Investment banks will often require top-notch Excel modelling skills when they hire analysts or associates from other investment banks or from other professionals in the finance sector (i.e. accountants and consultants). Part of those interviews almost always includes a full-blown Excel modelling test to be completed in a few hours to test your operational and DCF modelling skills.
A modelling test is similar to a case study; you are given assumptions, sometimes a brief description of the business, and then asked to perform some analysis. The most common test given is to a Discounted Cash Flow analysis (DCF) and Operational Modelling (i.e. forecasts). Sometimes you may be asked to build Merger models but this is less common. The models given are usually very complex with a very short time allowed for completion.
The most common type of test will happen like this:
- You will be seated in a room alone with a laptop, with only Excel on it.
- You will be given some assumptions, either on a separate page, or in an Excel file saved on the laptop. Except for the assumptions and maybe some basic headings, the file will be totally blank.
- You will then be asked to build a model based on the assumptions within a specific time frame (two to four hours)
While many people can be good at interviews through extensive practice, you can't fake a modelling test. The investment banking modelling test is the ultimate test of your ability to be a good analyst or associate.
- A modelling test can help the investment bank test the following:
A standard DCF modelling test that you would get for an analyst-level investment banking modelling test interview.
You can also download the DCF modelling test. You would have four hours to complete this test.
The answer to the DCF modelling test is also available.
Investment Banking interviews typically start with a battery of questions about yourself. All those questions you will get in the investment banking interview have a single purpose and are trying to assess Adaptability, Analysis and Problem Solving, Commercial Awareness, Communication, Decision-Making and Judgment, Influencing and Persuasiveness, Leadership, Motivation, Relationship-Building and finally Teamwork.
1) Why did you choose to study economics/chemistry/history, etc.?
2) If you are from overseas, prepare to answer why you chose London?
(Mention all the positives about London and how it is a financial center, multicultural, etc.)
3) What are your strengths and weaknesses?
Good strengths include being a hard worker, analytical, curious, being a good communicator, a good team player, resistant to stress, don't give up easily. "Good" weaknesses can be being impatient, taking a lot of time to make decisions, because you always need a lot of information, being inexperienced in finance (of course, that could describe all of the students), being a bad loser. Characteristics not to mention: your intelligence, introversion, shyness, or individualism.
4) Have you enjoyed your study? Why?
(Answer must be “Yes.”)
5) What is the achievement you feel proud of or least proud of?
The best examples are where you had to make a lot of effort, either hard work or team achievement. You can use sports, major study projects, or personal travel. The least proud achievements can be any kind of failure, but you need to show that you have learnt from that failure.
6) What would your teachers or other students describe about you? (See strengths and weaknesses.)
7) Give me an example of an important goal, which you have set and tell me how you reached it. What steps did you take? What obstacles did you encounter? How did you overcome the obstacles?
(Mention what your learned from this and how you improved.)
8) Tell me about a goal that you set that you did not reach. What steps did you take? What obstacles did you encounter? How did it make you feel?
(Again, mention what you learned from this and how you improved.)
9) Give me an example of instances in which you made mistakes and what you learned from them.
10) What courses have you liked most? Least? Why?
11) Why did you select your university? (Don't say, "It was the best"! Just mention classes, location, extra-curricular clubs, etc.)
12) What do you do in your spare time?
13) What would you most like me to know that is not in your resume? (Answer can be that you grew up in an interesting place or an interesting experience you had.)
14) How competitive are you? (Don't say: "I’m extremely competitive". Just add examples saying that you enjoy participating competitive activities such as sports, events, etc.)
15) Tell me about the time you worked the hardest in your life.
1) Why investment banking< (Please see our article on this specific question.)
2) Where do you see yourself in five years?
3) What are the most important things to you in a job?
4) Why did you choose to interview with us?
5) Why investment banking versus sales and trading? What is the difference?
6) In what area of investment banking do you want to work? Why?
1) How do you work under pressure and stress? Describe a time of working under an intense time pressure or deadline. How did you handle it and react?
2) Describe a situation that required you to do a number of things at the same time. How did you handle it? What was the result? How do you prioritize projects and tasks when scheduling your time? Give some examples.
3) Tell me about a situation in which you have had to adjust to changes over which you had no control. How did you handle it?
Analysis and problem solving
1) Give me an example showing how you demonstrated your quantitative ability.
2) Describe the project or situation that best demonstrates your analytical abilities. What was your role?
3) Tell me about a time when you had to analyze information and make a recommendation. To whom did you make the recommendation? What was your reasoning? What kind of thought process did you go through? Why? Was the recommendation accepted? If not, why?
4) Tell me about a problem that you solved in a unique or unusual way.
5) If your boss is shouting at you for an error you didn't make, how would you react?
1) Talk about a leadership experience - describe a leadership role of yours.
2) What are some key lessons you have learned about motivating people?
3) There are two analysts; one works very hard but his performance is just ok. The other one does not work hard at all and sometimes not in the office, however, his performance has been outstanding. If you were the manager, what would you tell those two people during their performance review?
4) Tell me about a time when you successfully resolved a conflict.
5) If your associate keeps giving you more work that you can handle and treats you unfairly, how would you handle the situation?
1) Tell me about a time when you were entrepreneurial or took initiative, and the end results.
2) Describe a recent unpopular decision you made. How was it received? How did you handle it?
1) How do you deal with team breakdown, difficulty, or disagreement?
2) Tell me about a time when you worked with a classmate or colleague who was not doing their share of work. How did you handle it?
3) Describe a situation in which you were able to build team spirit during a time of low morale.
4) What types of people do you have trouble getting along with? Why?
5) What, in your opinion, are the key ingredients to guiding and maintaining successful business relationships?
6) How do you get people to do things they don’t like to do?
Business Awareness and Commercial Judgment
1) Have you ever had to sell an idea to your classmates or friends? How did you do it? Did they accept your idea?
2) What do you think makes our bank successful in the current economy situation?
3) What qualities do you think make someone successful in business?
4) What do you think about the recession? When do you expect it to recover?
5) What do you think are some good investments in an economic downturn?
1) Based on your CV, what do you think concerns us about you? Knowing what you know about yourself, what would concern us most about you?
2) What negative feedback did you get from your classmates or at a previous internship/job?
3) Of those banks you interviewed with up to the second or third round and didn’t give you offer, what feedback did they give you and why? If not, why do you think they didn’t give offers?
4) Describe a time you have had to compromise on your standards, and why
Basic Technical Interview Questions
- Why would two companies with identical earnings in the same industry have different P/E multiples?
- Would you use Enterprise Value/Net Income as a multiple?
- In a perfect (tax-free) world, if you have a company with an enterprise value of $5 billion and you take out $2 billion in debt, what is the new enterprise value? What is the enterprise value if you subsequently use the $2 billion to pay out a dividend? What is the enterprise value if instead of paying out the dividend, you invest the $2 billion in a new project with an NPV of $3 billion?
- In a world with taxes, if you issue debt for 1000 and pay it out as a dividend, how does it affect your enterprise value?
- Why might a company be trading at a lower EV/EBITDA multiple than its competitors of the same size in the same industry?
- Give me an overview of at least five valuation methodologies for a company.
- Which of the valuation methods will tend to lead to the highest valuation?
- Which method of valuation is most robust? What are the pluses/minuses of each method?
- What percent of total DCF value is usually in the Terminal Value? What proportion did the Terminal Value contribute to the Enterprise Value? Why? What concerns are there?
- Explain the difference between WACC and IRR.
- How do you treat deferred taxes in a DCF?
- What are the pros/cons on a stock vs. cash acquisition?
- Who would pay more to acquire a company - a financial buyer or a strategic buyer? Why?
- Why do accretive mergers still sometimes see a falling stock price?
- Talk to me about some hostile deals that have been initiated lately. When does a hostile deal make sense? What percent of hostile deals are completed by the buyers who started the process?
Capital Structure and Financing
- If you were pitching to be an underwriter for an IPO, what would the table of contents of the pitch book look like?
- What implications are there for cash dividend versus stock repurchase? Why and when would you use one versus the other?
- How can a company reduce its Debt/EBITDA ratio without increasing EBITDA or paying down debt?
- What is staple financing?
- What is the IRR with an equity investment of £100m and exit equity value of £300m after three years? Give me the calculation formula.
- Give an example of Circular Reference in an LBO model.
- Walk me through the impact of an asset write-down on the financial statements.
- If a company changes from a LIFO to FIFO, how would that impact its financial statements?
