“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.

We kept getting messages from students and clients like the following:

“I’m currently working at a Big 4 firm and haven’t gotten many responses to my applications for traditional PE roles, but several value creation teams have invited me in for interviews.

Are these good opportunities? What should I expect? And are they worth doing over traditional PE deal-based roles?”

These are great questions, so I’ll cover them in this article, starting with what the team does:

What is “Private Equity Value Creation?”

Private Equity Value Creation Definition: The PE value creation team, also known as the operations, portfolio operations, or portfolio resources team, aims to make private equity firms’ portfolio companies more valuable by improving their revenue and profit margins.

If you Google this topic and look at the results, you’ll find articles and discussions about LBO models and points like the returns attribution analysis:

This type of “value creation” measures the returns sources in a buyout deal: Debt paydown vs. multiple expansion vs. EBITDA growth.

However, the “private equity value creation” team isn’t about spreadsheets but rather implementing changes that improve the company.

They aim to boost the company’s EBITDA not by making more aggressive assumptions in Excel but by taking real-life steps to increase revenue and cut expenses.

You can think of it like “Consulting, but with less ‘planning’ and more ‘doing.’”

The team structure varies widely, but upper-middle-market firms and mega-funds tend to have dedicated operations teams, while smaller firms combine their operations and deal teams.

Sometimes, it’s more like “in-house consulting” for portfolio companies with specific problems, and in other cases, the value creation team reviews every company and applies a specific set of steps to improve efficiency.

These value creation teams tend to hire two types of candidates: Seasoned executives for Partner-level roles and management consultants for junior-level positions (typically from the top firms of McKinsey, Bain, and BCG, known as “MBB”).

They may occasionally hire from corporate development and corporate strategy teams, but they would prefer to hire candidates in operational roles at their own portfolio companies.

For example, a VP of Business Development or Partnerships at a portfolio company might be a strong candidate for the value creation team at the PE owner.

What Does the Private Equity Value Creation Team Do in Real Life?

The work in these value creation roles spans a wide range, but it could include:

• Revenue Growth: Increase prices for unprofitable customers or fire them; implement up-sells or subscription plans to boost annualized recurring revenue; expand into new markets or geographies; monetize currently unused IP; tweak the sales and marketing strategies to win higher-ticket accounts.
• Margin Improvement: Outsource or automate more functions; cut unnecessary R&D spending; fire underperforming salespeople; reduce wasted marketing budgets; reduce the company’s rent by consolidating buildings/locations.
• People: Hire more experienced managers; improve the recruiting and onboarding processes.
• IT: Digitize old-school businesses that are still behind or improve the tech for more modern firms.

Management consultants recommend some of these; the operations team implements them.

The value creation team does not necessarily execute bolt-on acquisitions because the deal team is usually better equipped there (value creation will handle post-deal integration).

Also, the value creation team does not necessarily do much due diligence, even if it’s operational in nature.

This is more the responsibility of the deal team at many firms, but there is some variance based on how closely integrated the teams are.

The optimistic take on this work is that many companies are run inefficiently, and they benefit from these improvements.

The pessimistic take is that many PE firms use “value creation” as an excuse to underinvest and optimize the company for a short-term exit.

For example, many of the big tech private equity firms have been accused of doing this and creating worse long-term outcomes for companies they once owned.

Why is PE Value Creation Suddenly “Hot”?

Going back to the value creation definition above, two out of three returns sources in most deals – debt paydown and multiple expansion – will not work as well in the future.

When interest rates were at ~20% in 1980 and fell substantially over the next few decades, virtually all financial assets benefited: Corporate bonds, equities, and private equity.

Private equity firms didn’t have to do much to “buy low and sell high” because they could count on valuation multiples increasing over time.

The global demographic profile was also favorable, with the world population nearly doubling between 1980 and 2020, technology and outsourcing made many products cheaper, and inflation and energy prices were mostly low/stable (see more in this article).

However, we’re now in a completely different macro environment.

Many countries now have declining populations, inflation is higher and less stable, and interest rates are higher and unlikely to fall to 0% again – so PE firms cannot just bet on higher multiples for their portfolio companies.

Instead, they need to turn to EBITDA growth to earn high returns, which means using value creation teams to boost revenue and cut costs.

How to Recruit for Private Equity Value Creation Roles

Recruiting for the value creation teams happens on an “as needed” basis, so it’s much closer to the off-cycle private equity recruiting process.

These teams like to recruit consultants from the top firm (MBB), but as mentioned above, some people also get in from Big 4 consulting roles, corporate development/strategy, and operational roles at PE-owned portfolio companies.

These teams do not seem to recruit many people with a traditional investment banking background, presumably because bankers are clueless operationally.

You can contact the standard group of PE headhunters or even consulting or executive-level headhunters, but in most cases, it comes down to networking with the “Operating Partners” and other team members directly.

There are some industry conferences and events, such as the “Operating Group Partners Forum,” but these are more for senior-level hires.

Interviews are like management consulting interviews, with a mix of fit/behavioral questions, resume walkthroughs, and consulting-style case studies.

They’ll also create case studies on the spot where they give you basic information about Portfolio Company X and ask how you might improve it.

You can’t learn about each portfolio company before the interview, so the best method is to practice many cases across varied industries, focusing on growing revenue and improving margins.

Private Equity Value Creation Careers: Are You a “Second-Class Citizen?”

Each PE firm runs its operations team differently, but the short answer is:

• It is far from a “back or middle-office job,” as some people claim.
• However, it is still a rung or two below the deal team in terms of perception and compensation (see below).

The problem is that operational improvements can improve deals and boost returns, but they’re not necessarily required.

On the other hand, if a PE firm pays the wrong price or structures a deal incorrectly, it might fail regardless of any operational improvements.

Therefore, the deal team at the PE firm will always be viewed as “more important.”

Sometimes, the operations team is a bit of a ”whipping boy,” blamed when things go poorly but not given proper credit when they go well (similar to CFO roles).

All that said, joining as an Operating Partner after a previous executive career is a pretty good deal; you work normal hours, do interesting work, and can still earn a lot.

Joining as an Associate or something else midway up the ladder is a bit murkier.

First, depending on the firm, the promotion/advancement opportunities may not be clear.

There may not be a real path to the Operating Partner level unless you gain executive/operational experience at a normal company after working in the value creation team.

If you want to move up the ladder directly, you’ll have more luck joining a firm with “specialist” operational teams where a specific person handles a single task like supply-chain optimization.

The main advantages of a value creation career at the junior level are:

• You get better hours (50 – 60 per week) than in standard PE or consulting.
• You travel less than in consulting.
• You earn higher pay than in consulting and get to do more interesting work.

Private Equity Value Creation Salaries and Bonuses

You should expect a 10 – 20% discount on traditional private equity salaries and bonuses.

As of 2024, that means something like these numbers at a mid-sized fund:

• Associate: $200 – $300K depending on the firm size.
• Senior Associate: ~$400K.
• VP: ~$500K.
• Principal: ~$600K + $2 – 4M carried interest over fund life.
• Operating Partner: ~$1M + $4 – 6M carried interest over fund life.

Sources: The Heidrick Private Equity Compensation Report and The Operating Partner.

There are a few nuances here as well.

One point is that not all firms have strictly defined hierarchies for the value creation team, so these specific titles may not always be used.

Also, at some firms, the Operating Partners get carried interest in the entire fund-wide pool, while others grant it on a deal-by-deal basis, which could be good or bad.

Exit Opportunities from Private Equity Value Creation Roles

So, if you want to work on deals in private equity, can you start in the value creation team and move over?

Well… don’t get your hopes up.

In theory, it’s possible, but it’s not that likely unless you’ve had deal experience in a previous role, such as investment banking or corporate development.

It’s the classic chicken/egg problem: They want people with deal experience, but you must be in the team to get that experience.

The main promotion path in the value creation team is not always clear, so the path into other groups at the PE firm is even less clear.

The most likely exits are to operational roles at portfolio companies, management consulting, corporate strategy, or consulting at other firm types, such as the Big 4 (i.e., reverse the entry points into value creation).

All that said, the job can still be useful if you want to move into the PE investing team eventually, especially if you’re coming from a non-finance background.

It’s just that you’ll need to get deal execution experience first to maximize your chances.

Final Thoughts: Is Private Equity Value Creation Worth It?

Returning to the original question, private equity value creation roles can be good opportunities, but I wouldn’t recommend them over deal-based roles for most people.

It’s best to think of them as “upgraded consulting,” with higher pay, better hours, less travel, and more interesting work.

PE value creation is not “middle office” or “back office” work, but it’s also not exactly on par with the deal team, especially at the junior levels.

You must also be careful with the specific firm because there are huge variances in the work, pay, promotion, and hierarchy – far more so than in deal-based PE roles.

If your long-term goal is to get into traditional private equity and you get an interview with the value creation team, sure, take it.

But if you have other opportunities that would give you real deal experience, even if they’re not official IB / PE roles, I recommend them over value creation in most cases.

It’s sort of like venture capital careers: Nice for a short stint, but much better as a long-term job at the end of your working life rather than the beginning.

Resources to Learn More About Private Equity Value Creation

If you want to learn more, here are a few links:

• Value Add PE – Great case studies of how PE firms turned around portfolio companies, but most are paid.
• Private Equity Funcast Podcast – There are a few episodes on value creation; I didn’t find them terribly insightful, but you might learn something.
• The Operating Partner – Solid articles and interviews with people in the industry.
• From Consulting to Private Equity: How to Make the Leap

The post Private Equity Value Creation: Equally Viable Alternative to PE Deal Teams? appeared first on Mergers & Inquisitions.

Also, getting into a top MBA was so much of a hassle that few people wanted to apply for something else before the program began.

But then recruiting moved up, the MBA process became more structured, and now we have 4-year-olds aiming for “Target Kindergartens” so they can eventually get into investment banking ~15 years in the future.

Due to this “early prep” craze, pre-MBA programs of all types have become more popular.

Many incoming MBA students now wonder if they should complete them in addition to their normal internship(s).

I’ll answer these questions, but, as usual, we need to start with some descriptions:

What is a Pre-MBA Internship?

Pre-MBA Internship Definition: In a pre-MBA internship, an incoming MBA student works for a few weeks in a structured setting at a large company or in an unstructured setting at a smaller firm and uses the experience to boost their chances of winning formal summer internships the next year.

There are three main categories of pre-MBA programs, which the MIT page on the subject describes quite well:

1. Internships – These meet the definition above. They’re like traditional summer internships but often shorter and completed at smaller companies.
2. “Programs” – These are more like spring weeks in the U.K., where you attend a few days of events and workshops and get fast-tracked for first-round interviews if you do well enough.
3. Diversity, Equity & Inclusion (DEI) Events – These are like the “programs” above but provide underrepresented minorities (URM) with the chance to get fast-tracked for initial interviews. I do not want to wade into the DEI debate here, but these can be excellent for winning interviews if you legitimately qualify for them.

These pre-MBA programs are the most prominent in consulting, finance, and technology, which makes sense since most MBA students target these industries.

You can find companies that offer these pre-MBA internships on the websites of MIT and Wharton: Bain, BCG, McKinsey, LEK, Kearney, PwC, Deloitte, Amazon, and Google.

The deadlines vary, but most are in the April – May range, right before your pre-MBA summer.

Interestingly, there are not many investment banks on these lists.

Evercore has a “pre-MBA diversity program,” but GS, MS, and JPM only appear to offer “fellowships” or “early insight student programs” without specific details attached.

We’ll return to this point later, but in finance, it’s more common to do a pre-MBA internship at a small VC/PE firm or boutique bank rather than a bulge bracket bank.

These pre-MBA internships give you an advantage because MBA-level hiring is still based largely on work experience before your degree.

Yes, the top schools like to claim that you can use an MBA to “reinvent yourself,” but this is a bit of a stretch for many industries.

Management consulting firms like to hire candidates from diverse backgrounds, but for tech and finance roles, you have a big advantage with relevant work experience.

