Top Tools Investment Bankers Need in 2023

Investment Banking Tools

It’s 2023, and the bonanza of M&A deals and IPOs we experienced during the pandemic has dried out. 2022 was a dismal year for IPOs, with a meager 181 US IPOs compared to 1035 in 2021 and 480 the year before.

On the M&A side, global market turbulence has affected the number of mergers and acquisitions transactions and the revenue generated by fees. Goldman Sachs, a preeminent investment bank, saw investment banking fees drop by 48% in the last quarter of 2022. These figures lead experts to believe that the first part of 2023 is a continuation of 2022, especially since deal backlogs have been shrinking for most investment banks.

Based on these predictions and market realities, investment banking firms and other large financial institutions should focus on implementing the right technologies, innovations, and processes to improve efficiency, reduce costs and gain a competitive advantage in this competitive market.

Historically, larger investment banks have developed their technologies in-house for various uses, such as risk management, compliance, trading, etc. Creating their proprietary systems and technology ecosystem might work for some institutions, but it’s prohibitively expensive for most middle market and boutique investment banks. Thankfully, multiple technology providers focus on creating high-tech products for the investment banking industry. By relying on different technologies, especially automation and artificial intelligence, investment banks can punch above their weight, remain competitive, and even thrive during these times.

In this article, we go over the top tools investment bankers need in 2023.

Some of the essential tools, such as Microsoft Excel, PowerPoint, and email, are table stakes, and every bank should be using them. However, other technologies can complement them to optimize your workflow and make you a more efficient dealmaker.

Virtual Data Rooms (VDR)

Whether it is a merger, an IPO, or a placement, most deals involve troves of data and thousands of documents. As firms adopt more technology and generate more data, the volume of information in a typical transaction will continue to grow. At the same time, all the data exchanged and generated during a transaction needs to be secure and protected.

A virtual data room is a secure storage space to store, organize and share all the financial, legal, and other documents and data, especially during a transaction’s due diligence process.

With a Virtual Data Room (VDR), both buy-side and sell-side deal teams can significantly speed up the due diligence process without traveling to site locations and sorting through filing cabinets to find the information they are looking for. Additionally, VDRs increase collaboration between deal stakeholders and improve transparency and accountability by tracking tasks and how much time is spent on specific items. In short, VDRs are essential technologies every deal-making team needs.

VDR Providers for Investment Banks





Relationship Intelligence (RI) CRM Software

Investment banking is all about relationships.

To successfully execute a transaction, bankers need to know the people selling or buying companies and have good relationships with them or know someone who can make a warm introduction.

Keeping track of and fostering relationships is a challenging task. Spending dozens of hours per week manually updating spreadsheets or generic CRMs is not the best use of an investment professional’s time, plus there is always the risk of losing data if it’s kept in bloated, out-of-date spreadsheets.

Most investment bankers have lost deals due to siloed data, lack of follow-up, and their teams lacking access to up-to-date information. By leveraging automation and artificial intelligence, you can build stronger relationships and ensure details don’t fall through the cracks.

Relationship intelligence CRMs have been designed for investment bankers to connect buyers and sellers by leveraging the power of your firm’s long-standing relationships. Systems such as 4Degrees, analyze the strength of your team’s collective networks to surface warm introductions and identify the best path to prospective buyers or management teams. By serving as your firm’s central source of truth, 4Degrees ensures your team has a 360- degree view of your firm’s relationships and the entire deal process, keeping everyone on the same page. 4Degrees also eliminates busywork by automatically capturing all interactions by syncing with your email and enriching contact and company data- empowering teams to spend more time building relationships.

At 4Degrees, we have designed a Software as a Service (SaaS) relationship intelligence platform for investment bankers and other financial services industries, including venture capital and private equity. To learn more about pricing or to schedule a personalized demo, click here.

New call-to-action

Project Management Systems

Investment bankers engage in deals that are, in essence, projects with multiple stakeholders (issuers, investors, banks) and details. A project management system is crucial to ensure nothing falls through the cracks. These tools ensure all parts of the project, such as completing due diligence, legal reviews, and other tasks, have been completed while allowing managing directors and other leaders to assign tasks and responsibilities to specific teams or individuals.

Firms can use a relationship intelligence system such as 4Degrees to manage the different stages of a deal and get real-time data on where each transaction stands and what needs to get done.

Other generic systems, including Sharepoint or Microsoft Project, can also be used. Smaller firms looking for more lightweight app tools should consider tools like Asana and Trello.

Research Tools

Most investment bankers are using one or various research tools, including Pitchbook, Capital IQ, or a Bloomberg terminal. Although extremely powerful, some smaller firms might not be able to afford the expensive costs of having access to these tools.

These systems allow bankers to access key documents, financial statements, risk analytics, charting tools, and other tools to analyze large amounts of data and shape their investing process.

Fortunately, other less expensive alternatives can empower your firm with the data it needs to remain competitive and find deals where it can add value and provide advisory services. Tools such as Factset, Refinitiv, MergerMarket, SourceScrub, Alphasense, and YCharts, among other startups in this space, can be great alternatives to the previously mentioned costly research tools.

Depending on the sector and size of deals your firm specializes in, you can find the right research tool that fits your needs and budget.

Collaboration Software

M&A transactions require collaboration between the various parties involved, and being connected and on the same page is necessary to ensure the transaction flows smoothly and is concluded on schedule. Prominent software vendors such as Microsoft have recognized the value of collaboration by launching products such as Microsoft 365 (Excel) and Teams to increase team collaboration.

Although Excel is not the ideal tool for relationship management, it still has a place in investment banking. By using Microsoft 365, bankers can work on the same sheet simultaneously- thereby increasing their efficiency. All the other tools listed in this article also include an element of collaboration, including relationship intelligence CRM’s virtual data rooms and research tools. By using all these categories of products, your firm has the potential to increase collaboration and punch above its weight.

Concluding Thoughts

Deal origination is getting tougher for those investment banks still relying on antiquated processes and technologies. Although Excel is a very effective tool, it is no match for purpose build relationship management software (CRM), VDRs, and collaboration systems. Investment bankers should consider implementing these relatively inexpensive technologies to stay ahead of the curve and gain an edge over the competition.

Related Content

Share this post:
Meet the CRM Built for Deal Teams

4Degrees is tailored for the sourcing, relationship, and pipeline activities that drive your business.

Learn More

Download our Free Limited Partner (LP) List

We have compiled a free list of limited partners that have invested in alternative assets, including venture capital and private equity funds.
  • This field is for validation purposes and should be left unchanged.