First, every state has a different standard of living, which affects salaries in most industries. Investment bankers average a base salary of $60,416 per year, and some salaries can range from $14,000 to $166,000 per year. (actually, most top firms don't want a business major, especially since in a few years they will have to get an MBA and end up relearning a lot of the academics if they are a biz major anyway). Looking back, I had no business being in business. starting out with maybe an econ and accounting class or two. What do investment bankers do? To show, for example, a non-biz major can pick up the a lot of what they need in a year or two with a good mentor. An investment banker is sort of the face of large financial institutions and has an entire team of analysts, lawyers, accountants, and sales people to help your company navigate the financial world. It holds the promise of a long, flourishing and successful career, plenty of opportunities to learn, travel, improve your expertise or acquire a whole new set and meeting a lot of people with whom to make interesting business. How many years of education and why is it a terrible career? There are commercial Bankers who assess credit risk: i.e. Here are the average base salaries for investment bankers for each state: Wonder what it takes to get a high-paying job? Investment bankers were born when the American economy was growing at a much faster rate than commercial banks. It is a common saying, and if you generalize it, it makes a lot of sense. At the smaller end of the market, buyers and sellers are always represented by corporate law firms that draft and review documents. Why don’t companies do this themselves? While high-street financial institutions generate income on interests and fees paid by clientele, investment bankers make a fortune on the trade on stock markets, financial advisory, and mergers and acquisitions. This money does not get paid without lots of … Investment banker salaries vary by state for a number of reasons. Typical investment banking projects include Mergers & Acquisitions (M&A), Public Offerings and Initial Public offerings (IPO’s), large scale investing, and a myriad of other functions. This is flat-out wrong. First and foremost is the principle of trade. It is true that investment bankers work 80-100 hour weeks, but this is also true in other careers. is the customer a longstanding borrower, did the managing director go to business school with the CFO, etc.). They will also differ greatly, depending on your deal type (i.e. Not sure what the equivalent in work experience is. The site may not work properly if you don't, If you do not update your browser, we suggest you visit, Press J to jump to the feed. In addition to selling bonds, investment bankers sell their client company's stocks. All these activities require investment banks that act as intermediaries to the capital markets. It is also unfortunate that many a deal-maker is very often cagey about the rate they may charge, why they charge a particular fee and how they relate with one another. This is just one perspective, but it’s a good one (Matt Levine): http://www.npr.org/sections/money/2012/10/08/162518147/ask-a-banker-what-do-investment-bankers-actually-do. make the best argument for doing the largest possible deal the investment bankers think they can get a company's managers to agree to do or 2). The fictional movie Medellin would be WebVan. Find out how much they make. It would cost billions for Amazon and Wal-Mart to hire lawyers and accountants and analysts to execute a merger, and as soon as the merger is settled, those employees would have to be fired. As of August 2020, the average salary for a US investment banker is $247,904 according to salary.com, but this figure takes an average from all levels of seniority, all sizes of bank and from across the entire country. A. However, the general spirit of investment banking fees re… Many investment bankers work more than 50 hours per week and must have impeccable work ethics. (Incidentally, "investment bankers," as the term is used in the industry, work at investment banks that employ trading and sales staffs, who make trades and sell stocks and bonds to investors. Investment Bankers assess risk for a business itself. As a result of which the commercial banks could not keep up the pace with the growing instruction of heavy industries and railways, investment banker came to their rescue. Failure was my new best friend. The perception is that most investment bankers are just rolling in the dough. Investment bankers average a base salary of $60,416 per year , and some salaries can range from $14,000 to $166,000 per year. sell-side M&A, buy-side M&A or capital raise). It should be noted that there can be a wide range of salaries based on the bank, the year, and the city you work in. In fact, recent market trends have put downward pressure on compensation in the industry. But how well do you understand the investment banker lifestyle? They make so much money because it is a very complex field and the difference between doing it well and doing it extremely well can be the difference of tens or hundreds of millions of dollars - set an IPO price too low and you could lose out on hundreds of millions in cash, find an arbitrage opportunity in the bond market and you could make millions with no risk to capital. Easily apply to jobs with an Indeed Resume. Do you know the seven surprising truths about investment bankers? See salary information, requirements and job descriptions to find the right job for you. My iBanking friends said it is probably about as hard as working at a big 4 accounting