Investment Banking: The Job, the Hours, the Money, and How to Get In

Say "bank" and most people picture a branch on the high street. Deposits, current accounts, a mortgage adviser in a small glass office. That's commercial banking. An investment bank is a different animal: no tellers, no queues, no retail customers. What it sells is advice to corporate clients.

Like any bank, an investment bank splits into front, middle and back office. This piece focuses on the part everyone wants in on, the Investment Banking Division, usually shortened to IBD.

How a bank is organised

Front office (roles with direct client contact):

Asset Management (AM)
Investment Banking Division (IBD)
Sales & Trading
Wealth Management

Middle office (roles that directly support the front office):

Risk Management
Equity Research
Compliance

Back office (internal roles with no client contact):

HR
IT
Operations
Legal
Finance

The pecking order

The largest and most established investment banks are known as the bulge brackets: Goldman Sachs, JP Morgan, Morgan Stanley, Bank of America, Citi, UBS, Barclays and Deutsche Bank. Even inside that group there's an informal hierarchy of prestige:

Tier 1

Goldman Sachs (GS)
JP Morgan (JPM)
Morgan Stanley (MS)

Tier 2

Bank of America (BofA)
UBS
Citi
Barclays

Tier 3

Deutsche Bank
BNP Paribas
HSBC
Nomura

Sitting alongside them are the elite boutiques, which carry comparable prestige despite their size. They're called boutiques because they run only an IBD, often specialising in a single advisory line. The best known include Lazard, Evercore, Rothschild, Jefferies, PJT Partners, Perella Weinberg, Greenhill and William Blair.

Inside the Investment Banking Division

IBD is an advisory business, and it's usually organised along two axes: product teams and industry teams.

A product is a type of advice the bank sells, such as M&A, ECM or Restructuring. An industry is a sector, such as Aerospace, Healthcare or TMT. Most banks run a matrix: product specialists who know their instrument inside out but aren't tied to one sector, and sector bankers who know every product well enough to route a client to the right product team.

The main service lines are:

M&A - advising on mergers and acquisitions
ECM (Equity Capital Markets) - IPOs and other equity financing
DCM (Debt Capital Markets) - debt financing, mainly IG bond issuance
Leveraged Finance - structuring the debt behind leveraged buyouts (LBOs), refinancing operations, general corporate purposes. Strictly high yield companies
Restructuring - turnaround work, reworking the capital structure of distressed companies

IBD (Investment Banking Division) is the most prestigious division in an investment bank, and therefore the hardest to get into. The list above is also roughly ordered by prestige, from M&A at the top (the single most competitive team in the industry) down to Restructuring.

The business model is commission-based. A bank typically earns 1% to 5% of transaction value, and since its only real cost is people, the maths pushes it toward larger deals. The same amount of work on a bigger transaction produces a much bigger fee, so banks are selective about the deal sizes they'll take on.

One thing worth understanding early: usually only the main office (often London or Frankfurt) is built around product and industry teams. Secondary offices tend to run client coverage instead. Coverage bankers are generalists specialised by geography rather than by product or sector. Their job is to win mandates from local clients and act as the bridge to the product or industry team that will actually run the deal from headquarters.

What life in M&A is really like

Start with the central paradox of the job: begin a career in M&A and you'll be earning six figures at 24 with no time to spend a penny of it.

That isn't a joke. The hardest part of the job is the hours. Expect a minimum of 75 hours a week, spiking to 90 or 100 when you're on a live deal. In practice that means working until 2am on weekdays and often through the weekend into the late afternoon. It's the price of an extraordinary salary and a launchpad to the buy side, the promised land for most finance students.

So why is the job still so sought after despite the work-life balance? Because working in M&A means orchestrating billion-euro transactions, the kind that make the front page, and owning the whole negotiation process and the valuation work behind it.

You can advise on either side. Sell-side means representing the seller; buy-side means representing the buyer. Either way, the advisor's job is to find potential buyers or sellers depending on the mandate, value the company (mostly through DCF and comparable multiples) to establish a basis for negotiating price, and run the sale process by coordinating every party involved: legal advisors, strategy consultants, auditors and the rest.

