What do Investment Bankers do and why do they get paid so much?

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This is a loose analogy, but bankers are like real estate agents. They do M&A, IPOs, Capital Raises, and a few other things. In an M&A deal, they could represent the buyer or the seller and only get paid when the deal closes. They get paid so much because they make a percentage of each deal they close. There is a heavy focus on 'deal flow,' without which they don't make any money. At the end of the day it is a sales job, much more than consulting is. They are always on the hunt for the next transaction. Between deals, bankers work on a lot of pitch books (akin to consulting proposals). So the successful bankers make a lot of money because they sell like crazy (rain makers). The rest get pushed out pretty fast.

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What do we do and why do we get paid at all?

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They are bankers that make investments...

... they also go to cry in the bathroom all the time.

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EY1 “investment bankers” refers generally to those who work in the investment banking division (IBD) of a bank. Sales and trading is separate and apart

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Thanks Cog! Really good answer.

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Nice Cog! Thread closed.

On the work life balance aspect, they also treat weekend like its normal work days, though thats changing

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I read the post and first reply with Jerry Seinfeld’s voice

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Importantly, brokering a deal also means sourcing funding whether it’s leverage for an acquirer, equity issue for an IPO, or a bunch of other stuff. And structuring the deal optimally across those funding vehicles

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Cog - you’re missing the whole other side of I banking. Trading desks such have numerous instruments they manage from options, bonds/derivatives to investing before IPOs go down with high net worth clients. For example Goldman was 1 investor of 500 in Facebook allowed by regulations but their $$s represented thousands of their top clients.

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Point is most of an I-Bank is not out selling or building ppt decks

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Read Liar’s Poker

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