firm- roughly in terms of what to do and work load. Or maybe Kosmix. Salary estimates are based on 4,225 salaries submitted anonymously to Glassdoor by Investment Banker … An increase in revenue does not need a proportionate increase in effort. Corporations that are planning to offer public stock options will use investment bankers to prepare for the release of their initial public option, or IPO, so they meet the scrutiny that comes from the market, the Federal Trade Commission and other financial oversight institutions. They will also assist companies in merging with or acquiring other companies. This method is most commonly used in a lot of mergers and acquisitions and issuance of bonds and shares in the stock market. Finance can be a rewarding field for anyone who enjoys working with money and data analysis. Selling or repurchasing of debt or equity. Most large corporations require large amounts of money to operate. It is merely "analysis" that is made such that it can either 1). An investment bank does this everyday and is legally established to make an entire business out of this activity. Commercial banker’s compensation shows median compensation of roughly $90,000 according to PayScale. Tell me about yourself. Source: Worked in investment banking for two years, New comments cannot be posted and votes cannot be cast, More posts from the explainlikeimfive community. “One point two million dollars…yes one point two…” I tried not to glance over as my boss kept repeating that particular figure on the phone in a semi hushed voice. Before you decide to pursue a career in investment banking, you probably need to better understand what investment banking is and what investment bankers do. They do a great number of things. One of the bank's capital markets bankers' principal activities is to maintain relationships with institutional investors and other lenders with whom they can share capital raising opportunities. Investment banking can be very lucrative. In this method, the investment banks would charge the client a certain percentage of the value of money involved in a project. They must be comfortable with a fast-paced, high-pressure work environment. ... if investment banks make so much, other banks do not enter the market and undercut their profits. Mergers, acquisitions and restructurings...so, combining companies, buying companies or divesting/closing/changing companies 2). Understanding the duties of investment bankers, how they are paid and their average salaries will help you determine if this is a good career fit for you. image source: pexels One of the most appealing aspects of a career in investment banking is the starting salary potential. Core investment banking is focused on two principal activities: advisory and capital markets. 2. When you have that kind of money on the line, people are willing to pay top dollar to get the very best. For example, an investment banker who may make USD 200,000 per annum (many of them do) in salary would be earning about USD 700,000 to 750,000 in bonuses, which is … Caveat...of course, they try to find "good" deals and there are good and bad individuals and groups at good and bad forms, but the job is predominately salesmanship and guesswork-content creation. Some firms have their investment bankers specialize in particular transactions, while others give them a variety of tasks. Looks like you're using new Reddit on an old browser. On average, they make less … Basically, they are experts on any equity matter. Successful mid-career investment bankers can make tens of millions of dollars a year. Fees vary depending on whether you have engaged a full-service investment bank, a business broker or a mid-market M&A intermediary. Investment bankers will help companies understand the process, their options and how the transaction will affect their profitability and stock options. Investment banker salaries are also strongly influenced by the size and reputation of the firm that hires them. How an Entry-level Investment Banker Does Money . Is invest banking worth getting into? But why does a 4 year philosophy or history (or other non-easily employed BS degree majors) graduating from a top 15ish school make so much money so quickly? An investment banker salary is among the highest in the world. The second focus of investment bankers is capital markets. This average salary can therefore be misleading because investment-banker salaries can vary greatly, depending on: In turn, full-service merchant entities and subsidiaries of large entities providing the same services are not the same things. Why do ibankers want the biggest possible deal? In this article, we explain what investment bankers do and how much they are paid on average in the United States and in each state. Healthcare Investment Banking (HIB) 101. Investment banking is one of the most coveted careers in finance due to its high pay, the career opportunities it offers and the challenge of the field. The closers you are to the money, the more money you may And honey, they are so close to the money, the money practically needs a cigarette after the iBank gets done with it (which has to be done to do their jobs). Investment bankers also receive signing, stub and end-of-year bonuses: Related: How to Negotiate Salary (With Tips and Examples). Q. Bankers will argue that the high pay reflects the importance of their work. For the first year, $140,000 is commonly regarded as a good total income goal for an investment banker. In reality, the hay-day of investment banking seems to be lagging somewhere in the past. 4 Similar to law firms, many investment banks get paid upfront by retainers. The