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All You Need To Know About Investment Banking Training

In today’s era, Investment Banks play a significant role in boosting the economy by matching sellers and investors and increasing the liquidity status of the market. They act as advisors for companies on several complex financial matters, which increase the company’s growth and profit. The growth in business in turn helps to boost the economy. Investment Bankers in turn lead a high-octane job profile. It’s exciting, diverse, rewarding, and yet demanding and stressful. With the focus of acing the Investment Banking profile, in this article, we have stressed the importance of why a budding professional needs good Investment Banking Training.

Investment Banking Training

Introduction to Investment Banking and Bankers

Investment banks are non-deposit banking divisions or firms that have been licensed by the Capital Markets Authority (CMA) to conduct financial advisory services and corporate financial transactions. The major role of Investment Bankers is to connect the right investors like the public and lending institutions to any firms looking for their service. They conduct complex financial transactions in the area of mergers and acquisitions, Initial Public Offerings (IPOs), divestitures, security brokerages, risk management and analysis, and leveraged buyout to name a few. They are very important for the economy of any country for the following reasoning : 

  • They help in capital formation by stimulating high-net-worth individuals into investments, thereby increasing the capital flow in the market. 
  • They are directly and indirectly responsible for the growth of the Gross Domestic Production (GDP).
  •  They create adequate employment opportunities.
  • They help in creating liquidity in the market by selling Initial Public Offers (IPOs) and shares.
  • They assist in the development of infrastructure for the Government by assisting in fund management.

Now let’s take a look at the ground level employees who make the wheels of the Investment Banks running. Here are a few reasons why Investment Bankers add value to their transactions with clients: 

  • They develop various valuation models to help in mergers and acquisitions, and fundraising transactions.
  • They conduct in depth market research, company analysis, financial performance, and competition analysis.
  • They prepare pitchbooks, presentations, and analysis reports for clients.
  • They assist in the entire documentation during any major financial deals.

All these roles help the client business to concentrate on its core business instead of wasting time, money, and resources on these functions. 

Investment Banks and  Divisions

The foundation of excellent Investment Banking Training starts with teaching the different divisions in Investment Banking. A general understanding of all the divisions and the roles and responsibilities expected should be given. First, let’s have a look at the various types of Investment Banks operating globally : 

  • Bulge Bracket Investment Banks: These are major banking firms that have a large international and national presence. The clients are generally Fortune 500 companies and maybe Fortune 100 too. Their deal sizes are generally USD 1 billion and above and their global presence enable them to extend their services for the client in all the required location. They offer services in all the investment banking areas like mergers and acquisitions, asset management, equity research, and others. A few examples of Bulge Bracket are JP Morgan, Barclays Citibank, and HSBC.
  • Mid-Market Investment Banks: These banks are mostly locally present. Their clientele is not as big as the bulge bracket and generally, the deal size is lesser than USD 1 billion. They offer their services in all areas of investment banking. A few examples of mid-market banks are Axis Capital Ltd., Avendus Capital, Houlihan Lokey, and Cowen Group.
  • Elite Boutique Investment Banks: Firms like Morgan Stanley, Lazard, Evercore, and Rothschild & Co., are elite boutique banks as they deal in only specific areas of investment banking services. Their deal size is comparable to the Bulge bracket, they may be present globally too, yet they offer services in either Mergers & Acquisitions, asset investment management, and corporate restructuring.

In the following section, we will look at the services that a typical investment bank offers to its clients : 

  • Sales and Trading: Investment Bankers raise funds through leveraged loans and high-yield bonds. They analyze the capital requirement of the company and match investors/lenders accordingly.
  • Debt Capital Market: The Investment Bankers raise capital for a company by trading the debt securities or corporate bonds of the company
  • Equity Capital Market: Investment Bankers raise funding for a company by structuring and managing their Initial Public Offerings (IPOs)
  • Mergers & Acquisitions: Investment Bankers play a major role in the entire process of mergers or acquisitions. They do the entire market research, sensitivity analysis, forecasting, and documentation for the clients. 
  • Restructuring: The investment banks assist in the financial restructuring of the company to increase profitability and in turn the creditworthiness of the company for the shareholders and investors.: 

Fundamentals of Finance

Finance is the most fundamental part of Investment Banking. All good Investment Banking Training courses ensure that the aspiring professional can understand all financial documents and is aware of the following financial terms: 

