Investment Banking in Action: Case-Based Learning for Career Success

Investment banking is a fast and high-stakes world with complicated financial models, billion-dollar deals, and strategic advisory. The industry mainly focuses on case studies highlighting how investment banks help with mergers, acquisitions, restructuring, and acquiring money for companies. These investment banking case studies help beginners and industry experts comprehend that it gives value to different clients.  

This article explains investment banking based on actual transactions and gives a glimpse of the key decisions and procedures involved in major deals.  

What are the Investment Banking Case Studies?  

Applicants are likely to see investment banking case studies during the last phase of the application, such as during a final assessment or interview. There is a lot of competition for investment banking roles, so you must be well-prepared.  

Case studies in investment banking allow candidates to show how they can manage situations typical in the industry. Many investment bank case studies questions are about acquisitions, raising capital, or expanding a business.  

You may only have a short window to study the case on your assessment day. While evaluation financial modelling, or company valuation, is part of the case, receive it early to work on it before the assessment meeting. Presenting strong investment banking skills during the evaluation process is vital. 

Case Studies and Answers in Investment Banking 

The candidates usually experience investment baking case studies at the last stage of the application process. However, the investment banking world is highly competitive, so the aspirants should be fully prepared.   

• Case study - Modeling  

Background 

A leading investment bank aims to find better models for pricing financial derivatives. The bank now relies on the Black-Scholes model to calculate the investments it buys. However, it fails to precisely record the bank’s losses from trade in its derivatives market.  

Challenges Presented  

The bank must find improved ways to address its responsibilities with accounts. They need to work on enhancing their financial situation. 

Solutions Implemented 

At work, the bank can try advanced tools such as Monte Carlo, Stochastic Search, and Regressive models. These models give the bank a more effective approach to managing their money and guarantee that it is handled accurately. On top of the existing investment methods, they need to develop a risk management approach with an investment banker. 

• Case Study - Decision Making 

Background 

A bank specializing in investment advises a client who wants to invest. Since this type of investment is risky but can also lead to big gains, it works well for investment banking consultancies.  

Challenges Presented 

Since the business needs a high-value investment, it cannot avoid dealing with risk. There are greater market ups and downs, risk of blind trades, and issues like large systemic problems, laws, and third-party risks. 

Solutions Implemented 

The most important task for investment bankers is to define the desired outcomes. One can achieve this by considering the risks and benefits and comparing them with the proposed option. They can also pay attention to ongoing market trends and assess what might occur from launching this venture.  

Also, the business can choose actions proven to be highly effective and capture the best returns from their investment. It involves using broad models, especially predictive models, and exploring what changes or additions can lead to the top results. 

Real Life Case Study 

• Facebook Introduces Its Initial Public Offering (IPO)  

Facebook’s IPO in 2012 was one of the most widely discussed tech IPOs. Morgan Stanley J.P. Morgan and Goldman Sachs are the primary underwriters for the company’s IPO. Facebook reached a valuation of more than $100 billion with the help of investment banks, which arranged for $16 billion for the company.  

Investment banks set the price of shares, manage the regulatory filings, promote the stock to larger investors, and verify compliance with all regulations. Despite the problems with errors in trading and fears of overpricing, the IPO still made a strong impact and highlighted the importance of investment banks. 

• Disney Buys 21st Century Fox 

Disney purchased 21st Century Fox for $71.3 billion in 2017. The deal advice was provided by Center view Partners, Goldman Sachs and JPMorgan Chase. 

They shared different valuation models and strategies for structuring the deal with Disney and conducted thorough due diligence. To close the deal, banks needed to overcome antitrust concerns and the process of handing over assets and help bargain terms that would benefit shareholders. 

Ultimately, the acquisition allowed Disney to control major brands and increase its online streaming services through Hulu and other digital networks.  

• Large Capital Raise by Tesla through Convertible Notes 

In 2019, Tesla used investment banking to secure $1.6 billion by issuing convertible notes. The aim was to raise money for the Model Y launch and boost the company’s finances.  

The investment banks organized the IPO, analyzed the interest from investors, and decided on the right terms to satisfy the need for Tesla’s capital and the amount of risk accepted by investors. The company’s ability to raise money demonstrates how investment banks match their instruments to a company’s growth plans.

|Read More: Investment Banking Certificate Course  

Conclusion  

Case studies in investment banking demonstrate how significant financial choices are developed via careful preparation, professional review, and organized application. Companies that choose an IPO to merge with another big firm or consider innovative methods to raise capital often depend on investment banks. They help show that having financial knowledge and thinking about strategies is necessary for the growth of any company.