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Intro to Australian Investment Banking

In collaboration with High Finance Careers

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Introduction

Welcome to the Australian investment banking guide brought to you as a collaboration between The Aussie Corporate and High Finance Careers! This page will give you an insight into the world of investment banking in Australia. 

This guide will also provide an overview of the road to landing an investment banking gig from university as well as alternative pathways into investment banking. For example, it is common to jump from a transactional role at a Big 4 accounting firm before applying at a big investment bulge bracket bank. 

When going through preparation materials, most Aussies head to Whirlpool or Reddit, which may often take hours to trawl through, and hours more to figure out which comments are actually correct and helpful. Hopefully, this guide represents a decent effort to provide some sort of structure and advice for incoming candidates interested in a corporate finance career. 

We highly recommend you go and give @highfinancecareers a follow on Instagram, and to also visit @theaussiecorporate on Instagram for more information / insights into corporate Australia (shameless plugs). Our website also has some helpful firm insights to help you decipher the domestic IB landscape.

Finally, we’ve found the Letter of Intent newsletter to be a staple for any aspiring or current Aussie dealmaker – you can sign up for free at www.theletterofintent.com.au

What is investment banking?

Investment banking refers to working in a bulge bracket bank or boutique investment firm on the sell-side, which essentially means you are selling investment/financial services to clients. This differs from working on the buy-side in private equity or a hedge fund, where you are buying/investing in these same products. When we talk about investment banking, we are referring to the banks below, which includes the bulge brackets, boutique investment firms and institutional banking arms of the Big 4 Banks.

Bulge bracket investment banks (i.e. BB or BBIB) refer to the heavy hitting banks in the industry. In Australia, these include JP Morgan, Goldman Sachs, Credit Suisse, Morgan Stanley, UBS, Deutsche, Citi and Bank of America. Australia also has some pretty notable home-grown investment banks with the obvious one being Macquarie Bank and most recently, the newest kids on the block, Barrenjoey and Jarden, made famous after their raids on the BB banks for their top talent.

On another level, Australia has some well-regarded boutique investment firms including Luminis Partners, Allier Capital and Azure Capital, and its Big 4 Banks (CBA, Westpac, NAB and ANZ) all have investment banking divisions (i.e. institutional banking).

Pathways into investment banking

Summer internship

There are many different ways to break into investment banking including through different connections at various stages of your life / career. However, the most common and arguably easiest way is through completing a summer internship with a bank in your penultimate year of university. Often times, you will be in a strong position for the firm to offer you a graduate role off the back of the internship. Don’t get us wrong though, while this is the easiest way, it is by no means easy. Investment banking is a hyper-competitive industry, typically full of big egos and applying for a summer internship involves going through multi-week processes with different firms. The application process usually kicks-off mid-May and closes in mid July. Keep your eyes peeled, because this will essentially be your only chance in the year to land a summer role.

Graduate role

Alternatively, if you miss your chance at landing a summer internship, you could apply for graduate roles in your final year of university at the end of February. As with summer internships, firms generally open and close their applications at the same time, so make sure you mark down these dates in your calendar. It goes without saying though that without having secured a summer internship role, it would be ideal to have strong finance work experience or extracurriculars to make yourself stand out amongst the many others vying for these limited positions.

Big 4 Accounting Firm

Another way of breaking into investment banking if you miss out on securing a role straight out of university is to hone your trade at a Big 4 accounting firm (PwC, EY, KPMG, Deloitte), which are generally less competitive to get into than a traditional investment bank. Don’t just join any team though – the best teams to work for to obtain relevant experience for an eventual move to a bulge bracket would be, as a first preference, Deals (for PwC and EY) / M&A Advisory (Deloitte) / Transaction Advisory Services (Deloitte) and as a second preference, Valuations/Modelling. After 1-2 years in one of these teams, you should have sufficient work experience to hit up a recruiter or apply directly for open roles that pop up for junior associates at an investment bank/firm.

Coming from left field

What we mean here is a complete sea change, where someone jumps from a completely different industry. Most commonly, we see lawyers, accountants and strategy consultants being able to make a switch to investment banking after several years of experience. For example, as an M&A lawyer, exposure to transactions and deals is recognised as relevant experience when applying for investment banks. Having a finance degree (which is typically combined with a law degree in university is generally also very helpful as this will give you a good understanding of the skills required for investment banking.

