“Help! I hate this job. How can I move from wealth management to investment banking? I’ll do anything!”

The good news is that it is possible to do this.

The bad news is that it may be extremely difficult to near impossible unless you get a top MBA.

It’s arguably the most difficult “front office to front office” transition within finance, so you should probably start by considering why you want to make this switch:

Why Switch from Wealth Management to Investment Banking?

We cover many of the trade-offs in the earlier wealth management vs. investment banking article, but in short:

1. Investment banking has better exit opportunities at all levels.
2. The work might not be for you, even if you’re good at it – for example, maybe you find deals far more interesting than building a client book or managing their portfolios.
3. The average compensation in investment banking is higher (yes, top wealth managers can earn millions per year with great hours, but we’re talking averages).
4. It’s easier to grind your way up in IB without being “good” at the core skills of winning clients and closing deals; these skills matter as you become more senior.
5. Many people find wealth management work boring or repetitive and do not like the heavy sales/cold-calling aspects.

The problem with this list is that only #1 (exit opportunities) and #2 (the deal work in IB being more interesting) are good reasons to move into investment banking, specifically.

If you want higher compensation, the ability to advance without being great at sales, or more interesting work, many other options are far more accessible.

For example, corporate banking would satisfy many of these goals.

The compensation ceiling is lower than in IB or WM, but it’s still quite high (mid-to-upper-six figures), and recruiting is much less competitive than IB.

So, this career transition is a bit like the “age and investment banking” question: Unless you need something very specific, there are probably better ways to achieve your goals.

The 3 Basic Pathways from Wealth Management to Investment Banking

If you are dead set on aiming for an exit opportunity only investment banking offers or you really want to work on deals, maybe this transition makes sense.

If so, there are three viable times to do it:

1. Right After an Early-University Wealth Management Internship – It’s feasible to switch at this point because you don’t have much experience, and you can spin the WM internship as you “wanting to learn the finance industry” or work at a large bank.
2. After Your Final Internship in University – This one is a lot more challenging because banks do not hire many full-time Analysts outside their internship programs.
3. From a Full-Time Wealth Management Role – This one is even more difficult because wealth management is not a common source of lateral hires, as the skill sets are quite different. So, you’ll usually have to take more of an indirect path through several other “hops” if you do this.

There isn’t much to say about Case #1 because it’s a variant of the standard “How to Get an IB Internship” plan – start early, earn high grades, and network/prep aggressively.

It helps if you can get one additional, more relevant internship besides your first wealth management one, but it’s not necessarily required if the rest of your profile is good.

The other two cases require more explanation:

Switching Into IB After Your Final Internship in University

We published a great story from a reader who made this last-minute switch.

This story is older, but the strategies and tactics are still very relevant.

In short:

1. You need to start preparing and networking by the early-to-middle part of your summer internship to have any shot at full-time IB roles.
2. Focus on locations outside major financial centers and smaller banks, as the “intern quality” will vary a lot more, creating opportunities for you.
3. Bankers will not care about your WM experience at all, so you need to point to specific M&A or financing deals that have interested you and the additional work you’ve done to learn more.
4. Be prepared with “Plan B” options because this strategy depends heavily on a favorable deal/hiring market combined with underperforming interns in smaller offices.

Your “Plan B” options could be anything discussed in the lateral hiring article: Big 4 roles, independent valuation firms, corporate banking, corporate finance, corporate development, credit analysis, real estate lending, etc.

You will encounter the same objection repeatedly if you use this strategy:

“If you’re so interested in investment banking, why didn’t you do an IB internship instead of a WM internship?”

You can answer this objection and tell your story using two main approaches:

1) Say You Missed the Recruiting Cycle – For example, say that you became interested in finance and deals midway through your second year of university, but due to the very early start dates, this was too late for most internship recruiting in the U.S.

You applied for different roles at banks and felt this internship was your best option because it would allow you to gain client experience and learn how large banks operate.

2) Say You Became More Interested in IB During Your Wealth Management Internship – For example, say that you were advising clients whose portfolios included companies involved in deals, and you became more interested in deal execution from that.

If you’re at a target school with on-campus recruitment, option #1 will probably work best; if you’re at a lesser-known school, option #2 may be better.

Your odds with this strategy are not great, but if you’re willing to do a ridiculous amount of networking and interview prep in a short period, sure, go for it.

The transition only gets harder and more expensive if you wait, so it’s better to put in the time and effort earlier in your career.

Moving from a Full-Time Wealth Management Role Into IB

This is a very, very, very difficult transition.

I have covered finance careers for ~20 years, and I can think of exactly one person who has made this move directly.

The skill sets and cultures are too different, and it will be tough even if you aim to move from a bulge bracket wealth management team to a regional boutique investment banking team.

That leaves you with two main options:

1. Move Into a Less Competitive Deal-Related Field and Lateral Into IB – See the options above in Case #2.
2. Complete a Top MBA Degree – This is always an option, and all the standard tips apply: Apply and accept admissions in the first round, start preparing very early, and consider a pre-MBA internship to maximize your profile.

The MBA route is very expensive and time-consuming but also offers a higher success probability if you can get into a top program.

Also, it works best if you’re in the “sweet spot” of around 3 – 5 years of full-time work experience.

If you have 10+ years of wealth management experience, bankers will question your motivations for switching now (why didn’t you do it in Year 3 or 5?).

Common Challenges in All Wealth Management to Investment Banking Transitions

Regardless of your path and timing, you’ll have to deal with similar challenges in making this move:

• Bankers will always look down on you because many don’t consider wealth management a “real” finance role – even though some wealth managers earn more than bankers.
• You will probably have to take a step down in firm prestige/reputation because even with other roles in between, the perceived gap between WM and IB is still quite large.
• Avoid “prerequisite”-type stories to explain why you took the WM role because wealth management is not a stepping stone into anything else. Stick to the “missed IB recruiting” or “became interested in deals after doing WM” options.
• Expect to be grilled on the technical questions because bankers will be skeptical of your motivations. There are so many articles, guides, and resources about IB interview questions that you have no excuse to be caught unprepared.
• Avoid mentioning the parts of WM you don’t like, such as sales or cold calling, because it is much better to point out the additional skills in IB you want to gain over what you learned from WM.
• You need to go beyond your WM experience for your “Spark” and Growing Interest because bankers will not care much about what you did on the job. You need to point to significant efforts outside your day job to make these convincing.
• Give yourself ~6 months if you’re trying to leave a full-time WM role – If you can’t even get solid responses from your networking efforts to steppingstone roles, such as corporate banking, consider a top MBA in the future.
• If you do an MBA and don’t win an IB offer from that, aim for corporate development at a normal company or one of the other “Plan B” roles mentioned above. Your odds aren’t great if you end up here, but there’s always a chance if you can gain some post-MBA deal experience.

Final Thoughts on Moving from Wealth Management to Investment Banking

This is probably the most difficult transition of all the “front office to front office” moves in the finance industry, so you must think very carefully before investing time, money, and effort.

People sometimes claim that sales & trading or equity research to investment banking are difficult, but they’re much easier than moving in from wealth management.

The key point is that you shouldn’t do this because you dislike X, Y, or Z aspects of wealth management.

If that is your only motivation, there are dozens of other options in tech, finance, and related fields.

For investment banking to make sense, you must either want to work on deals because they interest you or because you need IB for a specific exit opportunity that is not otherwise available.

But if you understand these points and all the factors working against you, this transition might be worth the extreme effort required.

The post From Wealth Management to Investment Banking: How to Make the Leap appeared first on Mergers & Inquisitions.

There are countless references to “target schools” in the articles and interviews, and we assume everyone understands the term.

But that’s not always the case, and it gets confusing because target schools differ by region (U.S. vs. Europe vs. Asia) and level (undergraduate vs. Master’s vs. MBA).

Also, there are “semi-target” schools sitting in between non-target and target schools, and no one ever explains the precise difference.

I will provide a few lists and guidelines here, but I want to take a slightly different angle and explain the “why” and the “what next” parts.

In other words, what do you do differently in the recruiting process if you’re not at a target school?

And why do banks focus so heavily on a few schools?

Will they continue doing this, or will recruiting change in the future?

Definitions: What are “Investment Banking Target Schools”?

Investment Banking Target Schools Definition: “Target schools” send significant numbers of their students into investment banking each year and have broad alumni networks in the industry; large banks focus their recruiting efforts on these schools and often reserve spots for a fixed number of students at each target school.

There are no exact numerical criteria because this definition is based on relative numbers and banks’ recruiting efforts more than absolute numbers.

For example, if University A has sent 500 students into investment banking roles over the past 5 years, accounting for 10% of total IB hires in the country, and University B has only sent 50, University A is a “target school,” while University B is more of a “semi-target.”

And if University C has sent 1-10 students into IB roles over this same time frame, it’s in the “non-target” category.

Banks may also visit target schools in-person to hold events and information sessions (though less frequently than they used to).

Until the late 2010s, banks also conducted first-round interviews on campus at target schools; these are now done mostly via HireVue.

People have counted the number of working bankers by school and created lists based on that; you can find one from College Transitions here.

But there are a few problems with lists based strictly on the raw numbers:

• They don’t account for student interest and demand. For example, universities like Stanford and MIT are clearly targets in the U.S., and many students from these schools could get into IB if they wanted to. But they tend to be more interested in tech, startups, consulting, and other non-finance roles.
• They don’t differentiate between undergraduate, Master’s, and MBA-level recruiting, and the numbers differ at each level.
• They may not be adjusted for class size. But, on the other hand, you may not want to adjust 100% for class size because that leads to results like Washington and Lee outranking NYU in the list above.
• They don’t account for recent vs. longer-term trends. For example, if a school hasn’t placed well in the past 2-3 years but still has thousands of alumni in the finance industry, should it be a “target”? I would say, “yes,” but some would disagree.

It’s still useful to look at the numbers, but they should only be a starting point.

And any ranking should be viewed as an approximate guideline because of all these issues.

Investment Banking Target Schools by Region and Level

Here are my rough lists for the three main regions by level:

• United States (NY and regional offices):
  • Undergrad: The Ivy League schools (HYP and UPenn (Wharton) more than the others), NYU (Stern), U Michigan (Ross), UC Berkeley (Haas), Notre Dame (Mendoza), Georgetown (McDonough), Northwestern, Duke, UVA (McIntire), Stanford, MIT, UChicago, and arguably the top liberal arts colleges (Williams, Amherst, etc.).
  • Undergrad Semi-Targets: WashU (Olin), CMU (Tepper), UNC (Kenan-Flagler), USC (Marshall), UT Austin (McCombs), Vanderbilt, UCLA, Emory (Goizueta), Rice, IU (Kelley), Boston College (Carroll), and some liberal arts colleges like Middlebury and Claremont-McKenna.
  • Master’s in Finance: MIT, Princeton (more of a quant program), UT Austin, UVA, Vanderbilt, WashU, Notre Dame, USC, Claremont-McKenna, and maybe a few others (best to look at employment reports here).
  • MBA: The M7 schools, Yale, Stern, Haas, Ross, Tuck, Fuqua, Cornell (Johnson), and possibly a few others in the top ~20.
• London / Europe (MBA recruiting is far less developed):
  • Undergrad: Oxford, Cambridge, LSE, UCL, Warwick, and Imperial (U.K.); names like HEC, ESSEC, ESCP, ICADE, ESADE, IE, Bocconi, St. Gallen, WHU, and Mannheim in the rest of Europe. See the London IB article for more.
  • Master’s in Finance: LSE, LBS, Imperial, Oxford, Cambridge, Bocconi, HEC, SSE, WHU, RSM, IE, CBS, ESCP, St. Gallen, ESADE, and a few others if you count S&T/AM recruiting (EDHEC, ESSEC, Dauphine, etc.).
  • MBA: LBS, HEC, INSEAD, Oxford, Cambridge, IESE, Imperial, IE, ESADE, Bocconi, and possibly a few others in the list above.
• Hong Kong / Asia (MBA recruiting is far less developed):
  • Undergrad: Everything on the U.S. and European lists, plus HKU, CUHK, HKUST, and Chinese universities like Peking University, Tsinghua, Fudan, Shanghai Jiaotong, Nankai, Nanjing, and Zhejiang.
  • Master’s in Finance: Many of these names will be from the U.S. and European lists, but you can add any HK/Chinese ones from above with programs.
  • MBA: Everything on the U.S. and European lists, plus HKU, CUHK, and HKUST.

Look at the investment banking in Canada article for a discussion of schools there.

In the U.S., many schools are in the “grey zone.”

For example, where do liberal arts colleges such as Williams, Claremont McKenna, Amherst, and Bowdoin fit in?

Or what about universities like Vanderbilt and Emory that are not “the top of the top” but still in the top 20-30 nationwide?

Some of these could go in the “target” category (e.g., Williams and Amherst), but I’ve placed most of the others in the “semi-target” list.

In some cases, they are targets for locations such as Houston but not for NY-based roles (many Texas schools fall into this category).

If a school is a target for one or two locations but not the “main hub,” it is more of a semi-target because these regional offices hire many fewer Analysts and Associates.

Finally, note that there are also schools in the “non-target but still recognizable” category, such as Rutgers, Fordham, and UW Madison.

If you go to a school in this category, you won’t get “I’ve never heard of your school”-type rejections from bankers.

But you’ll still have to be more proactive and network more aggressively than students at target and semi-target schools.

We could argue endlessly about the exact lists, but the key point is that you must approach recruiting differently based on your current or planned school.

You might not know if you’re at a “lower-tier target” or “semi-target,” but you should always know if you’re at a school that is unknown to bankers or one they’ve heard of.

How Do Investment Banking Target Schools Affect Recruiting?

First, you will have a very tough time recruiting for IB roles from a non-target MBA program.

There are many fewer Associate positions, and most of these spots are reserved for students from the top MBA programs.

