Investment bankers advise companies, investors and governments on their largest financial decisions: selling a business, buying a competitor, listing on a stock exchange or raising money through debt. The bank runs the process, values the business, writes the documents buyers and investors read, and negotiates on its client's behalf. It is paid mostly through fees that arrive only when a deal completes, and that single fact explains much of what the job feels like from the inside.
For graduates, investment banking is one of the hardest jobs to get and one of the most demanding to hold. The hours are long, the work is detailed and the feedback is blunt. In exchange, a junior banker learns accounting, valuation and deal mechanics faster than almost anywhere else, sees how boards and owners make decisions worth hundreds of millions, and builds a CV that opens doors to private equity, corporate strategy and other investing careers.
This guide explains how a bank is organised and paid, follows a fictional sell-side deal from pitch to signing, and then covers analyst life, the career ladder, recruiting, the interviews and the exits, with notes on where Europe, the Nordics and the US differ.
Inside an investment bank
A large bank contains many businesses: retail branches, wealth management, lending, trading floors and more. When people say "investment banking" they usually mean the advisory and capital-raising business, which banks call the investment banking division (IBD), corporate finance, or simply "the banking side". Its clients are corporations, private equity funds, family owners and governments, and its products are advice on transactions and help raising money.
Coverage groups and product groups
IBD is usually organised as a matrix. On one axis sit the coverage groups, also called industry groups: technology, healthcare, consumer and retail, industrials, energy, financial institutions (FIG), real estate, and a financial sponsors group that covers private equity funds as clients. Coverage bankers own the relationships. A senior healthcare banker might spend years getting to know the leadership of a mid-sized medical devices company, so that when its board starts thinking about a sale or an acquisition, the bank gets the first call.
On the other axis sit the product groups, which specialise in a type of transaction rather than an industry. When a client decides to act, coverage bankers bring in the product specialists who know how that transaction is executed and priced. In practice, coverage analysts often do a great deal of M&A work themselves, while product analysts see a wider range of industries. Smaller banks and many European offices blur the line further, with generalist analysts who work across sectors and products.
M&A
The M&A group advises on buying, selling and merging companies. On the sell side, the bank represents an owner selling a business, division or stake, and runs a process to find the best buyer at the best price. On the buy side, it helps an acquirer find targets, value them, structure an offer and negotiate. M&A also covers defence work, such as helping a listed company respond to a hostile bid, and fairness opinions, where a bank formally advises a board on whether a price is fair. For most graduates, M&A is the classic picture of investment banking.
ECM and DCM
Equity capital markets (ECM) helps companies raise money by selling shares: initial public offerings (IPOs), follow-on offerings by listed companies, block trades where a large shareholder sells a stake quickly, and convertible bonds. ECM bankers sit close to the trading floor because their work depends on investor appetite on a given day. Debt capital markets (DCM) helps companies, banks and governments borrow by issuing bonds, advising on timing, size, maturity and pricing. DCM tends to be more flow-driven than M&A, with many smaller transactions executed quickly, and its hours can be more predictable, although the work is tied to market windows that open and close at short notice.
Leveraged finance and restructuring
Leveraged finance arranges debt for heavily indebted companies, most often to fund private equity buyouts, through leveraged loans and high-yield bonds. Analysts spend their days on cash flow, debt capacity and credit risk, which makes the group a well-trodden path into private equity and private credit. Restructuring advises companies in financial distress, or their creditors, on renegotiating debt, selling assets or going through insolvency. It is technically and legally demanding, and counter-cyclical: restructuring teams are busiest when the economy is weakest.
Not to be confused with markets
Sales and trading and equity research sit in the bank's markets division, not in IBD. Traders make prices and manage risk, salespeople look after institutional investors, and research analysts publish views on listed companies. Markets work runs to the opening and closing of exchanges and reacts to news in real time; banking runs in projects lasting weeks or months. The interviews differ too, with markets leaning on market views and quick arithmetic, and banking on accounting, valuation and deals. A muddled answer to "why this division?" is an early red flag.
