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finance a la shmoop - what do investment bankers do? well they sell money, sorta.

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that's what they do sell money and you might guess there are a good jillion

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different things that happen inside of an investment bank. but when most people [people fly inside fancy bank]

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ask this question they're referring to corporate finance division investment

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bankers who raise money for companies. you know they sell companies and they do

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other big fat financial strategy for well big fat companies and yes they earn

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big fat paychecks too. the easiest way to think about the line job of an [woman waves check]

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investment banker is to think about a realtor. they dress nice they knock on

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your door they fill your wallet with business cards, and then they ask to sell

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your home. if they do they get a five or six percent commission for their trouble, [man holds cards]

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or rather the total Commission is about five or six percent with about half of

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that amount going to the buyer's agent and about half going to the agent who

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listed the home for sale or rather their agency. well a home might sell for five

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hundred grand and five percent of that is 25k so each side might get something

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like 12 grand and change. the individual realtor who sold it might keep half that [chart with numbers shown]

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amount in their pocket in bonus money paid quarterly or however the local

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players pay it. while bankers aren't all that different they might charge 1% for

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selling a company like think selling GoPro to Apple for five billion dollars.

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but that 1% is a big number! not many homes sell for five billion bucks. so the [camera and apple logo displayed]

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banks get 1% in commission or a total pot of fifty million dollars which is

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generally also split by both sides. that's 25 million bucks paid to each

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side for the time of half a dozen professionals a hundred or so hours of

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lawyer time some legal filings submitted to the government and a few other small

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things, but that's it. ever been in the lobby of goldman sachs yeah nice work if [man holds tray of champagne]

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you can get it. so how do you get it well you start off being good at math in

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college get really good grades and go to an Ivy League school pretty much because

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most the bankers come from Harvard Yale Princeton Stanford and just a few others. [man stands in front of white board]

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you take a bunch of econ courses and hopefully have half a clue about

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how to work a spreadsheet. then you get signed by one of the big banks into

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their analyst program where you will analyze stuff- acquisitions mergers IPOs

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LBOs we do the math behind who gets what on

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each of those. if you're good you get promoted and become a master of the [frowning woman smiles]

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PowerPoint. it'll be you and you alone in charge of producing spiffy presentations

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to clients who would in theory happily pay your exorbitant fees in return for

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making even more money from buyers sellers and Wall Street in general. if

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you're good at presenting PowerPoint then you'll gradually gain the attention

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and respect of clients .it'll be you who reaches out and asks clients that is [woman smiles]

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CEOs and CFOs of large public companies generally speaking about this deal in

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that deal and every other strategic financial move in between as you're

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trying to sell them smaller companies and of course you get to know the

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smaller company CFOs and CEOs as well and they tend to return phone calls [group of people waves]

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little quicker. all right well if clients actually start relying on you to guide

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them financially then you become a vaunted managing director, who is then

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responsible for a book of business that is, you'll cover an industry like oil or

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gas or transportation or media telecommunications technology stuff like [various technology shown]

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that. and you'll be responsible for the banking fees your bank would get inside

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of that vertical .well your competition wins three deals in a row over you?

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ah, go back two steps do not pass go do not collect two million dollar annual

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bonus. but if you do become a player in the space get lots of clients to do [man in vintage library]

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business with your bank in various forms including having your bank manage their

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newfound wealth after the IPO then you begin to exhale

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that is multi million dollar bonus checks stock options in the bank itself-

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like you become a partner- a big fat expense account, and a fear loathing and [smiling man]

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adulation of your partners at the bank for whom you are paying the very

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expensive rent and light bills all. of this comes at a price

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stress levels in Investment Banking are high. divorce lawyers feast on investment

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banker fees and only a small handful of jobs which you [hands feed man money]

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would actually want are available to a highly competitive select group of

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people at any one time. but stay in the game long enough kissing client butt with

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gusto and while you make serious bank. like 50 to 100 million dollars in a

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career. maybe more .and all this as you dream about doing well pretty much

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almost anything else because at some point [man skis]

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kissing client butt it gets old real fast. yeah you'd much rather be the client.

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right, well the good news is you can retire young if you want to. and then you

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won't get to do anything else. you might be the oldest extreme snowboarder [man carries snow board]

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out there on powder, but you know, you do you.

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