You can still network aggressively and win Associate roles at boutiques and smaller/regional firms, but these roles tend to pay highly variable compensation, and your daily routine might be quite different (“sales” more than “execute deals”).

It may be slightly easier from a non-target Master’s in Finance, but it’s still an uphill battle.

The bottom line is that if you cannot get into a top MSF or MBA program, it’s not worth enrolling in a lower-tier program if your main goal is investment banking.

If you’re interested in other careers, such as corporate finance at a normal company or quant finance roles, these lists differ, and “non-target” programs might be fine.

At the undergraduate level, the main differences if you’re at a non-target include:

• GPA – To be competitive, you need perfect or near-perfect grades (3.8+ GPA). If this means taking easier classes or picking an easier major, do it!
• Major / Classes – A student at Harvard could major in Literature, History, or Gender Studies and still win an IB role, but you cannot. You need an accounting/finance major or something very close to it – or bankers might dismiss you.
• Work Experience – You need to have solid internships from early in university (ideally, Year 1 or the summer after Year 1) because recruiting starts so early. It starts a bit later in Europe and Asia, so the dates might be slightly delayed there.
• Networking – You’ll have to be more proactive in contacting alumni, setting up informational interviews, and conducting weekend trips.
• Targeted Firms – You will have a higher chance of breaking in if you target middle-market banks, “In-Between-a-Banks,” and boutiques.

Let’s say that Student A is at an Ivy League university but decides on investment banking late in the process (in the middle of Year 2).

Student A has a 3.5 GPA in a challenging degree program, and she has one previous finance-related internship at a tech company.

If she is motivated enough, Student A could put a good effort into networking and interview prep and walk away with an IB summer internship offer for the next year.

On the other hand, if Student B has similar stats but is at a non-target university, such as something outside the top 100 in the U.S., she would have a much harder time winning an internship offer.

To be more competitive, Student B would have to:

1. Start Much Earlier – This means internships starting in Year 1 or the summer after and networking from around the same time (the start of Year 2).
2. Earn a Higher GPA – Bankers might be skeptical of a 3.5 GPA from a lesser-known school, even in a challenging major such as math or engineering.
3. Get Better Work Experience – Ideally, this means 1-2 internships directly in finance, such as at a boutique bank or venture capital firm. You don’t want to rely on “loosely related experience” if you’re at a non-target.

You might look at this list and say, “OK, but how could anyone know their plans so early in university? Should I transfer to a better school if I get a late start?”

Unfortunately, transferring to a better university has become less feasible because recruiting starts so early.

If you’re already in Year 2 at a non-target, it’s probably not worth it.

But if you figure out your plans early, and you can transfer right after Year 1, it’s worthwhile because you can immediately tap into a better alumni network at the start of Year 2.

Do Investment Banking Target Schools Matter in Real Life?

The best answer I can give is “yes, but less than bankers think they do.”

There is a difference between the average student at Harvard or Oxford and the average student at Unknown Community College X.

The student at the elite university is more likely to burn the midnight oil, pay attention to small details, and understand the required accounting/finance/technical skills.

That said, there’s a much smaller difference, if any, between the average student at an elite university and one at a good state school or “semi-target.”

Like organic chemistry for medical school admissions, target schools function as a filtering mechanism for banks.

It lets them reduce 50,000 applicants to 500 interviews rather than 5,000 interviews.

Will banks continue to recruit so heavily from target schools in the future?

Students at the top schools have become more interested in fields like consulting and tech over time, so banks might change their focus a bit.

Also, newer elements of the recruiting process, such as HireVues, online tests, etc., allegedly level the playing field since everyone must complete them, regardless of their university.

But let’s be real: At places like Wharton, a plurality of the students, if not an outright majority, still wants to work in finance.

As long as that’s true, banks have no reason to spend time and money recruiting at lower-tier schools.

For this system to change, something dramatic would have to happen, such as:

• Banks go from hiring ~2,000 IB Analysts per year in the U.S. to ~4,000, so they need to go beyond the top schools to find enough candidates.
• Interest in finance at the top schools wanes, and a new industry rises to take its place (Biotech? Space exploration? I don’t know). So, banks need to expand their set of target schools.
• The university system is displaced by another credentialing mechanism, online training/certificates, or trade schools.

These changes are possible, but I don’t think they’ll happen anytime soon.

And the current system is engrained with the “lock-in” effect from all the bankers who attended target schools.

Target School Takeaways

You most likely found this article and skipped to the lists of investment banking target schools to check if yours appeared there.

I get it; it’s fun to look up rankings and debate the S tier vs. A tier vs. B tier vs. C tier.

But the main takeaway is that you need to consider your school in relation to your region and career goals.

For example, if you attend a university like Texas A&M or Rice, and you want to stay in Texas and work in IB in Houston, you’re completely fine.

And if you’re more interested in other careers, such as corporate finance, the Big 4 firms, or even business valuation, you don’t “need” an elite university.

Attending a target school makes the biggest difference if you want to work in investment banking or private equity at one of the largest firms (bulge bracket banks or PE mega-funds) in a major financial center.

Outside of that, a better university still helps, but more so for your first job and less for future jobs.

If you’re at a non-target school, transferring to a target or semi-target could work, but only if you do so early (after Year 1).

If it’s too late to do that, and you’re also late for the normal recruiting cycle, a more realistic path is to win roles in related industries, such as commercial/corporate banking, valuation, corporate finance, etc., and use those to move into IB via lateral hiring.

It’s a more roundabout path, but it might also let you hit your target.

Want More?

You might be interested in reading What’s The Best Major For Investment Banking? or How to Move from the Middle Office into Life Science Venture Capital Jobs.

The post Investment Banking Target Schools: Lists by Region and What to Do If You’re Not at One appeared first on Mergers & Inquisitions.

But that assumption was shattered within a few weeks, and the year turned out to be even worse than 2020 for me (and many others, I suspect).

The main difference is that when this never-ending “crisis” began in March 2020, there was some sense of unity, as everyone was in it together for a few months.

But as it dragged on, fatigue set in, people began to hate each other even more than usual, and supposedly “democratic” governments became tyrannical.

My solution was alcohol, combined with escapism in the form of books, TV shows, and video games.

But I’ll take a break from the drinking and reality-escaping this week to do my annual edition of reader Q&A:

Job Offer Decisions

The job market has been crazy since the start of 2020, with temporary panic followed by a boom, followed by more panic, followed by a boom… [continue in an infinite loop]. All of that has led to some “interesting” questions about job offers:

Q: I won an offer at a bulge bracket bank in London, but my long-term goal is private equity. I want to delay my offer start date so I can do an off-cycle internship at a large PE firm, which should benefit me in a few years when I recruit for these roles.

Is this a good idea?

A: I would not do this because there’s too much risk. Anytime you “delay” a job’s start date, you’re taking a chance that the market will suddenly shift due to another crisis, deal slowdown, etc., which could result in rescinded job offers.

Also, I don’t think a short PE internship right before this job will help much, considering the cycle starts later in London and moves more slowly.

Q: I have a corporate development offer at a public company and a strategy consulting offer at a Big 4 firm. How should I decide?

A: The corporate development offer is better if you want to stay in finance/deal roles, while strategy consulting is better if you want operational roles, such as sales, business development, market, product strategy, etc., at normal companies.

I don’t think there will be a huge lifestyle difference between the two, and while the salary and bonus will probably be higher in corporate development, that’s not the best way to decide unless you plan to stay there for a long time.

Q: I’m trying to get into investment banking by following your strategy of winning “steppingstone roles” and moving in as a lateral hire.

I have one offer at a Big 4 firm in the management consulting group and another at a non-Big 4 firm in the valuation team.

They’re both in the same location with identical compensation, and I want to get into IB, PE, or VC in the future. Which one’s better?

A: For IB/PE roles, the non-Big 4 firm valuation offer wins because it’s more closely related. Yes, the Big 4 firm has a better brand name, but I don’t think there’s a huge difference from the perspective of the large banks.

If you want more options outside of finance, the Big 4 offer is better because management consulting tends to result in a broader skill set (or at least, that’s the perception).

Q: I’ve been working in business valuations for a few years and just received two offers: one at a technology-focused middle-market investment bank and one for a mid-level corporate development role at a VC-backed startup.

If my long-term goal is venture capital, which one is better?

A: The MM IB offer gives you more options overall, but the CD role might be slightly better specifically for VC.

But this one also depends on the level of each offer.

If it’s something like a Year 1 Analyst in IB vs. an Associate or Manager in corporate development, most sane people would take the CD offer.

Bank Rankings

As always, some banks are moving up, others are moving down, and others are mysteriously stagnant. Which means that I probably need to update that “top investment banks” article.

Q: Should RBC now be considered a bulge bracket bank?

A: I acknowledge that RBC has been moving up the ranks lately, but looking at the data (see below), it still generates less in global fees than even the “lower-tier” BB firms like CS, Barclays, DB, etc.

Also, RBC is strongest in North America and lacks these other firms’ European and Asian presences.

Finally, when re-categorizing banks, a lengthy track record is also important. So, I’m a little reluctant to look at a few years of strong performance from RBC and say it should be in the same category as GS/MS/JPM.

But who knows, maybe RBC will join this group in 5-10 years.

Q: Jefferies is clearly in a different category than the other “middle-market banks,” and it has generated more in global fees than firms like Wells Fargo and UBS.

Will it eventually be a bulge bracket or an elite boutique?

A: Well, let’s look at the data from 2021 and 2020, courtesy of Refinitiv and Mergermarket:

I agree that Jefferies is much different than the other MM banks, but I think it’s too diversified to be an “elite boutique” and a bit too small to be a BB bank if you go by deal volume or fees generated.

So… for now, no, but I could see this answer changing in the future.

Q: Should European firms like UBS, Credit Suisse, and Deutsche Bank still be considered bulge bracket banks?

A: If you look at this globally, yes, I think they should be (see the data above) – but DB and UBS are in a different category than CS, which generates much higher fees.

That said, if you’re in a region like North America where the European banks are weaker, you could make a case that firms like the ones above are better.

This debate reminds me of the argument over the “stronger” vs. “weaker” Ivy League schools, so maybe it’s time to move to the next topic.

Career Transitions

Mysteriously, everyone still wants to get into investment banking and private equity… I’m no expert, but it seems like the salaries and bonuses might play a small role:

Q: I have 5 years of work experience in civil engineering. Do you think I can use a Master’s in Finance degree to move into investment banking and then private equity?

A: I think this would be tough even if you have brand-name schools and firms on your resume/CV.

You’re over-qualified for Analyst roles but under-qualified for Associate roles, so banks would not know what to do with you.

You might be able to use the MSF for other finance roles that care less about your years of work experience, but I think you’d need a top MBA for the IB/PE route.

Q: I’m working at a major valuation firm, and I expect to contribute to purchase price allocations and portfolio valuations.

If I want to break into IB, should I try to work on Fairness Opinions instead? Would that give me an advantage?

A: They’re slightly more relevant than PPA and portfolio valuations, but I wouldn’t recommend focusing on them since the actual work is extremely tedious.

You might benefit from doing a few, but spending all your time on FOs vs. all your time on PPAs will make a much smaller difference than other factors (firm name/reputation, networking, interview prep, etc.).

Q: I’ve been in the Treasury team of a Fortune 500 company for 2 years, where I’ve worked on debt issuances and currency risk hedging. Do you think I can get into investment banking or venture capital from here?

A: VC would be a stretch coming from this role. Sure, venture debt and venture lending exist, but they’re quite different from standard investment-grade debt issuances.

You stand a better chance on the IB side, at least if you target the most relevant group (DCM). If you move quickly, you can probably win a lateral role with enough networking/preparation; if not, you could always aim for corporate banking instead.

Books, TV Shows, Movies, Games, and More

OK, here’s one area where 2021 was less bad than 2020: there were some actual, new, good movies out in theaters, new seasons of existing shows, and some good new(ish) shows.

Q: Succession Season 3 thoughts? No spoilers, please.

A: I am still a huge fan of the show, but I thought Season 3 was a bit weaker than Seasons 1 and 2. The characters are always entertaining, but the story meandered too much, and some of the “payoffs” were not that interesting.

But the final few episodes of the season were great and made me forget some of my earlier complaints.

Q: Any other recent TV show recommendations?

A: So, I spent a good chunk of this year going retro and watching a bunch of series from the 80s, 90s, and 2000s (yes, I’m old).

But in terms of relatively recent series, I’ll recommend You on Netflix.

It’s a ridiculous show with contrived-to-unbelievable writing, but it was so much fun that I just turned off my brain and enjoyed it.

I watch an average of one 45-minute episode per day, which means I can’t finish too many multi-season shows each year. Too much content, too little time.

Q: Books?

A: I was in “retro mode” and “non-fiction mode” for much of the year.

But if I had to give a single recommendation for a 2021 book, I’d say Project Hail Mary by Andy Weir (author of The Martian).

I picked it up based on a recommendation and read the whole 500-page book in ~3 days. There are some logical/story problems, but if you like sci-fi, you will be hooked.

Q: Movies?

A: I saw quite a few in theaters this year; standouts were Dune and The Last Duel.

But I missed some superhero movies, I haven’t seen the new Spiderman yet, and I’ve also not yet seen The Matrix: Resurrections. My expectations are very low, and I’m expecting brain damage if/when I watch it.

Q: Games?

A: I went as far back as 1992 and as recent as 2020 here, playing only RPGs and narrative-driven games.

If I had to give a single recommendation for something within the past 1-2 years, it would be Yakuza: Like a Dragon.

And once you’re done, play everything else in the Yakuza series. These games are overlooked in Western countries, but I think they’re excellent and even better than GTA.

Site Updates, Courses, and Articles

And now to the fun part: you might have noticed that quite a lot of content on this site has disappeared over the past 1-2 years (285 articles, to be precise).

You might have also noticed some disappearing courses and changing pricing/packaging, so let’s delve into the fun explanations:

Q: Why did you delete that article on Topic X? I found it useful! Where is all the content going?