How banks earn fees
In advisory work, a bank mostly earns a success fee: a percentage of the deal value, or a fixed sum, paid only if the transaction completes. There is often a smaller retainer or monthly fee, but the bulk of the money arrives at the end. The fee is negotiated deal by deal, and as a share of deal value it tends to be smaller on larger transactions.
In capital markets, banks earn underwriting fees, often called the gross spread: the difference between what investors pay for shares or bonds and what the issuer receives. Several banks usually share the fee on an IPO, with the lead bookrunners taking the largest portion. Leveraged finance adds arrangement fees and, where the bank keeps part of the loan, interest.
Why the fee model shapes the job
Several features of banking life follow directly from this. First, a great deal of work is effectively unpaid. Banks pitch for many more mandates than they win, and some deals they do win collapse before signing because a buyer walks away, financing disappears or markets turn. The analysts who built the models were paid their salaries, but the bank earned little. That is why so much junior time goes into pitching: it is the cost of acquiring revenue.
Second, deadlines belong to the client and the deal, not the bank. If a buyer wants answers by Monday morning or a board meeting moves forward a week, the work has to be done, and because nothing is paid until completion, no bank wants to be the reason a deal slips. That is the structural root of junior weekend work.
Third, senior bankers are judged largely on revenue. A managing director's standing and pay depend on the fees attributed to their relationships and deals, which creates pressure to keep many potential mandates alive at once and a steady flow of short-notice pitch requests for analysts. Bonus pools across the division rise and fall with deal activity. Finally, the model rewards trust. Clients hire advisers they believe will deliver without embarrassing errors, so a wrong number in a board presentation is treated as a serious failure, which explains an obsession with accuracy and formatting that can surprise newcomers.
Types of banks
Banks are commonly grouped by size, product range and deal type. The labels are informal and the boundaries move, but they tell you what the work is likely to look like.
| Type | Illustrative examples | What sets them apart |
|---|---|---|
| Bulge bracket | Goldman Sachs, Morgan Stanley, J.P. Morgan, Bank of America, Citi | Global banks combining advisory, lending and markets, active on the largest deals and IPOs |
| Elite boutiques | Evercore, Lazard, Centerview, PJT Partners, Moelis | Advisory-focused firms on large, complex M&A and restructuring, without big balance sheets |
| Middle market | Houlihan Lokey, William Blair and others | Smaller and mid-sized deals, often for private companies and private equity funds |
| Regional and Nordic banks | Carnegie, SEB, ABG Sundal Collier, Danske Bank, DNB, Nordea | Deep local relationships and strong positions in domestic M&A, IPOs and bond issues |
| Boutiques and Big Four | Sector specialists; Deloitte, PwC, EY, KPMG corporate finance | Focused mid-market M&A, often alongside due diligence and transaction services |
Bulge brackets offer broad training, the largest deals and well-known brands, but on a very large deal a junior can be one of many people working on a narrow slice. Elite boutiques do mainly advisory work, often on high-profile transactions, with lean teams that can give analysts more senior exposure. Middle-market banks tend to work with private companies and funds, which can mean involvement in each deal from the first model to closing.
In the Nordics and much of continental Europe, local banks are important advisers on domestic transactions and IPOs, and their smaller teams mean analysts often work across sectors and products and see deals end to end.
Pitching and pitch books
Before a bank can run a deal, it has to win the mandate, usually through a pitch. A pitch book is the presentation brought to a meeting with a potential client, arguing that the bank understands the company, has a credible view of its value, knows the likely buyers or investors and has done comparable deals before. A sell-side pitch typically covers market conditions and the company's positioning, a valuation section with ranges from several methods, a list of potential buyers grouped by type, a proposed process and timetable, and the bank's credentials, often a page of "tombstones" showing recent relevant deals.
Juniors build most of it. The analyst pulls financial data, builds trading comparables and precedent transaction tables, drafts buyer lists and formats every slide to the bank's template. The associate checks the work and shapes the storyline, and the vice president and managing director decide the key messages and the valuation range they will stand behind. A pitch can go through many rounds of comments, often late at night before a morning meeting. Most never lead to a mandate, but they are how analysts learn sectors, valuation and the craft of turning analysis into a persuasive page.
A sell-side deal, start to finish
The clearest way to understand the job is to follow a deal. What follows is fictional but realistic, with simple illustrative numbers; real processes vary widely.
