Why is investment banking so complicated?

In my experience, working in investment banking is generally not complicated, but rather is characterized by some working methods etc.unnecessarily and thus more complicated than it would be necessary.

What do investment bankers do?

Basically, investment bankers are advisers who advise their clients, i.e. companies of different sizes, on takeovers, acquisitions, IPOs and the issuance of bonds/bonds and carry out the respective transaction afterwards.Numerous presentations are prepared, strategic considerations are made, balance sheets/profit and loss accounts/capital flow statements are analysed, aggregated and used for the valuation of the respective company. At the same time, the respective capital market is observed and analyzed, searched for other companies (potential buyers or sellers) is sought, talked to investors and comparable companies are evaluated.

Complicated work

Even if this sounds quite extensive, which it is, and complicated, there are working methods defined or developed over the years for many of these activities, so that one often follows instructions or often entered paths, especially in the young years.

However, it must also be noted that every company, industry, market and therefore every transaction is different.As a result, these established ways of working are gradually abandoned and you move on to new territory, where a great deal of creativity and understanding of the transaction is required, which can be quite complicated.

To give just one example:

A company like Volkswagen seems easy to evaluate.There are annual profits, numerous assets, such as factories, production machines, patents, contracts and, above all, a well-known, established and not unique business model. The situation is different with facebook, which went public in 2012. facebook had no annual profits at that time, hardly any fixed, tangible assets, no factories, no machines etc, its great value is the global network, with numerous users, clicks, likes etc and also the business model was quite new and relatively unique. But how do you rate such a network, what financial value do you assign to a registered user? As a banker, we also deal with such questions.

However, I have the impression that in many cases the very hierarchical structures, the numerous meetings, some of which are certainly important, but do not bring added value to all, and in particular the everlasting back-and-forth of presentations. and other materials, as well as the associated revising orBack and forth, which can take a lot of time, which in general can make exciting, interesting and not too complicated work difficult and also more complex.

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