- Where would you put a convertible bond on the balance sheet?
- Suppose you reviewed the financial statements of a firm for two consecutive years. Every line item on the income statement showed the same value for both years, but the numbers on the lines in the cash flow statement are different for the two years. Speculate on a few things that may have happened to cause this outcome.
- If convertible debt gets converted, what is the impact on the balance sheet?
Note - answers to those questions are included in our AskIvy Investment Banking Technical Guide, which contains 100+ other investment banking technical interview questions.
Aptitude tests are online or written tests given by investment banks that consists of a combination of numerical, verbal and logic questions. You will almost always be asked to do those tests online first once your CV has been shortlisted by banks. Once you pass those tests and are invited to come to the assessment centre, you will be usually asked to take them again on a piece of paper (which is sometimes more difficult or longer). This process is to ensure that you didn't ask a friend to take the test online for you.
Why do investment banks use those tests?
Each year, tens of thousands of students apply to investment banks. Those tests are a way for investment banks to make a first selection in their large applicant pool. They usually have a cut-off or minimum pass grade that students need to meet or exceed in order to go to the next stage of the interview process.
Do not underestimate those tests, even if you are doing extremely well at school. Those tests can be notoriously difficult, especially under stress, and will demand a great deal of preparation. Indeed, it would be a shame to fail an interview because of something that is in your control! In fact, the main reason why so many students fail investment banking interviews is due to the lack of preparation or overconfidence with regard to those tests.
Can you give me an overview of those tests in more detail?
The tests are generally provided by SHL, an organisation that creates those tests; usually, there are three kinds of tests.
In a numerical reasoning test, the examinee is required to answer questions by using information presented in statistical tables and graphs. Questions are given in a multiple choice format
In SHL verbal reasoning tests, you are usually presented with a passage and required to evaluate a set of statements by selecting one of the following possible responses
These logical tests evaluate cognitive abilities that rely on pure logic, without the use of written texts or numerical data. In the course of these tests you will be asked to recognize patterns that are presented by series of shapes and thus induce and predict which shape should come next in line
I want to practice, can you recommend me a good website?
JobTestPrep, a UK website, does a good job of helping students prepare for those tests.
Below is a detailed list of headhunting and recruitment firms that operate in the field of investment banking in London.
Sister firms, one catering for junior and middle management (Argyll Scott), and the other focused on executive search (Redgrave Partners) in Private Equity, Corporate Finance and Corporate Development disciplines. Clients include large cap LBO funds, mid cap, growth equity and distressed turnaround funds.
Contact Name: Matt Steeds
contact phone: +44 (0) 207 936 1130
Alan Mitchell is a financial markets city recruitment and search firm specialising in the areas of investment banking, private equity, equities and fixed income from analyst to MD/Partner level. Corporate finance coverage includes Mergers and Acquisitions, Private Equity, Corporate Broking, Equity Capital Markets and Debt Capital Markets in Investment Banks, Funds, Advisory Boutiques, Brokerage Houses and Accountancy Firms.
Equities clients include investment banks, regional specialists, mid-cap security houses, boutique brokers, specialist brokers, agency brokers and execution only houses with the team focussed on equity research,equity sales. Fixed Income coverage includes Credit, Bonds, Interest Rates and Derivatives.
contact phone: 020 34407655
Dedicated stand alone Investment Banking team with a track record and experience of the sector for over twelve years. Typical mandates at the Analyst to Director levels. M&A, Leveraged Finance, Restructuring, ECM, Corporate Broking, Country and Sector Coverage. Mandates are focussed on the UK and wider EMEA space. Partnering with clients on trends in the Investment Banking market including compensation trends (2013 Analyst report), analysis of strategic and cultural differences between Banks and up to date knowledge of hiring patterns.
Contact: Adam Cairns
Phone: +44 (0) 203 762 202
- Austin Andrew (www.austinandrew.co.uk)
Started with the vision to fill a perceived gap in the market for a mid level contingency firm with the service ethos of an executive search firm. Our experienced Consultants joined Austin Andrew to establish lasting and mutually beneficial business relationships with our clients. We strive to develop a long term understanding of our clients built upon trust and integrity, and we always aim to exceed expectations. We believe that this provides both stability for us and value for our clients, who benefit from our in-depth understanding of their business’ unique selling points.
Areas covered include M&A / Corporate Finance, Private Equity (Growth Equity, Leveraged Buyout, Venture Capital) and Corporate Development
Clients include large cap LBO funds, Mid cap, Growth Equity, Debt Funds, Venture Capital Trusts, Corporates, Advisory Boutiques, Investment Banks, Private Banks and Hedge Funds.
contact name: Zoe Manners
contact phone: +44 (0) 207 153 1666
Focuses on debt, equity and derivative sales, trading and research; wealth management; financial management, operations and middle office; credit and market risk and private equity
Finance and Banking focus, with good coverage of boutiques
Specialist recruitment provider to the Real Estate, Finance, Infrastructure and Energy sectors
Dartmouth Partners recruits individuals with an outstanding academic or professional background into firms who recognise that a competitive edge is gained by finding and hiring the best human capital available. They work with candidates broadly from 0-10 years experience.
Graduates: they run outsourced Graduate recruitment for Investment banks, Consultancies and “High Flier” Schemes for small businesses up to FTSE 250 companies.
Experienced professionals: they help 2nd and 3rd jobbers in M&A, PE, Consulting, Asset management, Hedge Funds, and Corporates
Contact Name: Logan Naidu
contact phone: +44 (0) 203 638 5101
General corporate finance recruiting firm that also covers capital markets
Greenwich Partners are a search and selection firm focused on Buy and sell side equity research, Private Equity, credit and debt investment funds, asset management, alternative investments such as fund of funds and secondaries and corporate development and strategy. The firm focuses on targeting candidates from strategy consulting firms, research houses, investment banks and other private equity or investment firms. Most of their work is at the Analyst to Director level.
Contact Name: James Heath or Sue Carter
contact phone: +44 (0) 207 953 4066
Small independent recruitment boutique covering financial services broadly, including corporate finance and sales & trading.
Focuses on placing junior candidates in investment banking, private equity and hedge funds
Broad-finance recruitment firms with strong relationships with most investment banks and boutiques
Specialises in advisory and investment space for experienced corporate financiers
Large recruiting firms that has a division that focuses on financial services
Specialist recruiter focusing on hedge funds and corporate finance
Active recruiting firms that focuses on finance, banking and accounting sectors
Purely specialised finance-focused search firm with broad coverage across both buy and sell side, with strong relationships with many investment banks and PE funds
General corporate finance firm with offices in NY, London, HK and Tokyo
Global Financial recruiter (covers US, Europe, Asia and Middle East) that focuses on any function in financial institutions.
Small recruiting firm specialising in investment banking, corporate banking and asset management
Independent financial services recruiter that focuses on the more senior end of the market
Walker Hamill is a leading recruiter in corporate finance/M&A, working with both investment banks and boutiques. We recruit from Senior Analyst through to Managing Director level and have been selected on numerous occasions as the Managing Agent for multi-vacancy assignments.
Contact : Tim Smith email@example.com
Would like to add your firm, contact name or anything else to this list? contact us here.
After having gone through all the online tests, case studies, presentations and the whole investment banking application process, the last five or ten minutes of your interview will always end with "do you have any questions for me?".
While this part of the interview is not the most critical one, many applicants still manage to destroy their chances by asking the wrong questions, or not knowing what to ask.
Our base advice is to keep the questions fairly simple. While asking a very smart question will probably not be the key factor that will get you the job, asking an overly complex or inappropriate question will definitely hurt your chances of getting hired.
Therefore, do not try to be the most original or smartest applicant by asking overly engineered questions. Here is a selection of the most appropriate questions to ask:
We strongly suggest not to go beyond those categories to limit potential damage. Questions to not ask are as follows:
Finding a position in investment banking is a highly competitive process, which gives you a very small margin of error when it comes to your resume or CV. While there is no such thing as the perfect investment banking resume (banks will not expect you to have perfect scores, be the president of every club in your school, and speak five languages), nevertheless applicants do make common mistakes that you should avoid.
This is our list of investment banking CV common mistakes.
Typos and grammatical errors simply show that you did not spend enough time on your CV, and therefore, you do not take your applications seriously. Also, a large part of your job as an investment banking associate or analyst will be to check for people's mistakes, so typos in your CV are a good indicator of whether you'll be good at your job! Banks do tend to be reasonable though, and if there is just ONE typo and the rest of your application is outstanding, you should not worry. But why take the risk for such an easy fix? Read all of your applications three times and run a spell-check before sending out anything!