The client and the mandate
Nordhavn Emballage is a family-owned Danish maker of sustainable food packaging, with revenue of €300 million and EBITDA of €45 million. The second-generation owners want to sell, and three banks pitch. The winner proposes a broad auction to both industrial buyers and private equity funds, with a valuation range of roughly €380 to €470 million in enterprise value, drawing on listed peers at about eight to ten times EBITDA, sector precedent transactions at nine to eleven times, and a discounted cash flow analysis.
The family signs an engagement letter: a monthly retainer plus a success fee calculated on the final deal value. If the deal collapses, the bank keeps only the retainer. The team is a managing director, a director, a vice president, an associate and two analysts.
Preparation: teaser, CIM and model
The analysts build a financial model from management's figures: historical results, a five-year forecast and the assumptions behind it, such as volume growth, resin prices and spending on a new production line. The vice president and associate spend days with Nordhavn's finance team challenging the forecast, because buyers will ask the same questions later.
Meanwhile the team drafts two documents. The teaser is an anonymous two- or three-page profile of "a leading Northern European sustainable packaging manufacturer" with headline financials, enough for a buyer to decide whether to engage. The confidential information memorandum (CIM) runs to fifty pages or more, covering the market, customers, operations, management, investment case and detailed financials. Analysts draft much of it, and every number must match the model and the accounts. The team also builds a buyer list of around fifteen strategic buyers and twenty-five private equity funds, which the family reviews, excluding a direct competitor they do not want to see their data.
First round
The bank sends out the teaser. Interested parties sign a non-disclosure agreement and receive the CIM and a process letter setting out the timetable. Over four to six weeks the analysts field questions, track every party in a spreadsheet and send the family weekly updates. By the deadline, nine indicative offers arrive, non-binding letters with price ranges from €360 million to €480 million. The bank weighs each one on price, financing certainty, conditions and credibility, and the family takes four parties into the second round: two industrial buyers and two private equity funds.
Second round: data room and management presentations
The second round is the most intense phase. The bank opens a virtual data room holding hundreds or thousands of documents: contracts, accounts, tax filings, employment agreements and environmental reports. Bidders and their lawyers, accountants and consultants carry out due diligence and submit questions, and the analysts and associate manage the answers, chase Nordhavn's team and keep the information each bidder receives consistent. Each bidder also attends a half-day management presentation, written by the bank and rehearsed with the chief executive and finance director, and some visit the factories. The sellers' lawyers circulate a draft sale and purchase agreement (SPA), which bidders mark up, because warranties, indemnities and closing conditions can shift as much value as the headline price.
Final bids, negotiation and signing
Three parties submit binding offers. A private equity fund bids €455 million with committed debt financing and a light SPA markup. An industrial buyer bids €465 million but needs competition approval that could take months and may require remedies. The third comes in at €420 million. The bank lays out price, certainty, timing and legal terms side by side, then pushes both leaders. The fund improves to €460 million and accepts tighter warranties, and the family chooses certainty over a slightly higher but riskier headline. After days of legal drafting, the deal is signed. Nordhavn has net debt of €60 million, so the family receives roughly €400 million of equity value, subject to closing adjustments. Closing follows some weeks later, and only then is the success fee paid. From pitch to signing, the process has taken about seven months.
What the analyst actually produced
Across the deal, the analysts built and maintained the model, drafted much of the teaser, CIM and management presentation, produced valuation pages for every meeting, prepared the bid comparison, ran data room logistics and wrote the status reports, checking numbers repeatedly because a mismatch between the CIM and the data room could damage the family's credibility with bidders. That is the reality of the junior role: less dramatic negotiation, more careful high-volume execution under time pressure, with a front-row seat to how a major deal comes together.
Analyst life and staffing
An analyst rarely works on one thing at a time. A typical load might be one or two live deals plus several pitches, shifting week to week. Banks allocate work either through a staffer, a senior banker or coordinator who tracks each junior's workload, or informally, with vice presidents asking analysts directly. Generalist programmes, common in Europe and at smaller banks, rotate analysts across sectors and products for the first year or two, while many US programmes place analysts straight into a group.
