Who are the major banks
While there are many ways to categorize and rank investment banks, there are really three main groups: the traditional 'bulge bracket' banks that offer a full range of financial products, the independent 'boutique' banks that focus on M&A and middle market banks that focus on smaller transactions.
The Bulge Bracket
Goldman Sachs
Morgan Stanley
J.P. Morgan
Bank of America
Citi
Barclays
[UBS]
[Deutsche Bank]
The Boutiques
Evercore
Centerview
Lazard
PJT Partners
Guggenheim
Middle Market (not exhaustive)
William Blair
Baird
Needham
Oppenheimer
Houlihan Lokey
Raymond James
Cowen
...
What are the products
Investment banks sell a variety of financial products but let us simplify their offerings here:
Mergers & Acquisitions advice. Typically means advising selling companies or acquiring companies or private equity firms (known as 'financial sponsors'). Typically bankers receive a success fee only when the transaction closes
Equity and Equity linked products. Issuing public shares in common equity, preferred equity or convertible debt. Initial public offerings ("IPOs") are the most sexy part of this product set
Investment grade debt. Bonds issued by companies that have been rated BBB- or higher by two or more ratings agencies
Non-investment grade debt. The world of leveraged finance which includes high yield, or junk, bonds and leveraged loans
Other. There are many other specialized products and services beyond those listed above
What are the groups
There are many industry and product groups within an investment bank but the below is a short summary:
Industry Groups
Technology, Media and Telecom
TMT is often the largest and most prestigious industry group at most banks, often co-headed in New York and the Bay Area. These days, the internet, software and semis bankers get much of the glory but media and telecom often produce the largest transactions
Industrials
Tends to be a catch-all for a variety of industrial products including manufacturing, aerospace & defense, building products/materials and many other things. It is generally a large but fragmented group
Consumer & Retail
This group includes everything from the most high-end luxury brands to grocery stores and packaged goods
Healthcare
Includes pharmaceutical and biotech companies (generally sub-categorized as Life Sciences), healthcare services such as insurance providers, healthcare IT, hospitals, clinics
Financial Institutions
Includes a multitude of sub-sectors including insurance, banks and fintech, this group covers many of the most complex business models that exist
Oil & Gas
Often headquartered in Houston near its clients, this group does many of the largest mergers, period. Furthermore, these teams do some of the more complex financial analyses and structuring in the business
Energy & Natural Resources
Includes mining, timber and other industries related to commodities and sometimes combined with utilities as well
Financial Sponsors
This team covers private equity firms and family offices and spends much of their time bringing other teams to the table such as leveraged finance.
Product Groups
Mergers & Acquisitions
Most firms have a distinct mergers & acquisitions group though some, such as Goldman, include M&A within industry groups. These teams lead, structure and execute sellside and buyside transactions
Equity and Equity-Linked Capital Markets
Consists of two sub-groups, origination which works with industry groups on winning new underwriting transactions, and syndication which works with investors on placing securities
Investment Grade Debt Capital Markets
Focused on underwriting investment grade bonds syndicating investment grade loans. Issuing companies generally have investment grade ratings from two of the three ratings agencies and the debt tends to be unsecured by any collateral
Leveraged Finance
Includes high yield bonds and leveraged loans. Corporations issue in these markets and financial sponsor led leveraged buyouts use these securities in their transactions
Rates & Hedging
Includes products such as rate swaps to change fixed rate debt to floating or vice versa depending on the rate environment and foreign exchange hedging products
Career progression and compensation
Investment bankers have a lockstep, up-or-out progression through the ranks. Most firms have some version of the below, sometimes with fewer levels or different titles.
Analyst. The role directly out of an undergraduate university degree. Often a two year program after which Analysts do bigger and better things such as join PE, VC, corporate, grad school
Duties: build models (XLS), build pitchbooks (PPT), open video/conference calls and take notes (DOC)
Comp: $100,000-200,000
Associate. More often MBA graduates though Analysts can also promote directly (the dreaded A2As). Generally 3 years
Duties: build pitchbooks (PPT), check models (XLS), open and run video/conference calls while taking notes (DOC)
Comp: $200,000-500,000
Vice President.
Duties: check pitchbooks (PPT) and models (XLS), lead video/conference calls and internal meetings and answer to senior bankers
Comp: $400,000-700,000
Director.
Duties: Develop pitchbooks, present content to clients and internally, lead execution of transactions
Comp: $600,000-1,000,000
Managing Director.
Duties: Develop client relationships, present content to clients, win new business and execute transactions
Comp: $800,000-2,000,000+