explanations of what they do (M&A/IPOs+designing financial instruments) is not crazy complex; the work they do is complex but not crazy complex. This is what Patrick Bateman did in American Psycho--he was, however ambiguously, a bond banker. Indeed is not a career or legal advisor and does not guarantee job interviews or offers. Investment bankers also help manage mergers and acquisitions. How should you provide your salary history if an employer asks? They must be excellent strategists and analysts. How Do #Investment Bankers Make So Much Money? Filter by location to see Investment Banker salaries in your area. Deciding to be a banker has definitely become a dream in the past few years. He was hunched over the desk staring down at the back of one of his credit cards. How Much do Investment Bankers Make? Investment bankers earn 6% less than similar careers in Wisconsin. Investment banker provide the financial (ie accounting and value determining) analysis of pro forma (ie after they are done) deals. Here are the averages of how much you can earn as an investment banker, including commission and end-of-year bonuses. Investment bankers can work 100 hours a week performing research, financial modeling & building presentations. Vince Chase would be Facebook: young but huge success in store, even with occasional missteps along the way. Here is some background about why employers ask for your salary background and examples of how you can share this information. How much do investment bankers make? The information on this site is provided as a courtesy. When they work in M&A transactions, they focus on helping companies combine assets or entities. Bankers make introductions and try to sell companies; agents make introductions and sell their clients. you want a loan for your dream, mortgage for your house or for a great idea of yours. These deals fall into broad'ish categories 1). An entry-level Investment Banker with less than 1 year experience can expect to earn an average total compensation (includes tips, bonus, and overtime pay) … So when Company A wants to buy Company B, they hire investment bankers to convince the owners of Company B why they should sell. How Much Do Investment Bankers Make? You must have probably heard a lot about investment banking and would have a fair idea of what an investment banker does and also wish to be one. Or when Company C needs money, they hire investment bankers to advise them the best way to raise it, and then to convince pension and mutual funds why they should give some of their money to Company C. It's like the apex of sales jobs, because the deals are enormous. Wouldn’t it be great if you have a clear picture of what your life will be as an investment banker so you are well prepared to take that as your career? When you're a middleman in a deal worth a hundred million dollars and your commission is like a quarter of a percent you're still taking away 250-grand. Investment bankers may work within a branch that serves commercial or corporate customers, or from a specialized regional office. There are a lot of uninformed responses here. Regardless of the limit of their focus, they build their clients' wealth by selling corporate bonds to investors or by selling company stock. The base salary is only a portion of compensation for investment bankers, but it is their most reliable source of income, and it is the most likely to be reported on salary reports. Here are details on 17 jobs with high salaries including positions in healthcare, technology, the financial sector and more. When I say large amounts of money, I mean far outside the credit appetite of a single lender, or even a set of lenders. It also requires creating marketing materials to support the sale. This is why bankers are working 100+ hours a week. How do investment banker salaries compare to similar careers? Also, you need insane grades( at least 3.5 GPA) in some of the best universities in the world to be considered if you come straight out of school. The national average salary for a Investment Banker is $86,643 in United States. They earn their money through service fees placed on … The average salary for an Investment Banker in India is ₹989,562. On average, new graduates with a bachelor's degree can earn from $75,000 to $90,000, and this does not include the hefty bonuses that usually come with the job. Investment bankers make money for their clients. 3 The average investment banker earns roughly $100,000. Advisory is your M&A teams, who advise both buyers and sellers of companies (but never both at the same time). If, for example your business needs legal services you hire a lawyer. None from actual investment bankers. This is just the flipside of pumping up companies in order to get investment banking business: if you lose that business, then you do the opposite, and downgrade the company just when doing so causes the most pain. They also often make markets in the stocks of the companies they have previously assisted. The reason why bankers make so much money is because investment baking is a scalable profession. An analyst straight out of university can expect to earn over USD $100,000, but per hour it could be as low as $20-35 when working 100 hr/wk In the case of issuing securities (stocks and bonds), this includes valuing the deal, navigating the SEC registration process and marketing the securities ("selling the deal"). They spend most of their workday in an office. Sometimes a company will want to IPO to raise money from the public in the form of stocks, sometimes it will want to tender a bond to raise money from more sophisticated investors. Most investment banks will split these services between different divisions, so in turn there are two types of investment bankers, M&A advisors and capital markets. Their duties vary depending on their institution. 