Investment Banking
What is covered
What many consider the pinnacle of finance with 6 figure salaries right out of college. 2 years of experience in 1 year in the biggest cities in the world. M&A, restructuring, capital raising, and equity raises. The role is fast paced but worth the long hours if you love banking, or if you see private equity, hedge funds, and veture capital in your future.
In this module we explain what investment banking is, the pay, hours, and hierarchy. Everything you need to know to answer the all-important "Tell me what an investment bank does," question.
What do IB analysts do?
Investment banking is typically structured in a hierarchy of roles and also divided into “product groups” and “industry/coverage groups.” Product groups specialize in a type of transaction like mergers or raising capital, and industry groups focus on a specific sector like healthcare or tech, but here we’ll focus on the four main product areas: M&A, Restructuring, Equity Capital Markets (ECM), and Debt Capital Markets (DCM).
1. Mergers & Acquisitions (M&A)
This is the group that clients call when they want strategic advice around one company acquiring another or two companies merging (A process than can take anywhere from 6-18 months). This is also the area most people think of when someone says investment banking. M&A bankers are in charge of analyzing financial statements, building forecasts and valuation models (discounted cash flow, comparables, precedent transactions), building pitchbooks to persuade clients, advise on deal structure, negotiate terms, and coordinate due diligence with lawyers, accountants, and other advisors.
The outcome can be a negotiated purchase of one business by another, a hostile takeover defense, divestiture of a business unit, or a spin-off. Deals are complex, fast-paced, and involve both financial and strategic logic because M&A bankers must justify why a deal should happen and how much one company should pay for another. M&A work is usually the most technical and often feeds directly into private equity recruiting because of this intense modeling work.
2. Restructuring
Resturcturing bankers advise when a company is under financial stress and may need to reorganize its capital structure to remain up and running. That could involve negotiating with creditors to reduce debt, refinancing obligations, advising companies entering formal bankruptcy processes (like Chapter 11 in the U.S.), or planning outside-of-court workouts. Restructuring professionals build detailed cash-flow forecasts, design renegotiation strategies, coordinate with legal and tax advisors, and help balance creditor interests with keeping the company solvent. This work generally requires comfort with both finance and legal frameworks as well as the ability to manage competing stakeholder interests in distress situations.
3. Equity Capital Markets (ECM)
ECM bankers help clients raise equity capital. This can mean shares of stock or equity-linked securities. That includes advising on initial public offerings (IPOs), follow-on offerings where a company already publicly listed issues more shares, convertible bond offerings, and block trades of existing shares. ECM professionals must understand how markets are pricing stocks, timing offerings for optimal investor interest, developing investor outreach strategies, and coordinating with sales and trading to place shares with institutional investors. ECM work is more market-oriented and often has shorter cycles than some advisory work, though it still requires strong communication, investor landing plans, and regulatory coordination. ECM roles are often considered a bit less model-heavy and can offer somewhat more predictable hours than M&A or Restructuring.
4, Debt Capital Markets (DCM)
DCM bankers help corporations, sovereign entities, and agencies raise debt capital. This can be in the form of bonds, notes, or structured credit products. They advise on maturity, coupon, covenant structure, and investor demand while coordinating with fixed-income sales desks, rating agencies, and settlement teams. DCM involves understanding interest rate environments, credit spreads, investor appetite for various debt instruments, and macroeconomic conditions. Like ECM, it touches the public markets, but the focus is on borrowing rather than selling ownership stakes, and it often requires detailed understanding of credit risk and benchmarks across markets.
Investment banking hierarchy
Analyst
Analyst, usually the entry point for undergraduates, is the engine of any banking group. Analysts spend the majority of their time building models, preparing pitchbooks and presentations, updating market data, doing industry research, and handling the repetitive but crucial tasks that keep deals moving. They learn technical skills, such as excel, PowerPoint, valuation methodologies, and are rarely client-facing early on (Unless you are in a boutique or middle market bank). In most banks, Analysts stay for two to three years before promotion or exit. Hours are long (typically 70-90+ per week), especially around live deals, because the work is highly detailed and deadline-driven.
Intern
Across all of these product groups, the intern role serves as the entry point and trial period for a career in investment banking. Interns, typically undergraduate juniors or MBA students, spend ten to twelve weeks working alongside analysts and associates. Their responsibilities include basic financial modeling, comparable company research, pitchbook formatting, market updates, and administrative support. Interns are evaluated heavily on attention to detail, work ethic, coachability, and ability to handle long hours rather than advanced technical mastery. At most firms, strong intern performance leads directly to a return offer for a full-time analyst or associate role.
Associates
Associates generally manage and review analyst work, take on larger parts of modeling, start drafting talking points for client meetings, and begin to coordinate parts of the deal process (like due-diligence calls or internal strategy sessions). Associates often come from MBA programs or are promoted analysts. While they still do analysis and execution work, they also start to take on managerial and client-interaction responsibilities, smoothing communications between analysts and senior bankers.
Analyst (1-3 years in role)
Associate
(3-7 years in role)
VP
(7-12 years in role)
MD
12+ years
Intern (1> year in role)
Vice Presidents (VPs)
Vice Presidents (VPs) act as project managers who coordinate execution across multiple deals, look at work from associates and analysts, and interact directly with clients and senior bankers. VPs often own portions of client relationships and are responsible for sections of pitchbooks, negotiating process timelines, or managing logistics with ECM/DCM. They start to play a role in strategy and are frequently in the room when terms are being discussed or strategy is being shaped, but they are not usually the lead originator of new business.
Managing Directors (MDs)
Managing Directors (MDs) are the relationship originators and closers. They spend most of their time meeting C-suite executives, private equity sponsors, or institutional clients to pitch new work, deciding which deals to pursue, negotiating major terms, and owning the firm’s reputation in the market. The MD is accountable for revenue targets, client retention, and often has discretion over staffing and resourcing. MDs do some deal execution work as needed but primarily focus on strategy, client relationships, and generating new fee-earning business.
Salary ranges (USD)
Boutique Elite Boutique Bulge Bracket (BB)
Intern (Summer) 20-40 hourly 48-70 hourly 40-60 hourly
Analyst $105K – $165K $180K – $210K $160K – $190K
Associate $160K – $320K $265K – $400K $290K – $390K
Vice President $275K – $500K $400K – $750K+ $450K – $650K
Managing Director $600K – $1M+ $1M – $3M+ $1M – $2.5M+
These ranges reflect typical outcomes, not guarantees. Actual compensation depends heavily on deal flow, firm performance, group (M&A and Restructuring often pay more than ECM/DCM), individual performance, and market conditions. At the MD level especially, compensation is highly skewed, with top performers earning multiples of the lower end of the range.