Staffing matters more than candidates expect. A deal that signs teaches far more than a run of pitches that go nowhere, and a vice president who explains the reasoning behind changes accelerates learning. Analysts known for reliable work tend to get the best deals, which compounds their advantage, so politely and early signalling what you want to work on is part of managing your development.
A typical week
Monday might start with a team call on a live deal, followed by a managing director asking for a pitch update for Thursday. The analyst refreshes trading comparables in the morning and turns a page of vice president comments into a new valuation section in the afternoon. In the evening a bidder sends forty questions through the data room, which the analyst sorts and forwards to the client's finance team. Midweek follows the same pattern of overlapping requests: the associate returns the pitch covered in comments, the client sends revised forecasts, and the model and valuation are rerun. Dinner is eaten at the desk, and one late request can turn a manageable night into a very long one. Thursday the pitch goes out; Friday brings a deal deadline; the weekend may hold a few hours of work or a full day. Quiet weeks happen, but they are hard to predict.
What the work actually is
Junior work falls into three categories. Modelling means building and updating Excel models: operating models, valuations, merger models and simple LBOs. Presentations means turning analysis into PowerPoint slides to exacting standards. Process management means coordinating clients, lawyers, accountants and bidders and making sure nothing falls through the gaps. AI tools and automation are increasingly taking over mechanical tasks such as data gathering and formatting, but judgement, accuracy and ownership remain the core of the role.
Levels to MD
Banks share a broadly similar hierarchy, though titles vary. Analysts are the graduate entry level and usually stay two to three years, carrying the heaviest volume of execution. Associates join after an MBA, a common route in the US, or are promoted from analyst, the more common route in Europe. The role shifts from doing the work to checking and managing it: reviewing models and slides, coordinating analysts and taking more client contact.
Vice presidents run deals day to day: they manage the team, own the timetable, deal with client management and play a growing role in pitches and negotiations. Directors, also called executive directors or senior vice presidents, lead deals and are expected to start developing their own client relationships; this is often where it becomes clear who will make it to the top. Managing directors own client relationships, win mandates and steer deals at critical moments. The path from analyst to MD takes many years, and only a minority of each class stays the course. The job changes completely on the way: an analyst succeeds through accuracy and stamina, an MD through relationships, judgement and generating fees.
Hours, lifestyle and pay
The reputation for long hours is earned, especially at analyst level. During live deals, weeks commonly run late every evening and into weekends, with occasional all-nighters before major deadlines. Hours vary by bank, group, region and deal flow; M&A and leveraged finance teams on live deals are often among the busiest, while some capital markets groups keep steadier schedules. The unpredictability is often harder than the length: plans made for seven in the evening get cancelled at half past six because a page is needed for an early call. The job demands an availability most graduate roles do not.
Pay is a base salary plus an annual bonus. At junior levels the base is the larger part and the bonus depends on individual performance and the bank's year. With seniority the bonus becomes a much larger share, and at MD level pay is closely linked to revenue generated, with part of senior bonuses often deferred over several years. Junior banking pay is among the highest available to graduates, but it varies widely by bank, city and year, and per hour worked it is less remarkable than the headline suggests. Use recent, city-specific sources for figures.
Routes in and recruiting
Banks hire from many degrees: economics, finance and business, but also engineering, mathematics, physics, law and the humanities. What matters is that you can learn the technical material, show genuine interest in deals and markets, and demonstrate that you can work hard and accurately.
Target schools and other routes
Large banks recruit most heavily from universities where they run events and have alumni networks, often called target schools. At a target school the challenge is competing with many similar candidates. Elsewhere you can still get in, but you need to be more proactive: contacting alumni and bankers, applying to a wider range of banks including middle-market and regional firms, and using internships at smaller firms as stepping stones. Other routes include starting in Big Four corporate finance and moving after a couple of years, lateraling from a boutique to a larger bank, or entering as an associate after an MBA.
Internships and timelines
Much graduate hiring runs through summer internships, and interns who perform well can receive return offers. Some banks also run insight programmes for earlier-year students and off-cycle internships at other times of year.