So, by completing a pre-MBA internship, you:

1. Potentially fast-track yourself for a real summer internship the next year if you’re doing this at a large company or via a diversity program.
2. Gain experience you can leverage when you apply to other firms (if you’re interning at a smaller firm).

Companies like pre-MBA internships because they get free or cheap labor from eager/motivated students, and they can hire back the ones who perform well.

Oh, and the DEI programs let these firms boost their diversity stats and appear more inclusive.

Do You “Need” a Pre-MBA Internship?

There’s no universal answer because the usefulness varies widely based on your previous career, diversity profile, post-MBA goals, and internship type (small vs. larger firm).

My general views are:

• If you are a URM, apply immediately for all the diversity programs you qualify for. These will give you a big advantage in virtually any field if you perform well.
• If you are making a “hard pivot” career change, such as engineering to investment banking, pre-MBA internships are very useful but not necessarily required.
• Pre-MBA programs at large companies tend to be more common and important in tech and consulting; internships at boutique firms (via networking) are more common in finance.
• Outside the diversity programs, the 3-day pre-MBA events are rarely worth it. It’s tough to spin a 3-day event as an “internship,” and you normally want something more substantial to list on your resume.
• Pre-MBA internships are arguably the most useful in eliminating certain careers from your list. There’s no better way to understand a job than to work in the field for 1-2 months!

Here are a few examples of when these internships are useful or not useful:

• Startup Engineer to Tech or TMT Investment Banking: A pre-MBA internship at a boutique VC/PE firm, bank, or search fund would be very useful here. You’d learn some required skills and get solid talking points for your “story.”
• Big 4 TAS to Investment Banking: It’s not worth it here because Transaction Services is closely related to IB and uses many of the same skills.
• Energy Consulting to Asset Management: Consulting is closer to finance than engineering, but a pre-MBA internship would still be useful because AM firms recruit relatively few MBAs and normally want people with finance experience.
• Healthcare Corporate Finance to Healthcare Investment Banking: If you worked as an FP&A Manager at Pfizer, for example, and now you’re targeting IB roles, a pre-MBA internship is probably not worth it. FP&A is a bit removed from IB, but it’s still a “finance role,” so you won’t necessarily get a huge story or skill-set benefit.

You should also keep in mind whether your desired move is plausible.

For example, if you have no finance experience, it is highly unlikely that you will get an offer at a multi-manager hedge fund or private equity mega-fund after the degree.

A pre-MBA internship won’t bridge the gap because you don’t have the full-time work experience or investment track record to be competitive for these roles.

However, you might be competitive for investment banking, asset management, or consulting roles, and a pre-MBA internship could help with those.

How Do You Apply for Pre-MBA Internships?

At the large firms, it’s easy: Go to your MBA program’s website, look up the opportunities, and submit your applications well before the deadlines – ideally, as soon as they open.

If you’re targeting an informal venture capital internship, private equity internship, or search fund internship, focus on smaller, local firms.

For private equity, anything with under $1 billion in AUM should be fine (i.e., below the normal “middle-market private equity” cut-off).

For VC, firms with under ~$200 million or less in their current fund are appropriate (if you can’t find this information, maybe target firms with under $500 million AUM total).

And for boutique banks, find firms that advise on deals worth less than $100 million.

You will have to complete extensive outreach to win offers at these firms, and you can use the cold-email templates on this site to get started.

To find these firms, you can start by searching on LinkedIn and other job boards; Google Maps is surprisingly useful in many regions as well.

Your pitch should be something like this:

• You’ve previously worked in Industry X and are an incoming MBA student at School Y who wants to transition into Industry Z.
• You’ve prepared independently, including studying the technical skills and building/researching [Models, stock pitches, sample portfolios, etc.], and you’re confident you can add value or save time for the team.
• You’re looking for a pre-MBA internship but can also work part-time in the first year of your program.

Timing is critical for these informal internships because you must start looking several months in advance.

For example, you should ideally start your search for summer 20X5 internships before the end of calendar year 20X4.

That means you need to win admission in Round 1 to have a good shot at these roles.

You can start later and still get an internship, but it will be more stressful, and your chances will be lower.

In interviews, be prepared for the usual range of technical and behavioral questions and even stock pitches, case studies, and modeling tests, depending on the firm type.

Yes, there’s a lot to worry about, but all these assessments will be required if you apply for official internships and full-time jobs in these fields.

It’s just that you’ll need to learn the skills more quickly in this case.

With case studies, stock pitches, and modeling tests, focus on breadth over depth.

For example, if you’re targeting PE internships, don’t spend 10 hours building a hyper-advanced LBO model with PIK Interest, bolt-on acquisitions, and a dividend recap.

Instead, pick a single company and give yourself 1-2 hours to assess it and build a simple model.

Since they could ask for almost anything in an interview, it’s best to practice simple models and pitches for a wide range of companies.

What Should You Expect If You Win a Pre-MBA Internship?

There’s not much to say about the 3-day internships; expect to shadow people, attend networking events, and… network.

With the longer-term internships, you’ll help the full-timers with industry research, sourcing deals/ideas, building pitch books, or evaluating due diligence.

Do NOT expect a lot of “real work” – they’ve hired you because they need help with repetitive, time-consuming tasks.

Your goal is to learn the job, see if it’s right for you, save them time, and pick up talking points you can use in your story later in the year.

Also, do not expect much of a salary – they might pay you a small stipend to cover expenses or a modest hourly amount, but it will be far lower than actual job earnings from post-MBA roles.

How Do You Leverage Pre-MBA Internships?

Pre-MBA internships are helpful mostly if you complete one and then stick to that industry, such as a PE/IB internship, followed by full-time recruiting for IB roles.

It won’t be especially helpful if you do a PE internship but then change your mind and interview for product manager roles at Big Tech firms.

Once you finish, you should immediately incorporate the internship into your story and ask the senior people at your firm for additional referrals.

The MBA-level recruiting process for investment banking at the top schools is very structured and consists of on-campus events followed by coffee chats with bankers, invite-only events, and real interviews.

A pre-MBA internship won’t guarantee that you pass all these steps, but it will be quite important in your story, and you’ll sound more convincing in these initial events.

So, Should You Do a Pre-MBA Internship?

I’d sum it up like this:

Advantages

• They can be great for narrowing down your post-MBA career options.
• They’re very helpful if you’re making a big career change and need more relevant resume experience (especially for tech and finance roles).
• If you are an underrepresented minority (URM), these opportunities can be game-changers, and you should apply for them ASAP.
• You don’t need great qualifications or experience to win informal pre-MBA internships; you can do it with enough networking hustle and your school’s brand name.

Disadvantages

• You could pigeonhole yourself because by completing a pre-MBA internship, you’re committing to one specific field – not great if you change your mind.
• There’s a huge variance in individual internships in terms of recruiting effort, pay, and on-the-job tasks.
• Most pre-MBA roles at small firms will not convert into formal summer internships or full-time offers.
• You could burn out if you go straight from your full-time job to this internship to the MBA program – which might hurt your recruiting chances.
• Networking for these roles may be difficult if you’re an international student or you’re changing locations to attend the MBA program.

I realize that previous coverage on this site has implied that pre-MBA internships are required or critical, but I don’t think that’s true.

It’s more accurate to say that they can be very helpful for certain candidates but are never required; most people who win IB summer offers don’t have this experience.

If you have questions about whether a pre-MBA internship is worthwhile for you, comment away.

The post The Full Guide to Pre-MBA Internships: Are They Worth It? appeared first on Mergers & Inquisitions.

Unfortunately, there’s a lot of “group think” here, driven by endless forum threads and student groups over-hyping and over-marketing the concept.

Banks are also to blame because they now market spring weeks to students as young as 16.

If you want to work in investment banking in London, these “spring weeks” (1-2-week mini-internships in your first or second year of university) are helpful but not necessarily required.

It is 100% possible to win internship offers without attending spring weeks, and they have some downsides that no one ever discusses.

But before exploring “the dark side” here, I’ll start with a quick summary:

Investment Banking Spring Weeks Defined

Investment Banking Spring Week Definition: In a “spring week,” students in their first or second year of university complete a 1-2-week internship at a bank, normally in London, which may position them to win an official summer internship the next year.

Spring weeks are mostly “a thing” in the U.K., but large banks in Asia-Pacific may also offer them.

They do not exist in the U.S., Canada, or Latin America, and in continental Europe, you normally go to London to complete the spring week.

The concept is simple: Apply to dozens of these “pre-internships,” win and complete a few, and walk away with a penultimate-year internship already set up.

Unfortunately, it’s not quite that simple – due to massive competition, a fairly involved recruiting process, and low conversion rates at many banks.

Summary of Spring Weeks: Advantages and Disadvantages

My summary would be:

• Spring weeks can be a good pathway into full IB summer internships because, depending on the bank, 20 – 40% of students might receive internship offers (and at a few firms, this is closer to an 80%+ rate).
• Applications for March/April spring weeks open far in advance (August – October), and it’s “first come, first serve,” so apply as early as possible for the best chance.
• Expectations for technical skills and work experience are lower, but the process is more random than normal internship recruiting and depends on fit, grades, and activities. Many spring weeks also have a heavy “diversity” component.
• The odds of winning an individual spring week are low because many banks receive 2,000 to 5,000 applications for 50 – 100 spots. Since it’s a numbers game, you normally apply to dozens of spring weeks.
• To convert your spring week into an internship, you will go through interviews or case studies on the last day; ~50% of interns will then be invited to an assessment center, and ~50% of those might win a summer internship for the next year (but, again, the odds vary, and more than 25% will win internship offers at some banks).
• The main downsides of spring weeks are 1) Completing one does not guarantee you an internship, so you still need to keep networking, gaining work experience, and preparing even if you have won multiple spring weeks; and 2) Some students spend so much time applying to and completing spring weeks that their grades and activities suffer.

Which Banks Offer Spring Weeks?

All the bulge bracket banks in the U.K. run them, but so do many elite boutiques (Lazard, Evercore, PJT, etc.), middle-market banks (Jefferies, Houlihan Lokey, etc.), and “in-between-a-banks” such as RBC and Wells Fargo.

Outside of IB, various asset managers, hedge funds, consulting firms, and trading firms also run some type of spring week program, but we’re focusing on banking here.

The most important point is that the acceptance and conversion rates vary wildly by firm.

For example, Citi is known for awarding internship offers to 80 – 90% of spring week participants in many years, but other banks are in a much lower range.

You need to factor this in when making decisions because even if one bank is “better” on paper, a 90% conversion rate trounces a 15% or 20% conversion rate.

How to Apply for Investment Banking Spring Weeks

You need to pay close attention to application open dates and apply ASAP, just as with real internships.

You can easily look up banks’ “spring week,” “spring insight,” or “discovery” programs (they’re all the same), but you can also use various online trackers to find the dates.

In fact, here’s an example of one such tracker with dates and information by bank.

Applications normally open between August and October, offers are usually sent in December – January, and you get the scheduling information in February.

The exact process varies by bank, but you can expect something like this:

• Online Application: This includes your academic and contact information, CV, cover letter (if required), and competency questions, which are written versions of the standard fit questions (expect 1 – 5 questions with answers of 150 – 300 words each).
• Numerical / Verbal / Logic Assessment: These tests are very similar to those given at or before assessment centers, and you can practice the same way (we recommend JobTestPrep).
• HireVue and/or Phone Interview: Expect mostly fit/behavioral questions and maybe a few simple technical/deal/market questions.

The biggest difference vs. the normal recruiting process in the U.K. is that you may not necessarily go through a full assessment center (AC) before the spring week.

Since ACs are expensive to administer, banks usually reserve them for candidates who have advanced further into the process.

Also, students applying to spring weeks are in their first and second years of university, so the group exercises often given in ACs may not be useful at this stage.

Who Wins Spring Week Offers?

The acceptance rates for most spring week programs are below 5%, so the short answer is “not that many students.”

If 3,000 students apply to Bank A, perhaps 100 – 200 will be selected for interviews, and 60 might get spring week offers.