This goes together with the first point. You may think this is trivial, but formatting that is not consistent (company name bolded in one place, italicized in another) or wrong (words or paragraphs misaligned, text going over one page) will be spotted immediately by the banker reviewing your CV. Associates and analysts are trained to spot those kind of formatting mistakes and they can be unforgiving, and they will be the ones making a first cut in CVs. The only solution to avoid this is to print a copy of your CV once you're done with it, see what it looks like, and get at least one friend to review it. Finally, don't try to come up with your own template; just use the one provided by your school. Also, do not try to stand out with some "original" formatting - when it comes to investment banking, being conservative is always the best approach.
Do not forget that a CV is meant to be an advertisement for yourself. Space is precious, so limit yourself to what sells ‘you’ best to the investment bank. For example, you don't need to list your job as a sales assistant or as a waiter during your studies if another work experience is more relevant. Expand in detail the relevant experiences, and delete entirely what does not sell you best. The only exception would be mention something like "Achieved 2.1 grade while working 20 hours part-time as a shop assistant at xxx". In this case, it works because it shows that you are a hard worker who can manage multiple demanding tasks, an important quality for an investment banker.
It is fine to mention some of your courses, ONLY if they are relevant (corporate finance, private equity, economics) or stand out and show some very specific interest (19th Century Russian history, quantum physics, etc.). Do not overdo it - your courses should never take more than one line in your CV and should be limited to three or four courses at the absolute maximum, and you do not need to describe those. Bear in mind that 90% of the applicants will write "Corporate Finance" or "M&A" in their list of courses so try to pick another one or two that sound interesting if you can.
Bankers don't want to know what you did (we can guess that from the title of your job), but they want to know what you learnt and achieved through your experience. Therefore, be results-oriented and use numbers. For example, do not write the all too common M&A internship description: "Performed valuation using DCF, comparables analysis, calculated WACC, and did benchmarking for associates in the group." Do write: "Led the valuation of a $700 million technology company under associate supervision, which involved building a complex operating model from scratch, full WACC analysis, and benchmarking of 25 companies in four countries." What is the difference? The good version gives more concrete details and clearly demonstrated the complexity of what you were doing. More interesting details will catch the banker's attention and also prove that you understand what you were doing. Note that this also works for any other kind of experience. Another example: Do not write: "Researched the consumer goods industry and helped partner writing industry reports." Do write: "Supported partner's analysis of the consumer good industry by identifying and benchmarking key performance indicators of 50+ retail companies across the UK."
Give a good, concise overview with some details, but do not go too deep and try to make a job sound more interesting that it was. Bankers will get a good idea of what you did just by looking at job titles and firm names. Be honest and go straight to the point when talking about your responsibilities and achievements. Also, remember to limit your resume to one page only.
Clichés can damage your application. Remember, you do not need to mention your skillset - this should be evident from what you have done instead; don't tell it to me, prove it to me! Clichés include being an "analytical thinker", "developed great team-playing skills", "ability to learn fast", "worked under high pressure and had to meet tight deadlines", "leadership ability and skills", and "extremely hard worker."
Boring ones includes: reading, jogging, travelling (even travelling to 20+ countries, far too common), shopping, cinema, going to restaurants, or eating, fishing. Weird/geek ones: Word and Excel, mental arithmetic, computer games, programming, drinking. You can refer to our section on "What to write in the ‘other interests’ section of my CV."
This includes: fluent in English, proficient in Word, PowerPoint and Excel, good understanding of valuation concepts, etc.
- Using "I". For instance, "I analysed the financial reports of company xxx. I compiled the reports. I used Excel to do tables and charts." You should be using action verbs without the “I”, which makes you sound arrogant.
- Not using action verbs. These are good action verbs for investment banking: leading, analysing, performing, reaching, accomplished, supported, assisted, communicated, presented, contributed, delivered, drafted, ensured, finalised, generated, helped, launched, modelled, negotiated, oversaw, processed, supervised, or volunteered.
- Improper word capitalization, i.e. Worked in the Customer Service Department of a Retail Company.
This mostly relates to projects in investment banks. Make sure that all the information contained in your CV is in the public domain.
If you would like your CV to be reviewed by AskIvy, please see our CV Review Service here.
One of the most common questions that gets asked here is this: "How do Imake it into Goldman Sachs?" Goldman Sachs is consistently ranked atthe top of the investment banking league tables, attracts top talent, andpays the highest bonuses, so no wonder students and bankers all want toget a job at the prestigious investment banking firm.
These are the tips we gathered from a "Goldmanite", who spent 16 years at the firm:
No magic list of courses, study, deals, or anything else will guarantee you to get hired by Goldman Sachs.
Let me explain how this works:
1. Work like crazy to get into a great university.
In the U.S., it takes a REALLY top-tier Ivy League school in the UK, a "red brick / Oxbrige" school, a Grande Ecole in France, etc. This is because thousands of super-smart, aggressive, very hardworking young folks from around the world are constantly banging on the doors of firms like Goldman Sachs trying to get jobs. If your education doesn’t compare favourably, you won’t be considered. If you are not already enrolled at Harvard or Cambridge though, don’t worry, you can overcome that; just read the remaining things on this list and be sure that you blow them away.
2. Get very, very serious about your schoolwork.
Firms like Goldman can afford to be very picky, and they hire only the best and brightest. Your transcript had better prove you are one of them, or you won’t even get an interview. You don’t have to be Einstein; you can get top grades by simply working your tail off.
3. Become a well-rounded person.
Good grades from a top school aren’t enough. Keep current on world events. Understand the economy. Play sports. Play in a band. Act in a play. Learn about wine. Be involved in a variety of activities beyond academics. When you get that interview with Goldman, they will want to see that you are a fascinating, engaging person.You should be someone who has interesting stories to tell, maybe has something to teach them; someone they will want to hang out with. The boss wants to know that if he takes you to lunch with a wealthy client, you’ll be able to participate in the conversation and speak intelligently on a wide variety of topics.
4. Understand how business works.
Subscribe to the Wall Street Journal or Financial Times, and read at least the front page every day. Understand how companies market, sell, and produce goods; understand finance and accounting. Find out how companies buy raw materials, find employees, borrow money, go public, manage their cash, etc. If you want to work for an investment banking firm like Goldman, you must understand exactly what those companies do for their clients. Also, an MBA will really help.
5. Find a mentor.
Within your extended network, there is someone who has been successful in business: a family member, a professor, a former employer, etc. Maybe they even worked in one of the big firms like Goldman. Call them and ask for advice. Tell them what you are trying to achieve and ask for their guidance. If they are well-connected, they might even provide the most valuable help of all: an introduction to someone at a big firm. This is the absolute best way to get your foot in the door.
Finally, if you don’t get a job at Goldman, RELAX! Each of the steps above will lead you to money, even if it’s not at Goldman. For example, if you work hard and get into a top school, many of your fellow students will have rich parents, CEO fathers, Senator uncles, etc. By the time you graduate, you will be “connected”, and you will personally know influential people who can do favours for you and help you on the way to greatness.
However, this is the most important part. DO NOT CONFUSE MONEY WITH HAPPINESS. I personally followed all of the steps above; I worked for the big firms, and I am financially secure. But I’m also 40, unmarried, burnt out on work, and probably a little boring because I spent all those years focusing on dry work stuff. I decided that I wanted money, so I set a course to get it. But if I could do it over again, first I’d figure out what I love most; then I’d go do it with a vengeance regardless of the money. If you sincerely have a passion for investment banking, go for it. But if you simply lust for money, think carefully. Would you marry someone you didn’t love? No, you’d become miserable and regretful. The same thing will happen if you choose a career you don’t love. Good luck finding the answer and making it happen!
The recommended Goldman Sachs reading list that we have compiled below (this is the list they hand out to incoming investment banking employees) is one of the most comprehensive finance reading list that probably exists. This is an extensive library covering a lot of aspects of investment banking - from the history and culture to specific areas in trading or corporate finance. Its is definitely a good starting point to educate yourself on topics of interest, occupy yourself during a quiet winter / summer and get up to speed with some of the finance jargon!
Industry Background and Flavour
General Industry Reference
Fixed Income and Equities
Options and Derivatives
Written About, By or For Money Managers and Traders
Investment Banking assessment centers will always include individualand group case studies, which will require some preparation before you can handle those confidently.
