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This chapter provides a broad overview of investment banking and of life as a junior investment banker. An investment bank is an institution that provides financial advice and raises money for three main sets of clients: companies, governments, and wealthy individuals. The chapter discusses various types of transactions that investment banks execute for their clients and the different types of investment banks that exist, including bulge bracket banks and boutiques. The universe of investment banks can be segregated into two types: bulge bracket banks and boutiques. The chapter describes the hierarchy of job titles that exist in the industry and the day‐to‐day work that junior investment bankers perform. It also discusses the lifestyle of an investment banker, including typical work hours, culture, personalities, and compensation. The chapter further focuses on a discussion of the common exit opportunities that exist from investment banking and try to clear up some of the common misconceptions held by many prospective bankers.

This chapter focuses on Financial Modeling. Financial modeling is, along with valuation, one of the two core technical skills required of junior investment bankers. The core modeling skill required of investment bankers is to be able to create a forecast of a company's three financial statements: income statement, balance sheet, and cash flow statement. This type of model is known as an integrated cash flow model and is the subject of the chapter. Models are built by analysts or associates when advising on buy‐side and sell‐side M&A transactions, Leveraged Buyouts (LBOs), issuance of new equity or debt, and restructurings. In addition, financial modeling is a key skill for many other roles within corporate finance, including equity research, private equity, asset management, hedge funds, and corporate development. The purpose of the chapter is to introduce one to basic modeling skills so that one can begin to build one's own financial models and is able to intelligently talk about building models in an interview.

This chapter illustrates Mergers and Acquisitions (M&A) and discusses the kind of work that investment bankers do when advising on an M&A transaction. Probably, the common reason for a company to make an acquisition is to grow. Synergies, valuation of the target, and diversification are some of the other reasons for a company to make acquisitions. A merger (also known as a single‐step or one‐step merger) is a type of transaction whereby the acquirer purchases the stock of the target from the target's shareholders. A merger is generally used in friendly transactions and not for hostile or unsolicited deals. The chapter highlights a discussion of why companies acquire other companies. It discusses the standard M&A process, with a focus on the role of a junior banker. It explores the kind of analysis particular to M&A that bankers perform. Most importantly, it describes the accretion/dilution analysis, a topic that often comes up in investment banking interviews.