How to Be an Investment Banker: Recruiting, Interviewing, and Landing the Job + Website

Praise for How to Be an Investment Banker "Andrew Gutmann has written a clear and easy guide for budding investment bankers and finance professionals everywhere. It lives up to its title, providing not only intelligent advice and guidance but a good summary of core financial principles every dealmaker should know." — Steven M. Davidoff, New York Times "Deal Professor"; Professor of Law and Finance, Michael E. Moritz College of Law, The Ohio State University "In this book, Andrew demystifies the competitive recruiting process for investment banking jobs. He provides clear and thorough explanations of the technical knowledge needed to ace the interviews and succeed as a banker. Above all, his perspective on the industry will help readers determine for themselves whether this is a career for them. He tells it as he sees it, no holds barred. It's his directness that students find appealing and makes this required reading for anyone seriously considering a career in investment banking." — Regina Resnick, Associate Dean and Managing Director, Career Management Center, Columbia Business School "Andrew's book provides a great overview of investment banking recruiting as well as the key technical topics you need to know for interviews and the most important qualitative questions. Unlike a lot of other guides and resources I've seen, he also tells it like it is rather than sugar-coating the truth, which is exactly the right approach to take." — Brian DeChesare, founder, Mergers & Inquisitions and Breaking Into Wall Street "Mr. Gutmann's book provides an excellent bridge between classroom finance and real-world application in investment banking. Thoughtfully organized, digestible, and without sugar coating, How to Be an Investment Banker is an essential tool for those considering the pursuit of a job in investment banking." — Michael F. Malone, Managing Director, Career Management Center, Kellogg School of Management, Northwestern University "For prospective investment bankers, this book offers an excellent overview of the business and the tools/techniques that should be part of your arsenal. More important, though, the book also offers guidance on seeking out and finding an investment banking job and a reality check on what an investment banker's life is like." — Aswath Damodaran, Professor of Finance, New York University Stern School of Business and author of Investment Valuation "Andrew Gutmann has managed to turn his highly useful website into a highly useful book. How to Be an Investment Banker provides a road map for becoming and remaining an investment banker. It is not for the faint of heart." — Jonathan Knee, author of The Accidental Investment Banker

Introduction xi Overview of the Book xii Who Is the Book For? xiii Structure of the Book xiii Acknowledgments xix Chapter 1 Introduction to Investment Banking 1 Overview of an Investment Bank 2 Overview of Investment Banking 7 The Life of an Investment Banker 22 Frequently Asked Questions 47 Chapter 2 Accounting Overview 55 Introduction to Accounting 56 The Income Statement 58 The Balance Sheet 69 The Statement of Cash Flows 83 Integrating the Three Financial Statements 88 End–of–Chapter Questions 99 Chapter 3 Finance Overview 101 The Financial System 102 Principles of Finance 107 Introduction to Corporate Finance 114 Valuing Securities 130 End–of–Chapter Questions 145 Chapter 4 Financial Statement Analysis 147 Sources of Financial Information 148 Financial Statement Analysis 158 Analyzing Different Time Periods 169 “Normalizing” the Financials 174 End–of–Chapter Questions 177 Chapter 5 Valuation 179 Introduction to Valuation 180 Comparable Company Methodology 194 Precedent Transaction Methodology 210 Discounted Cash Flow (DCF) Analysis 219 Valuation Conclusions 238 End–of–Chapter Questions 245 Chapter 6 Financial Modeling 247 Overview of an Integrated Cash Flow Model 248 Building an Integrated Cash Flow Model 262 End–of–Chapter Questions 292 Chapter 7 Mergers and Acquisitions 293 M&A Overview 293 The M&A Process 302 M&A Analysis 310 End–of–Chapter Questions 322 Chapter 8 Leveraged Buyouts 323 Overview of LBOs 324 LBO Modeling 331 LBO Conclusions: Do We Do the Deal? 347 End–of–Chapter Questions 348 Chapter 9 Recruiting, Interviewing, and Landing the Job 349 What Are Investment Banks Looking For? 350 The Recruiting Process 354 Resumes and Cover Letters 360 Networking and Informational Interviews 368 Interviewing 375 Receiving an Offer and Being a Banker 398 Conclusions 403 Further Reading 405 About the Author 407 About the Website 409 Index 411

ANDREW GUTMANN is the creator of www.ibankingfaq.com, one of the most widely visited websites focused on the topic of investment banking. He has developed and taught finance and investment banking classes for a number of institutions, including the Institute for Finance, the firm that he founded. For the past five years, he has also been a career coach at Columbia Business School, where he advises and mentors MBA students interested in investment banking careers. Andrew is a former investment banker who has executed M&A and restructuring transactions for clients across a number of sectors. Andrew lives with his wife and daughter in New York City.