What are Investment Banking Case Studies?
A case study will consist of a question or several questions that are asked based on a client’s business. You will be given some information about the clients; your task will be to answer those questions, and justify the advice you would give to the client. Most case study exercises happen during the assessment centre day, i.e. you will be given the materials and prepare on the spot. Occasionally, some banks give candidates the case study materials beforehand and you will have some time (usually one night) to prepare.
Why Investment Banking Case Studies?
Interviewers want to put candidates into a "real" business environment to test their capability of handling real work.
The case study exercise is a great way to test candidates’ analytical skills, creativity, presentation, communication, and people skills! That is why a case study usually weights much more than any other interview or test during the investment banking recruitment process.
What are typical Investment Banking Case Study questions?
Client A wants to get your opinion on which company they should acquire from four companies and why Company B needs to raise capital. They come to you and ask if they should raise debt or equity, and the best way to do it. Company C approaches and asks you whether they should expand through acquisitions, or organically?
How to prepare?
There are only few ways to practice case studies: (i) make sure you read the business news often and (ii) practice as many as possible.
Will banks look at my application if I have a 2.2 or a third?
The harsh reality is that most big banks will discount anyone without a 2.1 degree, even if you have graduated from the best universities in the country. Banks receive so many applications that they have to find methods to make a selection, and the first selection is based on academic performance. The worst part of this is that even if you get a post-graduate degree, banks will still look at your undergraduate degree and this will be weighted against you, even though the first degree’s record can be mitigated by outstanding performance in your second degree.
How can I get a job in investment banking if I have a 2.2 or a 3rd?
All is not lost. There are a few ways that will allow you to get into big investment banks, even though this can be difficult initially. Here are a few commonly suggested routes:
Finish another degree with top grades
This is the ideal scenario if you studied something other than finance or business for your first degree. If you got poor grades for the first non-finance degree, you could enroll in a Masters in finance/accounting at a prestigious school, and study extremely hard to reach top grades. Often, this will be sufficient to mitigate your poor performance. When applying to banks, make sure you highlight some mitigating factors for your poor undergraduate performance. Valid excuses include your need to help the family business, your great involvement in some club activities, or any other personal reasons.
Focus on lower-tier institutions
Many students who don’t earn top grades try to apply to non-investment banking positions (such as back office, operations, etc.) in the hope of transferring to investment banking. In our view, this is a mistake, because such transfers will be highly unlikely. It is much easier to transfer from a lower-tier bank to a top-tier bank, than moving across very different departments in a top-tier bank, especially into the M&A department, which rarely accepts "outsiders". Therefore, we encourage you to apply for lower-tier institutions that may overlook a weak academic performance. That includes banks such as HSBC, RBS, Commerzbank, or Santander. These banks do not receive many applications compared to Goldman Sachs and Morgan Stanley, and also London investment banking boutiques, for which we have compiled an extensive list. Those smaller banks tend to focus on some niche areas such as technology, retail, or natural resources sectors. Sometimes they focus on smaller deals or specialised transactions, and include HCA Saavian, Piper Jaffray, Evercore, Moelis, Oppenheimer, Thomas Weisel, Brown Brothers Harriman, William Blair, etc.When the economy picks up and M&A volumes are increasing, the top bulge brackets will often hire from boutiques, given the shortage of applicants. This will be your chance to move into top investment banks.
Go work for a corporation and enter banking later
Many bankers did not start as an analyst from the graduate scheme. Banks typically specialise in Industry groups (technology, retail, healthcare), and therefore industry experience is highly sought after. A good solution would be to work for a blue-chip corporate outfit (such as Microsoft, Procter & Gamble, BT, Vodafone, etc.) for two to three years, and use this experience to apply to investment banks later on. The ideal position for a placement into investment banking would be to work in the internal strategy department or corporate M&A department of the firm. At the same time, to make yourself more attractive, you could get an ACCA qualification or a CFA qualification to show your strong finance skills.
Do an MBA in two to three years
Life as an investment banking analyst is very hard, so it may not be in your best interest to directly enter into investment banking. There is one way to skip this step: the MBA. Therefore, one solution to poor academic performance would be to do something that you truly enjoy for two or three years (work for a corporation, a non-profit organisation, start a business), excel at it, and prepare yourself for a top MBA. The recipe to get into a top MBA is to work hard, do your research, participate in many activities outside work (volunteer, start a business, do something out of the ordinary, learn new languages), and study very hard for your GMAT. A top MBA on your CV will essentially give you a shot at all the best investment banks, without the pain of a three-year stint as an investment banking analyst!
Yes, you do still have a chance.
However, while banks will look at the overall quality of your application (grades, essays, extra-curricular activities and motivation), you will be in a more difficult position compared to students who have done one or several internships with investment banks. The main reason is that those with previous experience will be considered a "safer" investment, and understand and accept all the challenges of investment banking. Simply put, those with experience will already know about the tough the hours, the stress of the job, and where they are going. To improve your chances of acceptance, follow those steps:
1) Spend a lot of time showing your interest in banking
Demonstrate that you did your own research on "what is investment banking" and "why investment banking". Have a clear rationale for (1) “Why did you want to go into this field?” and (2) "Why didn't you do any finance-related internship before?" Be truthful; it is perfectly fine to say that you didn't know about finance and investment banking in your first career years, but when you went to a banking event or when you talked to some alumni, you became interested. In fact, this might well be the best answer to give. Also make sure you do some reading and have a good high-level understanding of the financial world.
2) Excel at open questions, interviews, and case studies
Easily said, though you will need to perform very well for interviewers to be fully convinced of your motivation; make an extra effort compared to your peers with banking experience. For example, the case study questions do not require any prior finance knowledge, therefore, this is an area where you can do extremely well if you are well-prepared. You will need to get an "extra edge" during the process to be noticed.
3) Leverage your non-finance experience, make it a strength
Banking and finance internships are a nice-to-have, but in reality, there are limits to what you can really learn during a three-month internship in investment banking. If you get a spot on a graduate programme there will be an intensive training programme that will teach you everything you need to know anyway. As a good strategy, use any non-finance or non-banking internships as a strength to convince your interviewer that this experience will help you do a good job as a banker.
1 If you did an internship in a corporate firm, let's say Procter & Gamble, you can say that you understand about corporate strategy and the way that potential clients work, which are important skills for a banker.
2. Also, you can even play the sector angle; if you worked in marketing at Procter & Gamble, you can say that you are interested to work with retail clients and work in an Consumer Goods M&A team. This strategy is often very effective.
3. The same applies to people from non-finance degrees, and those with pharmaceutical or chemical backgrounds, engineering backgrounds, etc. You should stress that your understanding is better about those industries than a graduate who has only been working in the finance sector.
Many students believe that having a degree unrelated to financewill hurt their chances of getting an interview with London investmentbanks. Truthfully, many investment bankers never studied accounting or finance when they were undergraduate students.Nevertheless, there are a few traps that you will need to avoid, and some good tips to best position yourself. Here is what you should bear in mind when applying and interviewing:
#1 If you were a science student, play on the analytical angle
In your early days as a junior banker, your job will be all about the numbers. Therefore, a background in hard sciences (physics, engineering, chemistry, etc.) is very well-regarded by investment bankers. In your application and during your interview, do highlight that you like to deal with numbers and highly analytical subjects. Bankers will always be impressed if you can show that you are mastering topics that sound complicated: abstract mathematics, theoretical physics, nuclear engineering, or organic chemistry.
#2 If you studied a "soft" subject (Politics, Psychology, etc.), then you will need to demonstrate analytical ability elsewhere in your CV
The first thing that enters the mind of a banker when seeing a degree in a soft subject is "can this person handle the numbers?". During the application process, you need to show analytical ability in your extracurricular activities or hobbies. These can be very simple things such as managing a budget for a club as its treasurer, having built spreadsheets, or worked on anything quantitative during a past internship. Also, highlight sections in newspapers such as the Financial Times to familiarise yourself with some of the finance jargon. Good way would be to read a few banking and finance books and try to familiarise yourself with some valuation concepts.
#3 Use your non-finance degree to differentiate and indicate your preference for a specific sector
Are you a Computing Science major? Mention your interest in working with technology clients in the Technology M&A Group, or work in equity research covering technology stocks. Similarly….
-Chemistry major: Good for Industrials clients and covering chemical companies (i.e. Solvay, Dupont), know a couple of chemical companies' names.
