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Investment Banking, as an industry, has been the stuff of legends of decades. The massive deals and high-stakes attract a special breed of highly intelligent and driven young men and women towards it. But getting into IB is perhaps the biggest challenge in itself. There are hundreds of candidates applying for a single opening and all of them come form top schools with excellent grades.
Yet, the grind to get in is worth it. It opens up a whole new world and you become valuable not just in your industry but for any company that is looking for a finance whiz. BankersByDay provides detailed guides and courses for breaking into IB, but if you’d rather just read a good technical book, then I still have you covered.
This is the list of best reference books that will help you boost your career in investment banking. They each focus on one specific area like fixed income, PE, M&A etc. But you won’t lose anything by going through all of them.
1. Best Book for Investment Banking Prep
This is the go-to investment banking book which finds a spot on almost every banking book list. The authors are known names in IB circles and it covers all of the basics that you need to know when starting out, preparing for an interview or getting warmed up before an internship. Think of this as standard reading if you are interested in a career in investment banking. It is often recommended by professors at top business schools as well.
This particular edition also gives you access to five downloadable valuation model templates that should really help you get some hands-on experience with how things work in the real world. These include DCF, a leveraged buyout, M&A models, comparable companies analysis and precedent transaction analysis. You also get six months access to Wiley’s online Investment Banking Course with videos, practice questions and other study aids. It’s a great deal.
2. Best Books for Bonds, Fixed Income, Debt Capital Markets
This is a personal favorite of mine. I just have a personal bias towards bonds, fixed income securities and debt capital markets. I am not sure why – probably because I fell in love with the math behind bonds and this book had a lot to do with that.If you are interested in a field that is even slightly related to fixed income securities, then this book is a must. Everyone from DCM bankers to FICC traders, derivative structuring analysts and bond raters need to read this.
Topic coverage is extensive (this is probably the thickest book on my shelf!) and most of the newer topics are also covered like electronic trading, credit derivatives valuation and risk, CLOs, ETFs, leveraged loans, tail risk hedging, multi-factor fixed income models, fixed income hedge fund strategies, high-yield bond portfolios and so on. This is obviously in addition to all the traditional stuff from the preceding editions.
3. Best Book for mastering Valuation
No investment banking book list can be complete without Damodaran. And this may be his magnum opus. It provides perhaps the best look at valuations for beginners and intermediate students alike. This book is recommended reading not just for investment bankers interested in valuations, but it is usually part of the course work across some of the worlds top business schools.
This particular edition also includes valuation techniques for start-up firms, real options, conventional asset classes, distressed companies, real estate, private equity deals and so on. Valuation is an art form and Damodaran is Gödel, Escher, Bach all rolled into one.
4. Best Book for Leveraged Finance
More specific to Leveraged Finance but still a good all-round resource for fixed income enthusiasts. It covers everything from yields, spreads, ratio analysis, business analysis, modeling, scenario building, credit risk etc. needed to successfully execute a LevFin transaction. Leveraged Finance is a unique beast and this book offers a unique take to tackle it.
The book has been authored by a Credit Suisse Managing Director so you know its overflowing with real-world insights and expertise. He goes into detail why convention strategies don’t work with Leveraged Finance deals and how you should go about sourcing and processing data for pricing and decision making for such transactions. If you are involved with LevFin in any capacity, reading this book is perhaps the best favour you can do for yourself.
5. Best Books for Private Equity
This pair of books is comprehensive a take on private equity as you can find anywhere on the web. The first one is a definite guide to private equity and the second one is its case book companion. It has been authored by private equity veterans and covers everything you need to know form deal sourcing, to LBOs, exits to responsible investment and from risk management to value creation through operation optimization.
The second book contains a series of 19 private equity case studies that are meant to really drive home the practical nuances, challenges, risk ward dynamics and intricacies of such deals. This is perhaps the most valuable such collection available anywhere and these have been taught at some of the worlds top MBA programs.
6. Best Book for LBOs
Do you like LBOs? If you want to get into Private Equity, then you better learn to love them. I admit LBO modeling is not the most intuitive of things since there is so much subjectivity in how you can approach things. But this books offers the best strategies for solving those problems. It covers all the bases and is especially helpful for preparing for an upcoming test as part of the recruitment process.
Topic coverage is truly vast with downloadable financial models that you are walked through. You will cover sources of funds, use of funds, assumptions, debt covenants, return to investors, depreciation schedules, working capital schedules, debt schedules, balance sheer, cash flow statement, income statement, and even hot keys to make you a better Excel modeler. When it
7. Best Book for Mid-market Investment Banking
I am going to let you in on a little secret: Middle Markets is where it’s at. It’s the fastest growing segment of the global economy (other than tech) and it is an untapped segment. Which means there is stupendous growth potential here for investment banks and private equity firms. But the thing is most books and courses focus only on the big deals or sometimes startups. This book is an exception and you need to read it.
This book provides a holistic overview of transactions in the $5 million to $500 million range. Mergers, acquisitions, divestitures, market trends, strategies, pre-transaction due diligence, post transaction activities are all covered in satisfying detail. It is just a must read if you intend to cover MM deals from either side of the table.
8. Best Book for Equity Research
Equity Research is not the trickiest of subjects in finance, but it is one where you can get into infinite detail and complexity as you attempt to perfect your model. This book offers you a shortcut to compress the learning process and save you some time while your brain builds some muscle memory.
It starts off with an introduction to how it all works and then moves on to detailing how to actually build a model using practical examples. There are dozens of spreadsheets provided for you to sink your teeth into. You will learn how to build models used for equity research and how to maintain and update them. You will be made aware of all the nuances and pitfalls of creating such a model.
9. Best Book for Financial Modeling
Definitively the best book for learning financial modeling for investment banking roles. This book is heavily focused on Excel which is a plus point since that you means you get some real hands-on experience and not just dull theory. You get to get your hands dirty with some actual worksheets that you can download as part of this product. Topic converge includes everything from Monte Carlo simulations to WACC, corporate valuation, creating efficient portfolios and everything else you can think of.
You will work with basic and advanced financial models for corporate finance, portfolio management, bonds, options and so on. Even the use of VBA is covered for some advanced Excel magic. Whatever you are looking for in a financial modelling book, this one will surely meet your expectations and then some.
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About the Author
Gaurav started his finance career as an intern in Citi’s Institutional Clients Group in 2009, eventually ending up as an Associate Director at Standard Chartered Bank’s Corporate & Institutional Banking division a few years later. By 2016, he was an independent consultant helping FinTech start-ups in London with product development and launch. Gaurav also helps banks with their digital banking initiatives and advises PE & VC firms with investments in the financial services and FinTech sectors.Gaurav writes on topics ranging from EU banking regulations and tradional finance to Blockchain startups and the future of banking itself! He has an Engineering degree in Computer Science and an MBA with a double major in Finance and Marketing. He is also a Certified Financial Risk Manager.