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Investment Banking Analysts

History

Investment banking practices have been in use since ancient times, but the industry as we know it today began to take shape during the Civil War. Banks sold millions of dollars in government bonds to a large number of individual investors to help pay for the war. (This strategy was later used by the government to finance the expansion of transcontinental railroads.) Companies interested in raising capital began selling securities in the public markets, and financial firms became active partners to the issuing companies: acting as underwriter of the financing, distributor of the resulting public offering, and a jack-of-all-trades attending to the miscellaneous transaction details. Firms such as Goldman Sachs, Lehman Brothers, and Salomon Brothers became household names. From this time forward, analysts have helped investment bankers by building financial models, conducting research, and performing a variety of other duties.

Since the 2008 financial crisis (which is considered the worst financial crisis since the Great Depression), the investment banking industry is in transition. Some banks such as Morgan Stanley and Credit Suisse have retreated from their trading activities (instead focusing on expanding their wealth management divisions), boutique firms such as Moelis & Co. and Perella Weinberg Partners LP have gained market share, and some companies are choosing to skip using the services of investment bankers altogether during the acquisitions process. Employment of research analysts, investment bankers, sales workers, and traders has declined by 20 percent since 2010, according to Coalition Ltd., a London-based research firm.

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