  • Time Value of Money: The value of money currently in hand is more than for the same amount in the future. If the money at present is not invested properly now, then it cost a major loss opportunity cost to the investor. The method of analyzing the time value of money is also known as evaluating a discounted cash flow (DCF) method which is used by an investment banker to gauge the potential gain from any future projects being taken up by the client company. The DCF evaluation is also an integral part of risk management and financial planning.
  • Risk and Return: A good investment banker knows the potential and risk taking capacity of a client firm. Thus keeping that in mind they evaluate and analyze the investment potential.
  • Financial Statements: A proficient investment banker should be able to understand and analyze the financial statements of a company. The Financial Ratios in the statements give an insight into the profitability of the company, how effective its management is, what is the debt load on the company, and how efficient its overall operations are. This insight helps during decisions of mergers and acquisitions and investment.
  • Corporate Finance: Corporate finance deals with managing the financial activities, managing the capital in the company, and increasing the value of the company to be more credible for the investors. It includes working capital management, capital budgeting, and capital structure. An investment banker can analyze the creditworthiness of the company before proceeding further in any deal or negotiation.

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Economic and Market Analysis

An essential module in any Investment Banking Training program is the analysis of economic indicators. These indicators such as Gross Domestic Product ( GDP), inflation rate, crude oil prices, unemployment rates, Consumer Price Index, etc, help in the analysis of the current and future economic activity and stability of the market. These macroeconomic factors reported by the government or nonprofit organizations are the indicators of the financial health of a country. An ace investment banker has to be able to understand and analyze the economic trends through these indicators.

Market research and analysis are two strong points of an ace investment banker to contribute to making informed decisions before any important merger and acquisition or raising capital. With the help of different methods an evaluation of the past, current, and future market trends, growth rate, customer behavior, market size, and competitors an investment banker develops strategies to predict the trends, analyze key competitors, and identify risk and opportunities which help in making data backed decisions. 

Technical Skills Development in Investment Banking Training

Financial Modeling is an important part of Investment Banking Training courses and all leading institutes focus primarily on training the students on this aspect. Financial Modeling is required by an investment banker to forecast the financial performance of a company, project, or firm in the future based on relevant assumptions done with the help of various complex mathematical techniques. An investment banker uses it for making informed decisions in the area of sales and trading, portfolio management, equity research, and before releasing Initial Public Offering (IPOs) and shares. The historical, current, and predicted financial performance of a company, share, financial asset, or major investment is done with the aid of financial models to project the viability of the decision.

The Key Components of a Financial Model Are as Follows : 

  • Balance Sheet
  • Income Statement
  • Cash Flow Statement
  • Supporting Financial Schedules
  • Sensitivity Analysis
  • Valuation Reports

These are basic financial documents, the knowledge of which every investment banker must know. 

There Are a Few Commonly Used Financial Modeling Techniques That Investment Banks Use, These Are as Follows : 

  • 3- Statement Models (Balance Sheet, Income Statements, and Cash Flow Statement)
  • DCF and Valuation Model
  • Mergers & Acquisition / Accretion/ Dilution Models (These are specifically used for Mergers & Acquisition)
  • Leverage Buyout Models

An ace Investment Banker needs to be good at analyzing the trends and patterns based on which they can make presentations to clients.

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Industry Research

Industry Research is a crucial role for an investment banker. Market research helps the banker to make more accurate valuations as they are based on data. From the point of view of an investor, it gives a clearer picture of the company’s revenue, growth, market credibility, and performance, which in turn assists in making correct investment decisions. Thus, research is an integral part of all Investment Banking Training courses. Here is a brief overview of the classification of research methods, which will assist students to judge the course curriculum of any institution: 

  • Quantitative Analysis: In this analysis, the company’s liquidity, profit, revenue structure, operations, and solvency are taken into account.   
  • Technical Analysis: The technical analysis involves using modeling techniques and other data analysis of the past and current financial data of the company relating to volume, price, and asset value to forecast the future value of returns on investment in that company.
  • Macro Economic Analysis: Research based on the impact of macroeconomic factors like inflation, government regulation and policies, GDP, and other related factors, on the revenue and financial assets of a company is known as macroeconomic analysis. 
  • Sentiment Analysis: The analysis is based on market sentiments, investor sentiments, and their impact on the credibility of the company.