-Biology/Medicine: Healthcare clients
-Engineering: Industrials, technology or telecommunication clients
-Marketing major: Retail and consumer clients, media clients
-Law: UK M&A group or UK companies, since you understand the legal environment
-Maths: Try complicated industries that like maths backgrounds such as telecommunications
-History/Geography/Psychology, etc.: It will be more difficult to find an angle but if you show interest in finance and numerical ability, you will be perfectly fine.
#4 Have a good story on why you want to do investment banking
Be prepared to answer the question: “Why did you choose to study History/Engineering/Biology, and why are you interested in investment banking?” If you are a non-finance student, try to get involved in finance-related activities as soon as you can.
#5 UK banks are very open to candidates’ non-finance backgrounds with good grades
While this is not generally the case in Continental Europe, where banks will typically want to see a finance-related degree (the exception being engineers and lawyers), the UK system is very open. Primarily, Investment Banks want to see evidence of analytical ability through your activities and through passing numerical tests and brainteasers, and well-rounded personalities with maturity and good communication skills, who will be able to handle pressure and interact with senior people. In most cases, a non-finance degree can come as a blessing to differentiate yourself in an industry that is still mostly populated by economics and finance majors. Following the above advice will help you present it as a strength.
International students, particularly those not perfectly fluent in English, face some additional challenges when applying and interviewing with London investment banks. Nonetheless, many have successfully been able to frame their international experience into a selling point during investment banking interviews.
Practice is even more important.
Try to practice with native English speakers. For improving your English, there is no time like the present to start speaking English more often with native speakers.
Don't assume the interviewer knows about your university or the education system in your country.
If your university is the best or among the top in your country, say so. Providing too few details may confuse the interviewer. Having said that, giving too many details will bore them. Try to read the interviewer’s body language and tone.
Become familiar with some of the finance and banking terminology.
Keep reading the news (Wall Street Journal, Financial Times, Bloomberg News, The Economist etc.) as well as some financial books, so that you get familiar with business talk and expressions. For bankers, keep reading broker reports, especially those with "initiate coverage", and other finance reports and industry reviews.
Be more direct and succinct.
Bankers have a reputation for being direct and to the point, whereas some international students and professionals have been criticised for being too long-winded in their answers. Avoid putting the answer of a question to the back of an explanation - just give the answer first and explain later.
Provide positive rather than negative answers.
For example, "I love Barcelona" is better than "I don't like Real Madrid".
If you don't understand, ask for clarification.
Seeking a clarification on a question is much better than providing an answer that does not match the question. Useful ways to ask for clarification are, "Could you please clarify your questions?" or "Could you please be more specific?", or "Could you please re-phrase the question?"
Don't be apologetic for your accent
If the interviewer has not understood your answer because of your accent, simply re-answer, making a greater effort to be more clear.
Make the fact that you are international a selling point
Most employers are looking for diversity of thought, languages and experience. As such, they want to hear about your relevant international experience. Make an effort to find the right spin for yours story and then practice delivering your message with confidence. Don't be seen as shy or unsure of yourself - particularly as it relates to being an international student. Even if you don't speak any relevant language for the job, your diversity remains a strength – just find the right story. As there are a lot of very successful Asian and Middle Eastern Finance professionals in Europe, so you can make it there too.
For students and graduates, besides the technical questions, CVs, questions and brainteasers, this is a question you WILL get during asked at interviews: "Why investment banking?"
There is no engineered answer for this, but, based on our experience of interviewing candidates, the best answers are:
1) The learning curve in investment banking is very steep and you want to learn a lot and take on new challenges
Investment Banking is a challenging career and you will indeed learn a lot through the experience. You will learn about finance and acquire strong technical skills, such as financial modelling and accounting, but you will also learn about how to manage others and how to work in teams. Also, and this is one of the most important skill for an investment banker, you will learn how to remain calm, focuses and efficient under very high pressure.
2) You are eager to learn. You believe that working surrounded by smart and talented people by be beneficial and help you learn even faster.
Investment banks attract top candidates from the best schools all over the world. This means that your peers will be smart, highly ambitious, and from very diverse backgrounds. This means that you will be able to learn a lot from them, which will make the experience very valuable.
3) You were always interested in corporate finance and financial markets, as illustrated by your hobbies, studies, club memberships, etc.
Several candidates do have a genuine passion for finance and investment banking. Some of them are very knowledgeable about current events, specific deals, and have been very active in finance or banking clubs and events during school. If this is your case, make sure to stress this.
4) You will enjoy working in investment banking because M&A transactions affect whole
industries, and you will have the opportunity to make a real impact.Many bankers love their jobs because they have a visible impact on society and industries. As an investment banker, you will work on multi-billion dollar IPOs, mergers of some of the largest companies in the world, or merge companies in different countries. Closing a deal is a very rewarding and satisfying experience, especially when it makes the news on TV or the first page on the Financial Times. This sense of power and accomplishment is a big motivation factor for many bankers.
Things not to mention:
- The taboo topic: " because I want to make money"!
- Because you think it is "interesting". Bankers are number-driven people, therefore you cannot be vague or imprecise. You will need to substantiate with hard facts why you think it is interesting.
Nevertheless the answers above are just "valid" ones. While they wont take any points away from you during an interview, they won’t help you score points either. Investment Banking is competitive, so you'd better come with a great answer if you want that spot at the top investment banks.My on the topic is that you should add a personal touch by using a personal "story". However, you will need to be very honest, because interviewers will see right through a fabricated answer. Here are some good "stories" that I we have heard while interviewing candidates, and may apply to you also:
Your friend, family member or alumnus, who works in an investment bank, inspired you.
Bankers like to hear about this, because it means that you have a "real view" about the industry, and it also means that you have a good network. On a separate note, don't lie, because they will ask you which person and in which bank this person works, and may well check to see if you're making it up or not. The investment banking world is a very, very small world.
You won or took part in a stock-picking competition, or an M&A competition or event, and you really enjoyed it.
This is good because it shows your interest, but it also shows that you are competitive. Bankers like competitive personalities. Again, don't make this up, as many bankers like to check. I personally would call people and do an extensive Google search on applicants' CVs to verify most facts. It is fine if you didn't win, but at least make sure that you know the subject of the competition very well, because they'll definitely quiz you on this. Therefore, know what you did and what were your strategies.
You read a news item about an intense takeover battle and you found it exciting; this stirred your interest towards investment banking
This is good because it shows passion and interest for the job, and also shows that you made some research and have good finance knowledge. But make sure you know the transaction in every detail, and be prepared for questions such as, "Did the company pay in equity or cash? How much did they pay in total? Do you think the transaction makes sense?"
You did an internship in finance and loved it
It is good to highlight any prior experience in finance, even if it is not directly related to investment banking. What you need to show is that you like dealing with a lot of numbers. Be ready to explain what you did and liked about your experience, and explain your activities in detail.
>> A few words of caution here. First, make sure you did your research and know your "passion areas" very well, otherwise you will lose all your credibility. Also, be very careful on the use of the word "learn". Wanting to learn is great, but don't leave the impression that they will have to teach you everything! If you mention that you want to learn too often, they will tell you to go study a PhD or go back to university. I would rather emphasise the challenge than the learning aspect, or a combination of both. Finally, make sure your story is short, concise, right to the point, and sounds genuine. Bankers are well-known to have a short attention span.
To conclude, the key words here are: prepare well and be truthful. Do not EVER lie. If you don't know or can't answer, just say it. It is fine and doesn't mean all hope is lost. Also, I want to emphasise again that you should NEVER talk about money. If you are asked whether you are interested in money, just mention that the challenge and learning opportunities are the most important aspects to you, but you also like to be rewarded for good work.
First impressions do matter for any interview, for they matter even more for investment banking interviews. This is because investment banking is a client-facing business, and clients are often very senior professionals. Quality of work is often associated with how a person looks - therefore investment banks will pay a particular attention on how you dress.
Investment Banking Dress Code for Men
- A navy-blue, medium-to-dark gray, or black business suit is best (discreet pinstripes in these colors are fine too).
- Avoid green, brown, and light-colored suits. Don't wear different colored pants and jackets.
- Be careful to avoid too much cologne, as the interview room can often be very small; it is commonly observed that students’ cologne is overpowering. Limit yourself to one squirt in the morning before the interview. We put this item so high up on the list because it is actually the top complaint by interviewers who have to spend their whole day in a very small room and prefer not to be bathed in scent.
- Long-sleeve dress shirt. Solid white is always a safe option. If not white, light blue is another good option. You are not trying to make a fashion statement so you should be conservative.