Preparing for success

Landing an investment banking gig is no small feat and frankly requires years of hard work and preparation. Preparation can be broken down into four categories. Each of these categories loosely represents an element of your candidacy that will be assessed and examined by your interviewers. The idea is to maximise each but if you are sorely lacking on one then you need to make sure that you compensate by strengthening your performance on the others. The earliest thing you can do to set yourself up for success in the recruiting process is have a history of academic excellence. In most people’s minds, this is a combination of where you went to school (e.g. a Go8 university, your major and your WAM).

Academics

For investment banking, you generally want to major in finance (if that wasn’t obvious enough) and typically see most folks come from a Commerce / Engineering / Law background. If you are someone looking to lateral, without a commerce degree, you will need to make sure you have a great explanation as to why you are hoping to move into investment banking and should have solid marks. While there is no official cut-off, the investment banks will look at the quality of your marks.

Generally, you will be pretty safe from any negative biases on your academics if you have something above 75+ WAM or a Distinction average across the board. In addition, the more experience you have accumulated post-university in a relevant line of the work (including, for example, experience from a Big 4 accounting firm), the less relevant marks may be.

Work experience

Previous work experience will be a key way for you to differentiate yourself, whether it be applying for summer internships or coming from an alternative pathway. We would recommend focussing on obtaining some sort of relevant work experience at an investment bank or anything tangentially related to investment banking in order to make yourself stand out. This accomplishes three major things: 

  1. helps you get real life experience that you can speak to in your interviews;

     

  2. gives you great credibility for why you’re interested in pursuing investing banking, and

     

  3. sets you apart as a well-prepared, hungry candidate willing to work and learn in order to get your foot inside the door.

Our further two pieces of advice are these:

  1. start small and build up to more significant internship opportunities — e.g. HFC’s founder started with one internship at a local wealth advisor’s office and another at a small marketing startup before finally landing a gig at an investment bank

     

  2. you will likely need to be scrappy, shameless and innovative to get gigs — don’t consider yourself above any opportunity, send out cold emails/DMs and use whatever resources that are at your disposal to land a position. Look for jobs posted by your school, within your alumni network, and through family and friends. Don’t be surprised if you land a gig through friends or other connections.

Once you’ve landed roles with investment banking experience, make sure you highlight your deal experience in your resume. For example, set out a “Selected Transaction Experience” section that specifically references the individual company you either spent a lot of time looking at, made a bid for, or closed a deal with. This delivers a lot more credibility to your experience and gives you a specific transaction (potential or otherwise) to talk about in your interviews. The goal should be to be able to deliver a thorough 1-2 minute walkthrough of every deal listed on your resume and then be able to dive deeper into basically any element of the transaction that an interviewer could ask for (market dynamics, competitive advantage, bid strategy, key financials, etc). It should go without saying you shouldn’t disclose anything confidential. 

For university students that may find it harder to get this type of work experience, make sure you join finance societies such as FMAA which allows you the opportunity to network with industry professionals and build up your exposure to investment banking in general. Participate in competitions held by the bulge bracket firms (e.g. UBS Challenge), to get your name out there and apply the theoretical skills you have learnt in the classroom.

Networking

“Your network is your net worth” 

We’ve always thought that networking is a bit stuffy, like you’re at some cocktail party with a name tag and you’ve got to go introduce yourself to 5 new people. But don’t make the mistake of many candidates and assume that networking isn’t an important aspect of landing a job. 

Often, you’ll hear that you should make sure to ask a lot of questions – but quality is better quantity here. A thoughtful question will leave a memorable and positive memory more so than being the person who mic hogged with 100 questions. 

Show genuine interest and lay off the alcohol. There will be plenty of that once you’re firmly entrenched in your investment banking role. 

Another great tip is to be aware of where alumni from your university have placed and connect with them on LinkedIn. Don’t be afraid to shoot that cold email or DM as long as you are genuine and have thought about your approach so as to not waste people’s time. Take a second to look at their career progression and the places they have worked to give yourself an idea of the pathways leading to their investment banking role.