Mergers & Acquisitions

Mergers and Acquisitions are complex financial processes that are the main bread and butter of the Investment Banking industry. A company takes the assistance of an Investment Bank when they plan to acquire a new company, a division of the company, divest or sell themselves for higher profits A detailed study of this module must be a part of every Investment Banking Training.  The role of an Investment banker in the entire process is as follows: 

  • Industry Overview: A company either has limited sources or is short on time to research to gauge the overview of the industry. An Investment Banker, thus, assists in providing the list of the potential sectors and potential companies to conduct the best viable deal.
  • Company Valuation: The main role of an investment banker is to evaluate the valuation of a company. They have to be adept in the latest financial modeling techniques, that are used to forecast the actual valuation of the target company based on its historical and current financials. They must be aware of trends, patterns, and variations in the valuation. This helps a big deal in favor of the client to make an informed correct decision.
  • Origination of Deal: The Investment Banker has to match the best possible company to the need of the client and propose to initiate the deal. 
  • Negotiation: In a negotiation, there are two sides involved, a buy side and a sell side. The negotiations involve various complex financial details that the companies on both sides may need to be made aware of. Investment bankers engaged in both sides have to ensure that all the possible financial details and regulations and legal compliances are taken care of during the negotiation, which works in the best interest of both parties. This helps the companies save a lot of time and any blunders in the future.
  • Closing the Deal: Investment Banks overlook the entire process of the contract starting from scratch, like preparing the draft, entire documentation and finally getting the deal legalized.
  • Post Merger Assistance: The responsibility of an Investment Bank doesn’t cease at the deal finalization. They have to ensure that the process of partnership or merger is carried out smoothly.

Soft Skills Development

Apart from educational skills, there are certain soft skillsets that organizations give preference to when choosing a potential candidate for the role of an investment banker. These soft skills are an essential part of all the Investment Banking Training courses and are generally clubbed with resume building and interview preparation of the students. The soft skills that are expected of an ace investment banker to possess are : 

  • Communication: Investment bankers have two major roles to perform, the first is client interaction and the second is presentations to internal company members. Both roles require them to be excellent at making presentations and explaining complicated financial terms that can be easily understood even in layman’s terms.
  • Analytical Skills: The role requires dealing with huge data sets and modeling techniques. An investment banker is expected to analyze details and present solutions to complex financial problems and variations. They need to have a keen attention to every detail as any oversight can cause grievous mistakes during dealing and negotiations.
  • Creativity: An investment banker has to be creative in figuring out different solutions to problems. They should be open minded to receive suggestions and criticism at the same time and always look forward to coming up with new ways to tackle the problems at hand.
  • Discipline: Investment Banking is although quite a lucrative and high paying career, yet stress, and long working hours go hand in glove with the job role. Thus, an ace banker would always know how to work keeping their work life balance and not relent under pressure.
  • Time Management: An investment banker has to maintain multiple projects at the same time, thus, multitasking is an innate skill one needs to develop. Time management is of utmost importance as any delay can not only cost the client and the bank huge amounts of money but also causes a big dent in the credibility of the banker and the bank.
  • Networking and Relationship Building: In the investment banking sector, the clients that a banker deals with are highly educated, skilled, and people at high posts like CEOs, CFOs, MDs, etc. Thus, not only communication skills are important but good relationship building skills are integral to acquiring and retaining clients. A good relationship with present clients paves the way to an extensive networking opportunity, as here word of mouth counts majorly.

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Education and Professional Certificates 

The top Investment Banking Training programs being conducted by top institutions have the following educational and professional requirements for the candidate: 

  1. Graduation in finance, accounts, mathematics, statistics, or any equivalent degree in finance.
  2. Post Graduation in finance 
  3. Minimum 2 years of work experience in the same field ( few institutions have this as a prerequisite to admission in their course)
  4. Additional certificates which an aspiring professional can get to get an edge during placement drives. These are as follows : 
  • Chartered Financial Analyst (CFA): It is a globally recognized certificate that is awarded by the CFA Academy. This is to certify the integrity and competency of an aspiring candidate as a financial analyst.
  • Financial Industry Regulatory Authority (FIRA): An investment banker keen on working in the US has to obtain a license from this body to work in any security firms and brokers.
  • Certified Public Accountant (CPA): This certificate is awarded by the American Institute of Certified Public Accountants and gives the license for a candidate to work in the finance and accounting industry.
  • Financial Risk Manager(FRM): This certification course gives the students training in all new developments and improvements in fields related to risk and quantitative analysis.

