Introduction to Investment Banking

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1. 1

   Chapter 1Free

   Start here

   What is investment banking?

   Goal: Explain what an investment bank does, who it works for and how it gets paid.

   1. 1.1

      Banks vs investment banks: what's the difference?

      Tell apart a bank that holds your savings from one that advises companies on big money decisions.

   2. 1.2

      Who are the clients?

      Name the 4 client types: companies, governments, investors such as pension funds, and private equity firms.

   3. 1.3

      Why do companies need an investment bank?

      Give 3 reasons: specialist expertise, access to investors, and someone to run the process.

   4. 1.4

      How an investment bank makes money

      Understand that banks earn fees, often a percentage of the deal, and are often paid mostly when the deal succeeds.

   5. 1.5

      Investment banking in one sentence

      Write your own one-line definition, then compare it with a model answer.

   6. Checkpoint 1

   Try Lesson 1.1 for free

   Words of this chapter (11)+

   Commercial bank

   A bank that takes deposits and lends money to people and businesses

   e.g. Your savings account at a local bank

   Investment bank

   A bank that helps companies and governments raise money and do big deals

   e.g. Advising a company that wants to buy a rival

   Universal bank

   A bank that does both commercial and investment banking

   e.g. JPMorgan, UBS

   Client

   The person or organisation that hires the bank

   e.g. Nestlé hiring a bank to sell one of its divisions

   Capital

   Money a company uses to run and grow

   e.g. Cash raised to build a new factory

   Investor

   Someone who puts money into a company hoping to get more back

   e.g. A pension fund buying shares

   Advisory

   Giving expert advice for a fee

   e.g. Telling a client what price to offer

   Fee

   What the client pays the bank for its work

   e.g. A percentage of the deal's value

   Success fee

   A fee paid only if the deal actually happens

   e.g. Paid when the acquisition closes

   Financial markets

   Places where shares, bonds and other assets are bought and sold

   e.g. The SIX Swiss Exchange, the NYSE

   Deal

   A transaction the bank works on

   e.g. A merger, a share sale, a bond issue

2. 2

   Chapter 2Free

   Unlocks after Checkpoint 1

   How companies raise money

   Goal: Explain the difference between equity and debt, what an IPO is, and why a company would pick one over the other.

   1. 2.1

      Start with the money: revenue, costs, profit

      Read a 3-line example: a café sells CHF 500,000 of coffee, spends CHF 420,000, and so makes CHF 80,000 profit.

   2. 2.2

      Two ways to get money: shares (equity) or borrowing (debt)

      Explain that equity means giving up part of the ownership, while debt means promising to pay the money back with interest.

   3. 2.3

      Bonds up close

      Read a simple bond: CHF 100 borrowed for 5 years, paying 3% interest each year, then CHF 100 paid back at the end.

   4. 2.4

      What is an IPO? (going public)

      Describe the path from private to listed company: choosing banks, the prospectus, the roadshow, setting the price and the first trading day.

   5. 2.5

      The underwriter's job

      Understand that the bank finds the buyers, helps set the price, and may take on the risk of shares that go unsold.

   6. 2.6

      Shares or borrowing: how a company chooses

      Weigh the trade-offs: debt keeps ownership but must be repaid even in a bad year; equity costs nothing each month but dilutes the owners.

   7. Checkpoint 2

   Words of this chapter (24)+

   Revenue

   All the money a company takes in from sales

   e.g. CHF 500,000 of coffee sold

   Costs

   All the money a company spends

   e.g. Rent, staff, coffee beans

   Profit

   Revenue minus costs

   e.g. CHF 500,000 − CHF 420,000 = CHF 80,000

   Equity

   Ownership in a company

   e.g. Holding 10% of a startup

   Share (stock)