Since students have almost no experience, the selection process comes down to:

• Do you go to a target school, or at least a decently well-known school?
• Do you have good grades, such as a 2:1 or above? What about your A-Levels, especially if you don’t yet have an academic record?
• Do you have interesting hobbies, activities, or student groups?
• Are you in one of our diversity categories (e.g., female, international, non-STEM/finance major, certain ethnicities, etc.)?
• Are you personable?

Usually, at least 50% of the students who win offers are from target or semi-target universities in the U.K. (e.g., Oxford, Cambridge, LSE, UCL, Warwick, and Imperial).

The remainder come from a mix of target and semi-target schools in continental Europe and lower-ranked schools in the U.K.

What Do You Do in a Spring Week?

You might wonder what you do at a bank if you only intern for 1 – 2 weeks, as most deals take months or years to execute.

Your tasks will include:

• Shadowing a few bankers.
• Attending workshops and training sessions.
• Practicing some of the work skills with non-client companies.
• And getting plenty of networking opportunities and attending social events.

You won’t be allowed to work on live deals for confidentiality reasons.

And if you’re in sales & trading, you won’t be allowed to trade or sell, just as you’re similarly restricted in S&T internships.

Therefore, most of your success depends on how well you network and how you perform in the final interview(s) or presentation.

How Do You Convert a Spring Week into a “Real” Internship?

This one varies by bank, but you’ll usually have to prove yourself with an end-of-week interview or case presentation.

If you do well enough, you’ll get invited to an assessment center, and if you perform well there, you’ll get a summer internship offer for the next year.

That’s a huge advantage because you won’t have to worry about applying or going through the entire recruitment process again.

The overall odds look like this:

• < 5%: Your chances of winning a spring week from a single application.
• ~50%: Your chances of doing well enough in the spring week to advance to the AC or other evaluation afterward.
• ~50%: Your chances of winning a real internship offer out of the AC.
• ~25%: Your overall chances of converting a single spring week into a summer internship, with huge variation by bank. The average range is probably more like 20 – 40%.

For tips on performing well at each stage, please see the articles on IB internships, internship preparation, S&T internships, and assessment centers.

The rates trading article has some tips for S&T assessment centers and interviews.

Bankers look for the same criteria as always: Reliability, decent industry knowledge, and evidence that you learned something during the week.

The main difference is that they can’t judge your “work product,” so networking and following up with everyone you meet are more important.

In other words, don’t just attend a social event and chat with people there.

When you meet someone, get their contact information and follow up with a quick call later if they seem receptive and helpful.

What If You Don’t Win a Summer Internship?

If you complete a spring week that does not convert, all you can do is apply for standard summer internships the next year.

Ideally, you’ll complete a finance internship before bank applications open in ~August and do the usual networking and interview prep.

If you have multiple spring weeks, your odds of winning at least one internship increase substantially.

However, if some of these spring weeks overlap, even by a few days, you can’t complete them all – so you’ll have to pick the firm(s) you’re most interested in.

If your SW does not convert, you’ll need a solid explanation before your next interviews.

You can refer to the article about what to do with no return offer from an internship, but I would recommend keeping your explanations short and sweet:

“I did well in the workshops and training but didn’t fit well with the team.”

“I liked the work but preferred a different industry or product group.”

“They were looking for people with a more extensive background in [X], so I wasn’t the best fit.”

OK, So What Are the Downsides of Investment Banking Spring Weeks?

Reading everything above, you might think:

“OK, so winning spring weeks is very difficult, and your chances of getting a full summer internship aren’t great, but so what?

It’s the same as normal IB summer internships at the large banks.”

There are a few problems, but I’ll start with the most obvious one: Some students spend excessive time on spring week preparation and applications when they could use their time and resources more effectively.

It’s like the downsides of studying for the CFA: The certification won’t hurt you, but it’s not necessarily worth the time and money required.

Also, completing a spring week mostly helps when applying to one specific bank for the same role.

For example, if you do an IB spring week at Bank of America but then decide to focus on corporate finance roles at Fortune 500 companies, this spring week will not help much vs. a 10-week summer internship.

Bankers in regions like the U.S. also have a low awareness of spring weeks, so if you decide to move or work elsewhere, the experience won’t help much.

Finally, completing a spring week does not guarantee an internship next year, so it may not reduce your workload.

In other words, if you win 2 spring weeks at different banks, you can’t just say, “OK, I’m done – time to relax and not worry about next year.”

You might not convert either one, so you need to continue preparing and networking, and you’ll need to gain some solid experience between now and internship applications.

By contrast, you could ignore spring weeks, do student activities and clubs, and network a bit to win a summer internship at a boutique PE/VC/other firm.

You would be under less pressure because there’s no expectation of return offers there, and you could still leverage the experience to apply to internships at large banks afterward.

Final Thoughts on IB Spring Weeks

The bottom line is that investment banking spring weeks were more useful a long time ago – before every finance/economics student in Europe became obsessed with them.

Due to over-saturation and obsessive-compulsive behavior, the odds have worsened, and the value proposition has fallen.

If you want to work in IB in London and you’re starting early – before you arrive on campus in a 3-year degree or in Year 1 of a 4-year course – yes, apply to spring weeks.

But also realize that:

1. A 2-week internship does not determine your entire life’s destiny.
2. There are other paths into banking (do 1-2 internships and a good activity, do off-cycle internships, pursue lateral hiring after graduation, etc.).
3. At most banks, most summer interns have not completed a spring week at the firm.

If you understand these points and avoid freaking out over your acceptance status at 50+ banks, your spring week experience might be almost as much fun as a spring break.

The post Investment Banking Spring Weeks: The Full Guide appeared first on Mergers & Inquisitions.

Some argue that GE offers the best of both worlds: the opportunity to fund innovation and growth – as in venture capital – plus the ability to limit downside risk and invest in proven companies – as in private equity.

Others would counter that growth equity’s rapid ascent was mostly due to the easy money that persisted between 2008 and 2021.

With interest rates at ~0%, funds inevitably flowed into anything with “growth” in the name – regardless of its real growth potential:

What is Growth Equity?

Growth Equity Definition: In traditional growth equity, firms invest minority stakes in companies with proven business models that need the capital to expand; some firms also use “growth buyout” strategies, which are like traditional leveraged buyouts but with higher growth potential.

Most of the confusion around “growth equity” comes from the fact that it includes two different strategies, and many top firms use both.

Here are the main differences:

1. Strategy #1: “Late-Stage Venture Capital” – This is what most people think of as “growth equity.” This style is about purchasing minority stakes in cash-flow-negative-but-high-growth companies that want to scale and eventually go public or sell (think: Uber or Airbnb before their IPOs). Valuations are high, the returns depend on future growth, and deals are for primary capital, i.e., new cash the business needs. There’s usually a long list of previous VC investors as well.
2. Strategy #2: “Growth Buyouts” – This strategy is more like traditional leveraged buyouts because the PE firm acquires a much higher percentage of the company (or even majority control). Most companies are already profitable, the potential returns are lower, and there’s usually a large secondary component (i.e., the Founders sell some shares to take money off the table, but “the company” doesn’t get any of that cash). Debt financing is much more common, and the GE firm is often the first institutional investor.

Over time, many traditional growth equity firms have shifted to the “growth buyout” category as their assets under management have grown.

Most of this guide deals with the “late-stage VC” strategy, as dozens of other articles cover private equity strategies such as leveraged buyouts and traditional private equity.

The Top Growth Equity Firms in Each Category

If you asked the average person to name the “top” growth equity firms, you’d probably get a list like the following:

But there’s a bit more subtlety because these firms operate in different categories:

1) Primarily Late-Stage VC Deals – Examples include a16z Growth, Battery, Bessemer, Sequoia Growth, and Technology Crossover Ventures (TCV).

Most of these firms started out doing early-stage VC deals and still invest across all company stages.

2) Primarily Growth Buyout Deals – Firms like Accel-KKR, Great Hill, Mainsail, PSG, Spectrum, and TA Associates go here.

Many of these firms use debt to fund deals, and they complete bolt-on acquisitions for portfolio companies.

3) Mix of Late-Stage VC and Growth Buyout Deals – General Atlantic, Insight, JMI, Stripes, and Summit are good examples.

4) Private Equity Mega-Funds with Growth Teams – TPG Growth is the most famous example, but you could also add the growth teams at Advent, Bain, Blackstone, Permira, Providence, and Warburg Pincus (note that these are not all “mega-funds” according to our definitions).

You could keep going and add plenty of names.

For example, Susquehanna Growth Equity is another great firm, but it doesn’t use the traditional LP/GP structure, so I’m not sure where it fits in.

Similarly, SoftBank has played a big role in growth equity (for better or worse…) but it’s the investing arm of a corporation, not a standalone PE/VC firm.

Many other well-known VCs have also raised growth equity funds, including Benchmark, Kleiner Perkins (KPCB), and NEA.

Why Did Growth Equity Get So Popular?

The main factors were:

1. The Rise of Tech and Software – Since so many growth equity deals involve technology, the sector’s rise over the past 10 – 20 years also drove a lot of growth equity investing.
2. Companies Began Staying Private for Longer – A long time ago, startups went public within a few years of raising VC funds (see Google, Cisco, etc.). In the 2010s, startups began to postpone their IPOs, but they still needed funding.
3. Tech Industry Maturation – As the technology industry matured, companies generated more predictable cash flow, but they still needed capital to scale.
4. Loose Monetary and Fiscal Policy – The quantitative easing (QE) and zero-interest-rate policies (ZIRP) that existed in most countries between 2008 and 2021 spurred a lot of “growth investing,” as established/sleepy firms like Fidelity suddenly became interested in riskier investments. Many hedge funds also joined the party.

From a career perspective, growth equity appealed to many bankers and consultants who didn’t want to be “pigeonholed” in venture capital (limited exit opportunities) or suffer through “banking hours” once again in private equity.

Growth equity offered a compromise: Modeling and deal work, networking, and shorter hours than most PE roles.

Growth Equity vs. Venture Capital vs. Private Equity

This section will focus on Strategy #1 (Late-Stage VC Investing) because Strategy #2 is nearly the same as what most middle-market private equity firms do, but with higher-growth companies.

Official descriptions usually cite the following points to explain how growth equity firms differ from VC and PE firms:

• They acquire minority stakes in companies (like VC and unlike PE).
• They invest in revenue-generating companies with proven business models (like PE and unlike early-stage VC).
• They aim for cash-on-cash multiples between 3x and 5x rather than the 5x, 10x, or 100x that VCs target and the 2x – 3x that many PE firms target. The targeted IRR might be in the 30 – 40% range.
• They earn returns primarily from growth via acquisitions and organic sources.
• They do not use debt since they only make minority-stake investments. However, they often invest using preferred stock with liquidation preferences attached to limit their downside risk (similar to VCs).
• The average deal size is bigger than early-stage VC but smaller than many PE deals; the $25 – $500 million range might be the norm for U.S.-based firms.
• The main risk factor in deals is executing the growth plan, not default risk due to debt (PE) or product/market risk (VC).

Growth equity firms could invest in any industry but tend to be skewed toward technology and TMT, with some exposure to consumer/retail, healthcare, and financial services.

The specific growth strategies used by portfolio companies could include almost anything, but a few common ones are:

• Paying for employees, buildings, and equipment to enter new geographies or markets.
• Developing new products or services.
• Scaling a company’s sales & marketing by hiring more sales reps.
• Completing bolt-on acquisitions that will boost the company’s revenue and cash flow.

On the Job: Growth Equity Careers

Unsurprisingly, growth equity careers are a mix of private equity careers and venture capital careers.