A: The vast majority of the deleted/consolidated articles on this site had extremely low traffic.

If the top articles here attract 20,000 visitors per month, some of these deleted articles had 5 visitors per month.

It’s not a 20% difference; it’s multiple orders of magnitude.

Many articles were outdated, others were redundant, and others were relevant only for a short period, such as the 2012 or 2016 elections.

I may end up restoring or updating some of these, but I don’t think that “more content = better site.”

Q: Why did you remove the Oil & Gas Modeling course? Is it because of ESG? Did ESG activists come to your house and threaten to kill you?

A: Nope, but that would have been entertaining. I think ESG is mostly nonsense for many of the reasons Damodaran has highlighted.

Put simply, there wasn’t much interest or demand for Oil & Gas, and a lot of the content was old and in need of updates.

However, you can’t just make “quick updates” to videos that are based on older SEC filings and Excel files; “update” is a euphemism for “re-do the entire course.”

And I didn’t feel like spending a year of my life re-doing the entire course to maintain a product that generated ~1-2% of total revenue.

Q: What about all the other pricing and packaging changes? What’s happening?

A: The “core” courses are a bit more expensive now, but the Platinum package, with everything on the site, is cheaper because of the removal of the Oil & Gas course.

The main financial modeling course (Financial Modeling Mastery) has a ridiculous amount of content, and it was underpriced for a while.

The overall pricing is still not quite correct, but it’s closer to reasonable now.

I don’t think anything major will change next year, mostly because I’m tired of managing/overseeing/checking all these changes.

UPDATE: This FMM course has now been split into separate, shorter courses.

Q: OK, so what about that Project Finance / Infrastructure course? Venture Capital? Anything?

A: This one comes down to the numbers.

If I spend an entire year, or even ~6 months, working on something new or updating an existing product, it has to contribute a substantial percentage of total revenue (at least 10%).

I’m skeptical that Project Finance could reach that level (and before you leave a comment, remember that I have all the sales data on everything going back to 2007).

However, I might consider it anyway if someone else did the Excel work and research, and we set up a profit share or royalty agreement.

So, who knows – maybe 2022 will turn out to be better than 2021, and you’ll get this new course anyway…

The post 2021 End-of-Year Reader Q&A: Job Offer Decisions, Bank Rankings, Career Transitions, and Disappearing Content appeared first on Mergers & Inquisitions.

“Aha! A way to break into investment banking from another career – without an expensive MBA program – or a way to trade up to a larger bank and get better exit opportunities.”

While those are both possibilities, they are not sure things.

In contrast to the summer internship recruiting process, the lateral hiring process at banks is random, unstructured, and difficult to describe.

If you can deal with a lot of uncertainty, you could win offers through lateral hiring.

But if not, you could easily go down the rabbit hole of applying to dozens of firms and never hearing back:

What is Lateral Hiring and Why Does It Matter?

Definition: Lateral hiring refers to the process banks use to recruit candidates with some amount of full-time work experience, often in investment banking elsewhere, but also in related fields such as valuation, corporate banking, and transaction services – rather than recruiting students directly out of undergraduate, Master’s, or MBA programs.

Most lateral hiring happens at the Analyst level; there is some amount for Associates (and up), but it’s more limited.

Quite a few Managing Directors and senior bankers also switch banks, but we’re focusing on Analyst-level recruiting here.

To have a good chance of winning a lateral offer, you must be in a closely related field because banks want you to start contributing immediately on Day 1 without any training.

Banks give most of their full-time offers to interns who performed well…

…but the turnover rate in investment banking is extremely high: many full-time Analysts quit before their first year ends.

If someone quits in the middle of the year, the bank must find a replacement ASAP.

That explains why lateral hiring exists at all: if everyone stayed for 2-3 years and left at predictable times, banks wouldn’t bother.

As banks keep accelerating the recruiting process for undergrads, lateral hiring has become increasingly important because it’s easy to miss the entire process.

If that happens, you can use lateral hiring to avoid an expensive MBA program or a Master’s in Finance degree…

…if certain conditions are true.

Why Make a Lateral Move?

The root motivations are usually money and exit opportunities.

If you’re a recent grad and you work outside of IB, you will probably earn more in banking in ~95% of cases.

You’ll also gain access to exit opportunities, such as private equity, hedge funds, and corporate development, that are difficult to break into from most other industries.

And if you’re already in IB, you’ll probably earn a higher bonus and gain access to larger buy-side firms at bigger banks.

Why Not Make a Lateral Move?

There are also some bad reasons to start the lateral recruiting process, such as:

• Group Conflicts / Internal Politics – Just switch teams at your current bank.
• You Want to Cover a Different Industry – If you’re in a group such as FIG or Real Estate, and you want something less specialized, it’s much easier to switch groups instead. The same goes for capital markets vs. M&A or industry teams.
• You Want to Switch Locations – Again, it’s much easier to move around internally.

A few specific moves are also a bit pointless:

• Bulge Bracket to Elite Boutique, or Elite Boutique to Bulge Bracket – I’m not sure why you’d do this at the Analyst level. This one might make more sense for senior bankers.
• Bulge Bracket to Bulge Bracket – See above. Maybe this one makes sense if you’re at one of the “lower-ranked” BBs in a less-than-ideal group (ECM or DCM), and you want to move to a higher-ranked bank and a better group at the same time.

If you’re going to take the time and effort to make a lateral move, make sure it’s a significant jump – boutique to middle market, or middle market to bulge bracket (for example).

Who is “Eligible” for Lateral Hiring?

If you’re already working in investment banking at any level, you can move to another bank… pretty much whenever you want to start the process.

But if not, eligibility for lateral moves depends on:

1. How many years you’ve been out of your undergrad or Master’s program.
2. How closely related your current job is to investment banking.

With the first point, it gets much harder to break in once you’ve been working in another industry for more than 2-3 years.

You’ll be over-qualified for Analyst roles, but banks won’t hire you directly for Associate roles, so you’ll have to do an MBA at that point.

With the second point, you need to be in a closely related field to have a good chance.

For example:

• Big 4 Valuation Transaction Services – Doable.
• Independent Valuation Firm – Doable.
• Corporate Banking – Doable… for certain groups.
• Corporate Development – Doable, but few people win CD roles without IB first.
• Corporate Finance / FP&A – Doable, but more difficult because you don’t work on deals.

Even something like audit is too removed to make a direct jump – you would need a steppingstone role, such as one of the ones above, in that case.

It can even be quite difficult to move in from other divisions at a bank, such as asset management, wealth management, or sales & trading, because you don’t work on deals (for more, see our coverage of wealth management vs. investment banking).

Of those, sales & trading to investment banking is the most viable move, but only if you act quickly and have deal-like experience.

Some of these transitions are group-dependent as well.

For example, you could probably move from credit risk or corporate banking to DCM, but M&A or industry groups would be more difficult.

The same goes for investor relations to ECM or anything in commercial real estate to real estate investment banking.

If your current job is significantly different, such as marketing, engineering, or non-profit fundraising, then you will need a major shift (MBA, MSF, or very different job) to break in.

The #1 question you need to ask yourself is, “How long will this entire transition process take?”

If the process takes at least 3-4 years, you’re not going to win IB Analyst roles, so you’re better off applying to top business schools and using MBA-level recruiting to break in.

One final note: in some emerging markets, the process is less structured, so you might be able to move directly from fields like accounting/audit into investment banking.

How Much Can You “Level Up” with Lateral Hiring?

If you’re not currently in investment banking, you are probably not going to win a job offer at a bulge bracket or elite boutique bank.

But I have seen plenty of career changers win offers at regional boutiques, industry-specific boutiques, and middle market banks.

Within IB, it’s feasible to go from a boutique to a middle market bank, or a middle market bank to an elite boutique or bulge bracket.

But you’re probably not going to move from an unknown 10-person boutique in the Middle of Nowhere directly to GS, MS, or JPM in New York.

Location can also be a major issue: it tends to be much easier to move to financial centers such as New York and London because those places have far higher turnover.

International moves can also be quite difficult, especially if you have visa issues (e.g., you want to work in the U.S., but you’re not a citizen or green card holder).

You’re almost always better off transferring internally to do that.

Remember that lateral slots open up when people leave unexpectedly; banks don’t want to spend months on paperwork when they need to hire you ASAP.

Process Timing: When Do Lateral Spots Open Up?

The common thinking used to be that lateral spots opened up in June and July as bonuses were paid out and people switched banks, moved to the buy-side, or quit finance.

But then most banks started to award Analyst bonuses on a year-end schedule to match senior bankers, so this rule broke down a bit.

However, it was never much of a “rule” to begin with because people often quit banking unexpectedly in the middle of the year.

Yes, some Analysts are motivated to stay to collect their bonus, but if they hate the job so much that they want to die, they’re not going to stick around for 6-9 months to earn $50-$60K.

To find openings, your best bet is to search sites like Indeed and LinkedIn and set alerts whenever an “Investment Banking Analyst” role pops up in your region.

The important part here is not so much the “timing” of these spots opening up, but rather the timing of your own work experience: when you started, how long you’ve been there, and what you’ve done so far.

For example, if you just started working at a boutique bank 1-2 months ago, and now you want to move to a larger bank, very few bankers will take you seriously.

That’s not enough time to gain significant deal or client experience, as nearly all M&A deals many months (or years!) to execute.

You’ll probably need more like 6-12 months of experience in your current role to start networking and interviewing for other jobs.

If you’re in investment banking at a smaller firm, that should give you enough time to work on 1-2 solid deals, even if they’re still ongoing when you start recruiting.

And if you’re in another field, that should give you enough time to get the experience that you can spin into sounding like deals.

How Do You Get Started with the Lateral Hiring Process?

Before doing anything, you need to get your resume in order.

If you’re already in investment banking, take a look at our private equity resume template and tutorial.

Yes, it’s for “private equity,” but the same principles apply when you’re aiming for any deal-based role (IB, PE, CD, VC, etc.).

If you’re in some other field, you should take your experience and spin it into sounding like deals.

This will be easier for roles such as Big 4 Transaction Services, valuation, and corporate development because… you do work on deals, or at least with clients.

The main difference is that you’ll have to make it sound like you worked on deals from start to finish, or that you had knowledge of the entire process from start to finish.

Corporate finance roles at normal companies are trickier because you do not work on deals in those.

My advice is to take some of your projects – internal financial projections, presentations to management, forecasting the cash requirements, etc. – and turn them into “deals.”

If you can link your work to the company’s overall results, that’s a good start.

Once you have your resume, you need to come up with your story and start applying.

Your story should not be difficult if you’ve read our coverage of how to walk through your resume.

If you’re switching banks, it can be some variant of: “I want to work on more of Deal Type X, which your firm does, but which mine does not.”

If you’re switching industries, make it about wanting to work on deals from start to finish, or about advising many companies rather than just staying at a single company and working on internal deals or forecasting there.

After your story is set, you can apply to online job postings on sites like Indeed and LinkedIn, but networking + applying online is always more effective than just applying online.

One strategy might be to revive the contacts you made in your networking efforts from university, send them an update, and casually ask about open positions at their firms.

If you’ve been out of touch for only a year or two, you can send a quick email; if it has been longer than that, you might need to “warm them up” a bit first.

Headhunters are rarely effective in this lateral hiring process because:

1. If you’re a career-changer, headhunters will ignore you because they think you have a low probability of success.
2. If you’re already in IB, you can reach out via cold emails, apply to online job postings, and get responses like that.

If you have to write a cold email to someone, you could use the following template:

SUBJECT: Experienced Analyst Position – [Bank Name]

“[Banker Name],

My name is [Your Name], and I’m currently a First-Year Analyst at [Bank / Company Name] in the [Group Name] group. I recently applied to the Experienced Analyst position in [City Name] that [Banker’s Bank] posted on [Job Site Name], and I wanted to find out more about the role.

I saw that you worked at [Banker’s Bank] in [City Name], and I wondered if you might have a few minutes to speak on the phone and provide additional details on your group. I am available on Monday – Wednesday next week between 1 PM and 4 PM [Time Zone]. Thanks for your time – I really appreciate it.

Best regards,

[Your Name]”

If you get a “quick hit,” you might start the interview process right away.

If not, you might have to persist with your networking for weeks or months until something turns up.

As mentioned above, though, the turnover rate at banks is very high.

If you have been networking for months and months, you’ve turned up nothing, and there’s no economic crisis, recession, or market crash taking place, then it’s very likely that you’re doing something wrong (see the bottom section of this article).

What to Expect as the Hiring Process Moves Along

The lateral hiring process is unstructured, so interviews could drag on for weeks or months depending on the firm and group – or you could win an offer in a matter of days.

Part of the problem is that it’s tough to define a true “hiring need” in many groups.

For example, if an under-performing Analyst suddenly quits, does the group really need to hire a new one ASAP?

Probably not, but they may want to hire one “soon” just in case someone else quits.

Even if this group starts recruiting, they may be slow to respond and schedule interviews because it’s not their top priority.

You should expect that it will take a few months to go through the process, and possibly more like 6-12 months to win an offer somewhere.

In the process itself, banks tend not to use HireVue interviews or online tests.

Instead, you can expect:

• One or two phone interviews.
• A Superday, or a series of interviews with more senior bankers spread over several weeks.
• And there’s a decent chance you’ll get a modeling test or case study as well, such as the sample 3-statement modeling test on this site.

They will still ask “fit” and technical questions, but your deal experience is also incredibly important.

If you don’t know the details of each deal you listed on your resume/CV – buyer and seller’s financials, relevant multiples, transaction rationale, and how you contributed – you’re not going to make it very far.

If you’re moving from a boutique to a middle market bank, interviewers often focus more on fit because they want to make sure you’ll thrive in a new environment.

But if you’re moving to a bulge bracket or elite boutique bank, the focus is often technical because bankers assume that you’ll have less modeling experience, coming from a smaller firm.

If you’re moving in from another industry, expect even more of that.