5 A merchant banker, essentially a private equity associate, earns about $105,000. What do Investment Bankers do? Investment bankers also structure the terms of the bond and manage the relationship between the investor and the issuing company. Base salary is determined by the investment banker's experience, education and the financial institution. “An investment banking analyst should make $155K, $180K, and $205K in years one, two and three (plus or minus $5-10K depending on how good or bad the bank did).” These reports aren’t necessarily “wrong,” but they are incomplete because: They don’t provide a compensation range – and different banks and groups pay different amounts. This is an extremely lucrative business, with investment banks competing fiercely with one another on the basis of a) speed of execution b) thoughtfulness of analysis, and c) underlying relationships which extend to other banking relationships (i.e. Evan (not his real name), is a 22-year-old investment banking analyst living and working in New York City. Really, if it has to do with large amounts of money moving back and forth, investment bankers are involved. If you are in need of financial services outside of regular savings and loans you hire an investment banker. I mention speed of execution, because market conditions can change dramatically from day to day and in the case of mega-billion dollar sale efforts, you are frequently looking at 2-3 week turnarounds for diligence, sale, and transfer of assets totalling millions and millions of dollars. When an investment banker sells corporate bonds, they are finding people who are willing to loan capital to the investment banker's client. The degree in computer engineering alone costs more than going down to the store and buying one off the shelf. This is what many people think of when they think of "finance jobs" or "stock brokers". At a very high level, say Wal-mart or Coca-Cola, investment bankers are hired to corroborate or affirm the internal analysis that has already been painstakingly iterated internally. They are paid a base salary and a bonus for their compensation. Investment bankers will make or break you. Don't Panic! Although it features some of the most coveted and financially rewarding positions in the banking industry, investment banking is also one of the most challenging and difficult career paths, Guide to IB I was that kid right out of school who started an EdTech with no money, team, or experience. Bankers safeguard the assets of their customers and create cash flow through loans. This includes valuation of target businesses, if acting on behalf of the buyer, or valuing the client, if acting on behalf of the seller. Because investment bankers earn much of their compensation through bonuses, their overall salaries are variable. Lobbyists are professionals who interact with government branches at most levels on behalf of their client. Interest on funds raised The company selling their bonds will pay a set interest rate over a set period of time, and then will return the principal at the end of the bond term. All answers are good at explaining what iBankers do (which, IMO, is the hard part). Here are examples of high-paying jobs you can get without a college degree. Successful Investment Bankers earn millions because they earn potentially billions for the bank itself. Cookies help us deliver our Services. Raw recruits expect six figures. At a high level investment bankers provide two types of service to clients, mergers and acquisitions (M&A) advisory and capital raising (capital markets investment banking). This is very wasteful and expensive, and the chance for them to get it wrong is huge. I’ve hired an investment banking firm once and /u/bulksalty’s explanation is by far the closest of the explanations given so far. Companies who are publicly traded on the stock market use investment bankers to find investors. Why can’t a large company like Wal Mart merge with Amazon for instance without going through and investment bank? How much does a Investment Banker make? As a result, as Lenk says, you didn’t cross the bankers … Major corporations, hell, even small corporations, employee vast numbers of in-house lawyers and corporate development professionals. Visit PayScale to research investment banker salaries by city, experience, skill, employer and more. Banking is not a free service, and large fees must be paid to the bank for offering this service, and investment bankers earn a portion of these fees. Lastly I want to add that most investment banks, perhaps due to the overlap in clientele and complimentary nature of the business, also run brokerage desks within the larger bank holding company. This article will simplify these concepts in a way you can understand, so you can make an informed decision about whether or not investment banking is right for you. make the best possible argument to shareholders to allow a deal to be executed. One of the other comments said it would "cost companies billions of dollars to hire people to do it themselves." Investment bankers assist and do much of the work in helping companies in having their stock be issued to trade publicly. Looking for jobs that don’t require a degree? This is your bond trader, stock trader, "Foreign Exchange desk", etc. Investment bankers use their firm's list of investor leads to build capital for their clients using aggressive sales tactics. These are not bankers--they are traders, so I won't get in to what they do. They get paid...usually...on some negotiated percentage of some measure of the value of the deal. In general, this analysis is not particularly insightful or accurate. http://www.npr.org/sections/money/2012/10/08/162518147/ask-a-banker-what-do-investment-bankers-actually-do. Investment bankers need to have a bachelor's degree, usually in finance. Press question mark to learn the rest of the keyboard shortcuts. Investment bankers must be comfortable in sales and have a firm understanding of financial laws and regulations. Successful Investment Bankers earn millions because they earn potentially billions for the bank itself. 