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Why Alpha Advisors' Clients Get Into Goldman Sachs & Morgan Stanley Investment Banking Division?
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What is an Investment Bank?
An investment bank (IB) is a financial institution that supports large-scale fundraising and M&A (mergers and acquisitions) for corporations and governments. While commercial banks handle deposits and loans for individuals and businesses, investment banks specialize in more complex financial transactions.
Main Functions of Investment Banks
1. M&A Advisory
M&A advisory is the core business that supports corporate mergers and acquisitions. This function is broadly divided into two divisions: (1) Coverage and (2) M&A Execution.
1. Coverage Division
- Industry-specialized relationship managers
- Building close relationships with companies in assigned industries
- Understanding strategic challenges and identifying M&A opportunities
- Required skills:
- Industry knowledge and analytical ability
- Communication skills
- Understanding of business strategy
- Network building capability
2. M&A Execution Division
- Detailed financial analysis and valuation as the execution team
- Planning and implementing negotiation strategies
- Coordinating legal and accounting due diligence
- Required skills:
- Advanced financial modeling capability
- Logical thinking and analytical skills
- Project management ability
- Stress tolerance
Career Choice Considerations
Many students tend to aspire to join the M&A Execution division. This is largely due to their strong desire to be involved in major M&A deals that can determine a company's fate. However, this choice requires careful consideration.
First, while the Execution division is highly competitive, the Coverage division has relatively lower competition rates. Additionally, it's important to note that "aspiration" and "aptitude" don't always align. Choosing a division that maximizes your strengths is key to long-term career success.
If you don't have a strong preference for execution work, it's worth considering starting in Coverage. The Coverage division also offers valuable experience and leaves open the possibility for future career changes. It's crucial to make choices with your post-entry career path in mind.
Advice
When aspiring to join an investment bank, we recommend keeping these two points in mind:
1. Don't Make Decisions Based Solely on Admiration
It's important to thoroughly understand the job content and compare it with your own aptitude. Try to experience the actual work through internships whenever possible to identify any gaps between your image and reality.
2. Take a Strategic Approach
Make realistic choices considering the competition rates and think about long-term career planning. Having multiple options enables flexible adaptation.
Both Coverage and Execution divisions can be valuable first steps in an investment banking career. The key is to coolly analyze your characteristics and inclinations and make strategic career choices.
2. Capital Markets
3. Sales & Trading
Career Path and Required Talent
Recruitment and Promotion Flow
1. Analyst (Entry level-3 years)
- Focus on financial analysis and document preparation
- Demanding work but opportunity for skill acquisition
2. Associate (4-6 years)
- Management of analysts
- Beginning of client interaction
3. VP (7-9 years)
- Core deal management
- Independent deal sourcing
4. Director/MD (10+ years)
- Primary focus on deal sourcing
- Potential for high compensation
Required Qualities and Abilities
- Outstanding analytical and logical thinking skills
- Resilience for hard work
- Teamwork capability
- Communication skills
- English proficiency (for global deal handling)
Essential Preparation
1. Active participation in internships
2. Acquisition of basic finance and accounting knowledge
3. Enhancement of Excel skills
4. Strengthening English proficiency
5. Industry research and networking
Why Are Alpha Advisors' Clients Getting Into Goldman Sachs & Morgan Stanley Investment Bank Division?
Investment banking is one of the most popular career choices among students. However, many students pursue this path based solely on admiration and fail in the selection process.
Why? Because investment banks aren't simply looking for academically excellent students. For instance, interviews frequently include questions like these:
(1) Behavioral Interview Questions
- What are your long-term goals, and why do you want to achieve them?
- Why investment banking to achieve these goals?
- These goals could be achieved through consulting as well - why specifically investment banking?
- Why Goldman Sachs specifically?
- Why not Morgan Stanley?
- Why are you willing to work 24/7 in investment banking?
(2) Technical Questions about Finance
- Name 10 M&A deals from the past 6 months that interest you. Why these deals?
- Alimentation Couche-Tard from Canada is attempting to acquire Seven & i Holdings of Japan. What's your analysis of this?
- What are the business strategic, financial, and social impacts of this M&A?
- If you were a banker, which companies would you want to see acquire which others? Why?
You must be able to answer such questions immediately.
The key point is that they're not just looking for students with financial knowledge. What's more important is something deeper at your core - your motivation for the work.
Why do you want to work in this demanding industry? What do you want to achieve?
In other words, it's about your long-term goals. Everything stems from long-term goals. While Alpha Advisors attracts talented individuals from around the world, and while there are many excellent students, there's often a tendency for low-quality motivation in applications.
Why? Because they lack long-term goals. The most powerful, persuasive, and moving motivation is "I must work in investment banking to achieve my long-term goals."
You can't expect to receive an offer with passive motivation like "because everyone else is aiming for investment banking." If you want to enter investment banking, you need to thoroughly consider your future and design your long-term goals.
Alpha Advisors consistently produces a large number of successful investment banking candidates each year because we thoroughly help build these long-term goals. This is where our value lies.
If you aspire to secure a position in investment banking, we encourage you to consult with Alpha Advisors immediately. Many people come to us for consultation "after being rejected," but we strongly recommend gaining appropriate advisors as allies before reaching that point.
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