Even if the group has a hiring need, you may not hear back quickly, so you need to keep following up and checking on your status.

How Do Lateral Offers Work?

If you make it through the entire process and win a lateral offer, you can expect the following:

• You will probably “lose a year” if you’re switching levels (boutique to MM or MM to BB/EB) – so if you’re a First-Year Analyst now, you’ll start over as a First-Year Analyst.
• Base salaries are fairly standardized at mid-sized and larger banks, so you should earn the market rate. The same goes for bonuses – there are standard levels, and your bonus will depend on the market, fees generated, and your performance.
• You may get a signing bonus, but don’t count on it – it’s not in banks’ interest to award signing bonuses because doing so encourages people to hop around like rabbits. If you don’t see it in the offer letter, you can ask, but don’t press the issue too hard.
• You may get a relocation package if you’re switching cities, especially if the distance is significant (e.g., LA to NY or Hong Kong to London).
• You will probably have to give up the bonus you’ve accrued so far at your original firm, especially if you leave a few months into the calendar year.

A long time ago, people thought that “losing a year” was terrible.

But as of 2020, this is often a benefit if you’re switching banks specifically to recruit for private equity roles.

Since PE recruiting keeps moving up, you want as much time as possible so you can walk into interviews with more deal experience.

What If You Don’t Win a Lateral Offer?

If you go through this entire process and come away with no offers, you need to reflect and ask, “What happened?”

For example, did you not win any interviews (or enough interviews)?

If this is the case, then maybe your work experience wasn’t close enough to IB for you to be a competitive candidate – or maybe you did not use an effective networking strategy.

Or, if you did win interviews, did you perform poorly in them? If so, why?

Were your technical weak? It’s not rocket science – anyone can master these questions with enough preparation and practice time and the right interview guide.

Did you not have enough deal or client experience? Maybe you need to stay in your current role for more time and try again.

The tricky thing about lateral hiring is that even if you can fix some of these issues, you may not have time to do so if you’re moving into IB as a career-changer.

For example, let’s say you’ve already been working for two years at a Big 4 firm.

You went through this process but came away with no offers and only a few interviews.

If you need more deal experience or more technical preparation, and either one will cost you ~6 months, pushing you to 2.5 years in your current role, it will become more difficult to win Analyst roles.

You could still do it, but the odds start tipping against you past the 2-3-year mark.

If that’s you, then it may be time to consider an MBA program instead.

The window for getting into IB is relatively narrow, and the longer you wait, the more likely it is to close suddenly.

Lateral hiring can be a very effective way to make a career change – as long as you act quickly and don’t let that window slam down on your face while you’re jumping out of it.

For Further Reading

• From Regional Audit to Investment Banking: How to Break in *Without* the Big 4 Pedigree
• From Valuation Advisory to Investment Banking: How to Make the Lateral Leap
• How to Cold Email for an Internship: Investment Banking Cold Email Templates and Guide
• M&A Investment Banking: The Best Group Ever?
• How to Move from Accounting to Investment Banking and Leave the Audits Behind Forever
• From Wealth Management to Investment Banking: How to Make the Leap

The post The Full Guide to Lateral Hiring in Investment Banking appeared first on Mergers & Inquisitions.

Ah, the investment banking analyst.

This was the subject of the first article I ever wrote for this site – an article that has continued to generate comments, threats, and snarky reactions ever since.

Here’s what an investment banking analyst really does, the pros and cons of the job, what to expect in an average day, and how to break in.

What Do Investment Bankers Actually Do?

Investment bankers advise companies on large, corporate-level transactions such as mergers and acquisitions and debt and equity issuances.

“Advise companies” means “work with management teams to market and sell companies, find potential targets to acquire, and make deals go through; or recommend the best terms and timing for a capital raise and then market that debt or equity issuance to investors.”

The role is part advice, part sales and marketing, and part negotiation and deal-making – on a grand scale.

In the investment banking career path, the Analysts are the foot soldiers and workhorses.

They’re near the bottom of the hierarchy, above only Summer Interns.

Investment Banking Analyst Job Description

Many articles about investment banking say that as an Analyst, you’ll be “in charge of Excel and PowerPoint deliverables, administrative tasks, and responding to requests from clients and potential clients.”

That is true, but it misses the point of the Analyst role.

As an Analyst, your job is to do whatever it takes to support senior bankers in winning and closing deals, even if that means doing ridiculous tasks that have nothing to do with accounting or finance.

Many students from top universities kill themselves earning high grades and winning multiple internships, all to land that elusive investment banking role…

…and then they start working and are disappointed to find that most of their time is spent revising presentations, tracking buyers and sellers, and doing mind-numbing market updates.

Even in highly technical groups, you’re unlikely to spend even 50% of your time on tasks such as financial modeling and valuation.

The “average case” for your time on the job might look like this:

• PowerPoint for Pitch Books and Other Presentations: 50%
• Random and Administrative Tasks: 30%
• Excel-Based Financial Modeling and Valuation: 20%

In less technical groups, such as Equity Capital Markets, you’ll spend even less time in Excel, and in more technical groups, such as Restructuring, you might spend closer to 40-50% of your time on technical tasks.

Finally, note that even if you happen to spend more time on the “interesting work,” it’s still not all that interesting.

Unlike in buy-side roles, where you might use your own research and market/customer analysis to inform your models, many IB models are “paint by numbers” where the numbers are linked to the client’s demands – even if those demands are unrealistic.

You may occasionally get something more interesting, such as an on-site visit, meeting a company’s finance team, or brainstorming potential buyers or sellers, but don’t get your hopes up.

In fact, one of the best perks of the job may be beating down consultants in rap battles.

Investment Banking Analyst Working Hours

Yes, the hours are bad for the reasons described in our article on investment banking hours.

On average, you’ll be in the office 70-85 hours per week, though you won’t necessarily be “working” that entire time.

However, you will be on call 24/7, and you’ll have to respond to urgent requests and emails all the time, making it difficult to have a life or plan regular activities.

Banks have tried to improve the hours over time with “protected weekends” and other mandatory time off, but the results have been mixed.

It’s a bit better for Analysts now than it was in the late 1990s or mid-2000s, but it’s still a grueling job that requires incredible sacrifice.

Wait… Why Would Anyone Ever Want to Be an Investment Banking Analyst?!!

“Wait a minute,” you say, “this job sounds awful. Most of the work is boring, you work 80 hours per week, and you deal with crazy people all day. Why would anyone do it?!!”

Good question.

Most Investment Banking Analysts do the job because:

1. It’s Not a Long-Term Position – You do it for 2-3 years, and then you move up into senior roles in investment banking, or you move into jobs such as private equity or hedge funds.
2. You Earn A Lot – Investment banking offers higher compensation than any other job out of university, except for a few quant finance roles and programming jobs at big tech companies.
3. You Gain Access to Great Exit Opportunities – And you can win more interesting roles in private equity, hedge funds, venture capital, corporate development, and other fields after working as an IB Analyst. For more, please see our article on exit opportunities.

The basic philosophy is “short-term pain, long-term gain.”

By killing yourself for a few years, you give yourself many future options in other, more-interesting, higher-paying jobs.

If you value your free time and don’t want to sacrifice your early 20s, this is not the right job for you.

Investment Banking Analyst Salary (and Bonus)

Base salaries at large banks in the U.S. range from $100K to $125K (as of 2022), with some elite boutiques paying above that and some regional boutiques still paying below $100K.

Bonuses are often 0.5x to 1.0x your base salary, so average total compensation might be between $150K and $250K; numbers around $200K are probably the norm, given base salaries of $110K and $125K for Year 1 and Year 2 Analysts at the large banks.

Pay is lower outside the U.S., even in other financial centers such as London, and pay also tends to be lower at boutique investment banks.

For more on this topic, please see our article on investment banker salaries.

What Does an Investment Banking Analyst Do?

Each day in your life as an Investment Banking Analyst is different, but an “average day” might look like this:

9 AM – 12 PM: Arrive at the office, update a status report on potential buyers in an M&A deal, send it out, and join an update call with the client’s management team.

The senior bankers do most of the talking, so you work on a pitch book for a different, potential deal in the background.

12 PM – 3 PM: You join a few “due diligence calls” for another deal, where the potential buyer asks customers of the seller questions about why they use its products and services.

You’re just there to monitor the calls and make sure the potential buyer doesn’t go too far with its questioning. After that, you run to Starbucks with a few Analysts for a quick break.

3 PM – 5 PM: There’s a huge incident as a traveling Managing Director requests briefing materials for an upcoming pitch ASAP, and you have to scramble around to find and send hundreds of pages of reading.

5 PM – 7 PM: Your Associate comes over to review the Confidential Information Memorandum (CIM) for the client from this morning, and you start making his changes to the financial summary and market sections.

There’s a bit of downtime after this, so you order food and then shop for furniture online.

7 PM – 10 PM: As one of the VPs is leaving the office, he decides that the team needs to re-do a pitch book for an upcoming initial public offering (IPO), and he wants to see the new draft by tomorrow morning.

You start coordinating with the Equity Capital Markets (ECM) team to get market updates and case studies.

10 PM – 1 AM: The Associate signs off on the new qualitative slides in this draft of the pitch book, and he leaves the office. You continue to tweak the valuation and Excel-based parts.

1 AM – 2 AM: Another Analyst at the office is having a major problem with a complicated Excel model not working, so you decide to stay another hour to help out, and then you go home.

This is a fairly busy day, but not an outrageously busy or terrible one.

Factors that create “bad days” include:

• Multiple Live Deals: If you’re on 3-4 deals that are all active at the same time, the workload is unpredictable, and you could get streams of requests throughout the day.
• Big Upcoming Pitches: Since pitches have hard deadlines and bankers like to do unnecessary work, you could easily end up staying late or even pulling an all-nighter to finish a long and detailed pitch book.
• Last-Minute Emergencies: For example, if a traveling MD suddenly needs information for a meeting taking place in 1-2 hours, be prepared to scramble.

“Good days” or “slow days” tend to happen when you can focus on a specific deal or client instead of being pulled in 10-15 different directions.

Interacting with management teams is probably the best part of the Analyst job, so those discussions can also create good days.

A Week in the Life of an Investment Banker

In an average week, you will not have much free time on weekdays.

Many Analysts are in the office from 9 AM to 1 AM each day, and sometimes a bit less than that on Friday or other “slow days.”

You might get called in for a few hours on Saturday and Sunday, but you’re unlikely to be there all day unless you’re working on an important deal that’s close to the finish line and that requires your presence.

If you’re wondering about the gym, sports, or having a social life, you do all of that “when you can,” which often means late at night, on weekends, or not at all.

Investment Banking Recruiting: How to Break In

The bad news about becoming an investment banking analyst is that it’s still a very competitive field to get into, and you don’t have a great shot unless you go to a top university, earn high grades, and complete multiple internships.

The good news is that there’s so much information about investment banking available today that if you really want to break in, and you put in the effort, you probably can.

You might have to compromise by working at a smaller bank or non-bank initially, or you might have to “pound the pavement” with aggressive cold calls and cold emails, but it’s still doable.

By contrast, if you were recruiting for this job several decades ago (e.g., the late 1990s), it would have been nearly impossible to get in as a non-traditional candidate because there was so little information about it.

We cover the details in our article on how to get into investment banking, but the two main paths into the industry as an Analyst are:

1. As an Undergraduate – Complete multiple finance internships in your first and second years, earn high grades, network with alumni, win a summer IB internship at a large bank following your third year, and convert it into a full-time offer there.
2. As a Recent Grad – Still complete internships during undergrad, but get started with IB a bit later, so work in a related-but-not-quite-banking role after graduation, such as at a Big 4 firm or valuation firm, and then network and win an offer as a lateral hire.

The Investment Banking Analyst Job: Is It Right for You?

If you’re reading this site, you are probably a high-achieving, Type-A personality, so I’m not going to waste time discussing whether or not IB is right for you (for that one, see our coverage of the investment banking career path).

Instead, there are two specific questions you should ask yourself:

1. Do you need to work as an Investment Banking Analyst first if your ultimate goal is something else in finance, such as hedge funds or private equity?
2. What is the long-term outlook for this job? For example, if you’re in high school or your first year in university, will IB Analyst roles still be around in the future? Will they be automated or displaced?

The short answer to the first question is, “No, you don’t necessarily need to start as an IB Analyst anymore if you can win a good offer at an established buy-side firm right out of undergrad.”

However, if you’re not sure what you want to do in the long term, then you can’t go wrong with an IB Analyst role because of the options it gives you.

For more on this one, see the investment banking vs private equity article.

On the second question: unless something very fundamental in the economy and financial markets changes, Analyst roles are unlikely to go away or even change significantly.

Many people also “predicted” that Investment Banking Analysts would go extinct after Excel was developed and adopted by everyone, and that didn’t exactly happen.

I could see programming skills becoming more important, as they have in sales & trading, but I doubt that most IB work will shift away from Word/Excel/PowerPoint in the near future.

So, once you put in the time and effort required to get into the industry, you start working, and then you start complaining about your job, you can look back fondly on this article:

“Wow, it’s just like he described. And… not that much has changed. Except for my compensation – bonuses are up this year! (phew)”

Further Reading

Take a look at Investment Banking Fitness or Investment Banker Salary and Bonus Report. Or see this End-of-Year Reader Q&A about Job Offer Decisions, Bank Rankings, Career Transitions, and Disappearing Content or The Investment Banking Certification: The Most Useless Idea in the World?

The post The Investment Banking Analyst: Job Description, Hours, Salaries and More appeared first on Mergers & Inquisitions.

Just like a fraternity, investment banking offers a clear hierarchy, certain rituals you must complete, and benefits and added responsibilities at each level.

And, as with a fraternity – or the mafia – you may also run into serious problems if you stay “in the business” for too long.

In this article, we’ll cover the advantages and disadvantages of the investment banking career path, including the work, hierarchy, promotions, lifestyle, hours, salaries, and exit opportunities at each level.