   One small piece of a company's ownership

   e.g. One Nestlé share

   Shareholder

   Someone who owns shares

   e.g. A pension fund holding Nestlé shares

   Dividend

   Part of the profit paid out to shareholders

   e.g. CHF 3 per share each year

   Dilution

   Your ownership % shrinks because new shares are created

   e.g. Founder goes from 60% to 45%

   Debt

   Borrowed money that must be paid back

   e.g. A bank loan, a bond

   Loan

   Money borrowed from one lender, usually a bank

   e.g. A 5-year bank loan

   Bond

   A loan split into small pieces sold to many investors

   e.g. A 10-year Apple bond

   Principal

   The amount borrowed

   e.g. CHF 100

   Interest / coupon

   The yearly price of borrowing, as a %

   e.g. 3% per year

   Maturity

   The date the loan must be paid back

   e.g. 5 years from now

   Default

   Failing to pay back debt

   e.g. A company that cannot pay its bondholders

   Credit rating

   A grade for how likely a borrower is to repay

   e.g. AAA (very safe) to C (very risky)

   Private company

   A company whose shares are not on a stock exchange

   e.g. Most family businesses

   Public (listed) company

   A company whose shares trade on a stock exchange

   e.g. Nestlé, Apple

   IPO

   Initial public offering: the first sale of shares to the public

   e.g. A startup listing on the Nasdaq

   Stock exchange

   A marketplace for buying and selling shares

   e.g. SIX Swiss Exchange

   Prospectus

   The official document describing the company for investors

   e.g. Hundreds of pages on risks and finances

   Roadshow

   Meetings where the company pitches itself to investors before an IPO

   e.g. Two weeks of meetings in London and New York

   Underwriter

   The bank that organises the share or bond sale and finds buyers

   e.g. Goldman Sachs leading an IPO

   Valuation

   What a company is estimated to be worth

   e.g. "Valued at CHF 2 billion"

3. 3

   Chapter 3

   Unlocks after Checkpoint 2

   Buying and selling companies (M&A)

   Goal: Explain why companies buy other companies, what a banker does at each step of the process, and why some deals fail.

   1. 3.1

      What are mergers and acquisitions?

      Tell apart a merger (two companies combine as equals) from an acquisition (one company buys another).

   2. 3.2

      Why do companies buy other companies?

      Name 4 motives: growth, synergies, entering a new market or country, and buying technology or talent.

   3. 3.3

      The banker's job in a deal

      Tell apart buy-side work (helping the buyer) from sell-side work (helping the seller), where the bank runs the sale and looks for the highest price.

   4. 3.4

      A sale, step by step

      Follow a sale from preparation, teaser, NDA and information memorandum to bids, due diligence, signing and closing.

   5. 3.5

      Why deals fail

      Name 3 reasons: regulators block the deal, the buyer overpays, or the two company cultures clash after the merger.

   6. 3.6

      A real deal, explained simply

      Follow one famous deal from start to finish and see the ideas of this chapter in action.

   7. Checkpoint 3

   Words of this chapter (17)+

   M&A

   Mergers and acquisitions

   e.g. The M&A team advises on deals

   Merger

   Two companies combine into one

   e.g. Two equal-sized rivals joining

   Acquisition (takeover)

   One company buys another

   e.g. Microsoft buying Activision

   Acquirer (buyer)

   The company doing the buying

   e.g. Disney

   Target

   The company being bought

   e.g. 21st Century Fox

   Synergies

   Extra value created by combining

   e.g. Closing one of two head offices

   Premium

   How much more than the current share price the buyer pays

   e.g. Offering CHF 120 for a CHF 100 share = 20% premium

   Buy-side / sell-side advisor

   The bank advising the buyer / the seller

   e.g. Two banks on opposite sides of one deal

   Auction

   A sale where several buyers compete

   e.g. Five companies bidding for one brand

   Teaser

   A short, anonymous summary sent to possible buyers

   e.g. "Swiss food company, CHF 200m revenue"

   NDA

   Non-disclosure agreement: a promise to keep information secret

   e.g. Signed before seeing any real numbers

   Due diligence

   A detailed check of the target before buying

   e.g. Lawyers reviewing every contract

   Bid

   An offer to buy at a stated price

   e.g. CHF 500m for the whole company

   Signing / closing

   Agreeing to the deal / the deal officially happening

   e.g. Closing often takes months after signing

   Antitrust (competition law)

   Rules that stop deals which hurt competition

   e.g. A regulator blocking a merger of two rivals

   Hostile takeover

   Buying a company against its management's wishes

   e.g. Going directly to the shareholders

   Cash vs stock deal

   Paying the seller in money or with your own shares

   e.g. "$95 per share in cash"

4. 4

   Chapter 4

   Unlocks after Checkpoint 3

   Inside an investment bank

   Goal: Map the main teams of a bank, explain why some teams may not share information, and tell the different types of bank apart.