- A conservative silk tie. Silk makes a nicer knot and dimple than most other fabrics. If you can't afford 100-percent silk, try a silk blend. Your tie should end in the center of your belt buckle, not above the waist or down to the crotch.
- Wear calf-length dress socks (not crew or tube socks) that match your suit, so that interviewers can't see your naked legs when you are sitting.
- Wear low-heeled, conservative dress shoes that are color-coordinated with your suit, ideally in black.
- Make sure your shoes are well polished.
- Don't go without a belt if you're wearing pants with belt loops. The belt should match your shoes (e.g., black with black).
- Get a professional haircut before the interview. If you have longer hair and really can't stand the thought of cutting your long hair for interviews, at least tie it back in a ponytail.
- Clean-shaven is the best way to go. If you have a beard, goatee, or moustache, shave it off for interviews. If you just can't, at least make sure it's well-groomed.
- Carry anti-perspirant with you if you are worried about sweating.
- Do not wear suspenders.
- Avoid wearing very expensive watches (i.e. Golden Rolex) if you do have one. It could generate feelings of animosity/jealousy.
- Make sure your nails are clean and cut short.
- It if fine to bring a briefcase or portfolio with you to the interview - much better than a backpack.
Investment Banking Dress Code for Women
- Either a skirt suit or a pantsuit is completely fine for interviews. Traditionally, a skirt suit is considered more conservative but there is absolutely no requirement to wear one. You can't go wrong wearing a solid navy-blue, black or medium-to-dark-gray business suit, with a solid-white or light blue, no-frills dress blouse with a high neckline. Long-sleeve blouses are best.
- Be careful not to wear too much perfume as the interview room can often be very small; it is commonly observed that students’ perfume is overpowering. Limit yourself to one squirt of your perfume in the morning before the interview. We put this item so high up on the list because it is actually the top complaint by interviewers who have to spend their whole day in a very small room and who would prefer not to be bathed in scent.
- It is highly recommended that you wear hosiery (skin-colored is best). Carry a spare pair in your bag, just in case the pair you are wearing develops holes or ladders.
- Wear low-heeled, conservative dress shoes (closed at the front and back) that are color-coordinated with your outfit.
- Don't go without a belt if you're wearing a skirt or pants with belt loops. Wear a dress belt that matches your shoes (e.g. black with black).
- Style your hair tastefully or have it professionally done. If it's long, wear it up or back, so you're not constantly flipping it out of the way. Don't wear a hairstyle that covers your face. Stick to discreet hair accessories if any.
- Avoid fingernail designs and bright- or odd-colored polish. Clear or no nail polish is best.
- Take a natural approach to applying makeup and avoid unusual or bright colors. Definitely don't apply sparkles to your hair or face.
- If you wear earrings, wear small, conservative ones. Wear only one per ear in the traditional earlobe position. It is best to opt for pearl earrings and/or necklace since it coordinates best with most conservative business suits. In general, keep jewellery simple, small and discreet. Not wearing any jewellery is also a good choice.
- Carry anti-perspirant with you if you are worried about sweating.
- It looks more professional to carry a briefcase or portfolio into an interview than a purse/handbag.
Investment Banking is attractive not only to fresh graduates, but also to a lot of professionals in other fields that would like to make the switch into the industry. The bad news is that it is quite difficult to move into investment banking if you are working in another industry or if you don't do something that is already somewhat similar to investment banking (i.e. accounting, audit, corporate strategy, strategy consulting). The good news, however, is that there is a very common and popular way to break into investment banking: the MBA.
Why is it difficult to switch into investment banking without an MBA?
Investment Banking careers are very standardised, and most people either join when they graduate from university, after an MBA, or they join from other banks. The exceptions are for qualified accountants, auditors, and sometimes for people working in corporate strategy, because their skills are similar and transferable, but even then, they're a minority and often have to start from scratch at the bottom.
The reason is that the lifestyle and skillset required for M&A work does not really exist in most other industries: extremely long hours (up to 100+/week), very high levels of stress, constant pressure, and ability to build complex valuation models from scratch (at all hours). Learning and adjusting to this takes a lot of time, so this is why the indutry is hard to get into from the outside.
Why do banks hire MBAs?
The turnover at investment banks is very high, especially at the analyst and associate levels (as an MBA, you join as an associate). Therefore, investment banks need an "outside" source for fresh investment bankers.
They choose to hire MBAs for the following reasons:
- It is convenient since everybody is already pre-screened. If you managed to get into a good business school, this means that you have already passed a screening process, so part of the job is already done for the banks. The banks use fewer resources, have higher conversion rates, and best of all, it’s free (no headhunter fees to pay!)
- MBAs are supposed to teach you about corporate finance, so part of the training you need is done for them. In theory, good MBAs will teach you corporate finance concepts and accounting, so the banks are confident that they won't need to teach you everything. In practice, banks will send all the MBA recruits for a one to two months’ finance training camp just to be sure.
- Business schools are full of people that need to pay back their MBA student loans. It’s not uncommon for MBA students to borrow over $100,000 for their study. Banks know it, and know that their salary package and/or a big sign-on bonus will attract a lot of students in need of hard cash in exchange for a few years of extreme labour.
What are the pros and cons of studying an MBA to do investment banking?
- There is a very structured process for MBA hires, which makes things much easier
- This is the only degree that gives a chance to people from ANY background, even non-finance or non-business!
- You will start as an associate, while a lot of other degrees make you start as an analyst (three years below!)
- The MBA gives you two chances to get into every investment bank that comes to campus: for internships, and for full-time work.
- You can use the alumni network and banking events to get to know investment bankers rapidly.
- Classes teach you about corporate finance and accounting, and ex-banker classmates can help you prepare for interviews.
- A very expensive and time-consuming way to get an investment banking job (but payback is quick, usually two to three years)
- An MBA teaches you some finance skills, but you won't really get any in-depth knowledge (compared to a Masters, for example).
- MBAs are usually looked down upon by other bankers, because they don't know much about finance when they start.
- The MBA doesn't guarantee you a job in investment banking!
When should I start an MBA?
As soon as you can, after at least one to two years of work experience. There is no need to wait to have three to five years’ experience or more to do an MBA. In fact, the younger you are, the better, and the more attractive you will be to investment banks. After around age 32 or 33, even with an MBA, it gets very hard to get a job in investment banking. The main reason is that the lifestyle is unlikely to appeal to people with families, or people that don't have the physical stamina to work extremely long hours. While some people in early or mid-thirties can still make the switch, it will require a lot of convincing to get the offer from investment banks.
Why not study a Masters in Finance?
A Masters degree can teach you a lot about finance. But usually, the network is not as great, banks most often make you start as an analyst and Masters are not really targeted for M&A recruiting.
Which MBA do you recommend for investment banking?
All MBAs are not equal. Investment banks are very selective when it comes to MBAs, so don't expect to find a job if you go to an unknown school. These are the best "target" schools to attend: Wharton, Columbia, Harvard, Chicago Booth, Stanford, Kellogg, Darden, Stern, Insead, IMD, LBS, IESE, HEC, and a few others. Outside of this list, it will be quite difficult to get into the best investment banks, but you might be able to get into lesser-known institutions.The traditional "investment banking" universities that place the most students into those jobs and with the largest alumni networks in banking are Wharton, Chicago Booth, Columbia, Stern, LBS and Insead.If you are interested in our MBA essay review service by alumni from top business schools, please get in touch at firstname.lastname@example.org
We often hear this question about brainteasers: "How important is the ability to make quick calculations and solve brainteasers in investment banking interviews, relative to other portions of the interview?" Simply said, "How important are brainteasers?" Brainteasers are not a major part of the interview process compared to your performance on the other parts, but they are useful for the interviewers for the following reasons:
1) Another test of analytical ability
Banks will test you in multiple ways, but sometimes, when they have to make the choice between several very good candidates, they will ask brainteasers to see who can do better.
2) Brainteasers demonstrate your ability to handle strong pressure
This is in fact the main purpose of a brainteaser. Bankers will often throw a question out of the blue, saying "What is 49 x 22" or "How many smaller cubes are in a 10 x 10 cube?" just to see how you react. Some people totally lose their concentration in such stressful situation even though they can be brilliant during exams or at online tests.Brainteasers can tell the difference. Good bankers need to be able to think clearly in stressful situations, so be ready.