But let’s start with the basics before we move fully into the frat house:

What Do Investment Bankers Do?

Investment bankers advise companies on large, corporate-level transactions such as mergers and acquisitions and debt and equity issuances.

“Advise companies” means “Work with management teams to market and sell companies, find potential targets to acquire, and make deals go through; or recommend the best terms and timing for a capital raise and then market that debt or equity issuance to investors.”

The role is part advice, part sales and marketing, and part negotiation and deal-making – on a grand scale.

For more, please see our articles on mergers and acquisitions, pitch books, how you win deals as a Managing Director, and our investment banking industry overview.

Why A Career In Investment Banking?

Many people are drawn to the investment banking career path for the money: even at the mid-levels, you’ll be in the top 1% of income earners in most states and countries.

Others are attracted by the excitement of deals and high-stakes negotiations with important people such as CEOs and Board Chairs; some are fascinated by deal mechanics as well.

And still others are attracted to investment banking careers because of the exit opportunities, particularly the ones available to junior bankers such as Analysts and Associates.

Investment Banking Career Requirements

The investment banking career path attracts people who are:

• Competitive, high achievers who are willing to work long, grinding hours.
• Extremely attentive to detail.
• Solid in terms of reading/writing and math, though not necessarily amazing in either area, as little “real math” is required.
• Interested in deals rather than simply following the markets or investing in public companies or other assets.
• Interested in a specific exit opportunity that normally has investment banking as a prerequisite, such as private equity or corporate development.

Junior investment bankers are usually (but not always) recent graduates from top universities, such as the Ivy League in the U.S. or schools like Cambridge and Oxford in the U.K.

They complete finance-related internships during undergrad, intern at a large investment bank, and then win a full-time return offer from that bank.

Outside of that, you can also get in if you’re working full-time in a related field, such as valuation at a Big 4 firm or corporate banking.

And you can break in at the MBA level if you’re at a top business school and you have the right work experience.

Regardless of your level, you’ll always need the following to break into the industry:

1. A sequence of work and leadership experience that looks highly relevant for IB roles;
2. Good academic credentials (grades, test scores, and university reputation);
3. A lot of networking and interview preparation; and
4. Something “interesting” that makes you appear like a human rather than a robot.

For more, see our comprehensive guide on how to get into investment banking and our articles about investment banking recruiting.

Or, check out our IB Interview Guide for more about preparing for specific questions and getting up to speed on the technical side:

It is nearly impossible to break into investment banking careers in the mid-levels, so you do it:

1. Early – Right out of undergraduate, an MBA program, or as a recent university grad; or
2. Much later on – If you’re already a C-level executive in another industry, for example.

The Investment Banking Career Path

The investment banking career path and corporate hierarchy is well-defined and hasn’t changed much over time:

• Intern or Summer Intern – Assistant to the Monkeys
• Analyst – Monkey
• Associate – Better-Trained Monkey
• Vice President (VP) – Manager of the Monkeys
• Director or Senior VP (SVP) – Manager and Rainmaker-in-Training
• Managing Director (MD) – Rainmaker

There are some variations and slightly different titles, but this is the basic investment banking career path.

We’ll look at each level in detail below (see the investment banking internship guide for more on the Intern or Summer Intern level).

For now, here’s a summary of what to expect at each level:

NOTE: The descriptions, salaries, and bonuses below refer to front-office roles in investment banking, not to the back or middle office, which are supporting functions.

Also, the compensation figures are based on pay in the U.S., and specifically at large banks in New York. Pay will be lower, sometimes significantly lower, in other regions – yes, even in London – and at smaller banks. For more, please see our coverage of investment banker salaries.

Investment Banking Analyst Job Description

As an Analyst, you’re in charge of Excel and PowerPoint work and administrative tasks such as tracking buyers and sellers, managing the data room and deal documents, and responding to requests from clients and potential clients.

To get a flavor of the work and what an average day is like, see the articles on the investment banking analyst job, mergers & acquisitions, and investment banking pitch books.

Age Range: Most full-time Analysts have just finished undergrad, while some have completed Master’s programs, military service, or another full-time role, so we’ll say 22-27.

Investment Banking Analyst Salary + Bonus: This varies from year to year, but base salaries tend to be between $100K and $125K USD at large banks, with bonuses that are roughly 0.5x to 1.0x that base salary. Total compensation is often in the $150K – $250K range (as of 2022).

Investment Banking Analyst Hours: You’ll be in the office for 70-85 hours per week, but you won’t be working for that entire time. Investment banking hours are long, but there’s also significant “downtime.”

You’ll work less on weekends, and sometimes you’ll get a protected weekend where you get Friday night into Saturday off.

A long time ago, some groups were known for making Analysts work consistent 90-100+ hour workweeks, but that is rare now.

Promotion Time: Traditionally, it took 3 years to be promoted to Associate, but many banks have cut this time to incentivize long-term employment, so now it’s more like 2.0 or 2.5 years; we’ll say 2-3 years to be conservative.

Investment Banking Analyst Exit Opportunities: As an Analyst at a large bank, you have access to the full set of investment banking exit opportunities: private equity, hedge funds, asset management, corporate finance, corporate development, venture capital, and more.

At smaller banks, your opportunities will be more limited to other banks, corporate finance, and corporate development roles.

Investment Banking Associate Job Description

As an Investment Banking Associate, you are a better-trained monkey who has more life experience, earns more, and does work that’s a bit more interesting.

The Analyst on the team will do much of the grunt work, but the Associate assigns the work, checks it, and occasionally jumps in to do some Excel and PowerPoint, especially in more complex presentations and models.

Associates also attend more meetings and have more client interaction, though they’re unlikely to have “speaking roles” in most meetings.

Some Associates are recruited out of top MBA programs, while others are Analyst promotes. Rarely do Associates get recruited from completely different industries.

Traditionally, Associates were seen as long-term hires at the bank, while Analysts usually left after a few years, but banks have been trying to change that by encouraging Analysts to stay longer (results are TBD).

Age Range: Associates come from more diverse backgrounds, so 25-35 is the safest bet for the age range. It would be virtually impossible to become an IB Associate much before 25 unless you graduated university at age 18 or 20.

Salary + Bonus: Associates tend to earn between $300K and $550K USD for total compensation, with base salaries progressing up from $175K to $225K at large banks.

Expect significantly lower bonuses at smaller banks.

Hours: The average is more like 65-80 hours per week because you don’t get called in for quite as many last-minute emergencies.

Promotion Time: If you perform well, it might take 3-4 years to reach the next level of Vice President.

However, it’s harder to get promoted to VP because the bank might not need another VP right away, or it might be skeptical of your ability to become a rainmaker eventually.

Exit Opportunities: Investment banking associate exit opportunities are more limited.

Headhunters will not actively court you in the on-cycle private equity recruiting process, as they do for Analysts at large banks, so you need to be far more proactive.

Corporate finance careers or corporate development careers are always options, but if you want PE or HF roles, you’ll need to be extremely targeted and proactive to have a good shot, and you’ll almost certainly have to focus on smaller firms.

Investment Banking Vice President (VP) Job Description

Investment Banking Vice Presidents assume more of a “project management” role and do not get into the weeds in the same way as Analysts and Associates.

VPs communicate with the Directors and Managing Directors, interpret their requests, and then work with Associates and Analysts to implement those requests and check their work.

For example, if an MD wants to pitch a potential client on a certain deal, the VP will find out what he wants and then give the Associate and Analyst instructions to complete it.

VPs get far more client interaction, and they might do things such as calling potential buyers to pitch a client that the bank is selling – whereas Analysts and Associates would seldom do that (if ever).

Over time, Vice Presidents also start developing relationships and winning clients.

Being an investment banking VP is arguably the toughest job in the industry because you need to balance deal pitching and execution with relationship development, and that is a precarious juggling act.

Age Range: It’s probably more like 28-40 here since you must have been an Associate first; hardly anyone gets in from outside the industry.

Investment Banking VP Salary + Bonus: Base salaries range from $250K to $300K USD, with total compensation in the $500K to $900K range at large banks (as of 2022).

Investment Banking VP Hours: Average hours at this level are around 55-70 per week, mostly because the work shifts to project management rather than last-minute presentations and requests.

Promotion Time: It usually takes 3-4 years to be promoted to Director, assuming you perform well.

But it’s very easy to get “stuck” at the VP level or forced out if you don’t show that you have what it takes to become a rainmaker.

Investment Banking VP Exit Opportunities: They’re even more limited than the ones for Associates.

You’re not going to win a traditional private equity or hedge fund role at this level, so you either switch banks, move into corporate development, or go into a completely different field.

And “switching industries” often means significantly lower pay, so VPs might have trouble justifying the change.

Why is Everyone at a Bank a Vice President?

You might have noticed that a lot of people at banks have the title “Vice President.”

This happens because banks like to give employees the feeling of advancement and promotion, without necessarily offering them true advancement or a pathway to the top.

The title of “Vice President” means far less at a bank than it does at, say, a Fortune 500 company, where VPs have huge decision-making power and seniority.

Investment Banking Director Job Description

Directors are also called “Senior Vice Presidents” or Senior VPs (SVPs), and sometimes there are other variations like Executive Directors (EDs) or “Principals.”

This level is a mix between what VPs and MDs do, and the role differs depending on the bank and group.

Sometimes Directors focus on developing relationships and winning clients, and other times they do more execution work and project management like VPs.

But no matter what a Director does, he/she will have to move closer to winning clients to advance to the next level: Managing Director.

Age Range: You must have been an Associate and VP to get here, so the minimum age is probably in the low 30’s. We’ll say 32-45, with 45 on the high end and plausible mostly if you went to business school late.

Investment Banking Director Salary + Bonus: There’s a bit of a bump over VP-level compensation, but not necessarily a dramatic one; the typical range for total compensation might be $800K to $1.2 million per year, with the majority in the bonus (as of 2022).

Investment Banking Director Hours: The hours drop to around 50-60 per week, but required work travel picks up.

Promotion Time: It’s probably an average of 2-3 years to get promoted to Managing Director, assuming you perform well enough to justify it.

Investment Banking Director Exit Opportunities: Your options are, once again, “join a normal company or switch banks.”

If you’ve developed more of a Rolodex, you might be able to move into a buy-side role such as private equity, but it’s still very rare.

Most private equity firms like to hire bankers at an early stage and then develop them over time; they view mid-level hiring as a bit awkward.

Investment Banking Managing Director (MD) Job Description

Managing Directors have one goal: to make it rain.

They spend their time winning clients, meeting companies, and developing relationships, and they’re on the road doing that much of the time.

The MD is the King of the Jungle, and all the lower-tier monkeys answer to the MD and do his/her bidding.

Sometimes MDs get involved in deal negotiations, especially for very important deals or ones where they have special relationships, but otherwise, they focus on winning deals.

Age Range: It’s nearly impossible to reach this level before your early 30’s, so we’ll say 35-50 for the range.

Few MDs continue working until the official retirement age (65-70); it’s a stressful, high-pressure job, and past a certain net worth, it’s just not worth it.

Investment Banking Managing Director Salary + Bonus: Base salaries are in the mid-six-figure range, with total compensation in the high six figures to low seven figures. An MD doing decently should earn between $1 and $3 million per year, and sometimes a low multiple of that (as of 2022).

A normal MD is unlikely to earn $10 or $20 million in one year; the MD would need to be even more senior (e.g., Group Head) or in a buy-side role for that to be plausible.

Investment Banking Managing Director Hours: Similar to Directors, the hours are in the 50-60 per week range, but with even more travel time now.

Promotion Time: There are levels beyond “normal MD,” such as Group Head and COO and CEO, but there’s no set path to reaching them and no set time frame.

It’s not as much of an up-or-out culture at this level, so banks will keep you around as an MD as long as you keep producing clients, deals, and fees for them.

Investment Banking Managing Director Exit Opportunities: At this level, you might be able to move around and win other high-level jobs at companies or possibly even in private equity or other buy-side roles.

You can do that because everything is sales at the highest levels; a deep Rolodex is useful in many fields.

However, most MDs who leave willingly do so because they want to do something different: they retire early, focus on family, or explore an interest or hobby.

Careers Beyond the MD Level: Group Head, COO, CEO And More

As stated above, there are roles beyond the Managing Director level: Senior Managing Director, Group Head, CEO or COO, and so on.

There’s little data available on the paths to reach these roles, but these very senior levels are 100% results-driven.

Similar hierarchies and career paths also exist in buy-side roles such as private equity – in fact, you can take a look at our detailed article on the private equity career path here.

For example, to reach the top in venture capital or private equity, you need a track record of investments that have yielded solid realized gains.

If not, you’ll get stuck in the mid-levels and eventually forced out.

Investment Banking Career Pros and Cons

Summing up this article, here’s how you can think about the trade-offs of the investment banking career path:

Benefits / Advantages

• High salaries and bonuses at all levels.
• Potential for quick advancement up the ladder if you perform well.
• Access to top-notch exit opportunities, especially as an Analyst.
• Industry is unlikely to be disrupted by technology because at the top levels, it’s a relationship-based sales role.
• Exposure to many different companies, industries, and management teams.
• You gain useful hard and soft skills that apply broadly to different industries and companies.
• Advancement is directly linked to your performance and contributions, especially as you move up.

Drawbacks / Disadvantages

• Terrible work/life balance and brutal hours; even at the top levels, the lifestyle isn’t great since you’ll have to travel a lot more.
• Often boring, repetitive work and lots of downtime where you’re waiting around for other people.
• Easy to get “stuck in the middle” and not be good enough to advance to the top.
• More limited exit opportunities if you try to leave the field in the mid-levels.
• You do nothing useful for the world and make no positive social impact unless you get rich enough to donate to charities.
• Extremely tough to get into the industry if you get a late start, you’re a career changer, or you attend a non-target school.

So, is investment banking right for you?

