowly, you can look at other people in the crowd as well. So you could look at some people on your left, then in the middle, and then probably on the right, and then keep repeating this exercise. When you do that, you will realize you can bind your entire audience together.
- The next aspect of good presentation skills is body language. Research says that 55 of the communication occurs not through what you’re saying but through your body language. So, use your body language to your favour to increase the impact of your presentations: keep a straight posture, maintain eye contact with your audience, and use hand gestures to increase the impact of your delivery. If you’re uncomfortable using hand gestures too much, you could keep them in a steeple pose. Keeping your hands in this posture also shows confidence when talking, so use body language to your advantage when delivering your presentations.
- The final tip to deliver killer presentations is to practice all these tips. They are useless if you don’t practice them, so when preparing your next presentation. Make sure to use these tips. This will help you remember them. Also, apply them to your future presentations once these slides are ready. Practice delivering these presentations, standing in front of a mirror, or recording yourself on a camera. This is the best way to analyze your mistakes and improve upon them, so practice practice. Practice until you’re happy, satisfied, and feeling super confident.
Investment Banking Skills # 3 – Financial Knowledge:
You need to have intermediate knowledge in finance. For example, you must know CFA level 1 or interlevel knowledge of CA. MBA in finance is very good to go. I am giving here an example of finance. The property you own and rent to a renter is an asset. You rent your property, and the renter pays you rent every week or fortnight. Assets put money in your pocket. The property that you live in and have a mortgage on is a liability because it takes money out of your pocket. A financially literate person tries to accumulate more assets and fewer liabilities.
First, you need to learn basic to advanced-level formulas of Excel to create a full-fledged financial statement. Then, the candidates have to know the real-life financial case studies.
At the end of the day, when it comes to professional business valuation, there are three main approaches. We’re going to go through each of those three with you. Right now, we’ve got a cost approach. You’ve got a form of relative valuation known as a market approach, and finally, you’ve got an intrinsic form evaluation known as a discounted cash flow analysis.
When it comes to the cost approach, there are two different methods. One is looking at what the cost to build something was. For example, say you were going to buy a company that had a manufacturing facility. How much has been invested in building that facility? And what was the total cost of it? Another approach is to look at the replacement cost. It’s one thing to consider how much it costs to build something. But that may have been a long time ago, and inflation, as well as technological changes, may mean that the replacement cost today is dramatically different than what the cost to build originally was. When looking at valuation, the cost approach can be useful because it’s like an opportunity cost.
If I wanted to acquire a company, I could pay for that business already operating. Let’s look at the market approach as a form of relative valuation. With this approach, we look at what other companies or assets are worth and use them as a proxy. For what we’re trying to value, the first method is to look at comparable companies that are publicly traded. They’re relatively easy to find because these companies share trade on exchange. They’re publicly invested, so we can view their price at any time and determine what other investors will pay for that company. If they’re similar to the one we’re trying to value, then we can use ratios to figure out what that company we’re trying to value is worth based on its revenue.
The other way to use the market approach is to look at precedent transactions. Precedent transactions mean past mergers and acquisitions, where we can see how much an acquiring company paid for a business. This form of valuation includes a takeover premium.
So generally, more money is paid for a control position taken together. These two forms of market valuation can provide a good overview of what a company might be worth relative to other companies. Finally, on the right, we have discounted cash flow analysis, a form of intrinsic value. Intrinsic value means that we look at the company in isolation.
Investment banking Skills 4# – Research Skills
We don’t look at what other companies are worth. We don’t look at the cost approach to see how much has already been invested. Instead, what we do is forecast the future performance of the business. Typically, about five years, then assume a sale of the company or a perpetual growth rate to give us a terminal value. This constitutes the forecast; that forecast is then discounted back to today using a discount rate.
Typically, the weighted average cost of capital lets us arrive at the net present value of the business. So, as you can see, this form of valuation only looks internally at the company, makes assumptions about what the future of the company will look like, and discounts all of those cash flows.
Investment Banking Skills # 5 – Knowledge of Statistics
A solid intermediate to advanced accounting knowledge of statistics and maths skills so that you can create the valuation method in a real-world scenario.
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Investment Banking Skills #6 – Keen Discernment
I think curiosity is a human and animal trait that forces you to seek out novelty, examine it, test it, and discover what it is. And you see it, as I said, not just in humans but in all kinds of animals, and if done carefully, it’s a survival trait. The world of curiosity is this wonderful but scary place because you don’t know what you’ll get. If you knew what you would get, you’re not being curious. You explore, you look under rocks, and there might be something on there that can kill you. And there might be something under there that could feed you, and you don’t know until you look under the rock.
Other Important Investment Banking Skills
- The next thing you should have is an analytical thing for what needs to be done in a given time. You need to understand what is right and wrong in an ongoing deal.
- Investment banking is about selling the companies, so in this case, you need to have good selling skills for the clients.
- You need to build a relationship with your clients professionally for future projects and networking. In that way, you are a trustworthy person with a good reputation for business transactions. In not the slightest manner, the trust should be broken because it is very hard to survive in an industry without trust.
- You must communicate well with simple communication techniques for a stress-free discussion.
- You need to update with global market trends with local business houses for better valuation of strategies.
- In investment banking, you need to perform several tasks simultaneously with multiple roles; therefore, you need to be a multitasker simultaneously.
- Investment banking has long duty hours; therefore, you need to be very good at handling pressure on yourself because it involves huge amounts of money in every aspect. Are you very good at managing stress with yourself?
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It is a harsh truth that in India, you need a very good qualification to get into investment banking because we have a high force sitting with excellent qualifications. Therefore, a person with an ordinary education never gets preference because of robust competition in India.
- You need a tier-1 MBA degree from the top 10 colleges in India.
- If you are a commerce graduate, you need to know about financial modeling, valuation, and preparation of a pitchbook. It will give you an edge over other candidates.
- If you have done your CFA, then EXCEL and financial knowledge are very good add-ons.
- If you are from any other background like arts, engineering, or law, then you need to do the course in investment banking to get along with concepts.
- If you have done your CA, you need to have some hands-on experience in investment banking to bridge the gap between theory and real work scenarios. With CA, you have very good theoretical knowledge. Still, you have to do some courses in financial modeling for hands-on experience.
FAQs related to investment banking skills
1. Can investment bankers become CFOs?
Yes, Investment Bankers can become chief finance officers (CFOs), but only after a minimum of 10 years of experience.
2. Can investment bankers work from home?
No, Investment banking is a work-from-office job. It doesn’t fit a work-from-home category because it is a deal-specific duty. You have to work with client-based projects with high-performance, skill-based scenarios.
3. Which is the best institute to learn investment banking?
IIM SKILLS is the best institute for value-for-money learning opportunities. Its investment banking course is three months in duration. The training offers one one-month internship opportunity. The course cost 47082 INR with tax included. The feature of the course is mentioned below:
- More than 70 hours of lectures with doubt clearance
- More than 95 hours of assignment-solving practice
- Job call support
- Linkedin Profile Building
- Mock interviews
- Installment fees payment
- Free templates
- Case study learning
- Short course to be job-ready
Conclusion on investment banking skills
The blog is written to cover all aspects of skills required in investment banking. Although I never claim that the article is perfect. I have tried to give the maximum information within a limited word limit. Which skills do you want to teach you within the coming months? Mention that in the comment section below.