   1. 4.1

      The main teams

      Describe the investment banking division, sales & trading and research, and how IB is split into industry and product groups.

   2. 4.2

      Front, middle and back office

      Tell apart the teams that earn revenue, the teams that control risk and rules, and the teams that process and settle trades.

   3. 4.3

      The information wall

      Explain why the deal team, which knows about secret deals, is kept apart from traders, and why insider trading is a crime.

   4. 4.4

      Big global banks vs small specialist banks ("boutiques")

      Compare bulge bracket banks, elite boutiques and middle-market banks.

   5. Checkpoint 4

   Words of this chapter (17)+

   IBD

   Investment banking division: the deal advisors

   e.g. The team advising on an acquisition

   Coverage group

   A team that focuses on one industry

   e.g. The healthcare group

   Product group

   A team that focuses on one kind of deal

   e.g. The M&A group

   ECM

   Equity capital markets: share sales and IPOs

   e.g. Running an IPO

   DCM

   Debt capital markets: bond issues

   e.g. Selling a company's new bond

   Leveraged finance

   Loans and bonds for companies that borrow a lot

   e.g. Funding a private equity buyout

   Sales & trading

   Buying and selling securities for investor clients

   e.g. A trader buying bonds for a pension fund

   Market maker

   A trader always ready to buy or sell, earning the small gap in price

   e.g. Quoting CHF 99.90 to buy and CHF 100.10 to sell

   Equity research

   Analysts who study companies and publish recommendations

   e.g. A "buy" rating on a stock

   Front / middle / back office

   Earning revenue / controlling risk and rules / processing trades

   e.g. Bankers / risk managers / operations staff

   Compliance

   The team that makes sure the bank follows the law

   e.g. Checking that a trade is allowed

   Insider information

   Important secret information that could move a share price

   e.g. Knowing about a takeover before it is announced

   Insider trading

   Illegally trading on insider information

   e.g. Buying the target's shares before the deal is announced

   Information barrier

   Rules that keep deal teams apart from traders

   e.g. Separate floors and separate computer systems

   Bulge bracket

   The largest global banks offering every service

   e.g. Goldman Sachs, JPMorgan, Morgan Stanley

   Boutique

   A smaller bank that focuses on advice

   e.g. Lazard, Evercore

   Middle market

   Smaller deals, often under about $500m

   e.g. Selling a regional company

5. 5

   Chapter 5

   Unlocks after Checkpoint 4

   The people and the career path

   Goal: Describe the career ladder, picture a realistic working day, and know the concrete steps that lead to a first internship.

   1. 5.1

      The ladder: Analyst → Associate → VP → Director → Managing Director

      Know what each level does, from building models and slides to winning clients.

   2. 5.2

      A day in the life of an Analyst (the honest version)

      Picture the long hours during a busy deal, the late changes to slides, and how much you learn.

   3. 5.3

      Skills you need

      Name the hard skills (Excel, PowerPoint, accounting basics) and soft skills (clear writing, attention to detail, working under pressure).

   4. 5.4

      How people get in

      Understand the recruiting timeline, spring weeks, off-cycle internships, and fit vs technical interview questions.

   5. 5.5

      Where bankers go next (exit opportunities)

      Know that many analysts later move to private equity, hedge funds, corporate development or startups.

