The deal team
Investment bankers generally work in "deal teams" which, depending on the size of a deal, vary somewhat in makeup. For a mid-sized deal, a team is usually composed of an analyst, an associate, a VP, and an MD (managing director).Here we provide an overview of the roles of the positions in corporate finance, from analyst to managing director. (Often, a person in corporate finance is called an I-banker.) Because the titles and roles really do not change between underwriting to M&A, we have included both in this explanation. In fact, at most smaller firms, underwriting and transaction advisory are not separated, and bankers typically pitch whatever business they can scout out within their industry sector.
Analysts are the grunts in the corporate finance world. They often toil endlessly with little thanks, little pay (when figured on an hourly basis), and barely enough free time to sleep four hours a night. Typically hired directly out of top undergraduate universities, this crop of bright, highly motivated kids does the financial modeling and basic entry-level duties associated with any corporate finance deal.
Modeling every night until 2 a.m. and not having much of a social life proves to be unbearable for many an analyst. After two years, many analysts leave the industry. Unfortunately, many bankers recognize the transient nature of analysts, and work them hard to get the most out of them they can. Ironically, the unfortunate analyst that screws up or talks back too much may never get "real" work, spending his days bored until 10 p.m. waiting for work to come, stressing even more than the busy analyst. These are the analysts that do not get called to work on "live transactions," and do menial work or just put together pitchbooks all the time.
Much like analysts, associates hit the grindstone hard. Working 80- to 100-hour weeks, associates stress over pitchbooks and models all night, become experts with financial modeling on Excel, and sometimes shake their heads wondering what the point is. Unlike analysts, however, associates more quickly become involved with clients, and most importantly, are not at the bottom of the totem pole. Associates quickly learn to play quarterback and "hand-off" menial modeling work and research projects to analysts. However, treatment from vice presidents and managing directors doesn't necessarily improve for associates versus analysts, as bankers sometimes care about the work done, and not about the guy working away all night to complete it.
Hailing directly from top business schools, associates usually possess only a summer's worth of experience in corporate finance, so they must start almost from the beginning. The overall level of business awareness and knowledge a bright MBA has, however, makes a tremendous difference, and associates quickly earn the luxury of more complicated work and better bonuses.
Upon attaining the position of vice president, those in corporate finance enter the realm of real "bankers." The lifestyle becomes much more manageable once the associate moves up to VP. On the plus side, weekends free up, all-nighters drop off, and the general level of responsibility increases -- VPs are the ones telling analysts to stay late on Friday nights. In the office, VPs manage the financial modeling/pitchbook production process in the office. On the negative side, the wear and tear of traveling that accompanies banker responsibilities can be difficult. As a VP, one begins to handle client relationships, and thus spends much more time on the road than analysts or associates. You can look forward to being on the road at least three to four days per week, usually visiting clients and potential clients. Don't forget about closing dinners (to celebrate completed deals), industry conferences (to drum up potential business and build a solid network within their industry), and of course, roadshows. VPs are perfect candidates to babysit company management on roadshows.
Directors are the major players in corporate finance. Typically, MDs work their own hours, deal with clients at the highest level, and disappear whenever a drafting session takes place, leaving this grueling work to others. MDs mostly develop and cultivate relationships with various companies in order to generate corporate finance business for the firm. MDs typically focus on one industry, develop relationships among management teams of companies in the industry and visit these companies on a regular basis. These visits are aptly called "sales calls."