Let’s run down the average tasks an Analyst or Associate completes each day at a “Late-Stage VC” firm to demonstrate this:

• Sourcing: As in VC careers, there’s a lot of emphasis on “sourcing” or finding new companies to invest in (read: cold calling and emailing). Deals and business strategies are less complicated than in PE, so finding great companies is a competitive advantage.
• Financial Modeling: Like private equity, 3-statement models are common, as are valuations and DCF models, but LBO models are less common since not all deals use debt. Like venture capital, cap tables, liquidation preferences, and primary vs. secondary purchases come up frequently (plus, SaaS metrics, SaaS accounting, and so on).
• Portfolio Companies: You probably won’t interact with management teams quite as much because your firm won’t own controlling stakes in all its portfolio companies. You may still help with operational issues, but it’s harder to “force” companies to change in a specific way.
• Due Diligence: For similar reasons – minority stakes rather than control deals – you won’t devote quite as much time and effort to due diligence in deals.

If you do the math, you’ll see that something doesn’t add up because the modeling, deals, and due diligence are less intense than in PE, but you also work longer hours than in VC (50 – 60 hours per week up to 70 – 80 when a deal is closing).

What accounts for the difference?

At some firms, the answer is “a lot more sourcing.”

But at other firms, you might spend more time on market/industry research or get more involved with portfolio companies.

The overall career path, tiles, and promotion times are like the private equity career path, but compensation is usually lower (see below).

Growth Equity Recruiting: Who Gets In, and How Do They Do It?

The recruiting differences vs. other fields of finance are as follows:

1) Candidate Pool: Growth equity is open to a wider pool of candidates than PE roles, but not as many as VC roles. Many people still get in from investment banking and management consulting, but some also get in from VC and finance-related jobs at startups. Also, you can get in more easily from a middle-market or boutique bank.

That said, you are still highly unlikely to win growth equity offers from something like engineering at a tech company or brand advertising.

Even product management is questionable – it can work for VC roles, but probably not for GE since you need more technical skills.

Finally, you can get into GE directly out of undergrad, but it’s less common than in IB/PE, and it’s not necessarily recommended because many of these roles are “sourcing heavy.”

2) Process: At most firms, the process is closer to off-cycle private equity recruiting, where you must proactively network to find roles. The biggest GE firms and the PE mega-funds still use on-cycle recruiting, but

3) Technical Skills: People often claim that growth equity interviews are “less technical,” but this is not universally true. You could easily get asked to complete an LBO modeling test, a 3-statement model, or a DCF, and standard IB interview questions and VC interview questions could come up.

Obviously, you’ll need these technical skills if you join a team that does “growth buyout” deals.

But even if you apply to a late-stage VC team, they might still give you a modeling test to weed out candidates.

Growth Equity Interviews and Case Studies

The main question categories in interviews are:

• Fit/Background – Expect to walk through your resume, explain “why growth equity,” why this firm, your strengths and weaknesses, and so on.
• Technical Questions – Everything is fair game (see above).
• Deal/Client Experience – You should review your 2-3 best deals and say whether you would have done each one, with “growth” as the key criterion.
• Firm/Portfolio Knowledge – You need to know the firm’s investment thesis, strategies/verticals, and have a rough idea of its portfolio companies. To save time, focus on 1-2 specific companies and do enough research to discuss them in-depth.
• Industry/Market Discussions – Rather than trying to “learn” the entire SaaS, AI, or hardware market, focus on one specific vertical (e.g., the top 2-3 companies, your #1 investment pick, the growth drivers, the risk factors, and the overall outlook).
• Mock “Sourcing” Calls – The firm could also ask you to role-play a call with a prospective portfolio company by introducing yourself, asking key questions, and requesting a follow-up conversation.
• Case Studies – Most GE case studies are either 3-statement modeling variants or open-ended market-research case studies, but anything is fair game (paper LBO models, simplified or full LBO models, etc.).

An open-ended case study might give you a few pages of information on a company and ask you to draft an investment recommendation.

To do this, you will have to research the company’s market size, competitors, growth strategies, and strengths/weaknesses.

We don’t have a direct example here, but the VC case study on PitchBookGPT gives you a flavor of what to expect in a qualitative case.

For a modeling example, see our growth equity case study based on Procyon SA.

Compensation and Exits

These two points depend on whether you worked on growth buyouts or late-stage VC investments.

In growth buyout teams/firms, compensation at larger firms is generally a 15 – 20% discount to private equity compensation.

So, if an “average” PE Associate earns $300K – $350K in total compensation, the average range might be closer to $250K – $300K at a growth buyout firm.

However, note that the mega-funds might still pay about the same because they may align compensation across groups.

If you work for a smaller, late-stage VC fund, expect compensation closer to normal VC levels (maybe the $200K – $250K range, though it’s hard to find specific data here).

Fund sizes are smaller, portfolio company exits takes more time, and performance is less predictable, all of which account for the lower pay.

On the other hand, some firms pay “sourcing bonuses” if you contact enough companies, and they may offer co-investments in certain details, so there are ways to increase your pay as well.

As far as exit opportunities, you could move into standard private equity if you worked on growth buyouts, but this is much more challenging coming from a late-stage VC role.

Other opportunities include other GE firms, VC roles, startups/portfolio companies, or an MBA.

You wouldn’t be the best candidate for most hedge fund roles (traditional PE is better), but corporate development might be possible, especially if you had IB experience before entering growth equity.

Pros and Cons of Growth Equity and Final Thoughts

Summing up everything above, here’s how you can think about growth equity:

Pros

• It’s more accessible than traditional private equity roles.
• You potentially make a high impact from day one since much of the job involves finding new companies to invest in.
• You work with more “exciting” companies since your goal is to find and accelerate growth.
• Compensation is solid, especially in growth buyout teams, though it is usually a discount to traditional PE (albeit with better hours).
• There’s a good mix of exit opportunities spanning VC, PE, and operational roles.

Cons

• Some firms require extensive sourcing, including pressure to meet specific call targets, which many people do not like.
• You have limited control over portfolio companies due to the minority stakes, which means you can’t necessarily “change” specific things.
• It doesn’t necessarily offer a net advantage over joining a traditional VC or PE firm because each benefit has a drawback (e.g., shorter hours but lower compensation).
• Growth equity is highly cyclical – more so than early-stage VC or traditional PE – since late-stage funding tends to dry up quickly in down markets.

The last two points here are the most serious ones.

Even in a terrible market, plenty of early-stage VC deals still happen because people are always starting companies.

And while PE firms are less active in poor markets, they can still work on their portfolio companies, make add-on acquisitions, and pursue asset sales or divestitures.

By contrast, many growth equity firms get stuck in “no man’s land” because they write large checks but may not have majority control to implement big changes.

Growth buyout teams get around this issue if they do > 50% deals, but in many cases, you’d be better off going to a traditional PE firm first to gain a broader skill set.

If you like it, you can always shift to GE or VC afterward, as it’s much easier than the reverse move.

That said, growth equity can still be great for the right person – if you understand that combining two industries means you get the best and the worst of each one.

The post Growth Equity: The Child Prodigy of Private Equity and Venture Capital, or an Artifact of Easy Money? appeared first on Mergers & Inquisitions.

It’s one area where people on both sides tend to talk past each other:

• Bankers say that wealth management roles pay less, offer less interesting work, and lack good exit opportunities.
• Wealth managers say that investment banking requires crazy hours, has mostly dull work, and is ridiculously competitive to get into; also, the “compensation ceiling” may be similar in both fields, so why kill yourself in banking?

The truth is that both claims are correct but incomplete.

To illustrate the problem, I’ve created two “career ladders” for these fields:

Now let’s dig in:

Wealth Management vs. Investment Banking: Job Functions

Wealth managers advise individuals on their investments and may provide other services, such as tax and estate planning.

These individuals are usually “high net worth” (HNW), meaning an average of $5 – $10 in assets, but it could be as low as $1 million. And wealth managers at large banks may advise people with as little as a few hundred thousand to invest.

Some of these client differences relate to the distinction between private wealth management and private banking; for more on that, you should review the the private banking article.

By contrast, investment banking is more about advising companies on transactions such as M&A deals, equity and debt deals, and restructuring.

In wealth management, you advise the same clients over long periods, but in IB, you hop from deal to deal – though some groups do operate on more of a “client service” model.

When a deal becomes “active” in IB, you dive into it and go in-depth into all aspects, from the financials to the buyer/seller outreach to the presentations and more.

You can think of it like this:

• Wealth Management: Broad and long-term/continuous client coverage.
• Investment Banking: Deep and short-term coverage (just until the deal is done!).

There is some overlap because at the large banks, wealth management clients often get early/privileged access to investment banking products, such as upcoming IPOs, equity/debt offerings, or new investment products.

The Nature of the Work: Markets, Analysis, Sales, and Interpersonal Skills

Wealth management (WM) requires broader knowledge of the financial markets since you may have to advise clients on everything from their portfolio allocations to upcoming tax changes.

(Note that the scope is more limited in “pure” WM roles; you’ll do more non-portfolio work in private banking.)

Wealth management also requires more sales and interpersonal skills even at the entry level because it is a sales job from Day 1 – and you need to start bringing in clients early to succeed.

There’s much less technical work because your analysis tends to be very high-level. Think: benchmarking portfolios rather than modeling companies.

You will very rarely get exposed to the type of financial modeling that bankers complete: 3-statement models, DCF models, M&A models, LBO models, and so on.

Investment banking eventually turns into a sales job, but only when you reach the VP level or above (roughly 7-8 years into the IB career path).

At the Analyst level, it’s more about grinding away in Excel and PowerPoint.

As you move up in the early years and become an Associate and early VP, it turns into “project management” and making sure your team delivers.

Knowledge of the financial markets is helpful, but you don’t need it like wealth managers do because you just need to understand the deals you’re currently working on.

One final note is that in wealth management, there’s a split between relationship managers and investment professionals.

This split doesn’t exist in quite the same way in IB, so you can get a very different experience in WM depending on your role.

Recruiting in Wealth Management vs. Investment Banking

You should know all about IB recruiting from reading this site, but it’s insanely competitive and starts very early.

To get an IB internship that leads to a full-time return offer, you need to get “pre-internships” in Years 1 – 2 of university, prepare for recruiting by the middle of Year 2, and do a good amount of technical prep – while earning high grades and doing something to make yourself look interesting.

If you miss undergrad recruiting or change careers, you can also get into IB via lateral hiring or from a top MBA program, but these paths take more time (and money!), and your odds are not spectacular.

By contrast, wealth management is much less competitive to get into.

If you have good sales skills, you could break in with a middling GPA (3.0 – 3.5) and without a target school or great internships.

Like any sales job, they hire lots of candidates because it’s impossible to know in advance who will succeed.

The philosophy is to hire many candidates and let them “sink or swim.”

Interviews are broader than IB interviews and require knowledge of asset allocation, economics, and and financial markets, but far less specific technical knowledge.

For example, they might ask you how to use a DCF, what bond yields are, or the trade-offs of debt vs. equity – but but they won’t ask you to build a DCF model or calculate Unlevered Free Cash Flow.

As with the job itself, the theme is breadth over depth.

Wealth Management vs. Investment Banking: Careers and Promotions

At a high level, the IB and WM career paths seem similar: it might take 10 – 15 years to reach the top (Managing Director), and you start out doing analytical work but shift to sales as you advance.

However, the “sales shift” starts much earlier in wealth management, as it’s pretty much a sales job from Day 1 (with some analytical work mixed in).

The first few years are very tough because you start from nothing – but if you build a decent book, the job gets easier since you’ll have consistent revenue from long-term clients.

By contrast, the first few years in investment banking are tough in a different way: tons of work, crazy hours, and an unpredictable schedule.

You don’t need to be good at sales to make it to the VP level; you can grind your way up if you’re good enough at executing tasks and following instructions.

To advance and move beyond the VP level, you do need sales skills, which not everyone has – this is why the more analytical candidates often leave for private equity and hedge funds in the early years.

Investment banking careers are also less stable than wealth management ones, and mid-level bankers often get laid off because they’re expensive and do not yet directly generate revenue.

I would summarize the careers like this:

• IB: Tough-but-grindable early years; the mid-level roles become less stable and require more real-world skills to advance.
• WM: The early years are painful because you need real results to advance, but it gets easier as you move up and gain “sticky” long-term clients.

