All You Need to Know About Cracking Healthcare Investment Banking
If you’re contemplating a career in investment banking, this post will help you delve deeper into what areas within #ibank would be a great prospect to focus on.
The COVID-19 onslaught propelled the healthcare industry’s overall performance so this week we’re analyzing the merits of working in the healthcare specialist team of the investment banking division. In healthcare IB, bankers advise companies in the biotech, pharmaceutical, medical device, healthcare service/facility, and healthcare IT markets on mergers, acquisitions, and debt and equity capital issuances.
Most healthcare firms fall into 2 broad categories:
2. Healthcare Equipment & Services – Includes hospitals, assisted living and nursing facilities, labs, managed care, and medical device companies. You’ll work on leveraged buyouts and standard M&A deals with bigger companies that use greater debt. You’ll learn more about finance and less about the market and the science behind different drugs, focusing more on market/ product knowledge as there won't be a lot of leveraged buyouts (LBO) and high-yield debt financings involved.
You’ll be using standard methodologies such as DCF, comparable company analysis, precedent transactions, accretion/dilution, and LBO models are used depending on the deal type. However, the valuation may be quite different when it comes to assessing companies waiting for drug approvals, potential patents, and major research breakthroughs.
The top global banks, JPMorgan, Goldman Sachs, MS, CITI, and Barclays dominate the bear’s share of healthcare M&A deals (over 40%) and often have a dedicated team. But you can get access to such deals working with firms like Jeffries or smaller banks and players with a niche focus.
While you’ll have an edge with an advanced degree in life sciences (genetics/ biotech, etc.,) healthcare groups hire many undergrads from unrelated majors as well. Although a background in medical science is valued, knowledge of healthcare business models is much more important as it impacts everything you do.
The recruitment process for internships will remain the same as any other IBD program- attend a top undergrad or MBA program, earn high grades, get relevant internships/work experience, and do a good amount of networking and preparation. Background with some exposure to healthcare always helps so you can tell your story more effectively, but it’s not a strict requirement.
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