The Investment Banking Front Office is a revenue-generating department. Broadly, Investment Banking (IB), Sales & Trading (S&T), and Research divide it. According to market roles, IB is responsible for the Primary Market, and S&T for the Secondary Market.

IB receives funding requests from corporate clients. In ECM, stocks are issued for capital procurement. Methods such as IPOs, rights issues, and convertible bonds can issue shares. DCM issues bonds for debt procurement. Besides straight bonds (SB), convertible bonds (CB), and bonds with warrants (BW) may issue depending on corporate circumstances. Other financial instruments and M&A can also provide external funding.

S&T redistributes products issued by IB to investors based on investment preferences.

Research publishes in-house research reports for IB and S&T to provide ideas and materials for business operations and to offer expertise in industries/markets as deals progress.

IBD is generally what IB refers to. It is also known as Corporate Finance. The main goal of investment banking is to connect clients to the capital market. It is the most important department in investment banking as it is a department that generates revenue. The salary is also the highest.

IBD’s main revenue sources are success fees and advisory fees from closed deals. Whether it succeeded or not is very clear. If the deal is not closed, you will hardly receive a success fee. Therefore, the tendency to focus on deals that are likely to succeed is stronger than in other jobs. So, if you have the word “work-life balance” in your mind, you should never choose it. If the work-life balance is good? Then consider it as a doomed team. If sales performance is poor, some teams may be eliminated within two years. Because of this environment, you are always tense about work. Even after work, always have your phone nearby and be prepared to receive calls, and always be prepared to go to work anytime. This can lead to stress and make you increasingly nervous.

Nowadays, many IBD alumni are scouted by general companies and solve small deals on their own. In the early 2010s, along with the trend of a few chaebol-centered money flows in the Korean market, some investment banks went out of business because the market was shrinking due to fierce competition and the profit rate of deals was too low.

In the past, it may not have been common for Korean nationals studying abroad to work in New York offices, but it is quite common recently. Just by looking for 5 minutes on LinkedIn, it is not difficult to find Korean analysts for each bank. In fact, as of 2018, in one coverage group of a certain bulge bracket bank, there were three Korean nationals working together. Although there are many Ivy League, especially Columbia and Wharton alumni, there are also many non-Ivy League alumni. Even in flagship groups such as Goldman Sachs TMT, Morgan Stanley M&A, JP Morgan Healthcare, and BofA Merrill Lynch Leveraged Finance, Koreans can often be seen. MBA recruiting has become smaller in scale recently, and companies increasingly prefer A-to-A. Therefore, most of them are American undergraduate alumni.

Moreover, because of the nature of IBD, you need to be very sociable and have a wide network to close deals. Therefore, domestic undergraduate degrees that are not helpful in academia are almost useless in getting a job in IBD abroad. Contrary to what is known, unless you are a client (a chaebol that can give deals or a high-ranking Chinese bureaucrat) who can reward more than 1 billion won for an intern hiring, the background of the family is not helpful at all. As of 2019, there were only two Korean nationals who graduated from domestic universities working at a bulge bracket investment bank IBD in New York. One had previous financial experience in Korea and went to Harvard MBA, and the other graduated from a Korean undergraduate school without prior financial/consulting experience and got a job at a flagship group after going to Stanford MBA. As a Korean undergraduate without prior financial/consulting experience, getting a job at Wall Street bulge bracket investment bank IBD is a legendary, unicorn-like existence whether it’s an MBA associate or an analyst. It’s a mysterious case with few precedents, requiring a lot of intelligence, academic background, networking skills, and cultural competence (skills to have soulful conversations with white ajusshis). In this way, getting a job at a bulge bracket in New York right after graduating from a Korean university is practically impossible.

Along with strategic consulting, investment banking is one of the two main streams of finance jobs where new elite talents from Anglo-Saxon circles start their careers. When we compare the two, while strategic consulting deeply researches and provides solutions to one problem, investment banking needs to handle a lot of work efficiently. Strategic consulting conducts projects for more than 3 months, with 4 to 5 people working on one project, divided into tasks. Therefore, the work proceeds by focusing intensively on solving one difficult problem like accountants or researchers. However, in Industry Groups, one junior may be involved in 4 to 5 deals at the same time. In this case, work proceeds quickly to solve numerous problems in the traditional way. Although there are such differences between the two, there are cases where transitions from strategic consulting to IBD’s specific Industry Groups occur.

IBD is not a prophet, so many assumptions made in IBD may turn out to be wrong in the future. Even when this happens, to avoid being left behind, you must always quote rather than assume according to your thoughts. Therefore, clients and seniors in IBD want to quickly verify various analyses and assumptions to see if there are any problems with the results, if the numbers are accurate, and what the sources are. Therefore, when conducting research at the junior level in IBD, the most important thing is to talk based on accurate numbers and quickly answer which source the numbers are from. The persuasion in IBD is not about stimulating or stirring up people’s emotions but mostly based on numbers. Thus, accuracy is important. Mathematics does not require advanced mathematics but requires the ability to quickly recognize errors if incorrect numbers are entered. Even in this field, the use of AI is increasing. In the mid-2010s, Goldman Sachs and BofA Merrill Lynch automated a significant portion of IPO operations, causing a big shock to the financial industry.

IBD careers are very helpful for transitioning to private equity funds.

The departments are broadly divided into Product Group and Industry Group.

In Industry Group, it is divided into specific industries or fields such as Industrials, TMT (Technology, Media & Telecommunications), Natural Resources (Oil & Gas and Mining), Real Estate, Healthcare, and FIG (Financial Institutions Group), and is responsible for financing companies in each industry through means such as share and bond issuance, and when actual capital intermediation activities occur, they earn intermediary fees. Financing consulting is done by the Industry Group, but when actual deals are concluded, they collaborate with the Product Group responsible for the product.

In addition, in the 2010s, some investment banks created a Financial Sponsors Group separately to handle related tasks only as the number of PEF funds raised increased. JPMorgan and BofA Merrill Lynch, which have large and beautiful balance sheets, are representative in the Leveraged Finance sector.

The Product Group specializes in specific transactions such as M&A or Leveraged Finance (LevFin). For example, in the case of M&A, it connects the buyer and the seller of a company and earns advisory fees when the transaction is completed. In LevFin, it is involved in transactions requiring high leverage such as LBOs and Leveraged Acquisitions.

In the case of M&A, there is a deadline once the project starts. Since it is a very heavy task that starts with writing proposals, it takes 1 to 2 weeks. Within the deadline, as much information as possible needs to be collected through financial statements, expert interviews, etc., to find weaknesses of competitors or the other party. The difference from Trading is that the work is not about fighting every minute but about completing deals within a set period, so there is no need to postpone meals or restroom breaks. Also, unlike Trading, where tasks are fought every minute, there are times when you are waiting or resting. However, unlike Trading, where tasks are fought every minute, M&A teams do not have the luxury of regular working hours and work-life balance.

ECM (Equity Capital Market: stock issuance) and DCM (Debt Capital Market: bond issuance) are sometimes classified by banks as specific categories within the Product Group, or departments may be organized in the form of Industry Group / Product Group / Capital Market Group.