Professional Ethics and Integrity

There are many situations an Investment Banker has to face while on the job that put them in dilemma regarding the right code of conduct and business ethics. A top Investment Banking Training course has professional ethics and integrity as a part of their training to ensure that students can make ethically right decisions. Here is a list of inclusions in the Professional Ethics training course : 

  • Fiduciary Duty: This emphasizes the duty of the Investment Banker to work for the benefit of the client even during circumstances that are not agreeable to the banker. The banker has to always give unbiased professional advice to the client which should not be of any benefit or gain to the banker.
  • Insider Trading: Insider trading has severe legal consequences which the banker is made aware of and in no circumstances should indulge in such illegal practice of trading securities.
  • Confidentiality: In this section, the consequences of revealing confidential information about the client or the negotiation by the investment banker are taught.
  • Conflict of Interest: Many circumstances may arise during a negotiation that acts in conflict of interest of the bank, yet the banker has to find solutions and impart unbiased advice in these circumstances which act for the benefit of the client.
  • Compliance: In this section laws on anti money laundering, know-your-customer procedures, and other compliance factors associated with negotiations are imparted to the students.
  • Whistleblowing: Even as a junior associate if a banker comes across unethical conduct and dealings, in which manner and on what criteria can they report is taught to the students.

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In conclusion, a career in Investment Banking is highly lucrative not only in terms of remunerations but also in terms of learning new skills. The role also carries a lot of responsibilities and stress, dilemma and long working hours are a part and parcel of the role. A good Investment Banking Training program not only focuses on the financial fundamentals but also on the additional nonquantifiable aspects of the responsibilities. 

All Investment Banking Training programs focus primarily on the fundamentals of finance, new technologies introduced in the field, modeling techniques, mergers and acquisitions, and capital markets to name a few. This equips the students to navigate smoothly through any complex financial deals, analyze the market correctly, and impart informed decisions to the clients.

An integral part of any Investment Banking Training program is soft skills development which is a nonnegotiable for any aspiring candidate. The clientele they face, the complex financial terms that they have to break down during presentations, and the networking skills required for customer attraction require expert guidance which good training can provide. Another important benefit of Investment Banking Training is the knowledge of the code of conduct, compliance, and laws and regulations ensuring that the candidate when faced with these kinds of situations in the future can act ethically correctly.


Q. Why is it important for an aspiring candidate to join a training course?

A training program provides an aspiring investment banker with the necessary financial skills like mergers and acquisitions, capital markets, financial structuring, and an understanding of Initial Public Offers and stocks and bonds. Courses that focus on modeling, valuation techniques, and sensitivity analysis gives an in-depth understanding of the technology being used in investment banking. In addition, soft skills and a code of conduct prepare the student for any compliance or ethical issues they might face in the future.

Q. Are there any key educational and professional requirements for joining a training program?

A candidate interested in joining an investment banking course should have a bachelor’s degree in finance, economics, mathematics, and statistics. A post-graduation degree like an MBA gives an edge to the student in understanding the course and job placements, yet it is not a prerequisite. Top institutions like IIMs require a minimum work experience of 2 years in the same field as a requirement to join their course.

Q. What are the certificate courses which an investment banker needs to acquire?

The certificate courses which an investment banker while on the job requires are as follows:

  • Certified Financial Analyst(CFA)
  • Certified Financial Planner ( CFP)
  • Certified Investment Management Analyst(CIMA)
  • Association of Chartered Certified Accountants (ACCA)
  • Chartered Financial Consultant(CHFc)

Geetanjali Pantvaidya is a Post Graduate in MBA Marketing from Army Institue of Management Kolkatta. A Y2k batch pass out , She started her career with Caltiger.com which the country’s first free ISP. She has over 12 years experience in marketing working in the telecom industry, banking , insurance and the education industry. Hailing from an army family background, the love for travelling was deeply rooted in her veins since childhood, thus, her stint as a travel manager with Thomas Cook. She embarked on her journey as a content writer with a travel company.

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