Wealth Management vs. Investment Banking: Compensation and Hours

Salaries and bonuses change each year and depend on the firm and group, but in both careers, you’ll start in the low-six-figure range (e.g., $100K to $200K) and advance from there.

Expect something on the lower end of that range for WM roles at large banks and something in the mid-to-upper-end (or above) for IB roles.

At the mid-levels, VPs and Directors in IB also earn significantly more than the equivalent positions in WM (it’s maybe a ~30 – 50% discount in WM).

At the top, MDs in wealth management can theoretically earn $1 million+ year, just as many investment banking MDs do.

However, it might be more realistic to expect “high-six-figure pay” if you make it to that level and have a good base of long-term clients.

There’s less money to go around because the fees are lower, as most groups charge 0.5% – 1.0% on assets under management (AUM).

Investment banks also charge fees in that percentage range, but they’re charged on deals worth hundreds of millions or billions of dollars.

Some wealth managers eventually amass $100+ million in assets under management, but it’s a very slow process, and there’s a limit to how much in AUM any one group can manage.

As a result, the dollar volume of fees ends up being higher for a similar headcount in investment banking.

Compensation is also more individualized in wealth management, especially as you advance – if your clients generate significant fees, you should still do well even if others in your group perform poorly.

This is not the case in IB until you reach a very senior level (for more on all these points, see the article on investment banker salaries).

Finally, the hours are significantly better in wealth management because you don’t do that much work outside of normal business hours.

So, you won’t pull all-nighters to finish pitch books, and you won’t be called in over the weekend to make last-minute changes to a model.

It’s usually a 50-hour-per-week job, which is significantly better than the 60, 70, or 80+ hours required in IB.

The Top Firms in Wealth Management vs. Investment Banking

Most people would say the top investment banks are the bulge brackets and elite boutiques, at least for entry-level roles.

They do larger, more complex deals and offer better experience, compensation, brand-name recognition, and exit opportunities.

Even as you advance, there isn’t necessarily a reason to leave one of these firms and move to a smaller one outside of very specific lifestyle/personal issues.

In wealth management, some people argue that it’s best to start at the bulge bracket banks for the brand name, compensation, and network…

…but they might also say that the better long-term roles in the industry are at the pure-play firms and boutiques, especially on the “private banking” side.

These firms tend to work with higher-end clients, and the work tends to be more varied and interesting, with less cold-calling and cold-emailing to chase leads.

I could not find data to confirm this one, but I would also assume that the compensation ceiling is higher at these firms because they do not necessarily use a standard fee schedule.

Wealth Management vs. Investment Banking: Exit Opportunities

There are some huge differences here, and it’s tough to argue with the quality of investment banking exit opportunities: private equity, hedge funds, corporate development, corporate finance, venture capital, startups, equity research, and more.

It offers the broadest set of possible exits within the finance industry if you leave early (in your Analyst years).

As you advance, your exit opportunities narrow because PE firms and hedge funds don’t want to pay for expensive VPs or Directors with no direct investing experience.

The corporate finance/development options and a few others remain, but you’re unlikely to exit into a PE mega-fund – or any sizable PE firm – as a seasoned VP in investment banking (for example).

The exit opportunities in wealth management are much more limited because it is an exit opportunity.

In other words, people don’t go into WM to leverage it into another job: They go in it to build up a client book and eventually earn a high income with a good lifestyle.

If you decide it’s not for you, you might be able to move into investor relations, fundraising, or sales jobs, but deal-based roles are highly unlikely.

Even hedge fund and asset management roles are unlikely unless you’ve had a lot of experience analyzing individual companies or doing very technical analysis.

You might have a shot at sales & trading if you’ve had experience with relevant products, such as FX hedges for international clients, but even that is a stretch.

Final Thoughts on Wealth Management vs. Investment Banking

The basic issue is that investment banking “wins” for entry and mid-level roles due to the higher optionality, higher pay, and the ability to grind your way up the ladder.

Yes, IB is far more difficult to get into, and the hours and lifestyle are much worse – so these points count against it.

But if you’re an ambitious student or you’re early in your career, you shouldn’t care too much about these issues.

At the top levels, WM and IB roles are arguably similar, and wealth management might even offer advantages in terms of reduced stress and shorter hours.

But it’s tough to get there, and the burnout/quit rate is very high.

In the past, many students used WM roles at large banks to get solid brand names on their resumes and become competitive for IB internships.

But I’m not sure how well this works anymore because of hyper-accelerated recruiting, at least in the U.S.

It would be smarter to get more relevant internships – anything involving deals, modeling, or individual investments – even if they’re at boutiques or other, smaller firms.

That said, I think the sheer hatred directed toward wealth management in some online forums is quite exaggerated.

From my perspective, yes, IB is “better” for most ambitious/analytical people, but not everyone has the same personality, skill set, or goals.

If you’re very sociable but not the most analytical person, wealth management could easily be a better option for you.

Similarly, if you do not want to work more than 50 hours per week, and you’re in it for the cushy lifestyle after 10+ years, wealth management could also be better.

But remember that it is a different career ladder – and you don’t want to change your mind and fall off when you’re midway up 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 Wealth Management vs. Investment Banking: Career Deathmatch appeared first on Mergers & Inquisitions.

The IB internship recruiting timeline is now so insane that even mainstream news sources like the Wall Street Journal are writing about it (“The Race Is On to Hire Interns for 2025. Really.”).

And yes, you read the news correctly: Banks like RBC, DB, Houlihan Lokey, Rothschild, and Guggenheim opened 2025 summer internship applications in calendar year 2023.

Admittedly, not all banks did this, and many bulge bracket firms will start in the normal time frame of January – March.

In practice, this means you must be on top of IB internship recruiting from Year 1 of university if you’re in the U.S.

I’ll cover the following points in this updated article:

How to Get an Investment Banking Internship: The “Ideal” Timeline in the U.S.

By the time internship applications open in Year 2 of university – whether that’s in the middle or beginning (!) of the year – you should have the following elements in place:

• A good GPA – at least 3.5 and ideally a bit higher.
• One (1) solid finance internship and one (1) student/leadership activity or two solid finance internships.
• A decent amount of networking completed with bankers (e.g., 30 – 40 coffee chats or informational interviews).
• And ~30 hours of interview prep, which you can stretch over 2-3 months or cram into a few weeks (your story, standard behavioral questions, technical questions, etc.).

To accomplish that, I recommend the following timeline:

How to Get an Investment Banking Internship, Step 1: Your First Year in University

You don’t necessarily need to pick your major at this stage, but I would recommend finance/accounting or something that will be useful for a wide range of jobs.

Think: Engineering, math, statistics, or something with elements of all these, such as “management science” or “operations research.”

Avoid options like sociology, art history, gender studies, etc., unless you’re at one of the top ~5 universities in the country (it’s easier to get away with irrelevant majors there).

Next, front-load your schedule with easier classes in your first year, such as language classes or university-wide prerequisites.

Earn a high GPA from these easy classes and save the hard, technical ones for later years.

Join 1-2 student groups that will help you network into finance roles, such as the student investment club or the business frat. You could also consider investing or case competitions.

Most importantly, you NEED to get a finance internship in your first year or in the summer after your first year.

In the past, you could wait until Year 2 for your first internship, but this is riskier today because applications keep opening earlier and earlier.

And yes, some banks will still start later, but you want to keep your options open so you can apply to as many firms as possible.

You probably won’t be able to get a “real” IB internship, but you can find some good alternatives:

• Search fund internships.
• Internships at local venture capital or private equity firms.
• Internships at regional boutique banks.
• Corporate finance roles at nearby companies.
• Wealth management.
• Corporate banking.
• Anything in real estate, such as brokerage, appraisal, or lease management.
• Big 4 or independent valuation firm internships.

There is no set process, so you’ll have to find people on LinkedIn, send them messages or emails, and repeat until you find something.

How to Get an Investment Banking Internship, Step 2: The Summer After Your First Year

Ideally, you’ll complete your first finance internship in this period (see above).

You should also start learning the technical side (accounting, valuation, and basic M&A and LBO concepts) and begin networking with alumni.

It might even be a good idea to start networking before the end of your first year so you have more time to follow up with alumni and set up calls.

This may sound unbelievable, but with recruiting moving up and start dates becoming more random, it is better to start too early than to wait too long.

If your internship has normal hours, you could target ~10 hours per week for networking + technical prep.

A good target might be to complete 20-30 coffee chats or informational interviews by the time your second year starts.

With the technical prep, the most important point is to learn by doing.

Yes, you can read guides, take courses, and watch YouTube videos, but you should also spend a few hours building simple DCF models or 3-statement models to learn the key concepts.

You will retain far more information if you practice with companies you’re interested in than if you passively consume content.

How to Get an Investment Banking Internship, Step 3: Your Second Year in University

This is where it becomes unpredictable because it depends on when banks open their applications, which seems to change each year.

Since you can’t know that beforehand, you should continue networking with alumni and preparing for interviews as your second year begins.

Weekend trips to places like New York or London can certainly help, but you don’t necessarily “need” them if you’ve been able to speak with many alumni already.

You’ll also have to consider your internship plans for the upcoming summer (after your second year) since they will appear on your resume/CV and in interviews.

I would refer to the “pre-internship” list above and focus on the area you’re most interested in.

If you don’t already have a “brand name” on your resume, aim for an internship at a large, brand-name company; if you do have that brand name already, aim for a highly relevant internship, such as one where you work on deals and value companies.

At some point in your second year, applications will open, and the recruiting process will begin – at least if you’re at a target school.

All you can do here is pay close attention to news alerts and job postings and be ready to pounce the moment applications open.

Some people recommend resources like The Pulse, the Adventis newsletter, etc., but I can’t personally speak to how useful or accurate they are for tracking the dates.

If you do well in HireVues and investment banking interviews, you might have something lined up by the middle to end of your second year.

How to Get an Investment Banking Internship, Step 4: The Summer After Your Second Year

You complete your second finance-related internship here.

Also, not all banks finish their summer internship recruiting by this stage, so if you haven’t yet found something, you might still have a shot.

Smaller firms tend to be a bit slower, so you could find some middle-market and boutique openings, even if the bigger banks are done.

Therefore, you can keep applying and networking – but your chances decrease the longer it takes.

How to Get an Investment Banking Internship, Step 5: Your Third Year in University

Some banks will continue recruiting even into your third year, so you might still be able to interview around.

But if you do not win an internship within the first few months, chances are that you won’t be in IB at a large bank for the summer before your final year of university.

What If You Start Late or Miss Application Deadlines?

The best “Plan B” options depend on how far off you are.

If you can plausibly get finance internships in a related area, such as corporate banking or corporate finance, you could potentially aim for a full-time return offer in one of those fields, work for a year, and then go for lateral roles in IB.

Similarly, if you can win an offer at a boutique bank or another smaller firm, you could take a similar approach and work there for a year and then go for lateral roles at larger firms.

But if the best you can do is something like wealth management, it will be much harder to make this move (you want something with more financial or deal analysis – for more, see our article on wealth management vs. investment banking).

You could also think about fields like equity research that are less structured and that might allow you to get in without a previous internship.

On the other hand, if you missed the deadlines because you were on a totally different path – such as engineering, marketing, or pre-med – you will probably need to pivot more aggressively with something like a Master’s in Finance degree.

You could also work for a few years and go the MBA route, but I do not recommend that for your immediate “Plan B” because it’s slower and more expensive.

How to Get an Investment Banking Internship at the MBA Level

At the MBA level, the timing is less frantic because banks cannot recruit until students arrive on campus.

You should still expect a quick start to recruiting and on-campus events once classes begin, but that has always been the case at this level.

We have an article on the MBA investment banking recruiting process, so please refer to that for more details.

In short, you still need to prepare for interviews and do some early networking, but the entire process is very structured at the top programs.

So, your candidacy is more about presentation, consistency, and ensuring you have a good enough background to be competitive.

How the Recruiting Timeline Differs in Other Regions

In places like London and Hong Kong, the process has moved up to earlier start dates, but it’s not as ridiculous as in the U.S.