Technical preparation

Depending on the level you are recruiting for there may be more or less emphasis on this part and it might be in the form of an Excel test (if you are recruiting as a lateral for an Analyst or Associate role) or as a verbal test (if you are recruiting for internship or graduate roles).

Common parts of technical preparation can be broken into three parts:

  1. Modelling: You should get really familiar with modelling out a DCF. Not only is this important as part of the interview process, but this will form the basis of your day-to-day. If you are recruiting as a lateral into an Analyst or Associate role then be prepared to do a live Excel test where you will be asked to create a simple DCF from scratch or augment an existing one.

     

  2. Case Studies: In our mind, this is the second most important part of your technical preparation and the most seemingly difficult to get ready for. Typically, case studies will go hand-in-hand with a modelling exercise so that you address both the qualitative and quantitative elements of a company — both the financials / numbers / model outputs but also the business model / secular head- and tailwinds / strategy. Truth is, case studies are not difficult to nail, but they do require you to have a really well-practiced framework that you can rely on and adapt to any kind of company you might encounter.

  3. Market Questions: An obvious statement, but make sure to be well versed on what is going on in the M&A markets (or ECM markets if that’s the team you are interviewing for).

    The use of knowing news is a great way to flex your knowledge and interest in the markets. Avoid just knowing the facts of a deal and regurgitating it. This is an opportunity to show that you understand the strategic dynamics at play – so have a view on the rationale and whether or not you think it makes sense. Even more impressive, is if you have a well thought opinion on why you think a deal doesn’t make sense (just make sure you aren’t saying this about one of the bank’s deals).

    We don’t think it is worth reading the AFR cover to cover every day, but I do think it is good to pick a few newsletters that work for you, skim the headlines every day, dive deeper into concepts you don’t feel like you’re understanding, and work to test that knowledge through conversations you have. A great resource in Australia is the daily deals email from www.letterofintent.com.au.

Interview questions

"Why investment banking"?

Hopefully if you’re reading this, we don’t have to convince you of the benefits of a career in investment banking. But even if you’re completely set on the path, you will have to convince the firms that you are. We think that the principles for answering this age-old question are:

  • Do NOT badmouth or speak negatively about your work experiences. Don’t even use it as a compare / contrast point (i.e. “Well my work experience was okay, but moving forward I’d like to be more involved in investment banking”).

     

  • You may be asked to clarify why you’d pick investment banking over other job opportunities or your current job —the same rule applies (no badmouthing, no negative comparisons).

The goal should be to make the “Why investment banking?” question completely obvious for firms by building your resume clearly and completely toward that path. For example, referencing work experience at a boutique investment firm during your university days, M&A focused classes you took at university, or an investment banking case study you participated in are great examples.

This is sort of the initial gating item in your interactions with firms, so you should practice it ad nauseum and respond quickly to the kind of feedback, explicit and implicit, that you receive from your initial interactions. This will require a lot of emotional intelligence to determine if your interviewers are responding favourably to your answers or if they’re writing you off right from the get-go. 

If you can get past that gating question, then you’ll be ready for the set of key questions in the next section.

Key interview questions

In addition to the “why investment banking question”, banks are looking for three other key areas:

Market Knowledge

Make sure to have 2-3 deals you know well that recently took place. Know the facts, but importantly understand the rationale and have an opinion on it. 

Similarly, have an opinion on 2-3 ASX companies with a perspective on why you would or would not invest in it. 

Technical Knowledge

We covered this a little earlier but make sure to understand the basics of modelling to be able to answer technical modelling, finance and accounting questions. 

Grit

This will typically come up in your usual interview behavioural questions (tell me a time when you’ve overcome a challenging situation). The goal of your answer is to show you can deal with the pace of banking and the ups and downs it can bring. 

Tip: showcasing an example of some entrepreneurial endeavour is a great unique way to show both grit and hustle + initiative.

Networking during the interview process

If your interviews go well, you’ll often be invited to cocktail nights and be able to meet with the firm’s people. These may involve coffee chats with junior members of the team and then often graduates up to the top if the meetings go well.

Our advice here is to always be yourself — introduce yourself and express interest in learning about the firm and your role.

Need more help?

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There’s a whole lot of detail that goes with everything we’ve mentioned above and we’re more than happy to help!