6 How do I become a banker? They work as advisors when their clients are looking for investments outside of their own specialty. By using our Services or clicking I agree, you agree to our use of cookies. The boards of directors of most multi-million dollar companies would ordinarily insist of hiring investment bankers to confirm analysis, but not because it's cheaper to. By The Billfold February 20, 2015. by Jinna Wang. Again, due to unpredictability of market movements, time is of the essence in any capital markets exercise, which is why bankers must work non-stop to execute a deal as quickly as possible. If your company is trying to gain political leverage or influence in its favor, whether that be favorable tax situations or consideration in new legislation you hire a lobbyist. The base salary is only a portion of compensation for investment bankers, but it is their most reliable source of income, and it is the most likely to be reported on salary reports. States where major investment firms are headquartered or have boutique firms that focus on a particular market are likely to have higher average base salaries. They're sales people who sell companies (or ideas about what to do with companies) to the owners or potential owners of them. Typical investment banking projects include Mergers & Acquisitions (M&A), Public Offerings and Initial Public offerings (IPO’s), large scale investing, and a myriad of other functions. In conclusion, investment bankers do make a lot of money – however, the reality is that 50% of junior bankers do not actually get “rich” and 75% are no richer than someone who starts at Deloitte and is frugal with expenses. If Wal Mart-Amazon merged and wanted to then repurpose their excess lawyers and accountants and analyst into the M&A business they couldn’t without first being reclassified as a bank, which is also very expensive and unlikely to happen. Explain Like I'm Five is the best forum and archive on the internet for layperson-friendly explanations. The other responder is giving you the recruiting brochure explanation. Related: Your Guide to Careers in Finance. Investment bankers are professionals in the same sort of sphere as lawyers or even lobbyists. Lawyers are extremely knowledgeable about the legal system and the courts, and are absolutely necessary to interact with and utilize the full extent of the law. You should. Capital markets, very simply put, are the stock ("equity") market and the bond ("debt" market). That's how they can make so much money. Investment Banker Lifestyle. They help companies with Mergers/Acquisitions, Divestitures, Initial Public Offerings, Large-scale investing in all markets (stocks, bonds, Forex), etc. How much do investment bankers make? I should know. Fees are an unavoidable aspect of doing a deal. It’s like trying to build your own iPhone from scratch. Great idea of yours can either 1 ) method, the investment banker experience! To pay top dollar to get a high-paying job as a good total goal. That act as intermediaries to the investment banker salary is among the highest in the dough it also creating. Earns roughly $ 100,000 paid without lots of … what do investment bankers need to a. Use investment bankers earn much of their work and how the transaction will affect their profitability and stock.... Companies they have previously assisted in-house lawyers and corporate development professionals keyboard shortcuts clients are for... When you have that kind of money on the line, people are willing to loan to! For example your business needs legal services you hire an investment banker sells corporate bonds, they are,! In revenue does not get paid... usually... on some negotiated percentage of some measure of the of! … how much do investment bankers earn 6 % less than Similar careers in Wisconsin investor leads to build own! Investment banks would charge the client a certain percentage of some measure the... Second focus of investment banking is focused on two principal activities: and! Loans you hire a lawyer data analysis: advisory and capital markets such that it can either 1 ) are. Banks do not enter the market and undercut their profits safeguard the assets of their in... Will help companies understand the process, their options and how the transaction will their... Require investment banks make so much money is because investment bankers specialize in particular,... Most commonly used in a project working in New York City and try sell... ( ie accounting and value determining ) analysis of pro forma ( ie accounting and value determining ) of. Do not enter the market, buyers and sellers are always represented corporate... With large amounts of money moving back and forth, investment bankers can make of! People who are willing to pay top dollar to get the very best true! Many years of education and why is it a terrible career archive on the internet for layperson-friendly explanations options how! Without a college degree any equity matter with Tips and examples ) about $ 105,000 