There’s no universal answer, but if you want to make a decision, imagine a fraternity house with piles of money that gradually increase in size as you walk up the stairs.

If you can tolerate enough hazing and abuse to make it all the way up without passing out or dying of alcohol poisoning, you might just be a banker.

For Further Learning

For more on career paths, check out these articles:

• Is Finance a Good Career Path?
• The Private Equity Career Path: The Complete Guide
• The Hedge Fund Career Path: The Complete Guide
• From Wealth Management to Investment Banking: How to Make the Leap
• The Non-Big 4 Valuation Career – How to Break into Valuation at a NON-Big-4 Accounting Firm

And if you want help getting in at the first or second rung of these stairs, our friends at Wall Street Mastermind might be able to help you out.

They’ve worked with over 1,000 students to help them secure high-paying investment banking jobs out of school (and internships while in school), and their coaches include a former Global Head of Recruiting at three different large banks.

They provide personalized, hands-on guidance through the entire networking and interview process – and they have a great track record of results for their clients.

You can book a free consultation with them to learn more.

The post The Investment Banking Career Path: The Complete Guide appeared first on Mergers & Inquisitions.

Tired of audits?

Want to earn more and get more exciting work?

Looking forward to spending your time on changing font colors in Excel?

Congratulations! You’re well on your way to transitioning from accounting to investment banking.

Moving into banking from an accounting background is easier than moving in from engineering, but it’s about the same difficulty as a transition from consulting or law.

Here’s how to make the leap:

Defining the Scope: Ground Rules for Accountants in Search of Banking

First, this topic is more relevant if you’re in the U.S. because the CPA designation and accounting/audit/tax experience tend not to impress U.S.-based bankers, which makes it harder to get on their radar.

By contrast, in countries such as India, South Africa, and Canada, it’s more common to use the Chartered Accountant (CA) qualification to work in accounting and then move into finance.

So, if you’re in a country where accountants frequently move into banking, you should take a look at one of our country-specific articles.

Second, the ease or difficulty of making this transition depends heavily on the specific area of “accounting” you’re in and the brand name/reputation of your firm and university.

For example, if you’re working in audit at a regional, non-Big-4 accounting firm, and you also attended an unknown university, it will be an uphill battle to make this move.

Working in tax or any other area that’s not related to transactions will also make it difficult.

But if you’re working in a due diligence team at a Big 4 firm in New York, it will be easier to move in directly or to switch teams and then move in.

Finally, note that this article is based on interviews with readers who made this transition over the years. Rather than picking one specific approach, I’ve created a composite based on their feedback and suggestions.

What Are You Up Against, and What’s in Your Favor?

Bankers will believe in your accounting, math, and Excel skills, as well as your ability to work with clients.

However, they will raise objections about other issues:

• Can you handle the hours? While some accounting jobs require longer hours, you don’t need to burn the midnight oil constantly, as you do in banking.
• Can you pass the “airport test”? The stereotype is that accountants are “boring,” so you need to show that you have interests outside of work.
• Why banking now instead of earlier on? Usually, it’s best to say that you had limited exposure to IB at your university and that most people went into accounting or corporate finance at normal companies, so you became interested at a later stage.
• Do you know finance in addition to accounting? Accounting is backward-looking, while finance is based on projections. You need both for investment banking, but the stereotype is that accountants are experts on topics like Days Sales Outstanding trends but know less about financial projections, valuation, and transaction modeling.
• Are you a job hopper? This one will come up if you’ve moved from accounting to a “steppingstone role” before applying to banking jobs, especially if these transitions happened within 1-2 years. You can answer it by saying that it was your plan all along to get into IB, so the other jobs along the way were part of that plan.

The Blueprint: Accounting into Investment Banking

No two transitions are the same, but most successful candidates I’ve spoken with over the years follow this type of path to break in:

• University or Master’s Degree in Accounting or Related Area – And possible internships in audit/tax/accounting during university.
• Full-Time Role at Accounting Firm for 1 Year or Less – During this time, you network with other teams and firms and learn the valuation and modeling skills on your own.
• “Steppingstone Role” for ~1 Year – This role might be in the internal middle-market bank of a Big 4 firm, in Transaction Advisory Services (TAS), or in areas like Restructuring. You could also go to an independent valuation firm, join a corporate banking team, or move to a different accounting firm where you can work on deals.
• Apply for and Win an IB Role – You’ll start networking for these roles midway through your second job, and if all goes well, you’ll make the transition ~1 year into it.

You do not necessarily need a “steppingstone role,” but most accountants I’ve interviewed have had one.

It’s more important if you lack top school/firm names, or if you can’t point to work experience involving valuation and financial modeling.

The ease of winning these jobs varies widely based on your region and office.

For example, a Canadian reader said that the TAS team at his Big 4 firm received 300-400 resumes for 1-2 open positions and that networking long in advance was required.

But the odds might be better if you’re in a bigger office or one with more turnover.

It’s important to move over early, but not too early.

For example, if you stay in an accounting/audit/tax role for four years, banks won’t know what to do with you (Analyst vs. Associate), and they’ll wonder why you remained in accounting for so long.

Most candidates who make the transition after undergraduate spend 1-2 years in other roles.

If you’ve been working longer than that, you may have to consider the nuclear option: a top MBA program.

Focus is essential because you cannot work 50-60 hours per week, learn valuation/financial modeling, network, and also recruit for 4-5 different industries at the same time.

So, if you’re applying to IB roles, don’t also apply to PE, corporate development, and VC jobs just to “see what happens.”

Finally, the CFA can help your case, but you shouldn’t spend 1,000+ hours on it.

You can benefit by saying that you’re studying for it and pointing to specific progress you’ve made; you don’t need to have passed multiple levels.

Here’s a quick look at each step in the recruiting process if you follow that plan above:

Part 1: How to Tell Your Story

We have a detailed example of how to tell your story from an audit/accounting background in the IB Interview Guide, but here’s the summary:

• Beginning: Where you’re from, your university, and your first audit/accounting job. Insert an interesting fact here, or you’ll risk coming across as “boring.”
• Spark: A client or other engagement/work assignment that sparked your interest in finance (e.g., due diligence on a PE firm’s latest acquisition, auditing financial statements for an IPO, etc.).
• Growing Interest: You started teaching yourself valuation/financial modeling and deal analysis and moved into a more relevant role, such as a TAS/TS group, an independent valuation firm, or a pre-MBA internship at an investment bank.
• The Future and Why You’re Here Today: You want to use your accounting, valuation, and finance skills to advise companies on major transactions similar to the one that sparked your interest, and this firm has a great reputation in that area.

You will likely get the “Why now?” objection, so be prepared to explain the lack of exposure at your university or that you switched majors or quit another career track earlier on.

If you went to Wharton or Harvard and still ended up in accounting, I’m not sure how you respond to this one.

Part 2: Networking

I don’t have much to add beyond all the other networking advice, articles, and email templates on this site.

The main difficulty is deciding on how focused your efforts should be.

For example, should you focus on boutique and middle-market banks and ignore bulge brackets and elite boutiques?

And should you target bankers with non-finance backgrounds, such as career changers who entered from law, consulting, or engineering?

On the first question, I would not recommend networking with only smaller banks.

Yes, your chances are higher there, but you can get a lot of good information and practice by conducting informational interviews with large banks as well.

On the second question, you shouldn’t target career changers exclusively or you’ll run out of names quickly.

It’s better to find people with whom you have something in common, even if it’s a stretch, because you’ll have to contact dozens or hundreds of professionals to make this move.

Part 3: Your Resume

You can use one of our resume templates, such as the “Experienced” one, but you also need to spin your experience into looking more relevant to finance.

To do that, you should remove “backward-looking” language and make your work appear more forward-looking and results-oriented.

For example, if you have an entry like this:

“Performed Sarbanes-Oxley testing and found that client’s controls were sufficient; reviewed journal entries and determined that client’s reserves were appropriate, which allowed them to project prices of raw materials for upcoming construction project.”

It would read better as:

“Worked with client to develop Excel model that allowed them to project prices of raw materials based on previous historical patterns and proven reserves; client later used this as supplement to financial statements and in internal projections to validate potential return on new construction project.”

You shift the focus to a small part of the project, but a part that is highly relevant to banking.

You may also have to downplay your full-time accounting experience and emphasize internships that were more relevant (e.g., if you completed a PE or VC internship in university).

Part 4: Interviews

We covered the most common objections above, so you must be prepared for all of those – the hours, the airport test, why banking, finance knowledge, and job-hopper issues.

And, of course, you need a rock-solid story of 200-300 words to answer the “Walk me through your resume” question.

Technical questions will come up, but you are not likely to receive accounting questions because you’ll probably know more about accounting than the interviewers.

Beyond accounting, almost anything on valuation, M&A/merger models, LBO models, and credit analysis is fair game.

Detailed technical questions are more likely if you’re moving into banking without a steppingstone role or valuation/modeling experience.

I don’t have much to say other than “Read our guides, or look at all the free technical tutorials and YouTube content here.”

Part 5: Win the Offer

If you win an offer at the pre-MBA level, you’ll most likely start as a first-year Analyst – even if you’ve had 1-2 years of experience in accounting/audit/TAS/valuation.

Bankers tend to discount that experience and assume that you’ll have to learn everything on the job, so they’re reluctant to bring you in at a higher level.

However, you may receive an “early promotion” option where you could become a third-year Analyst after only one year on the job – if you’ve performed well.

Once you go beyond 2-3 years of full-time work experience, the appropriate position gets murkier, which is why it’s harder to break in at that point (unless you complete an MBA).

Success Stories and Examples of How to Break In

For inspiration, here are stories from readers who moved from accounting-related backgrounds into investment banking:

Story #1: Regional Audit to Valuation to Boutique/Middle-Market Bank

This one is a great example of how you can use “steppingstone roles” to move into finance. The reader here spent a year in audit, another year in valuation, and then won the IB role.

Story #2: PE Internship to Big 4 Restructuring to Investment Banking

This one shows that you don’t necessarily need a steppingstone role if your current and previous experience is close enough.

In this case, he downplayed the Big 4 role a bit and emphasized the private equity internship.

Story #3: Strategy Consulting to Big 4 TAS to Investment Banking via a Top MBA Program

This story is a good example of how to leverage banking-related experience at a Big 4 firm and a top MBA program to get in.

Story #4: Non-Big-4 Valuation to Corporate Development

The reader here found it difficult to recruit for IB roles because he had too much work experience, so he moved into corporate development instead.

Story #5: Big 4 Audit to TAS to Corporate Development

This is another story where the reader did not end up in investment banking.

But in this case, it was by choice: He interviewed for IB roles, decided it wasn’t for him, and used ~1 year of TAS experience to move into corporate development instead.

Story #6: Accounting to Financial Advisory to Pension Fund Private Equity

In this story, the reader skipped IB entirely and moved directly into a private equity role at a pension fund in Canada.

This one is probably less viable in the U.S., but it might work in other regions.

Story #7: Commercial Banking to Valuation to Investment Banking

This person was not from an accounting background, but he still used a common “steppingstone role” – an independent valuation firm – to move into IB.

Plan B Options

If nothing works out, you have a few options:

1) Stay in the Steppingstone Role

And then you could leverage this role into something else, such as in the corporate development and pension fund examples above.

2) Consider Non-Investment-Banking Options

Yes, banking gives you high pay, good exit opportunities, and solid advancement opportunities, but it also requires brutal hours and a lot of silly grunt work.

You might be much happier if you take a role in corporate development or corporate finance, or if you go into something more specialized, such as real estate private equity or commercial real estate lending.

3) Go to Business School or Complete a Master’s in Finance Degree

A top MBA program is not a magic bullet, and neither is a top MSF degree, but they can give you better access to recruiters.

They’ll also give you more time to win deal-related internships and to spin your background into seeming relevant.

4) Keep At It

You’ll likely need at least 6-9 months to have a good chance at winning offers.

The main constraint is that you cannot wait too long to make a move.

Once you go past 3-4 years in accounting, or any other field, it gets very difficult to move into investment banking without using the nuclear option (business school).

And you should never take the nuclear option lightly – even if it means you’ll never have to look at another audit again.

Want More About the Accounting to Investment Banking Transition?

If you liked this article, you might be interested in reading:

• How To Get Into Investment Banking
• The Corporate Finance Analyst: Promising Career Path, or “Plan B” if Investment Banking Doesn’t Work Out?
• The CFA for Investment Banking: Do the New Changes Make It Worthwhile?
• Investment Banking Interview Questions and Answers: The Definitive Guide
• From Wealth Management to Investment Banking: How to Make the Leap
• The Non-Big 4 Valuation Career – How to Break into Valuation at a NON-Big-4 Accounting Firm

And if you need help pivoting from accounting to investment banking, our friends at Wall Street Mastermind might be able to help you out.

They have helped other candidates lateral from accounting to investment banking, and they can even share a few case studies on how they did this.

Their students have gotten offers from every bulge bracket and elite boutique bank on Wall Street, and their team of coaches includes a former Global Head of Recruiting at three different large banks, so you’ll know exactly what banks are looking for in candidates.

They provide personalized, hands-on guidance through the entire networking and interview process, and they have a great track record of results for their clients.

You can book a free consultation with them to learn more.

The post How to Move from Accounting to Investment Banking and Leave the Audits Behind Forever appeared first on Mergers & Inquisitions.

Wait, WHAT?!!!

Yes, I know what you’re thinking: you could see how liberal arts majors, accountants, consultants, engineers, and male escorts might want to get into finance…

…but why would you ever want to go from running your own company to creating pitch books in a dungeon for 80 hours per week?

At first glance, it does seem implausible.

But I’ve seen a lot of questions about this transition in the past few years.

It might have something to do with the record number of idiots running around telling everyone to “be their own boss,” after which most people realize they do not want to be their own boss – but that’s just my cynical hunch.

As with any other transition into finance, your “story” is the most important part since you’ll use it when writing your resume, networking, and interviewing, so we’ll focus on that.

