The Best Financial Modeling Courses for Investment Bankers

Investment banking is focused on evaluating the worth of companies, for the purposes of either capital creation for corporate financing, facilitating mergers and acquisitions (M&A) such as leveraged buyouts (LBOs), corporate restructuring or reorganizations, or investing. For this reason, financial modeling is an important skill for investment banking professionals.

The process of conducting financial modeling is aimed at creating a mathematical model that reflects the historical, current or projected value or financial performance of a company, a stock, a project, an investment or any financial asset. Financial models are used to calculate the impact of different variables, such as interest rates or corporate growth rates, on the value of an asset.

A financial model can range from a simple calculation or formula to a complex series of calculations. Virtually any mathematical formula that is used to calculate or estimate a value related to corporate finance can be used as a financial model. Commonly used financial models in the field of investment banking include financial statement modeling, discounted cash flow (DCF) analysis, accretion/dilution modeling for mergers or acquisitions, and various enterprise value calculations and estimations.

Courses in financial modeling are often sought out by those aiming for careers in investment banking, but they can also provide helpful continuing education for people who are already working in the industry. As the field of financial modeling encompasses a vast array of modeling tools and techniques, it potentially offers many years' worth of ongoing training. For example, an investment banking analyst who has been primarily engaged in doing DCF equity valuation analysis for several years may benefit from studying course material that presents methodology for doing accretion/dilution modeling prior to moving into handling M&A.

There are both live instruction courses and online self-study curricula available. Online programs are considerably less expensive and allow students to work their way through the material at their own pace.

The Wall Street Prep Premium package is designed to mimic the actual experience of a financial analyst and relies heavily on presentations of real-world case studies. This course is used for in-house training at prestigious investment banks, and the course material is authored by a group of senior investment bankers from firms such as JPMorgan Chase and Credit Suisse. It provides training in basic financial statement modeling and teaches students how to construct financial statement projection models in Microsoft Excel , including sensitivity analysis and industry best practices. The course has a module completely devoted to DCF analysis, including calculating the weighted average cost of capital (WACC), terminal values and levered and unlevered free cash flow (FCF). Other topics covered include calculating options values and convertible securities.

The M&A section covers assessing accretion or dilution in stock deals, purchase accounting and purchase price allocation, common buy-side and sell-side processes, and adjustments for intangible assets, such as goodwill. The course has a separate segment on leveraged buyouts that covers constructing buyout models used to value a company or calculate returns for investors. Also covered are the various capital structures common for buyouts, such as bonds, bridge loans and equity. Considerable attention is given to modeling LBO debt, including analysis of mandatory amortization, senior and subordinate notes, and the effects of preferred stock.

Two additional course modules provide thorough instruction in modeling using trading and transaction comparables, including selecting the most relevant multiples for equity evaluation.

Course extras included are free access to Boost, an Excel add-on designed to increase financial modeling efficiency, and access to a library of Excel templates for creating financial models.

Upon completion of the course program material and passing an exam, students receive an official certification in financial and valuation modeling. A number of investment banks use the Wall Street Prep program for their own in-house financial analyst programs, and they require this certification.

The Breaking Into Wall Street (BIWS) Premium course, which costs about the same as the Wall Street Prep Premium package (around $499 as of 2015), covers essentially the same material as the Wall Street Prep curriculum, including sections on DCF analysis, financial statement modeling, M&A and comparables. The course relies heavily on video training and includes extensive practice exercises in using Excel, comparing different valuations and examining actual case studies of M&A deals.

The Premium package includes Excel and financial modeling fundamentals courses at no extra charge.

However, there are some significant differences between the BIWS course and the Wall Street Prep program. Unlike the Wall Street Prep course that is put together and written by a number of senior investment bankers and managing directors of investment banking firms, the BIWS courses are authored entirely by one former investment banker from UBS. While Wall Street Prep's program is actually used at over 100 investment banking firms and business schools, the BIWS course has, as of 2015, no such official usage. Also, the BIWS course does not offer the free Boost Excel add-on.

The BIWS Premium package includes a financial and valuation modeling certification after completing the program.

The Wall Street Training program does not offer a package curriculum that corresponds precisely to the Premium programs offered by Wall Street Prep and BIWS. The closest approximation in terms of material covered is contained in packages 2 through 6 of its Core Modules training. Package 2 offers instruction in basic evaluation and financial modeling. Package 3 provides comprehensive advanced financial modeling that teaches a student how to prepare an integrated five-year financial statement model, including figuring in dividend payments and simulating share buyback programs. Package 4 covers corporate finance and valuation methodologies, including trading comparables, although it does not offer in-depth coverage of transaction comparables evaluation. Package 5 is about M&A modeling, and includes topics such as accretion and dilution merger consequence evaluation, ability to pay analysis, and M&A deal structuring. Package 6 covers financial modeling for leveraged buyouts.

Together, the five modules cost $1,850, more than three times the cost of the Wall Street Prep or BIWS programs. However, individuals seeking only specific instruction in one or two areas of financial modeling might save money by purchasing individual courses that are offered for as little as $100 each. A separate module of in-depth fundamental and advanced Excel training is offered for $500.

The Wall Street Training program offers its own free macros designed to improve the functionality of Microsoft Excel, but they lack the extensive capabilities of the Boost add-on offered by Wall Street Prep.

Wall Street Training gives a financial and valuation modeling certification upon completion of all of the individual financial modeling modules.