Corporate Finance/ Investment Banking (CF / IB)

Are you interested in how corporations fund their business? What kind of projects should the firm invest in, how does it fund these investments (with equity and/or debt) and how does it give back to the shareholders/investors? Do you want to combine your analytical skills with accounting knowledge, building financial models in Excel? Then a career in corporate finance might be something for you..

As an investment banker, you help raise capital for clients by selling equity or issuing debt. You also assist clients with mergers and acquisitions (M&A), and you help companies go public (IPO). Moreover, you can advise your clients on unique investment opportunities such as derivatives. Usually, you work in small teams of 4 to 7 people.

Corporate finance has different divisions where you can work. It is divided into corporate development (strategy), financial planning & analysis (FP&A), treasury, and investor relations.

For a career in CF/IB, you not only need analytical and numerical skills but also good communication and teamwork skills. You need to be confident and be able to meet tight deadlines.

Mergers & Acquitistion (M&A)

Mergers and acquisitions are part of corporate finance, but the sector is so big it is worth its own section. Why do businesses merge or acquire other firms? They could look for growth, but they could also just buy out their competition when the costs of competing become too high. Another reason to merge are synergies. The efficiency of a business can increase when increasing production capacity through a merger. Companies could also partake in the M&A process for diversification or tax benefits. Valuation is a very important part of the M&A process. This is done through extensive financial analysis. Mergers and acquisitions are handled by (investment) banks or boutique M&A firms. 

Private Equity (PE)

In corporate finance, you manage the firm’s own capital, but in private equity, you raise capital from institutional investors such as pension funds, or wealthy individuals. The funds are raised on road shows, where the PE firm presents its previous projects and earnings. The raised capital is then invested in non-publicly-traded firms, usually for a duration of 4 to 7 years. In this period the PE firm aims to increase the value of the so-called portfolio company, and eventually sell for a profit.

In some PE firms, you also deal with setting up a strategy plan for the management of the portfolio company, to help them grow. However, not every PE firm has the same level of involvement. 

Venture Capital (VC)

Venture capital is similar to private equity. They also deal with portfolio companies, but venture capital invests solely in startups. They are less based on financial modelling because these startups do not have a lot of numbers to show yet. The investment is based on a feeling and the credibility of the business model. VCs are always looking for the ‘next new thing’ or ‘the next Google’. Venture capital is funded by angel investors, which are high-net-worth individuals who provide backing for small startups and entrepreneurs. Usually, startups in need of funding come to the VC firm itself, by sending in a pitch. The VC firm then assesses its business by talking to the founders and investigating the market they’re operating in. Did you know that only 1% of venture capital funds get invested in female-only teams, 5% into mixed teams and 94%(!) into teams that only consist of men? It's time to change these statistics, right?

Trading

As a trader, you can work at banks and asset management funds – basically, anywhere where stocks are involved. At banks, you trade in the name of the client, while at hedge funds you trade to make the highest profit for the fund itself. But, you can also work at one of the market-making firms. These companies are specialized in providing liquidity in the markets, by buying and selling securities. The profit is made from the bid-ask spread.

It is a fast-paced, highly evolving sector, using the newest and fastest technology. Market makers are often looking for people with mathematics, engineering or statistics degrees. This is because you need to have very fast problem-solving and computational skills. But no need to worry. You can practise these standardized tests. If you can pass the numerical tests, and have a high level of ambition and a visible interest in financial markets, you can also get in with a market maker firm.

Asset Management

An asset management professional assists their clients with increasing their total wealth by acquiring, maintaining and trading investments with the potential to grow in value. Usually, financial institutions offer this service to cater for the needs of high-net-worth individuals, government entities, corporations, and institutional investors like colleges and pension funds. 

The main challenge in this field is to increase value while mitigating risk. As a financial service provider, the tasks include providing professional advice, and making investment decisions based on a previously identified strategy of a client, as well as their risk tolerance and financial situation.