Timelines differ by country, by bank and from year to year, and many banks review applications as they arrive. Check each bank's careers page well before you plan to apply, and ask people a year ahead of you when their processes ran.
The process
The usual sequence is an online application, sometimes numerical or situational judgement tests and a recorded video interview, then one or two first-round interviews mixing fit and technical questions. The final round is usually a superday: several back-to-back interviews with bankers of different seniorities, sometimes with a case study, modelling test or group exercise. Our guide to what happens at an investment banking superday covers the format, and these tips on recorded video interviews help with the earlier screen.
Technical interviews
Technical questions test whether you understand how financial statements and valuation work, not whether you have memorised answers. Interviewers start with a standard question, then push with follow-ups to see whether your understanding holds. Undergraduates face core questions; laterals and associates face harder ones, case studies and modelling tests.
Accounting and the three statements
Almost every interview tests how the income statement, balance sheet and cash flow statement link. The income statement shows profit over a period; the balance sheet shows what a company owns and owes at a point in time, with assets always equal to liabilities plus equity; the cash flow statement reconciles net income to the change in cash. The classic question is how a change flows through all three. Suppose depreciation rises by €10 and the tax rate is 25 per cent. Operating profit falls by €10, tax by €2.50 and net income by €7.50. On the cash flow statement, net income is down €7.50 but depreciation is non-cash, so you add back €10 and cash rises by €2.50 because less tax is paid. On the balance sheet, cash is up €2.50 and fixed assets down €10, so assets fall €7.50, matched by a €7.50 fall in retained earnings. Walking through examples like this calmly is the foundation of everything else.
Valuation: DCF and multiples
A discounted cash flow (DCF) analysis values a business on the cash it will generate. You project unlevered free cash flow for five to ten years, estimate a terminal value with a perpetuity growth rate or an exit multiple, and discount everything at the weighted average cost of capital (WACC) to reach an enterprise value. Expect follow-ups on how free cash flow is built, what drives WACC, why the terminal value is often most of the total and how sensitive the answer is to small changes. Our article on how to answer "walk me through a DCF" sets out a clear structure.
Multiples value a business by comparison: trading comparables use how similar listed companies are valued, and precedent transactions use what buyers paid in past deals, usually higher because they include a control premium. You should know the difference between enterprise value, the value of the whole business to all capital providers, and equity value, the shareholders' portion, and bridge between them with net debt and other adjustments. You should also be able to explain why enterprise value pairs with EBITDA and equity value with net income: numerator and denominator must refer to the same capital providers.
Mergers and LBOs
Merger questions cover why companies acquire, how deals are financed and whether a deal is accretive or dilutive to the buyer's earnings per share. A rule of thumb for an all-stock deal is that it is accretive if the buyer's price-to-earnings ratio exceeds the one it pays for the target; for cash or debt deals, compare the after-tax cost of funding with the target's earnings yield. Expect questions on synergies and goodwill too.
Leveraged buyout (LBO) questions test how private equity funds make returns. A fund buys a company with €10 million of EBITDA at ten times, paying €100 million with €60 million of debt and €40 million of equity. Over five years EBITDA grows to €15 million and cash flow pays debt down to €30 million. Selling at ten times gives €150 million of enterprise value and €120 million of equity, three times the investment, roughly a 25 per cent internal rate of return. Returns come from EBITDA growth, debt paydown and any rise in the multiple, and leverage amplifies both returns and risk. Our IB technicals example runs through typical questions with follow-ups.
Fit and "why banking"
Many candidates who fail do so on fit, not technicals. Bankers are asking whether they want you on their team at two in the morning before a deadline, whether you understand the job and whether you will stay. "Why investment banking?" matters most. Weak answers talk vaguely about learning, prestige or "fast-paced environments". Strong ones are specific: an interest in how companies make strategic decisions, an internship or project that sparked curiosity about transactions, a clear picture of what analysts do, and an honest acknowledgement that the work is demanding. "Why this bank?" should draw on its position in your region, its recent deals and conversations with its people.
Expect to walk through your CV in two minutes, describe times you worked in a team, handled pressure or made a mistake, and discuss a deal you have followed: who bought whom, why, how it was valued and financed, how the market reacted and whether it made sense. Have a view and defend it. Our guide to a leadership story in under two minutes helps structure behavioural answers, and most banks expect a basic grasp of current interest rates and M&A and IPO activity.