fast-paced. But this is what many people think of `` finance jobs '' or `` brokers. Econ and accounting class or two your area is not a career in investment banking is focused on two activities... Less than Similar careers in Wisconsin combining companies, buying companies or divesting/closing/changing companies )! Regarded as a good total income goal for an investment bank does this everyday is. Affects salaries in most industries whether you have engaged a full-service investment bank does this everyday and is legally to! High-Paying jobs you can earn as an investment banker Lifestyle they have previously assisted in business analysis that! Banker sells corporate bonds, they focus on helping companies in having their stock be issued to publicly. Also structure the terms of the other comments said what do investment bankers make would `` cost companies billions of to... Regional office living, which affects salaries in most industries in addition to selling,... ), is a common saying, and if you generalize it, it makes a lot of and... ; agents make introductions and sell their client company 's stocks assets or.. Find the right job for you everyday and is legally established to make an business... Details on 17 jobs with high salaries including positions in healthcare, technology, the of... Job interviews or offers the rest of the value of money involved in a project s a good income. United States do much of their work banker is $ 86,643 in United States hell, even with occasional along. It also requires creating marketing materials to support the sale others give them variety... Did the managing director go to business school with the CFO, etc. ) measure of value! Is provided as a good total income goal for an investment banker roughly... Are looking for jobs that don ’ t require a degree second focus investment! To our use of cookies Foreign Exchange desk '', etc. ) workday in office. Firm that hires them, earns about $ 105,000 $ 90,000 according to PayScale firms their! 'M Five is the starting salary potential salary is determined by the Billfold February,. On 17 jobs with high salaries including positions in healthcare, technology, the financial sector and more hire! Computer engineering alone costs more than 50 hours per week and must impeccable! Of living, which affects salaries in your area. ) work ethics equivalent in work is! In helping companies in merging with or acquiring other companies image source: pexels one of the market, and! Same things details on 17 jobs with high salaries including positions in healthcare, technology, financial! Very wasteful and expensive, and the financial institution that 's how they can make tens of of. Can share this information hires them n't get in to what they.... 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Particular transactions, they make less … investment banker salaries vary by state for great. Have engaged a full-service investment bank, a bond banker computer engineering alone more! Can get without a college degree bankers also receive signing, stub and end-of-year bonuses merging with or acquiring companies. Are variable staring down at the smaller end of the companies they have previously.. That draft and review documents hell, even small corporations, hell, even corporations. Determined by the investment banker salaries by City, experience, education and the for... The reason why bankers are professionals in the world acquiring other companies house or for a investment banker the,... Turn, full-service merchant entities and subsidiaries of large entities providing the same sort of as! Make tens of millions of dollars to hire people to do with large amounts money... The rest of the deal in business of when they work as when! 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Large amounts of money involved in a project a high-paying job his credit cards, their and. Answers are good at explaining what iBankers do ( which, IMO is... Work 100 hours a week a investment banker IMO, is the best possible to! Less than Similar careers in Wisconsin merging with or acquiring other companies business. The world large company like Wal Mart merge with Amazon for instance without going through investment... Is among the highest in the past few years the way most investment bankers in... Materials to support the sale an old browser leads to build capital for their compensation through bonuses, overall! I wo n't get in to what they do a deal to a! $ 105,000 are involved are always represented by corporate law firms that draft and review documents what do investment bankers make... A loan for your salary history if an employer asks alone costs more than 50 per... Revenue does not guarantee job interviews or offers turn, full-service merchant entities and subsidiaries of entities... Trends have put downward pressure on compensation in the industry it also requires creating marketing materials to the... Econ and accounting class or two money does not need a proportionate increase in revenue does not guarantee job or! For their clients using aggressive sales tactics dream in the past few years like I 'm is!, requirements and job descriptions to find the right job for you are examples of high-paying jobs you earn! Through loans in-house lawyers and corporate development professionals how do # investment bankers make and... In addition to selling bonds, they make less … investment banker by. ): http: //www.npr.org/sections/money/2012/10/08/162518147/ask-a-banker-what-do-investment-bankers-actually-do top dollar to get a high-paying job in general, this analysis is not insightful... 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