But before diving into the specifics, let’s go back to that original question: why would you want to make this move?

So Why Would You Ever Want to Do This, Again?

Because you started or co-founded a company and you realized it’s not for you.

You might have been lured by promises of how great it would be, or maybe you watched The Social Network or Silicon Valley one too many times and got sucked in by the fantasy without understanding the reality.

Or maybe you had a great idea and executed it well, but you couldn’t gain traction or turn it into a sustainable business.

Or maybe you did gain traction, but you didn’t like the culture of a startup or the money and skills you gained weren’t worth the time and effort you invested.

In any case, though, it’s unlikely that you did exceptionally well (read: earned $5-10 million or more) in your venture, and you now want to get into IB – with that amount of money you would have to be crazy even to think about it.

Bankers know this as well: they’ll assume that you either “failed” or did “OK but not that well” if you started your own business and now you want to move into finance.

What You Have Going for You: Is That Midnight Oil Burning Yet?

In general, banking and even buy-side finance roles have little in common with entrepreneurship because they require completely different mindsets.

So you’ll have to overcome quite a few obstacles to make this transition – but let’s start on a positive note and point out what works in your favor with entrepreneurial experience:

• No one will doubt your ability to work long hours since you are on call 24/7 and constantly work as a business owner.
• Your communication skills are presumably above average since you had to use them to secure funding, win customers, and recruit team members.
• You’ll stand out because few people recruiting for IB will have had your exact experience.

Your #1 Challenge: Proving You’re Not a Failure

On the other hand, you have at least one giant challenge to overcome: proving you’re not a failure.

Bankers often look at former entrepreneurs and assume that “they failed” and need to get traditional jobs – so they can save up money and eventually return to new ventures.

To overcome this objection, you need to make three points in your story:

1. You started a company, but decided the work itself was not for you, and now you have moved on completely. The company did decently, and you left not because it “failed” but because of the work itself.
2. While running this business, you were exposed to finance in some way (fundraising, budgeting, forecasting, etc.) and liked that aspect more than operations, marketing, or product development.
3. And now you’ve demonstrated a clear commitment to get into the industry via off-cycle internships, pre-MBA opportunities, an MBA/MSF program, or some combination of those.

It is extremely difficult to make this transition without some additional experience or degree.

You might be able to pull it off if you had a corporate job for 1-2 years, started your own company, and then quit within 1-2 years, but I haven’t seen a firsthand example of someone doing that.

How to Spin Your Story Like a Pro

Normally you want to sound as accomplished as possible when telling your story, but it’s a bit different here: if you sound too successful, you’ll give the impression that you want to go back to a startup.

So you should focus on three points when you explain your transition:

• Point #1: Downplay Your Role and Contributions and Explain Why It Wasn’t for You
• Point #2: Use Your Startup Experience to Explain Your Shift into Finance
• Point #3: Explain Your Demonstrated Commitment to Finance

Point #1: Downplay Your Role and Contributions and Explain Why It Wasn’t for You

If you make it sound like you were part of a team, or at least that you were not the sole founder, your story will be more believable.

You’ll appear to have less of a “do or die” attitude toward entrepreneurship, meaning that you’re less likely to return to it in the future.

So it’s better to use language like “I had the opportunity to co-found a company with two classmates” or “I was part of the early team at Company X” rather than “I really wanted to start a company based on this idea I had…”

You could then say that you liked the company’s market and product and joined because of those reasons, but found that you weren’t a good fit because:

• It was difficult to gain specific skills because there was no structured learning environment – you had to do a lot of random things to find new customers and keep the business running.
• You had to cold call a ton of prospects to win sales – while you don’t mind some cold calling, you didn’t want to do it full-time.
• You didn’t have an edge because you weren’t a top engineer or highly connected investor/deal-maker, and startups heavily favor those types of people.
• You were not making an impact because the product was too early and you hadn’t found product-market fit yet; your skill set would have been more useful at a more mature firm.

You should pick points that are the opposite of what you get in banking.

For example, IB offers a highly structured learning environment and requires no cold calling from junior bankers (though you will have to do that in many entry-level PE ones).

Also, you don’t need an “edge” to succeed and make an impact as an analyst or associate – you just need drive, work ethic, and the ability to pick things up quickly. And you start seeing the results of your work within the first few months of the job (well, sometimes).

Point #2: Use Your Startup Experience to Explain Your Shift into Finance

Once you’ve explained why the startup world wasn’t for you, explain how the experience made you more interested in finance.

For example:

• You were involved in the fundraising process and liked pitching investors and answering their objections more than managing business operations.
• You were tasked with finance-related work, such as budgeting or creating forecasts, and found yourself more interested in that than in managing employees.
• You liked financial analysis, such as reviewing your company’s financials and making recommendations on future spending, more than interviewing users or researching new markets.

So you became interested in investment banking since it combines finance with the aspects you liked about the startup world, such as the fast pace, team environment, and client interactions.

Point #3: Explain Your Demonstrated Commitment to Finance

At this point, your story may sound logical but not credible: bankers will be skeptical of your intentions if you haven’t had relevant experience.

I have rarely seen someone make this transition without one or more of the following:

• A previous corporate job that was related to finance.
• An MBA or MSF degree.
• An internship, pre-MBA or otherwise, at a boutique bank or private equity firm.

You could point to self-study, but the examples above carry more weight because they require far more commitment from you.

The Result: Mark Zuckerberg Turned Gordon Gekko?

So if you put together all these pieces, you’ll end up with an outline like the following for your response to the “Walk me through your resume” question:

• The Beginning: Your undergraduate degree, what you did immediately after, and how you got involved with a startup.
• Finance “Spark”: While working on your startup, you realized it wasn’t quite for you because [Insert Reasons from Above] and that you were actually more interested in finance as you [Insert Reasons from Above].
• Growing Interest: So you became more interested in investment banking since you saw it as a way to combine finance with the skills you gained at the startup and in undergrad, and you completed an internship at [Finance Firm Name] to develop the required skills. You also decided to attend [MBA/MSF Program] based on feedback from recruiters and bankers that you would be seen as a “career changer” candidate.
• Your Future + Why You’re Here Today: So you’re here today because you want to make a long-term career in investment banking, and this firm is the best place to do that; you’re confident you can combine your background with the finance skills you’ve gained and advise companies in [Industry Name].

A good, executed example of this story might be:

• The Beginning: You’re originally from Chicago, but lived in Europe and the Middle East while growing up, and you attended high school in the UK and university in California at UC Berkeley. You were always interested in both finance and technology and took classes in both, and you had the opportunity to start an online marketing firm with two classmates after undergrad.
• Finance “Spark”: You were exposed to operations, management, and finance because you helped fundraise and create financial projections for the company, and you really enjoyed those tasks. While the startup was a great experience, you wanted more of a structured environment for learning the ropes, and you wanted to develop your financial skill set, so you decided to leave the company and pursue other opportunities.
• Growing Interest: You then interned at a local PE firm that was looking for people with experience in the online advertising industry; you liked working on deals, but you wanted to work on a greater variety of deals and advise companies’ management teams, which drew you to investment banking. You also decided to attend [Top MBA Program] to gain more of the skill set.
• Your Future + Why You’re Here Today: So you’re here today because you want to combine your startup, finance, and PE experience with the skills you gained at [MBA School Name] and work on more complex and varied transactions, ideally with Internet and technology companies.

Note the following points:

• He establishes his interest in finance early on so that his transition, later on, is not too much of a logical leap.
• He makes the process of starting a company seem like less of a 1-on-1 personal effort by saying “had the opportunity to” and pointing out the other two co-founders.
• He makes it clear that he left the company and is now pursuing only finance opportunities.
• The last part of the story references a specific industry, which is essential at the MBA level.

Networking: Dialing for Dollars Interviews

Once you have your pitch, you can start networking.

I don’t have much new to say, but a few additional points include:

• If your startup was venture-funded, go back to those VCs and get introductions to bankers from them. Even if your company failed or didn’t do so well, they should be willing to help as long as you had a decent relationship with them.
• Go back to candidates you recruited and even people you interviewed who might have connections to bankers, ask for referrals, and see what comes of it.
• Tap all your networks – undergrad, MSF, MBA, and anything else you have – and ask for referrals from professionals at the smaller firm(s) where you interned.

If you’re attending an MBA or MSF program, you need to start far in advance (~4-6 months) of the program’s start date to have a good shot at winning interviews via networking.

You obviously want to target smaller firms for your initial (pre-MBA) internship, but beyond that it makes sense to target firms only if you’re doing it based on industry focus (e.g., a biotech startup founder going to healthcare teams).

Your Resume / CV: Successful and Committed

Just like your pitch needs to show that you weren’t a “failure” and that you do have a demonstrated commitment to finance, your resume must do the same.

I recommend our MBA template because you’ll almost certainly need some additional degree to make this move.

Focus on anything finance-related from your startup experience, minimize the rest, and put an even greater emphasis on the internship(s) you completed afterward.

I see many bullets similar to the following on these resumes:

• Worked with team to conduct user surveys and determine most-requested features; prioritize implementation order and ensured timely completion
• Assisted CEO with fundraising deck and positioned company as leader in on-demand storage market for large enterprises

While these bullets aren’t terrible, the language sounds too product/marketing-focused and therefore less relevant to finance.

It’s better to emphasize the quantitative side and show how your work led to specific financial results:

• Projected costs and potential revenue from 5 most-requested features, and recommended one with potential one-year ROI of 2x and two-year ROI of 3x
• Researched top 10 venture capital funds and created customized fundraising presentations based on each fund’s portfolio companies and investment criteria; resulted in $2 million Series A round at $10 million valuation

Interviews: Objections, Please

As with all interviews, your success mostly comes down to your story.

But you can expect to be questioned on these additional points:

1. 1. How do we know you’re committed to banking for the long-term? Why not just start another company?

Answer: The fact that you’ve done it once makes you less likely to do it again because you know what it’s like and are 100% convinced it’s not for you. It would have been much easier to go back to another startup or take a normal job at a tech company; you’ve made a huge commitment by going down this path instead.

1. 1. So did your company fail? Why are you really here?

Answer: The company was not a blowout success, but it did decently, and it was still growing when you left. You left not because it failed or because you lost money, but because you realized the day-to-day work wasn’t for you and that finance was a better fit – for all the reasons you mentioned in your story.

1. 1. How do we know that you’re not still involved with your company on the side?

Answer: You’ve quit and no longer have any involvement. Plus, it would have been impossible for you to complete a finance internship and the MBA/MSF program and now recruit for banking if you were still spending time on it.

1. Why didn’t you start out in investment banking if you’re so interested in it now?

Answer: You considered it, but you received advice that it would be better to start a company earlier rather than later, and at that point you were not 100% set on which path you would follow. The startup experience confirmed that banking would be a better fit for you, but you couldn’t assess that upfront without firsthand experience in the field.

You will get technical questions, and case studies and modeling tests are increasingly likely, especially at smaller firms.

I don’t have much to say beyond “Take our courses” or “At the bare minimum, look at our free YouTube videos.”

Do These Strategies Work?

Yes – here are a few examples of anonymized, successful transitions from readers and coaching clients:

• Transition #1: He did a hardware-related startup right out of undergraduate with several friends, but realized it wasn’t for him within ~2 years, then won a part-time role at a boutique bank, and then won admission to a top MBA program and completed a pre-MBA internship at a PE firm before recruiting for and winning a banking role.
• Transition #2: She ran a real estate management company during university and for a few years after, but realized she wanted to apply those skills on a bigger scale and work on deals instead. So then she won a role as an investment analyst at a real estate development company and used that to recruit for and win a RE PE role.
• Transition #3: This person started out in product marketing and strategy consulting, left to acquire and turn around a failing business, and then won an operations/compliance role at a large bank. No, it’s not investment banking, but winning even a middle-office role without an MBA or other internship is impressive.

And Plan B Options…

So let’s say you go through all that effort but come up empty-handed because you couldn’t get the initial pre-MBA internship, you had bad luck, you didn’t have a good story, or you flubbed the technical questions.

What’s next?

Your top three options are probably:

• Venture Capital – Plenty of firms are looking for “Entrepreneurs in Residence,” and you might be able to leverage such a job to get into venture capital.
• Finance/Business Development at a Larger Company – With startup experience, you could target plenty of growth-stage firms that need expertise in these areas.
• M&A/Valuation at Big 4 or Independent Firms – These roles are often easier to get than traditional IB ones, and you can use them to move closer to your goal.

Are You a Failure?

If you’ve been able to start a business from scratch and make some amount of money with it, getting into investment banking should be easy, by comparison.

Most of it is about positioning yourself the right way, biting the bullet and completing another degree and gaining more work experience, and sheer persistence.

If you’re not willing to take those steps, then maybe it’s not for you.

But if you are, you can use the tips above to defy the odds and move from startup founder to financier.

For Further Reading

• No, You Can’t Have It All: Why Finance Does Not Guarantee You $10 Million and Your Own Beach in Thailand
• Should You Quit Recruiting or Working Full-Time and Start Your Own Company Instead?
• From $100K to $0 in 60 Seconds: How to Go from Investment Banking to Tech Startup
• Investment Banking to Sales at a Tech Start-Up: Do Deals and Make Bank Without Ever Staring at Excel Again?

The post How to Break into Investment Banking as a Former Entrepreneur appeared first on Mergers & Inquisitions.

But it might be something when it comes to exit opportunities as an Associate in investment banking.

Look at online discussions of this topic, and you’ll see words like “black hole” and “bottomless void” used to describe your options.

In reality, though, things are not even close to this abysmal.

There is a strong tendency for online discussions to veer into extremes: “X is impossible” or “Y never happens.”

But real life is more nuanced.

So even if you’re about to start work as a post-MBA IB Associate, you still have plenty of exit opportunities… IF you know how to find and exploit them:

Weren’t You in Banking for Life? How Did It Come to This?