So, you can afford to take your time a bit more and get internships in Year 2 (assuming it’s a 4-year degree – if it’s a 3-year degree, you need to move more quickly).

Applications usually open ~10-12 months before summer internships begin, so it’s less accelerated than the U.S. timing.

The Big 5 banks in Canada seem to be starting recruiting season earlier as well, but they’re more in-line with the start dates of the U.S. bulge brackets (well, except for RBC).

One difference is that there are more avenues into IB internships in regions like the U.K., such as investment banking spring weeks.

How to Get an Investment Banking Internship: What to AVOID

If you attend a good university, earn good grades, get 1-2 decent internships, and network/prepare in advance, you’ll probably be able to win an IB internship.

But you could also make plenty of mistakes that reduce your chances, so here’s what you should avoid:

First, it’s risky to transfer to a better university – even if you’re moving from an unknown state school to the Ivy League.

This strategy made sense for students at non-target schools a long time ago, but the new recruiting timeline makes it difficult to execute – as you won’t have much time to network with alumni or join student groups.

Second, do NOT take difficult classes in your first year. You cannot afford a lower GPA because banks use grades to weed out candidates.

Third, do not wait too long to start networking. If you wait until the middle of your second year, it might be too late!

Finally, do not focus on activities at the expense of internships. Yes, leadership experience is nice, and clubs can be useful for networking, but you will not make it far without internships.

Additional Reading About Internships

I’ve written a lot about IB internships over the years.

Here are the most relevant articles:

• How to Write a Finance Internship Resume with No Work Experience
• How to Cold Email for an Internship: Investment Banking Cold Email Templates and Guide
• No Investment Banking Summer Internship Offers: What to Do
• The Off-Cycle Investment Banking Internship: The Best Side Door into the Industry?
• How to Prepare for Your Investment Banking Summer Internship in Less Than 8 Hours (Excel, PowerPoint, industry knowledge, and networking)
• Investment Banking Internships: The Ultimate Guide (tips for the job and receiving return offers)
• How to Decide on Investment Banking Summer Internship Offers: Who Has a 97.5% Full-Time Offer Conversion Rate?

Finally, if you want to speed up your preparation process so that you can succeed in this hyper-accelerated recruiting timeline, our friends at Wall Street Mastermind might be able to help you out.

They can coach you through the process I laid out above step-by-step and remove the trial and error you would have to go through on your own otherwise.

Their team of coaches also 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 Get an Investment Banking Internship appeared first on Mergers & Inquisitions.

I first criticized the CFA in a 2009 article, which generated a lot of angry comments.

Not much has changed since then.

People online still argue about the merits of the CFA, whether they “need it” to win various roles, and its usefulness compared with an MBA, high grades, additional internships, or becoming a Twitch gaming superstar.

I got so tired of these debates that I never planned to cover this topic again.

But earlier in 2023, the CFA Institute announced the biggest changes to the program since it started.

The website 300 Hours has a detailed analysis, but here’s my quick summary:

• Expanded Eligibility: You can now register if you have 2 years remaining in university (rather than 1 year previously).
• Financial Modeling or Python / Data Science / AI: Starting in 2024, you must complete a “Practical Skill Module” on one of these topics for Levels I and II of the exam.
• Reduced Study Volume: They’re reducing the amount of material, so you “only” study for 300 hours per level. And they’re moving to shorter online Learning Modules with spreadsheets and videos rather than lengthy readings.
• Specialized Pathways: For the Level III exam, you can focus on portfolio management, private wealth, or private markets.

On the surface, these changes address some big problems with the CFA:

1. The lack of relevance to many finance careers and the limited practical skills tested.
2. The huge time commitment required to pass the exams.
3. The timing – The CFA is not very helpful in your last year of university due to the IB recruiting timeline.

So, should you make the CFA part of your recruiting strategy?

The TL;DR About the CFA for Investment Banking

I’ll go into “consultant mode” so I can sum up the traditional problem with the CFA via a 2×2 matrix:

The additions of financial modeling, Python, or data science/AI and the reduction in study materials shift it in a more positive direction:

But it’s an incremental shift because you’re still looking at 300 hours just for Level I.

Your time is still better spent on everything else in the “High Potential Benefit” column.

A total study time of 300-400 hours is approximately 10-15 hours per week for 6 months.

In that same time, you could:

1. Contact 100 bankers and conduct informational interviews with at least 10-15 of them.
2. Complete an Excel or financial modeling course or the most relevant parts of one (see our 10- and 20-hour study plans). Don’t spend 100+ hours on this, but 10-20 is fine, especially since you’ll learn technical questions simultaneously.
3. Significantly improve your resume through several drafts.
4. Complete a part-time internship at a local private equity firm, venture capital firm, or search fund.

Even with the announced changes, the CFA is still not more useful than everything above.

These points go back to the flawed concept of “investment banking certifications.”

In this field, certifications barely matter vs. work experience, academics, interview preparation, and networking.

Certifications exist mostly because they’re easy to sell, and the benefits take a long time to measure – so they often go unmeasured.

The CFA for Investment Banking: Counterarguments

Whenever I point out these issues, people who just studied for hundreds of hours tend to respond violently.

I’ll address here the most common objections and acknowledge the ones that have some validity:

“But I’m a career changer! I can’t do another degree or an MBA, so I need the CFA to get in.”

Please read the articles on lateral hiring and MBA-level recruiting.

If you’re unwilling to do an MBA, you do not have many paths into investment banking past a certain age.

The key problem is that unlike an MBA or even a Master’s degree, the CFA does not give you direct access to recruiters and on-campus recruiting.

In this case, you should focus on finding related jobs in adjacent, less competitive industries (see the lateral hiring article).

“I’m a liberal arts major, so I need the CFA to demonstrate my interest in finance.”

No. You need early finance internships in university to put yourself in the running for an internship at a large bank later, as the recruiting timeline starts ridiculously early.

If you’re starting early, it would be far more useful to take an accounting or finance class, do some self-study, and leverage these skills to win internships.

We even have a finance internship resume template if you have no real work experience.

“The CFA goes far beyond the skills required in investment banking.”

I agree. The CFA covers plenty of material that goes beyond the job of an IB Analyst or Associate… which is exactly why you don’t need it.

For example, they won’t ask about quantitative methods, derivatives, or portfolio management in a standard investment banking interview.

You need to know a wide range of technical and “fit” topics for IB interviews, so don’t bother with material that will not come up.

“But the CFA is useful in my country or region, and many bankers have it.”

This is a fair point.

Especially in many emerging markets, certifications like the CFA or CA (Chartered Accountant) can be more valuable.

In countries like India and South Africa, the CA can even be a pathway into IB roles (but note that this is the “CA,” not the “CFA”).

So, if you’re in a country where the CFA is highly valued, and many bankers have it, passing Level I at some point may make sense.

“I need the CFA to exit the back office.”

Nice idea, but this plan is unlikely to work. See our article on the front vs. middle vs. back office.

In this case, it’s best to use lateral hiring to move into more relevant jobs over time; you could also focus on S&T or markets-facing jobs for a higher chance of making the change.

And if you can afford it, a top MBA or Master’s in Finance would help you more than the CFA.

“I have a low GPA or attend a non-target school. The CFA will help me stand out.”

The CFA might provide a boost, but not enough to erase a 2.5 GPA (for example).

If you’re at a non-target school, the most important point is to start very early – and the CFA won’t help you overcome a late start.

Even with the new eligibility rules, you still can’t complete Level I until you have two years of undergrad left.

But IB recruiting for Year 3 internships takes place in Year 2 (at least at many banks in the U.S.), so this point is irrelevant for students.

If you really want to cite the CFA, you can always write that you’re “studying for it” and plan to take it on a certain date (and if you don’t pass, remove it).

“But I’ve already networked a lot, have good work experience, and am well-prepared for interviews. I don’t want to spend those 300 hours networking, so the CFA is a better option.”

If you’ve already done everything required to win IB interviews and job offers, I agree there are diminishing returns to networking and interview prep past a certain point.

But do you need the CFA if you’re in this position?

You’d be better off learning a new skill, joining a new activity, or doing anything more interesting than studying for another exam.

When is the CFA Useful?

I am trying to be fair and balanced, so here are the best use cases for the CFA:

1) Roles in Portfolio Management (and Some Equity Research and Hedge Fund Jobs)

There’s no question that it matters in many industries outside of IB, such as portfolio management.

If you go into this field, you’ll probably complete several levels of the CFA at some point.

Some equity research teams and hedge funds will also be impressed if you’ve passed it while working long hours.

But I still wouldn’t recommend it as your #1 priority for winning these roles – the quality of your stock pitches and your ability to discuss investment ideas matter much more.

2) Emerging Markets or Regions That Greatly Value It

It can be difficult to judge work experience in emerging markets, and the CFA offers a standardized way to assess skills, which is useful.

But this one depends heavily on where you’ll work and its importance there.

Also, in many smaller/emerging markets, having good work experience in a financial center like London or New York can be enough to get you a job.

3) You Want to Make a Big Career Change Without an MBA

There are some situations where the CFA, or at least studying for the CFA, might make sense.

For example, if you’ve worked in corporate law for several years and cannot quit to complete an MBA, the CFA could be a helpful signaling tool.

But I don’t think this strategy would work in most fields; it must be something related to IB but lacking technical skills.

4) You’ve Already Done Everything Else, You Have a Good Job, and Your Firm is Paying for It

Finally, if you’re already in the finance industry, you’re not changing careers, and you’re at a firm that pays for the exam prep and gives you time to study, sure, go ahead.

Passing the CFA will never hurt you.

It’s just that it might not help you all that much for the time and effort invested in it.

The Bottom Line on the CFA for Investment Banking and Other Finance Roles

The 2023 changes from the CFA Institute do make the exam more appealing and relevant for many roles.

Studying for it is easier, the “Learning Modules” are much better than long readings, and the expanded eligibility and specialized paths are nice.

However, these changes don’t solve the fundamental problem: If your goal is getting into investment banking, you could spend these 300+ hours on more useful tasks.

This applies to students and professionals at all levels, but the Return on Time Invested (ROTI) is particularly bad for university students.

If you missed IB internship recruiting, please do not think studying for the CFA will save you.

You need to get work experience ASAP, and if you’re too late for IB roles, you should focus on areas like corporate banking, corporate finance, Big 4 firms, and business valuation firms.

In fields outside IB/PE, the CFA ranges from “potentially useful” to “near requirement,” so it’s impossible to make a universal statement about its relevancy.

If you’re interested in a career where it’s important, sure, go ahead.

Within deal-based roles, the CFA has its uses for certain candidates and in certain regions – but it still wouldn’t make my “Top 5 Things to Do to Get into Investment Banking” list.

The post The CFA for Investment Banking: Do the New Changes Make It Worthwhile? appeared first on Mergers & Inquisitions.

Most articles are copied/pasted/tweaked text, others appear to be written by ChatGPT, and others repeat generic questions you might get in an interview for a janitorial position.

But there is a decent reason for all this: It’s much harder to write an article about VC interview questions since they are far less standardized than IB interview questions or PE interviews.

That said, it is still possible to explain the most important topics and give a few preparation tips, so let’s get started:

The Biggest Differences with Venture Capital Interview Questions

I’d summarize them as follows:

1. Less Technical and More Research – They’re not going to quiz you on merger models or how to calculate the IRR quickly, but they will expect that you’ve read about their firm and their portfolio companies and that you have investment ideas.
2. No Right or Wrong Answers – Some technical questions have correct answers, but many market and investment ones do not. There are better and worse explanations for your answers, but in the absence of time travel, VC interviewers can’t determine if your startup investment pitch was “correct.”

In some ways, prep for VC interviews is easier because you don’t have to learn or memorize many technical topics, but in some ways, it’s harder since you have to do lots of firm-specific research.