   6. Checkpoint 5

   Words of this chapter (16)+

   Analyst

   The entry-level job, usually straight from university

   e.g. First 2-3 years at the bank

   Associate

   The level above Analyst, often after an MBA or a promotion

   e.g. Checks the Analyst's model

   VP / Director / MD

   The senior levels that run deals and win clients

   e.g. The MD pitches to the CEO

   Deal team

   The group of bankers working on one deal

   e.g. 1 MD, 1 VP, 1 Associate, 2 Analysts

   Staffing

   Being assigned to deals

   e.g. "I got staffed on a new IPO"

   Pitch book

   The slide deck used to win a client

   e.g. 40 slides on why to choose our bank

   Financial model

   An Excel file that forecasts a company's numbers

   e.g. 5-year revenue forecast

   Spring week

   A short UK program where first-year students try out banking

   e.g. One week in London

   Summer internship

   A 10-week internship, often the main route to a job offer

   e.g. The summer before final year

   Off-cycle internship

   An internship outside the summer, common in Europe

   e.g. 6 months starting in January

   Return offer

   A full-time job offer given at the end of an internship

   e.g. Offered at the end of the summer

   Superday

   The final round: several interviews in one day

   e.g. 4 interviews back to back

   Fit vs technical questions

   Questions about you vs questions about finance

   e.g. "Why us?" vs "What is an IPO?"

   Networking / coffee chat

   Short talks with bankers to learn and get noticed

   e.g. A 15-minute call with an alum

   Buy-side vs sell-side

   Firms that invest money vs firms that advise and sell

   e.g. A PE fund vs an investment bank

   Exit opportunities

   Jobs bankers move to after banking

   e.g. Private equity, a hedge fund, a startup

6. 6

   Chapter 6

   Unlocks after Checkpoint 5

   Valuation and banker talk

   Goal: Work out what a company is worth in 2 simple ways and talk about a deal like a junior banker.

   1. 6.1

      What a company is "worth": market cap and enterprise value

      Calculate market cap (share price × number of shares) and understand that a buyer also takes on the company's debt.

   2. 6.2

      Valuing by comparison (multiples)

      Use a multiple the way you would use the price per m² of a flat, starting with the P/E ratio.

   3. 6.3

      Banker vocabulary: pitch, deck, deal, client

      Understand the working language of a deal team through a short simulated email thread between an MD and an Analyst.

   4. 6.4

      IB1 recap

      Follow one fictional company through the whole class: it raises money, gets bought, and the deal is valued.

   5. Checkpoint 6

   Words of this chapter (16)+

   Share price

   What one share costs right now

   e.g. CHF 50

   Market cap

   Share price × number of shares

   e.g. CHF 50 × 10m = CHF 500m

   Net debt

   Debt minus cash

   e.g. CHF 150m − CHF 50m = CHF 100m

   Enterprise value (EV)

   Market cap + net debt: the value of the whole business

   e.g. CHF 600m

   EBITDA

   Profit before interest, taxes, depreciation and amortisation: a rough measure of operating profit

   e.g. CHF 60m

   Multiple

   Value divided by a profit measure

   e.g. EV / EBITDA = 10x

   P/E ratio

   Share price divided by profit per share

   e.g. 20x

   Comps

   Comparable companies used to judge value

   e.g. Valuing a chocolate maker by looking at Lindt

   Precedent transactions

   Past deals used as price references

   e.g. What buyers paid for similar companies

   DCF

   Discounted cash flow: value based on future cash (taught in IB2)

   e.g. Forecasting 5 years of cash

   Pitch

   A meeting to win a client's business

   e.g. Presenting to a CEO

   Deck

   A slide presentation

   e.g. The pitch deck

   Mandate

   Being officially hired for a deal

   e.g. "We won the mandate"

   League table

   A ranking of banks by deal volume

   e.g. Top 10 M&A advisors of 2025

   Tombstone

   A small trophy or notice celebrating a closed deal

   e.g. A glass cube on a banker's desk

   Live deal

   A deal currently in progress

   e.g. "I'm on two live deals"

7. Milestone

   IB1 completed

   Pass the IB1 class quiz to add this milestone to your profile. Then it's on to IB2.