Capital Markets Analyst
Some would argue this is the sweet spot in the investment banking industry. It lies right in between investment banking and S&T, and it allows you to interact with both the private and public side.
Capital Market Analysts work along-side a company when they are trying to raise money either through equity or debt. Let’s refer to the graph below to give you a little bit of background on where capital markets fits within investment banking.
When a client wants to raise capital (money) through either equity or debt, the professionals in the Capital Markets group coordinate the communication between the investment banking industry group, S&T, and research. The goal of the Capital Markets group is to come up with a reasonable deal for both client and investors. If a company wants to sell 10 million shares at $15, and investors only want to buy 8 million shares at $11, there’s a problem. Capital markets professionals’ job is to try to reach an agreement that both the company and investors will be happy with.
Your main goal as a capital markets employee is to make the deal go through and make both your client and investors happy. This is much easier said than done. As a capital market analyst you can expect to be involved in multiple tasks around the deal offering. These tasks might include pricing the deal, dealing with investors, organizing road shows, writing pitch books, or producing sales memos.
As we talked before, the deal has to be priced fairly and preferably make both sides happy. For pricing a deal, capital markets have to consider what the company wants to get and what investors are willing to pay. The communication between the two sides goes back and forth until the agreement is reached, or until company decides that it doesn’t want to proceed with the offering because it is unfavorable for them. Remember that the market always has more power than the company since they’re buyers.
You will have to help companies present their story to investors. This is done through so-called road shows. A road show is nothing more than an organized set of meetings where the company meets with the main potential investors and presents their story to them. An investment bank serves as a coordinator between the two.
Finally, you will be working together with the fellow investment banking analysts, research, and sales force in creating pitch books and sales memos. Pitch books are created in order to show your client how great your bank is, that you’ve done research regarding their situation, and to present your valuation models. On the other hand, sales memos are created as a supporting document to sales force. So when they speak to the institutional investors and try to convince them to buy a certain security, they can have all the relevant information and arguments at one place.
Since capital markets are kind of a hybrid between investment banking and S&T, your skill set should also be somewhere in between the two skill sets for those jobs. It is always helpful to be detail oriented and very analytical. However, you will also find yourself working against time when trying to get the deal through. You can expect to develop good interpersonal skills because you will be dealing with a lot of clients.
On a relative basis, you will do much less modeling than investment bankers do. Therefore, if you want to become a financial modeling expert, you will either have to practice it on your own schedule, or consider working for an investment banking group.
Finally, you will learn how to keep private information private. It is extremely important for capital markets analysts to be able to know what information they can and cannot share. Remember that you will serve as a bridge between the private and public side. You will have to be extremely careful about not saying private information to the public side.
Once again, being a banker is tough work! You will work around 12 – 13 hours on weekdays, and have fairly flexible weekends. This doesn’t mean you won’t work on weekends, but definitely less than investment banking analysts. Capital markets people usually come to the office between 7:00 and 8:00 am. The hours are much more predictable than in banking, which means you can have life outside of work. All in all, being a capital markets guy/girl can be great. You still get all the benefits of Wall Street and you can have more predictable life.
A capital markets analyst’s compensation mirrors an investment banking analyst’s compensation. Year-end bonuses might be slightly lower than your fellow bankers, but when you consider other factors (e.g. work-life balance), even slightly lower pay seems like a better deal. The numbers are following:
- Signing bonus: ~$10,000
- Base salary: ~$70,000 – $90,000
- Year-end bonus: ~$30,000 – $60,000
Although these are pretty fair ranges to assume, it is hard to generalize and encompass what every bank pays, so use this only as guidance.