Categories of Venture Capital Interview Questions

I would split VC interview questions into 6 main categories. We’ll explain each one and give a few examples along with model answers:

1. “Fit” and Background Questions – Your resume, why venture capital, why this firm, your strengths and weaknesses, etc.
2. Market and Investment Questions – Which startup would you invest in? Which market is attractive? Which markets should we avoid?
3. Firm-Specific and Process Questions – What do you think about our portfolio? Which companies would you have invested in or not invested in? How would you analyze a potential investment and make a decision?
4. Deal, Client, and Fundraising Experience Questions – How did you add value to the deals you’ve worked on? If you worked at a startup, how did you win more customers or partners in a sales or business development role?
5. Technical Questions – You could get standard questions about accounting and valuation or VC-specific questions about cap tables, key metrics in your industry, or how to value startups.
6. Case Studies and Modeling Tests – These are less likely, but you could get a short investment recommendation, a market/company analysis, or a cap table exercise.

Venture Capital Interview Questions: Fit / Background

Q: Walk me through your resume.

A: See our guide and examples for the “Walk me through your resume” question and the article on how to walk through your resume in buy-side interviews.

The main difference for VC is that you want to emphasize your desire to advise and invest in startups in the long term.

For example, you could say that you liked the client and relationship aspects of IB but are less interested in the technical work, and you would make a bigger impact working with early-stage companies.

Q: Why venture capital?

A: Because you are passionate about working with startups, helping them grow, and finding promising new companies – and you prefer that to starting your own company or executing deals.

You can also link this back to tech or healthcare companies you’ve advised or earlier-stage businesses where your work made a difference.

Q: Where do you see yourself in 5 or 10 years?

A: The answer depends on whether you’re interviewing for a Partner-track position, which usually means “post-MBA role.”

If you are, the only correct answer is, “I want to continue in venture capital, advance, and make a long-term career of it.”

If not, you can say that you want to work with startups in the long term, but you understand that candidates normally move into something else after a few years.

So, you could mention a related job, such as strategy, finance, or business development at a portfolio company, and say that you want to return to VC at a higher level eventually.

Q: What are your strengths and weaknesses?

A: See our walk-through, guide, and examples. For VC, your strengths should include points like “communication/presentation skills,” “networking ability,” and “being able to update your views quickly” (i.e., strong opinions, loosely held).

For weaknesses, it might be acceptable to say that you don’t have the best technical skills or sometimes have trouble balancing important, long-term tasks with short-term, urgent ones.

It’s probably not a great idea to say that you second-guess yourself or take too long to make decisions because these are both bad weaknesses for investing roles.

Q: Why not private equity, growth equity, hedge funds, or entrepreneurship?

A: You’re most interested in tech or life science startups, and PE funds and hedge funds do not work with these companies in the same way, as they don’t directly fund their development activities.

Growth equity is a bit closer, but you’re more interested in early-stage companies that need VC support rather than already successful companies that need more capital.

Finally, you’re not interested in starting your own company because you like to advise portfolio companies and get a broad view of the industry rather than working on one idea for years or decades.

Q: Why our firm?

A: This one should relate directly to your research on the firm, including their target markets and portfolio companies. Example answer:

“I’m interested in your firm because you focus heavily on tech-enabled healthcare, which matches my biology and computer science background, and you have some of the best portfolio companies in the market, like [Insert Names]. I have also liked everyone I’ve met here, such as [Insert Names], and think I would fit in with your culture.”

Venture Capital Interview Questions: Markets and Investments

These questions span a wide range, as they could ask you to discuss everything from the current M&A and IPO markets to specific startup sectors you like.

There is no real “answer” to the preparation other than “Read a lot about markets and specific startups each week.”

Q: Tell me about the current IPO, M&A, and VC funding markets.

A: This one will change over time, but if you’re interviewing in 2023, you could say something like:

“Currently, all these markets are doing poorly after many companies went public over the past few years due to loose monetary conditions – and then failed to perform well. So, the IPO market has largely been closed, but there are some signs that it’s now opening up with recent deals like ARM and Instacart.

M&A activity is also down significantly, and higher interest rates, inflation, and more antitrust enforcement are making many companies think twice about acquisitions.

Finally, VC funding is also down significantly, and fewer startups are getting funded – and when they do get funded, it’s typically at much lower valuations than in the boom years, especially for late-stage deals.”

Q: Which current startup would you invest in? Why?

A: As with hedge fund stock pitches, you need to research markets and companies and develop 2-3 solid ideas here. These ideas must match the firm’s strategy and represent significant potential upside.

In other words, if the firm does mostly Series A investments, you should present ideas that could potentially generate a 10x multiple; but if the firm focuses on later-stage investments, the potential multiples can be lower.

Example answer:

“I would invest in Novoic, a healthcare IT startup in the U.K. that is using AI to do early detection of Parkinson’s, Alzheimer’s, and other diseases based on variances in speech patterns. It raised a $2.6 million seed round a few years ago, and if it could capture even a small percentage of the ~$3 billion revenue Alzheimer’s diagnostics market, it could be worth $500 million to $1 billion in 5-10 years. The market could also be much bigger than people think, especially due to aging populations worldwide – expectations are that it will double by 2030, but I think it could triple by then as younger people increasingly use these early detection tools.”

Q: Which markets are the most attractive to you? Why?

A: For this one, you should find highly specific markets – such as P&C insurance technology rather than “fintech” – and argue that others have overlooked them for reasons X, Y, and Z, but they could potentially create billion-dollar startups.

Avoid mentioning markets that are over-hyped or that represent “The Current Thing.”

Example answer:

“I would be interested in anything in the ‘care tech’ space, especially marketplace companies, because the population in most developed countries (and China) is aging rapidly, and there aren’t enough doctors, nurses, and care workers to meet demand, so technology will have to meet at least some of the needs. Marketplace companies also solve the problem of younger people who need to find jobs or income sources outside the traditional channels.

If you consider the hundreds of millions of elderly by 2030 or 2040, this market could potentially be worth tens of billions by then, with many startups positioned to grow as a complement to the traditional healthcare system.”

Q: Which markets should we avoid?

A: You’ll make the opposite argument here and say that a market is worse than the consensus view because it’s smaller than expected, it will grow more slowly than expected, or it has other disadvantages, such as too much competition or no way to build a “moat.”

Example answer:

“I would avoid anything in the ‘general AI’ space right now because most of these companies are building ‘products’ that should be features, and most of the benefits from this technology will go to the biggest tech companies, not startups. Although there have been many high-profile funding rounds lately, I don’t think most of these companies will have good outcomes for investors. There might be room for investment in something with proprietary data or a huge moat, such as a patent or other IP that gives them access to a market and limits competition.”

Venture Capital Interview Questions: Firms and Processes

These questions are important in venture capital recruiting because firms value “fit” so much – if you haven’t researched the firm and its portfolio extensively, they’ll find out quickly.

Q: Of our portfolio companies, name one that you would have invested in and another that you would not have invested in.

A: Most of your answer here should come down to the market being smaller or bigger than expected, but for later-stage companies, you can add something about the competition, the company’s product/services, and even its valuation in recent funding rounds.

Example answer:

“I would have invested in Qventus because the ‘hospital optimization’ space is huge, and many struggling hospitals are looking to cut costs ASAP. It has raised over $90 million so far at relatively low valuations, most recently in the hundreds of millions, and I believe it could eventually grow to a $1 billion market cap company, which might produce a 10x+ multiple for you.”

“I would not have invested in cargo.one because the freight forwarding space is quite crowded and commoditized, and while the market is big and the company’s product is good, it doesn’t do enough to differentiate against the competition. It might still produce a decent return, but I would have avoided this specific market and focused on others with higher potential.”

Q: How would you think through an investment decision?

A: First, you must ensure that the startup matches your firm’s size, stage, and strategy. If your firm only does Seed and Series A investments in tech companies, you won’t invest in a Series D round for a biotech company.

Next, you research the market and estimate how big the company could eventually get and what it might be worth to see if you could earn a reasonable multiple, such as 10x for a Series A or 5x for a Series B deal.

Then, you look at the team, the product, and the competitive advantages and make sure all of these are reasonable. As part of this, you’ll request due diligence data on users, Average Revenue per User, customers, financial performance, clinical trial data for biotech companies, and SaaS metrics for enterprise software companies.

You might also conduct some DD and analyze the data via Excel database functions.

If all of these check out, you might recommend investing.

Assessing the risk is not that important for early-stage VC investments because most startups fail – so you focus on the potential upside rather than everything that could go wrong.

Q: Suppose that you join our firm. How would you screen for new companies to invest in?

A: You would start by reading about the market and its current startups and finding product, team, and financial information.

However, the best VC deals tend to come from your network and personal referrals – so once you have an idea of the companies you’re seeking, you would reach out to everyone who might be connected and see if they can make introductions.

You’ll usually review each startup’s pitch deck or meet with them, and if they’re of interest, you’ll go through additional meetings and request more information before investing (see above).

Q: What are the most important provisions in VC term sheets?

A: The most important terms relate to economics and control. With economics, the investment amount and pre- and post-money valuations are critical, but so are terms like the employee options pool, liquidation preference, and participating preferred and participation cap (if they exist).

The pay-to-play and anti-dilution provisions are also important for determining what happens to a VC’s ownership in future funding rounds.

With control, the key terms are the Board of Directors composition, “protective provisions” that allow investors to veto certain actions, and drag-along rights that effectively allow one investor group to make decisions for the other group(s) (usually, majority shareholders “dragging along” minority shareholders).

—

There are many other potential questions, such as queries about the VC business model, the typical investment stages, sizes, and valuations, and how you might monitor portfolio companies.

Venture Capital Interview Questions: Deal, Client, and Fundraising Experience

Your deal experience could come up in venture capital interviews, but it tends to be less important because VC deals are relatively simple.

If you have an IB background, you should outline your deals by following the examples in the investment banking deal sheet article, and you should pick deals that are relevant to venture capital – a tech or healthcare IPO, a joint venture between two software companies, or something that required significant market analysis.

You should also take a critical view of each deal and be able to explain why you would or would not have done it if you had been the buyer or institutional investor.

These questions are not specific to VC interviews, so please refer to the other coverage on this site, such as in the private equity resume guide.

Venture Capital Interview Questions: Technical Concepts

You are highly unlikely to get traditional IB interview questions in VC interviews, but they could ask about VC-specific topics, such as different types of funding, startup metrics, and so on.

Q: What’s the difference between pre-money and post-money valuations?

A: The “pre-money valuation” is a startup’s Equity Value before it issues new shares to the VC firm, and the “post-money valuation” is the startup’s Equity Value after that happens.

If  the company’s pre-money valuation is $10 million before it raises $5 million from a VC firm, its post-money valuation is $15 million, and the VC firm owns $5 / $15 = 1/3 of it.

Q: Why would a startup raise money in a priced equity round vs. a SAFE note vs. a convertible note?

A: A priced equity round is based on the amount invested and the pre-money valuation, and the investors own Investment Amount / (Pre-Money Valuation + Investment Amount) afterward.

The ownership is clear, but priced rounds take longer to negotiate and may be more expensive.

Some startups prefer options like SAFE and convertible notes that defer the valuation and ownership questions. Investors that use these instruments contribute capital but do not get shares right away – instead, they convert into equity in the next priced round.

These instruments can be faster and cheaper, but they may also create problems in the priced round because the conversion method isn’t always clear, and future investors may dispute it.

Convertible notes are more complex than SAFE notes and might have terms like accrued interest (AKA PIK Interest) in addition to the standard valuation cap and discount. For more, please see our tutorials on cap tables and venture debt as well.

Q: What are some key metrics and ratios for SaaS companies?

A: We have a full video tutorial on this topic (see the notes). Important ones include the Lifetime Value (LTV) and CAC (Customer Acquisition Cost) and the resulting LTV / CAC ratio.

The CAC Payback Period, i.e., the number of months it takes to earn back a customer’s acquisition cost, is also important because it is far less subjective than LTV.

Other important metrics include the Gross Retention, Net Retention, Annualized Recurring Revenue (ARR), and Monthly Recurring Revenue (MRR).