3) They test your ability to structure your thoughts
With brainteasers, the best way is to tackle them step-by-step, with a clear logic in mind. Some people get confused and excited, and even though they may get to the final answer, they will look poorly organised and this will be weighted negatively. So how to handle brainteasers? The best way is to go step-by-step, slowly. Don't try to answer within five seconds. It is fine to say, "Please give me 30 seconds to organise my thoughts" and think through it.” The speed of your answer is the not the key; the key is the way you structure your answer. Also, investment bankers do not try to be mean or harsh by asking tough questions, they are just testing your reactions. Remember that they were in your shoes before, so relax.
Look at a few examples of brainteaser categories:
"If you add all the numbers from 1 to 100, what number do you get?" It’s clearly impossible to add the numbers one by one, so you know that there is a trick here. If the question sounds impossible, take some time to think and to try to find the trick - there is always a trick! The trick here is to think that the numbers from 1 to 100 can come in pairs that add up to 100. For example: 1 +99 = 100, then 2 + 98 = 100, etc, until you reach 49 + 51 = 100 and then you have 50 left on its own. Think about how many pairs there are. There are 49 pairs, plus the 100 left alone, and the 50 in the middle left alone. So 50 x 100 = 5,000 + 50 = 5,050. That's your answer.Another one: "what is 49 x 63?" The best way is to use easy numbers. 49 x 63 is in reality equal to 50 x 63 minus 63. 50 x 63 = 100 x 63 / 2 = 6,300/2 = 3,150. Deduct 63 from 3,150 = 3,087. You can use this "breakdown" method for almost every calculation. Even if you are not good at maths, you can still solve it easily this way.
"If it is 3:30pm, what is the angle formed in the clock between the minute hand and the hour hand?"Similarly, this is all about breaking down the problem and being careful. The answer is not 90 degrees; that would be too easy.Remember that the hour arm will also move as the minutes pass. The clock is a 360-degree circle. So every hour, the hour hand will move by 360/12 = 30 degrees. In half an hour, it will therefore move 15 degrees. Therefore the angle between the minute and hour arm will be 90 degrees minus the 15 degrees, or 75 degrees.
These may include the "jugs of water" questions such as, "You've got a four-liter jug and a nine-liter jug. You've got a pool of water. What are the fewest number of steps required to come up with exactly six liters of water?" I also have had the "pizza" question quite a lot, such as "How many cuts do I need to get exactly 16 equally-sized slices of pizza?" A very important point to note is that banker will very, very rarely come up with their own brainteasers, unless you come across a particularly nasty one! That means that they will usually Google a couple and change the data a bit, sometimes not changing the data at all! So the best advice we can give you is to practice a few of them by going through a Google search, and you should be ready. Remember, the most important part of the interview remains on personality and motivation.
Where do I find more practice?
You can take a look at our investment banking technical guide, which has an extensive section on brainteasers that you would typically get in investment banking interviews.There are also a few cheap brainteaser guides on Amazon, and we recommend the one below (although not specific to investment banking):
A few more free brainteasers for your practice:
How many disposable nappies were sold in the UK last year? (Estimation question)
How many times in a day are the hands of a clock at right angles? (Answer: 44)
How many numbers between 1 and 1,000 contain the digit 5 at least once (Answer: Think of how many numbers from 1 to 1,000 do not have any 5’s at all. This means that there are 9 possibilities for digits in the units, tens and hundreds place, or 9x9x9 = 729. So answer is 1000 - 729 = 271)
A car drives from point X to point Y, a distance of 60 miles, at an average speed of 30 mph. How fast would the car have to drive on the return leg from Y to X in order to average 60 mph over the entire journey? (Answer: not possible as one-way journey has already taken 2 hours. For average speed over entire journey to be 60mph, the total journey would need to be completed in 2 hours.)
You have 5 pots of coins. One of the pots contains only fake coins. The normal coins weigh 10 grams. The fake coins weigh 9 grams. You are given a weighing machine (one you would use to weigh yourself, not a balancing scales) and allowed to make only one measurement. How do you determine which pot contains the fake coins? (Answer: Take 1 coin for pot 1, 2 coins from pot 2, and so on and measure. The difference between the total weight and 150 will be the answer, e.g. if the weight is 143, then pot 7 is the one with fakes.)
At 3:30 pm what is the angle between the hands of a clock? (Answer: 90 - 30/2 = 75 degrees)
Often, if you are live outside the location you are applying to, or if a banker is travelling, you may be asked to do interviews by phone. Phone interviews are more difficult that traditional face-to-face interviews and you do not have the chance to use your body language or build a close rapport with the interviewer. Below are some tips to help you make the most of investment banking phone interviews:
The Basics: Confirm all aspects of the phone interview
It sounds simple, but getting this wrong may jeopardise your chances of passing the interview. Make sure you have the following:
Date, time, and length of the interview. For international interviews, double-check the time zone you are talking about (GMT, Continental Europe, EST, etc.), and that you will actually be available. Ask whom you will be talking to. If you are just told that somebody from XXX department will call you, ask for the full name and the position of that person. This will help your preparation. As a rule of thumb: Senior person (Director and Managing Directors) asks questions about your hobbies and background, Junior person (Analyst to Vice President) asks technical questions, HR person asks situational and personality questions such as “Can you tell me about a situation when …” or “Can you give me your three strengths and three weaknesses.”
Prepare the logistics well
Remember that investment bankers’ time is extremely precious and they will likely be in a rush when calling you. They may call you while doing something else, from a taxi on the way to the airport, or in between two conference calls. While they will likely be unprepared for the call, they will have little tolerance if anything goes wrong on your end, including these situations:
- No battery / no signal. It would be unacceptable to run out of battery during a call. If it happens, in some instances, you may not get a call back.
- Noisy background. Bankers will get in a horrible mood or even hang up if you’re calling them from the street, or in any kind of noisy environment (i.e. public places, train, etc.), or while doing something else. Make sure you are in a quiet space and undisturbed.
- Flipping pages or typing on a computer. Many candidates, when they are asked technical questions, will try to flip through books or check the answer on the Internet. You can ALWAYS hear people typing or flipping pages on the phone, and that’s an immediate “reject”. Don’t do it. Have some paper and a pen to take notes if needed, but as mentioned in the point above, don’t flip through books or pages or take notes on a computer.
Do your (comprehensive) research
Abraham Lincoln once wisely said: “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Even if this point seems obvious, most candidates fail because they did not prepare well enough. A well-prepared candidate will sound very different during the phone interview (i.e. more confident voice, clearer speech delivery), and this is absolutely key. In addition, investment bankers have little tolerance for lack of preparation and simple errors, so make sure you tick off every item in this checklist:
- Prepare a good answer for questions involving “why our bank, why our team”. Since you know 100% that this question will be asked, there is no excuse for a weak answer. Surprisingly, most candidates fail in providing reasonable answers for this simple, predictable question. Check the latest news on the bank and the deals they have closed recently.
- Google your interviewer. You should have their name before the interview, so Google them, check their profile on LinkedIn, and try to find common points or interesting conversation topics.
- Prepare yourself for “Do you have any other questions for me”, as you know that this will come 100% of the time. Do not ask about money or working hours,obviously.
- Prepare for every other question that you know will be asked, such as “Walk me through your resume”, “What kind of hobbies do you have”, “What did you learn while working at xxx?”
Practice your speech
You can always spot unprepared candidates on the phone because their speech will be hesitant and they will use filler words such as “like”, “actually”, “you know”, “hem” frequently. Preparation will avoid this to a great extend. Do not just “think” about what you will say, actually say it as if you were interviewing! Identify all potential questions that will be asked and practice your answer out loud. This will help make you sound more confident on the phone and will leave a good impression.
Also remember to speak slowly and clearly, especially if you have a foreign accent. Another good tip: standing up while doing interviews (as opposed to sit in a chair or on your bed) will tend to make you sound more confident.
Don’t forget your manners, even if the banker is rude himself!
Below is a clean list of London-based boutique investment banks with M&A departments. Boutique investment banks are usually smaller investment banks that specializes in certain types of sectors or companies. They tend to work on smaller deals or niche deals, usually below a billion dollars. Often, they will work on the the sell-side of a deal (i.e. helping sell a company as opposed to helping buy a company). They are good places to consider if you didn't get an offer at the bulge brackets as they are not sensitive to poorer academic records (except for the most prestigious ones) and will be a first good step into investment banking.
- Akur Partners. This independent capital markets adviser provides corporate finance advice, asset management, and deal execution.
- Alvarez & Marsal. Large accounting firm providing management consulting and transactionservices.