Most interview guides, including our own, say that you need to show “commitment to a long-term career in banking” at the Associate level.

And that’s true… in interviews.

But bankers are not stupid: they know that despite what you say, there’s still a good chance that you’ll quit or get fired at some point.

Purely from anecdotes and personal observation, I would be shocked if more than 50% of Associates made VP, and I would also be shocked if more than 10% made MD.

So even if you want to stay in investment banking, you might end up needing an exit anyway.

Or, you might have planned for an exit all along: perhaps you wanted to do banking but you graduated into a horrible recession, or you changed your mind about your previous career too late.

Or maybe you wanted to move into buy-side roles all along, but you smartly focused on just investment banking at business school to maximize your chances of winning offers.

So if you’ve wanted to move into a different role for a while, or you’ve changed your mind more recently, what do you do next?

First Off: Don’t Believe It’s “Impossible”

The truth is, both Analysts and Associate – and even VPs, MDs, and so on – have access to the same exit opportunities: private equity, hedge funds, corporate finance/development, venture capital, and so on.

The main difference is that at the Associate level and beyond, you do not have access to a structured recruiting process for those opportunities.

So yes, you can still get into private equity… but don’t expect recruiters to line up and call you after your first 3 months on the job.

Perhaps you don’t believe me.

I anticipated your objection, so here’s how you can prove it to yourself: go to Blackstone’s website and filter for professionals who are in private equity.

By my count, there are currently 17 professionals with the title of “Principal” there. Of those 17:

• 9 appear to have followed the “investment banking analyst to private equity” track (53%).
• 2 appear to have started in consulting and then moved into PE (12%)
• 2 were investment banking associates who moved into PE (12%).
• 1 worked in the US Treasury Department (6%).
• 1 worked at a normal company, and then did consulting (6%).
• 1 worked in IB longer-term (10+ years) but it is not clear what his position was before moving over (6%).
• 1 appears to have worked in private equity from the start of his career (6%).

Note that this analysis is all based on real people using their real names, as opposed to anonymous discussions or comments.

Here’s the point: “career paths” are fluid, and you should be skeptical of anyone who says that Transition X or Move Y is “impossible.”

Even at one of the largest and most well-known private equity firms, nearly 50% of professionals at the Principal level did not follow the “IB Analyst to Private Equity” route.

Here’s the 8-step process you can follow to do the same:

Step 1: Figure Out What You Want to Do

Focus is essential in lateral interviews and MBA recruiting, and it’s also critical here.

You are not going to have much success if you attempt to recruit for credit hedge funds, mid-market private equity firms, and growth equity firms at the same time.

You won’t have the time, and your background or current group may pre-dispose you for certain opportunities.

You need to narrow the industry and sub-industry first, and then add geography to maximize your chances.

“Mid-market PE Firms with a Consumer Retail Focus Based on the East Coast of the US” is a good place to start, but narrowing the geography to “New York” or “Boston” is even better.

If you have no idea what you want to do, you need to start reaching out to alumni in different careers, setting up informational interviews, and narrowing your options.

Step 2: Position Yourself in the Right Group

At the Analyst level, this point matters less because the path is more structured and any good coverage or product group will get you interviews.

But at the MBA level and beyond, you need an industry or deal focus to have a good shot.

You should push for the group that aligns most readily with your goals:

• Credit-Focused Hedge Fund: You should be in the Leveraged Finance or Debt Capital Markets group, or an industry group that does a lot of debt deals.
• Corporate Finance at Disney: You should be in the TMT group.
• Middle-Market Private Equity Fund with Consumer Retail Focus: Be in the consumer retail or financial sponsors group.

Some of this also depends on your pre-MBA background: even if your banking group has nothing to do with your intended exit opp, you could spin your way into it if your pre-MBA work experience is relevant.

For example, if you worked for a healthcare company and then moved into consulting and then ended up in the business services group, you could still aim for healthcare-focused funds.

Positioning yourself in the right group largely depends on your networking and internship experience; if you’re not in the right place, you should become an internal-networking fiend until you can move over.

One last point: if you’re interested in moving to a big company and doing corporate finance/development there, you’re much better off at a bulge-bracket bank.

As previous interviewees have pointed out, most people outside finance have no idea what “elite boutiques” or “middle market banks” are.

Step 3: Make Your Move at the Right Time

Opinions vary on this one, but I think that earlier is better than later when it comes to quitting banking.

Of course, you also need deal and client experience to speak to, so you can’t join, leave, and move to something else in six months.

You probably need a minimum of one year of experience at the post-MBA level, and sometimes more like 2-3 years, to make this type of move.

This timing is especially the case if you did not do anything finance-related before your MBA. If you did, then you might be able to make the move earlier on.

These transitions are still possible at the VP level and up, but I don’t have as good a sense for the timing there.

This timeline means that you need to start preparing well in advance of your networking and interviews.

Yes, they will still give you case studies and stock pitches, though traditional “modeling tests” might be less frequent.

They will dig into your deal experience and focus heavily on the merits of each company as a potential investment.

Step 4: Target the Right Funds or Companies

In theory, you could end up at Blackstone or KKR or TPG after working as an Associate in investment banking for a few years… but it’s not terribly likely.

For buy-side roles such as private equity and hedge funds, you’re better off going smaller, and for corporate finance-type roles, you’re better off going bigger.

On the “normal company” side, bigger firms tend to hire more and recruit more actively, and $50 billion companies need corporate finance staff more than $50 million companies do.

But for PE and HF roles, you’ll be up against current and former IB Analysts, most of whom probably have better technical skills than you and a much better ability to turn copious amounts of Red Bull into all-nighters.

So I would suggest different filtering criteria:

• New Firms/Funds: Your chances are much better if you get in just as a new fund is being set up. This happens all the time as financiers leave their roles, start new firms, and hop around.
• Existing Firms That Are Currently Fundraising: In many, but not all, cases, a firm that’s currently raising a new fund is seeking to do larger deals, go after new industries, or do new transaction types. All of these require additional team members.
• Current/Former Clients: Go back and find deals that involved financial sponsors, and reach out to them. At the very least, they know you and it won’t be a “cold approach.”
• Industry Alignment: The same theme you’ve seen throughout this article.
• Current/Former Co-Workers: Many bankers get frustrated and think they can start their own investment firms; the more daring ones even go through with it. If you know anyone doing this (e.g., through a friend in another group), your chances of getting hired go up.

You can set Google News Alerts so you don’t have to scan for news of new firms and fundraising activity.

For example, if I search for “private equity fundraising” on Google Alerts, I get this article about Genstar and FFL Partners both closing funds recently.

You might be a bit late to the game here, but it would be worth reaching out to both these firms if you want to work in San Francisco and you have experience in tech, healthcare, or financial services.

You can skip headhunters because they are unlikely to be helpful at your level.

They want candidates who line up exactly with what firms are looking for, which means an Analyst from Barclays’ Energy Group who grew up in the UK, lived in the Middle East, and plays golf with under an 85 handicap.

Step 5: Reach Out to These Firms the Right Way

At this level, you should know how to use LinkedIn and email to contact people. If not, see our tutorials and templates.

You could use LinkedIn to look up a firm that’s currently fundraising, find professionals there, and then email them (or use LinkedIn if you can’t find their address) with something like:

SUBJECT: [Firm Name] – New Fundraising Inquiry

“Hi [Name],

I saw in the news recently that your firm, [Firm Name], is currently raising $XX in a new fund. I’m an Associate in the [Group Name] group at [Bank Name], and I’m very interested in private equity investment in this space.

I just wanted to know if you had 5 minutes to speak so I could introduce myself and learn more about your new fund.

Thanks,

[Your Name]”

Besides the usual email and LinkedIn tactics, a few other networking strategies are more plausible at this level:

• Conferences: You may not go to a ton of conferences as a younger Associate, but you will get pulled into them more and more as you move up. You could use these to meet people at normal companies in your industry, or to meet with buy-side firms who are attending the same conferences.
• Client Visits + Recruiting Trips: You often get pulled into due diligence meetings and “deal negotiation” meetings, especially when a deal is just starting or when it’s about to finish up. You could use any downtime to conduct in-person meetings with firms in the area; you probably won’t have time for more than coffee, but even that is more effective than 100% online outreach.

Step 6: Push for the Interview

There isn’t much to this: follow up… follow up… follow up… and then send a few more follow-up messages for good measure.

More importantly, you should prepare to answer objections, both voiced and unvoiced, about why you’re making this move.

So you need to figure out what you can offer beyond traditional IB Analyst candidates:

• Operational Expertise: Particularly if you’re aiming for growth equity or operationally focused PE funds, and particularly if it’s a “down market” with less deal-making, operational experience from your pre-MBA life can be huge.
• Industry Connections: These can be invaluable for sourcing new deals or even helping portfolio companies to find new suppliers, customers, etc. Again, your pre-MBA experience will determine this one.
• Project Management/”Execution” Experience: As an Associate/VP/Principal, you’ll be tasked with driving transactions to completion… and you do something similar in banking (though more at the VP level). Some firms might be willing to overlook less modeling experience if you are great at herding the cattle across the finish line.

Much of this comes down to the specific firm’s strategy: a distressed credit fund will have one set of concerns (“Do you have the technical chops to work here, even though you’re not an Analyst?”), but a corporate finance team at a Fortune 500 company will have a different set (“Can you fit in with our culture, even though we’re not all serial killers?”).

Step 7: Prepare for Associate/VP-Level Interviews

Interviews with private equity firms and hedge funds will focus heavily on your deal experience and investment ideas at this level, so you need to solid talking points for all of those.

We’ve covered stock pitches and private equity investment recommendations quite a bit, so you should review those articles and come up with 2-3 ideas if you’re going for roles that require them.

These don’t need to be 20-page documents, but you should be able to explain your thesis, the catalysts, the valuation, the risk factors, and how to mitigate risk.

For your deal experience, you should be prepared to explain the following points for each transaction:

• Rationale: Why was the deal happening?
• Buyer/Seller Background Information: What were their financial and market profiles?
• Your Contributions: What did you do to drive the deal forward, or to prevent it from happening (e.g., in a buy-side M&A deal)?
• Your Opinion as an Investor: If you were the buyer or the investor(s) in the deal, would you have done it? Why or why not? What would make you change your mind?

Interviews at normal companies will be more open-ended and highly dependent on the company in question, but you’ll still get similar questions for corporate development-type roles.

Your story is always important, and for these types of transitions it has to answer one specific question:

“If you’re so interested in being an investor in this sector, why didn’t you start earlier or join at the pre-MBA level?”

You could answer that question in a few ways:

• Prerequisites: You had been interested in becoming an investor after your pre-MBA experience in the industry, but you needed investment banking experience first to have a good shot.
• Late Bloomer: After your pre-MBA experience, you wanted to work in finance but you weren’t sure if it would be as an investor or adviser. After working on a number of deals, now, you’re confident you want to be an investor instead.
• Specific Deal: You could use the same story, but point to a particular deal that made you more interested in buy-side roles (i.e., if you were frustrated by the limitations of IB, such as not getting to work with companies over the long-term).

It’s extremely unlikely that you’ll move into a new role at the same level you’re at in banking.

Expect some type of “discount,” whether that means coming in as a Senior Associate rather than a VP, or coming in as a 1st or 2nd year Associate rather than a 3rd or 4th year one.

Step 8: Develop a “Plan B” In Case This Doesn’t Work Out

The easiest exit opportunity as an Associate is to join another bank or another group at the same bank.

You’re not switching industries if you do that, but if you want to leave because your group sucks or because your superiors are crazy, you might get some relief.

Beyond that, the corporate route tends to be the most common exit for IB Associates.

So if buy-side roles don’t quite work out after 6-12 months of effort, you could switch your focus to finance-related roles at companies in your industry instead.

Putting It All Together: How to Win Exit Opportunities as an IB Associate

So here’s an example of how you might put together all these steps to win a buy-side offer as a post-MBA Associate:

• Pre-MBA Background: You worked at Pfizer in a junior R&D role, and then switched to healthcare consulting at a Big 4 firm.
• MBA and Banking: You attended a top 10 school, did an internship at a bulge bracket, and joined their healthcare team. You did well and got a return offer.

The role started off well, but you realized that a lot of the work is extremely high-level, and you’re looking to do more hands-on operational work and work with companies over the long-term.

At the end of your first year, though, you don’t have enough solid deal experience to push for a move into private equity, so you wait until the end of your second year to start recruiting.

• End of Your Second Year (24 Months In): You begin reviewing your deal experience and models, and also preparing ideas for interesting sectors/companies to invest in.
• Networking: Around the same time, you begin reaching out to healthcare-focused PE funds and VC firms in your area. After a few months, you don’t get a great response from VCs because they want PhD’s, so you switch your focus to PE.
• Narrowing the Firms: You receive a news alert about one firm that just raised $1 billion. Even though it’s bigger than others on your list, you might get a better response rate from them because of this expansion. Also, this firm focuses on operational improvements, so it aligns with your background.
• Interviews: This firm proves responsive, so you come in with one public investment idea and two private ideas. You also have solid talking points on two M&A deals and one convertible deal you worked on.
• After the Interviews: After that, it could turn into an extended process… or you could get an answer very quickly. We’ll be generous here and assume the process takes 3 months from beginning to end, so you move into PE near the end of your third year.

It probably won’t happen exactly like that, but you might use a similar strategy to make this transition.

Exiting investment banking at the Associate level isn’t the easiest thing in the world, but it is possible with enough persistence.

So the next time someone says it’s “impossible,” be skeptical.

It might just be nothing.

Further Reading

You might be interested in:

• From Finance to Tech: How to Start a Company, Sell It, and Start an Even Better Company
• The Private Equity Associate: Pathway to Glory, or Glorified Monkey?
• From Finance to Product Management: How to Escape the Dungeon and Move into the Technology Industry

The post Exit Opportunities as a Post-MBA Investment Banking Associate: Impossible is Nothing? appeared first on Mergers & Inquisitions.