ARR is different from normal “revenue” because it’s based on the recurring revenue in one month or one quarter, annualized for the entire year. So, ARR tends to be higher than simple “revenue” for growth companies since the recurring revenue grows each month.

SaaS accounting and metrics like bookings vs. billings vs. revenue are also important.

Q: How do you value a biotech startup?

A: Assuming it is developing patent-protected products, you usually use a Sum-of-the-Parts DCF where you project revenue and expenses for each drug, discount the cash flows to Present Value, and then add them up.

Unlike in a normal DCF, there is no Terminal Value – instead, you go out many decades and assume the drug hits “peak sales,” and that revenue then declines to a low level as generics enter the market.

In the final step, you also must factor in the PV of Net Operating Losses, the PV of corporate G&A / overhead, and the standard Enterprise Value bridge items to determine the company’s Implied Equity Value.

Venture Capital Interview Questions: Case Studies

Case studies could easily come up in VC interviews, but they tend to be more qualitative. They might give you a company’s pitch deck and financial information and ask you to evaluate the market, team, and financials, and make an investment recommendation (for example).

We have a direct example of a venture capital case study in our PitchBookGPT exercise, so refer to that if you want to practice.

If you get a more quantitative case study, it will probably be a cap table exercise or a variant of “Review the customer data and tell us what you would ask questions about.”

A simple cap table exercise might go like this:

• Seed Investment: $2 million at $8 million pre-money valuation with 1x liquidation preference.
• Series A Investment: $5 million at $15 million pre-money valuation with 1x liquidation preference and 10% employee options pool (created at the same time as the VC investment). Pari passu with the Seed investors.
• Series B Investment: $15 million at $50 million pre-money valuation with 1x liquidation preference. Senior to Seed and Series A.

Calculate the proceeds to each investor group at exit values ranging from $50 million to $300 million (use sensitivity analysis in Excel).

So, How Do You Prepare for Venture Capital Interview Questions?

This point goes back to the differences discussed at the top: VC interview prep requires far more research and outside reading.

Sure, you can complete a few case studies for practice, and it’s good to learn the basics of cap tables and the VC investment process, but they’re unlikely to ask you extremely technical questions about any of these.

Unfortunately, no article you can find online – including this one – gives you the magic-bullet solution because they cannot possibly know the specific firm you are interviewing with.

But if they did, they could probably replace most of the article text with “Google this firm and its portfolio companies extensively,” and you’d be well-prepared for venture capital interview questions.

The post Venture Capital Interview Questions: What to Expect and How to Prepare appeared first on Mergers & Inquisitions.

After putting in all that time and effort, you feel like you’re back at square one.

Unfortunately, it’s also quite common: in some years, over 50% of interns fail to get a return offer.

And in periods where deal activity is terrible (e.g., 2008 – 2009 or 2022 – 2023), the percentage may be even higher.

While it may feel like the end of the world, you are not actually back at square one.

But if you want a good outcome, you need a solid plan and honesty about why you didn’t get a return offer. I recommend the following steps, detailed below:

1. Step 1: Figure Out Why You Didn’t Get a Return Offer
2. Step 2: Pick Your Best Next Move
3. Step 3: Network and Prepare for Interviews
4. Step 4: Reevaluate Your Options If Nothing Worked

What is a “Return Offer”?

All the large investment banks – bulge brackets, elite boutiques, and middle-market firms – use internships as a recruiting tool for Analysts and Associates.

Effectively, the internship is an 8-10-week interview where you must prove yourself on the job by helping full-time employees with their tasks.

If you perform well and the bank has enough spots, you’ll get a “return offer,” which means you can start working full-time at the bank the following year after graduation.

These internships matter because the large banks make most of their full-time job offers to interns who perform well.

To succeed in your internship, please see our guide to investment banking internships.

This guide will focus on what to do if you did not perform well or if something outside your control resulted in no return offer.

Much of this guide also applies to related opportunities, such as investment banking spring weeks in the U.K., though there are some subtle differences (see the full article for more).

Step 1: Figure Out Why You Didn’t Get a Return Offer

You need to start by asking why you didn’t get a return offer.

Sometimes, it was because of something outside your control, such as the firm not hiring anyone, the group shutting down, or a bad market.

But in many cases, it was because you made specific mistakes, didn’t perform well, or didn’t “fit” with investment banking.

If you’re in this category, there’s no shame in admitting it.

It’s mostly the banks’ fault for accelerating recruiting so much that they hire many students who are not good fits for the job.

There are ~5 main reasons why you might not have received a return offer:

1. Poor Soft Skills – For example, maybe you made off-color comments, didn’t dress appropriately, or didn’t communicate effectively with full-time bankers. Or maybe you came across as weird or anti-social.
2. Poor Hard Skills – Maybe you could not use Excel or PowerPoint effectively, made math mistakes, or failed to check your work before turning it in.
3. Bad Market and Very Few or No Return Offers – Maybe deal activity was so bad that the bank didn’t need to award many return offers. Finance firms are notorious for under-hiring and over-hiring, so this happens a lot.
4. “No Return Offer” Policy – Some boutique banks hire interns but never plan to bring them back full-time. If you’re in this category, at least it’s easy to explain in interviews!
5. “Special Circumstances” – For example, maybe you had to start the internship late due to scheduling issues, or you had to work remotely for part of it, and these factors made it difficult to get to know the team.

You must understand which category best matches your situation because it determines your next move.

If it was something “beyond your control” (categories #3 – 5), it makes sense to give it another go and recruit for full-time IB roles or off-cycle internships.

But if it was “your fault” (categories #1 – 2), you may want to consider non-IB roles or give yourself time to improve by staying in school longer.

Step 2: Pick Your Best Next Move

Once you’ve determined why you didn’t get a return offer, you need to plan your next move.

In most cases, you have 6 main options, depending on your region and level:

1. Delay Graduation – This one no longer works well due to the accelerated internship recruiting timeline in the U.S. But if you can somehow delay your university graduation by ~3 semesters, you could use the extra time to apply for summer internships once again, ~18 months in advance.
2. Do a Master’s in Finance Degree – This one is best if you need to fix multiple issues in your profile, such as a low GPA and poor technical skills; it’s similar to delaying graduation but more realistic for the recruiting timeline.
3. Do an Off-Cycle or Post-Graduation Internship – This one is more viable in Europe because off-cycle internships are more common there. You don’t need to pay extra to stay in school, but many of these internships never turn into full-time offers, so it is a bit of a gamble.
4. Recruit Directly for Full–Time IB Roles – Banks hire most of their full-time Analysts from their summer intern classes, but you can always find a few firms and groups that under-hired or had terrible interns.
5. Aim for Non-Banking Roles in Finance – Maybe you discovered that investment banking is not for you because you don’t like the hours, the work, or dealing with sociopaths all day. But you could use the experience to aim for other finance roles, especially ones like equity research or corporate banking with less structured recruiting.
6. Aim for Non-Finance Roles – Or maybe you learned that you hate finance and never want to work in the industry. Great! You saved yourself years, and now you can find another job that’s a better fit (tech, consulting, marketing, startups, etc.).

At the MBA level, options #1 – 4 are not available, so you usually need to look for other full-time jobs outside of banking.

(Addendum #1: There’s a small chance you can find a full-time Associate role at a smaller bank, but I would be very cautious about these roles.)

(Addendum #2: Occasionally, an MBA student will fail to get a return offer and still find something else in banking, so it’s not impossible – but it is a lot more difficult than at the undergraduate level, so “not widely available” may be a better description.)

So, which of these options is best for you?

If you failed to get an offer because of your performance, you should consider options #2, 5, or 6 (Master’s degree, non-IB roles, or non-finance roles).

You need to be honest and ask yourself a simple question: “Do you want to work in banking but simply need to improve, or is it not for you?”

If it’s the former, consider another degree and how to use the extra time to improve your profile and get more experience.

If it’s the latter, read our guides to equity research recruiting, asset management internships, corporate banking, or product management (for example).

If you failed to get an offer mostly because of external factors but are still very committed to IB, you should consider options #3 and 4 (another internship or full-time recruiting).

Even if you’re in Europe or another region with off-cycle internships, I recommend networking to look for full-time roles first.

Yes, it’s difficult, and your chances aren’t great in a terrible market, but spots sometimes appear – and if you can win a full-time offer anywhere, that’s much better than interning again.

Step 3: Network and Prepare for Interviews

If you’ve decided that investment banking is not for you, please search this site for recruiting guides to other industries.

In short, you need to be a lot more proactive if you aim for something like equity research or asset management; there is less competition, but there are also many fewer spots.

If you are still aiming for full-time investment banking roles, this interview about how a reader won an IB offer at the last minute has some useful tips.

The short version: Aim for roles outside of major financial centers, target smaller banks (middle markets, in-between-a-banks, etc.), and do a ton of networking.

You can reach out to your existing contacts, find new ones, and send a message like the one below via email or LinkedIn:

“SUBJECT: Investment Banking Intern at [Bank Name] – Positions at [Name of Person’s Firm]

Hi [First Name],

I’m a student at [University Name] with a [XX] GPA and investment banking internship experience at [Bank Name] and [Describe Previous Internship Experience]. I’ve attached my resume here. I’m seeking full-time investment banking roles and just wanted to know if your group is hiring.

Thanks,

[Your Name]”

There is no magical secret to getting a response. Find people, email them, and follow up after 5-7 days until you get an answer.

If you eventually make it through to interviews, the #1 question will be:

“Why did you not receive a return offer at [Bank Name]?”

I recommend telling the truth, but not the whole truth, and spinning the reason slightly more positively.

If you say something like, “Deal activity was bad, so the group didn’t give out many offers,” the interviewer’s follow-up response will be:

“OK, but they did give out some return offers, correct? Why did some interns receive return offers while you did not?”

You can keep going back and forth like this forever unless you admit a weakness or mistake.

So, similar to the “Why is your GPA low?” question, it’s best to say that you made mistakes initially and improved over time, but it wasn’t quite enough to put you among the top few interns.

For example, you could say that you made some mistakes in email communications or office protocol at the start of the internship.

You received feedback that you had to improve, which you did, and your final review said you were much better.

However, they only brought back 1-2 interns due to the market, and because of these mistakes in the beginning, you didn’t quite make the list.

Besides this, investment banking interview questions will be the same: Expect to walk through your resume, answer technical questions, and discuss your deals.

Similar topics will come up even if you target off-cycle or summer internships.

So, if you’re already well-prepared for standard interviews, you mostly need to plan your explanation for why you didn’t get a return offer and discussions of your deals and internship work.

Step 4: Reevaluate Your Options If Nothing Worked

If you go through everything above and fail to win a full-time offer or another IB internship, return to Step 2 and reevaluate your options.

In most cases, the best choice is to aim for non-IB roles because you don’t want to spend much time without a full-time job.

So, consider related roles such as corporate banking, Big 4 firms, business valuation firms, corporate finance at normal companies, etc.

The #1 point is that you need to line up something post-graduation, even if it’s not your ideal role, it’s in a bad location, or it has below-market pay.

If you’re still 100% committed to IB and unwilling to compromise, your best option is to do a Master’s in Finance degree – but the timing may be tricky if you’ve already spent months recruiting for other roles.

No Return Offer: The End of the World?

It may seem like the end of the world if you complete an investment banking internship and fail to get a return offer, but it’s a common outcome.

The key is to be honest about why it happened so you can plan what to do next.

If you hated the internship and decided that IB is not for you, great – move on and start applying for other roles.

If you like “the idea” of investment banking but couldn’t perform well or tolerate the long hours, fine – think about something like corporate banking with better work/life balance.

And if you are 100% committed but failed to get an offer because of factors outside your control, start pounding the pavement and looking for full-time roles or internships.

In the short term, “no return offer” hurts, but in the long term, it can lead to more fitting careers if you handle it properly.

Want more?

You might be interested in:

• Distressed Private Equity: The Best Place to Invest When the World is Collapsing?
• The Definitive Guide to Equity Research Internships
• How to Decide on Investment Banking Summer Internship Offers: Who Has a 97.5% Full-Time Offer Conversion Rate?

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