Research for Job Search

I recommend reading What Color is Your Parachute? as your first book when you start job hunting your Junior/Senior summer. This book is an excellent guide to all aspects of choosing a career and job hunting. It is a refreshing look that matches your life's goals to a career and shows you how to land a job in that perfect career.

STRUCTURE OF ANALYST PROGRAMS

You are typically hired as an investment banking analyst and then placed into a specific group after the first month or so of training. Training is usually four to six weeks long and consists of classroom sessions punctuated by nightly social events. The idea is to get you used to being at the investment bank, allows you to mix and mingle with co-workers with whom you will later spend copious amounts of time, and gives you a fighting chance to understand the financial analyses and models used in daily investment banking work. Placement into some groups, such as Merchant Banking or High-Yield, is extremely competitive. Your score on an accounting exam may be used to help determine if you get first or second pick.

Since there is so much training and expense for each investment banking analyst, each interviewer and HR personnel will not only be checking out your skills and background but will also be determining if you are a "long haul" player.

PLAYERS IN INVESTMENT BANKING

Basically, there are investment banks (sell-side) and clients (buy-side). Investment banks create products in their corporate finance departments to meet the financial needs of their client firms. Institutions, such as mutual and pension funds, are buy-side. 

A good starting place to learn more about investment banks and their clients is in financial management books. Chapters dealing with stock offerings, mergers and acquisitions, leveraged buyouts, and investment banking should provide you with some background information. Read the annual reports and mission statements of investment banks to get a better understanding of their place in the financial world.

The following two books have received rave reviews regarding their look at investment banking as a career.  You should probably read one of these books before reading any books on valuation techniques just to make sure investment banking is really what you want to do.

Investment Banking:  The Vault.com Career Guide to Investment Banking by Tom Lott

The Business of Investment Banking by K. Thomas Liaw

As a fair disclosure, I have not actually read either of the above books.

It is essential to your success that you read the
Wall Street Journal daily. The Bruno Business Library and Gorgas Library both subscribe to the Wall Street Journal. You can even get your own subscription at the discounted student rates. Nobody actually reads the Wall Street Journal from cover to cover, but you should spend time on major world events, major business stories, investment banking activity, and the industry sector that interests you most. Specific industry magazines or papers would also help you get a grasp of the issues encountered by investment banking analysts in those industry groups.

VALUATION AND ANALYSIS METHODOLOGIES

The following books are especially helpful in understanding the tools behind M&A and investment valuation (I have read these books).

Mergers and Acquisitions:  A Valuation Handbook by Joseph H. Marren

Security Analysis on Wall Street:  A Comprehensive Guide to Today's Valuation Methods by Jeffrey C. Hooke

M&A:  The Art of Doing the Deal by Jeffrey C. Hooke

Investment Valuation:  Tools and Techniques for Determining the Value of Any Asset by Aswath Damodaran is a standard textbook in a most business schools. However, the editing in both the text and calculations is so sloppy that following Dr. Damodaran's work is extremely tedious. Obviously, Dr. Damodaran's work ethic would be quickly corrected in an investment banking setting where millions or billions of dollars are on the line ;-)

Reading and analyzing 10-K and 10-Q reports is a core skill of investment banking analysts.  I don't really have a quick reference to help you in this area.  Your goal should be to have an intuitive feel for the general layout and interaction of the balance, income, and cash flow statements with one another.  One excellent reference is an "end all - be all" guide to the analysis of financial statements.  It is called
The Analysis and Use of Financial Statements by White, et al.  If you had a firm grasp of all the knowledge in this twelve-hundred page monster, you would be worth your weight in gold.   This book goes into detail about even obscure concepts.  It's a great investment in yourself to purchase this book.  Besides, if you decide to pursue a CFA designation, this book is required reading.

The ability to use a Bloomberg machine to look up quotes, news releases, 5-year CAGRs, yield on debt issues, and other common information is extremely helpful in both the interviewing process and when you actually begin work as an analyst. However, as a fair warning, do not put "expert at using Bloomberg" on your resume unless you can do the key strokes in your sleep. "Basic familiarity with Bloomberg" or the equivalent will reflect your knowledge but avoid exposing an issue about which any analyst or associate could easily rip into you.

Finally, familiarity with searching for financial reports in SEC's EDGAR database and understanding Value Line and S&P reports are other helpful notches to have in your belt.

OTHER SITES SIMILAR TO THIS ONE

I felt that I needed to address a site I recently came across on the web because you would probably find it anyway. The site is called InvesmentBanking.Net and for $73 a copy sells a smaller subset of the information that I am giving away for free. Judging by the content of their published excerpts and the length of the booklet (only 57 pages), you would probably find it of questionable value to your job search. Between the information in this site, the books listed above, and the resources listed elsewhere in this site you should have ample information to understand the investment banking industry, understand the investment banking analyst position, and land a job offer.

The site also lists a guide for financial modeling and pitchbooks. Honestly, investment banks are simply looking for smart, driven people they can train (usually for a month or more). As long as you have a general idea of what pitchbooks are and understand the accounting behind financial statements you will succeed. Sure, the first few months may be a little rough with so much to learn but other analysts in your class will be in the exact same situation.