A quick review of the ECM (Equity Capital Market) analyst's job...

A quick review of the ECM (Equity Capital Market) analyst’s job…

In this article, Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023) explains what an analyst in ECM works on, on a daily basis.

What does ECM consist in?

The Equity Capital Markets or ECM teams are used to cover the equity financing needs of companies via financial markets. For this reason, they assist companies in initial public offerings (IPOs) and then seasoned equity offerings (SEOs), convertible bond issuances, capital increases or squeeze. The ECM analyst’s job is therefore a financing-related job like the Debt Capital Market (DCM), which differs, however, by the nature of the financing offered: debt or equity.

What does an analyst work on?

The analyst may first work on the origination of the deal. This involves, for example, proposing a financing solution to the client in parallel with a merger or acquisition (M&A) transaction. This will require a major pitch to convince the client that the proposed financing solution is the most suitable for its needs. On the other hand, the analyst will also have to work upstream on the technical aspects of the ECM transaction, i.e., the pricing of the transaction to reassure the client that the transaction will be successful. This is both a technical and commercial job, with strong relations with clients and other teams in the bank.

In parallel to this technical and commercial work and directly linked to the ECM transaction, the analyst must also work with the legal teams on the structuring of the transaction. This is often overlooked, but a share issue is a financial as well as a legal operation. That is why ECM teams also work on the tax and legal aspects of a share issuance or IPO for example.

Finally, the ECM analyst must regularly inform himself on the behavior of the financial markets in order to choose the most opportune moment for an IPO or a share issuance for example. The current context of massive inflation and instability linked to the war in Ukraine, for example, invites investors in the financial markets to be very cautious and therefore to invest less than usual. This is the reason why IPOs are so rare at the moment, as players wishing to go public fear the response of the primary markets. This work of monitoring the financial markets will be done by looking at the records on Bloomberg for instance, in order to obtain insights on the major market trends.

Why does ECM jobs appeal so much to students?

First of all, it is the dynamic working atmosphere that investment banking constitute that also attracts young graduates. ECM is marked by a culture of high standards and maximum commitment, with highly responsive teams and extremely competent colleagues. Working in a quality team is very stimulating, and often makes it possible to approach the workload with less apprehension and to rapidly increase one’s competence.

The position of ECM divisions within the Investment Banks also makes the job really interesting. Because as we have seen together, an ECM job suggests an ability to manage both theoretical models, market trends and legal specificities. For that matter, an ECM career can be very challenging, and this is what young graduates seek for.

What are the main exits for ECM?

What is special about ECM is that it is a profession between corporate finance and market finance, which means that it is possible to move into one of these two branches after working in ECM. Some go into Venture Capital or late stage start-ups to build on their knowledge of IPOs. Others go into Sales & Trading, although this seems to be more rare.

Resources

Coursera Lecture on ECM & how they work

Indeed 55 Capital Market Interview Questions (With Sample Answers)

About the author

The article was written in November 2022 by Louis DETALLE (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2023).

A quick review of the ECM (Equity Capital Market) analyst's job…