What an analyst actually does

As an M&A analyst you'll spend your time in PowerPoint and Excel. PowerPoint means information memoranda, the marketing documents that give potential buyers an overview of the target. Excel means building valuation models. A share of the work is administrative support for senior bankers.

Two years of this leaves you with the resilience and efficiency of a navy seal, wizard-level Excel and corporate finance skills, and a polished professional manner picked up from constant exposure to billionaire clients.

The day-to-day looks something like this. You get in around 9am, suit and tie non-negotiable. You clear your inbox, set the day's priorities, then start building models from financial statements and churning out slides for your associate to review.

Valuation work does involve some strategic thinking, since you have to decide which assumptions to use when projecting a company's future performance. But don't expect the creative latitude of strategy consulting. The work is more mechanical than that.

The pros

Starting total compensation (salary plus bonus) that can exceed €100k
Social status
Exit opportunities into private equity
Perks: paid taxis, client lunches and dinners at very good restaurants
Genuinely strong technical grounding in financial statement analysis and corporate finance

The cons

Brutal work-life balance (75+ hours a week)
Highly competitive environment
Steep hierarchy
Mechanical work for the first couple of years

As a general rule, the further you progress, the more the job becomes sales-oriented and the fewer hours you work, though it rarely drops below 60 hours a week. A managing director's job is mainly winning mandates from clients; they no longer touch the technical work.

The career ladder

Summer intern (3 months) or off-cycle intern (6 months)
Analyst (2 years)
Associate (2–3 years)
Vice President (promotion based on performance)
Director (promotion based on performance)
Managing Director (promotion based on performance)
Equity Partner (promotion based on performance)

The standard exits are:

Private equity
Hedge funds
Venture capital and growth equity
CFO roles

What you can earn (UK)

Summer intern: £13k–£15k for 10 weeks
Analyst: £65k–£80k base, plus a 20–70% year-end bonus
Associate: £80k–£120k base, plus a 20–70% year-end bonus
VP: £150k–£250k base, plus a 20–70% year-end bonus
Director: £300k+ base, plus 50%+ bonus
MD: £700k+ base (up to £3m), plus 50%+ bonus

How to break in

Investment banking is one of the toughest paths for an economics or finance student, and the competition is fierce for a simple reason: no other career offers entry-level salaries this high.

The recruiting cycle is unusual and runs on fixed deadlines. Here's the standard route, followed by the alternatives.

The standard path

Apply for spring weeks in the autumn of your first year
Do the spring week in the spring of your second year
Apply for summer internships in the autumn of your third year
Do the summer internship after your third year
Convert the internship into a full-time offer starting the following year, and do a one-year master's in the meantime

The alternative path is a six-month off-cycle internship. Being off-cycle, it sits outside the normal recruiting calendar and has no fixed deadlines. These positions open up as banks and individual teams need them, and after six months you can convert the offer to start full-time either immediately or within a year at most. The usual start dates are September and January/February.

You can also apply straight to a summer internship without having done a spring week, but it's harder, because a spring week typically gives you at least one of the following advantages:

Ring-fenced summer internship places, so you're only competing against other spring week alumni
Early access to summer applications
Interviews at the end of the spring week that lead straight to a summer offer

The general rule is that banks recruit full-time hires from their internship pools only. With rare exceptions, you can't apply directly to an entry-level full-time role. You can, however, apply directly to associate level and above when a bank opens a position.

If you've already started a different career and want to switch into banking, the usual route is an MBA followed by an application to a summer associate programme. It's effectively a summer internship, but one that can convert into a full-time offer at associate level.

The interview process

Expect an online aptitude and numerical reasoning test first, followed by a HireVue, which is a recorded video interview. Clear that stage and you'll be invited to an assessment centre: a single day of back-to-back interviews with people at different levels of seniority, from associate up to managing director.

The questions fall into five buckets:

Situational — what would you do in scenario X?
Motivational — why us? Why investment banking?
Accounting — above all, how the three financial statements link together
Valuation — mainly DCF and multiples
Commercial awareness — recent deals, market trends and so on

Your CV

Use an ATS-friendly template. It matters more than people think, because a CV that a parsing system can't read may never reach a human.

What recruiters look for:

A strong GPA or degree classification
A target university
A quantitative profile
Leadership experience
International experience
At least one internship in finance