How to prepare
Preparation works best as steady, structured effort over months, started early enough to learn the technicals before applications open, especially for US timelines. With three to four months to go, a realistic plan looks like this:
- Spend the first month on accounting and the three statements, working examples by hand until you can explain how any common change flows through.
- Spend the second month on valuation, including DCF, multiples and the bridge from enterprise to equity value, then add merger and simple LBO questions.
- Through the third month, practise out loud with a partner or an AI interviewer that asks follow-ups, prepare two or three deals in depth and rehearse fit answers.
- Throughout, network with bankers and alumni, sharpen your CV with quantified achievements and follow the financial news.
Practising out loud matters more than most expect. Answers that seem clear in your head often fall apart under pressure, and interviewers judge how clearly you explain and how well you recover when challenged, not just whether you know the answer.
Exits and long-term paths
Many analysts leave after two or three years, and the exits are a major reason people choose banking. Private equity is the most common destination, because funds value modelling skill, deal experience and work ethic. In the US, recruiting for private equity associate roles can start remarkably early, sometimes within an analyst's first year; in Europe and the Nordics it is usually less compressed. Our private equity career guide explains how that job differs from banking, and our comparison of the PE case study and the paper LBO covers its interviews.
Other common exits include growth equity and venture capital, hedge funds and private credit, corporate development teams that run acquisitions inside large companies, strategy and finance roles in industry, and start-ups, where banking experience helps with fundraising and financial planning. Moves into consulting happen but are less common; our management consulting and venture capital guides describe those paths. Not everyone leaves. Progressing towards managing director is a demanding but rewarding long-term career, and some bankers move between banks or from large banks to boutiques for a stronger group, a different culture or more senior client exposure.
Is it right for you
Investment banking suits people who enjoy detail and numbers, take pride in getting things exactly right, cope with pressure and unpredictability, and are motivated by learning quickly on large, consequential transactions. It suits people who can take blunt feedback without taking it personally, and who are comfortable trading a few years of lifestyle for skills, pay and options.
It is a poor fit if you need predictable evenings and weekends, dislike repetitive detail-heavy work, or are drawn mainly by prestige or pay. Many people underestimate how much of the junior role is execution rather than strategy, and how wearing the unpredictability becomes over time. Talk to current and former analysts, ideally through an internship, before committing. If you are weighing banking against consulting, compare the daily work rather than the brands: consulting is broader and more problem-solving oriented, banking deeper in finance and transactions.
FAQ
Do you need a finance degree to work in investment banking?
No. Banks hire from many degrees, including economics, engineering, mathematics, law and the humanities, but you do need to learn accounting, valuation and deal mechanics before the interviews, because the technical questions assume that knowledge regardless of background.
What is the difference between investment banking and sales and trading?
Investment banking advises companies on deals and capital raising in projects lasting weeks or months, while sales and trading buys and sells securities for institutional clients in real time. They are different divisions with different rhythms, skills and interviews.
What is the difference between a coverage group and a product group?
Coverage groups focus on an industry, such as healthcare or technology, and own the client relationships. Product groups, such as M&A, ECM, DCM and leveraged finance, specialise in a type of transaction and are brought in to execute it, so their analysts usually see a wider range of industries.
What is a superday?
The final round of investment banking recruiting: several back-to-back interviews with bankers of different seniorities covering technical, fit and deal questions, sometimes with a case study or modelling test, usually in a single day.
How technical are investment banking interviews?
For analyst roles, expect accounting, the three statements, DCF, multiples, enterprise and equity value, and basic merger and LBO questions, with follow-ups that test real understanding. Lateral and associate candidates face harder technicals and often modelling tests or case studies.
When should I apply for investment banking internships?
It varies by country, bank and year, and many banks review applications as they arrive, so check each bank's careers page early and apply as soon as applications open.
Is investment banking a good route into private equity?
Yes, it is the most common one. The modelling, valuation and deal experience is exactly what private equity funds look for, and many funds recruit directly from banking analyst classes, often after two to three years.