- Ambrian Capital London boutique investment bank specialised in Mining, Oil & Gas, Cleantech and Life Sciences
- Aperios Partners. Aperios Partners is a financial services group with activities in Investment Management and Investment Advisory.
- Aquaa Partners. Aquaa Partners is a London-based corporate finance advisory firm focused on the Telecoms, Media and Technology (TMT) industries
- Arma Partners London-based boutique that focuses exclusively on the Telecom, Media and Technology sectors
- The Blackstone Group Blackstone is not only a private equity firm, they also offer M&A and restructuring advice, and have a well established presence in London
- Boenning & Scattergood Philadelphia headquartered boutique with offices in London
- Brewin Dolphin British Investment Management firm with £23 billion under management, also doing M&A advisory
- Bryan Garnier & Co - Bryan Garnier & Co is an investment bank that specializes in European growth companies. The company caters to corporations, venture capitalists, institutional investors, and private clients through asset management, corporate finance, sales, and trading.
- Brown Brothers Harriman Oldest and largest private bank in the USA, 4000 thousand staff globally with an increasing focus on investment banking
- Cain Brothers. Investment bank focused exclusively on healthcare
- Cairn Financial Advisers. Expertise in IPO and Takeover Code transactions for prospective and current AIM and ISDX companies
- Cannacord Genuity Hawkpoint. Canaccord Genuity is a global, full-service investment bank focused on growth companies, with operations in 10 countries worldwide and the ability to list companies on 10 stock exchanges
- Cenkos. Cenkos Securities is an independent specialist securities firm focused on UK small and mid-cap companies
- Climate Change Capital boutique asset management and corporate finance advisory group
- Corporate Finance Associates. Corporate Finance Associates is an international investment banking firm providing mergers & acquisitions services including selling a business
- DC Advisory Partners Formerly Close Brothers, M&A boutique with a strong reputation in the UK and Western Europe
- Europa Partners. focus on five key sectors Media – publishing, broadcasting, exhibitions, creative services, Luxury goods – brands and retail, Professional Services – legal, consulting, creative industries, Specialist Advisory and Culture and the arts – venues, charities, events
- Evercore Partners US Boutique founded by Blackstone and Lehman Brothers alumni, with a growing presence in London
- Financière Cambon is a boutique investment banking firm that provides financial advisory services to the information technology sector. The firm offers mergers and acquisition, private placement, financial engineering, and business disposal and valuation advisory services. Additionally, it provides legal consulting services. The firm caters to information technology, telecommunications, and media sectors. Its clientele include Sushi Shop, Easyvoyage, Blue Consulting, Beezik, and Teleca group. Financière Cambon was founded in 2003 and is based in Paris, France with an additional office in London, United Kingdom
- First Capital - FirstCapital is an independently owned investment bank providing mergers and acquisitions, private equity and growth capital advice to high growth technol
- GCA Saavian Boutique investment bank that is the result of the merger between GCA, a Japanese boutique, and Saavian, a US boutique. Developing its presence in the UK.
Gleacher Shacklock Specialist UK boutique of 30 people, based in London
- Global Counsel. We provide direct counsel to corporate strategists and senior management. We act as a sounding board for business leaders on business development, public policy and regulations, market-entry, M&A and deal origination.
- GP Bullhound LLP - GP Bullhound LLP is a boutique investment banking firm that offers financial advisory services to emerging growth companies in the technology sector.
- Greenhill & Company One of the most prestigious US Boutique investment bank, with significant presence in London
- Green Square Partners. Green Square is a corporate finance advisory practice providing M&A to media and marketing communications businesses.
- GrowthPoint Technology Partners/ - GrowthPoint Technology Partners, LLC is a boutique investment banking firm that provides mergers and acquisitions, fundraising, and strategic advisory services to a wide range of information technology, energy technology, and healthcare IT companies.
- Hampleton - Hampleton is a corporate finance advisory firm. The firm provides mergers and acquisitions and sell-side advisory to technology-based sectors including SaaS and cloud services, mobility, IT services and outsourcing, internet commerce, infrastructure, information management, enterprise applications, and digital marketing. Hampleton is headquartered in London, United Kingdom with an additional office in San Francisco.
- Harris Williams & Company Global Boutique Investment bank focusing on the middle market (smaller companies)
- Houlihan Lokey US boutique investment bank with global offices, with a very strong reputation in the restructuring space.
- Investec. South aftrican bank with a focus on UK, South Africa and Australia.
- Liberium Capital London and NY based boutique with about 130 staff, founded by Collin Stewart ex-CEO, with a good track record in M&A.
- Livingstone Partners Mid Market M&A boutique, with good presence in US and Western Europe
- Magister advisors - Magister Advisors Limited offers financial and strategic advisory services to later stage companies.
- Moelis M&A boutique founded by Ken Moelis, Ex head of Investment Banking at UBS. Strong in the US, has a London office
- Mooreland Partners LLC - Mooreland Partners LLC is a boutique investment banking and financial advisory firm that caters to public and private information technology companies.
- Natrium Capital is an independent Mergers and Acquisitions (M&A) advisory firm specialising in providing high end strategic and M&A execution advice in the areas of chemicals, materials, biotechnology and clean technology.
- New River Corporate Finance. New River Corporate Finance LLP is an independent corporate finance business, advising on transactions in the UK and internationally.Our clients operate in four sectors: Energy & Infrastructure (including Renewable Energy and Transport); Technology, Media and Telecoms; and Finance & Funds.
- Panmure Gordon Boutique investment bank with offices in London and San Francisco, better known for its involvement in Technology transactions
- Perella Weinberg Partners one of most prestigious boutique, founded by M&A Legends Joseph Perella and Peter Weingberg (ex-CEO of Goldman Sachs)
- Piper Jaffray One of the largest US-based investment banking boutique with offices in London
- Qatalyst Partners LP - - Qatalyst Partners LP is a boutique investment bank that offers technology focused advisory services. It provides merger and acquisition and corporate advisory services. Qatalyst Partners LP is based in San Francisco, California with an additional office in London, United Kingdom.
- Quest Corporate. Quest is a Corporate Finance Boutique based in Edinburgh.
- Seymour Pierce London-based boutique investment bank, with a good reputation in equity research and an M&A team
- Stella Capital Advisors LLP - - Stella Capital Advisors LLP provides financial advisory services focusing on the media, Internet and technology (MIT) sectors.
- Thomas Weisel Partners US Boutique focused on the technology sector, with strong presence in London
- The Valence Group, LLC is a boutique investment banking firm that provides financial advisory services to chemicals and materials industries. The firm offers mergers and acquisitions, fairness opinions, valuation, cross border transactions, bid defence, and buy and sell side advisory services. Additionally, it provides environmental liabilities, carve outs, supply agreements, regulatory compliance, and intellectual property consulting services
- William Blair & Company Chicago headquartered-boutique with significant London based-presence, running Analyst and Associate programmes.
- White Oak Advisory. is an independent financial advisory firm providing specialist, high-level and impartial advice to governments and other clients on matters relating to sovereign finances and sovereign debt
- Zaoui & Co. . Michael and Yoel Zaoui established Zaoui & Co. in 2013 to advise select clients on mergers, acquisitions and other strategic and financial transactions, and investment decisions
Investment Banking Assessment centres are simply extended periods of interviews organised by London investment banks and held at specific locations (such as a hotel, or in the bank itself). Those interviews can include numerical and verbal exercises, case studies, and more traditional face-to-face interviews, either in group or individually, and often both.
Assessment centers are targeted at small groups of candidates that have already passed online numerical and verbal tests, and that have also usually passed a first round of phone interviews. Investment Banking recruiters use assessment centres in addition to the application, online tests and traditional interviews to find out how the candidates react and perform in variety of "real-life" situations that are similar to what you will encounter as an investment banker. For example, group presentations are situations you will often face as a banker presenting to clients; similarly, the numerical and verbal tests are designed to test your ability to handle complex financial models and large amounts of data under time pressure.
What should I expect?
Interviewers will judge you on your overall performance at various tasks and make a decision to hire or not. Therefore, you need to be quite balanced and do well at most of the tasks, which is indeed difficult. Assessment centers can only last one day (morning to evenings), or be spread over several days. In the majority of cases, it will include the following:
The first task when you arrive will be to retake verbal reasoning and numerical reasoning tests. Even if you have taken those tests online previously, the bank will ask participants to take those tests again, to confirm your previous results. They are usually paper-based and can be slightly more difficult than the online version, or longer. The best way to practice is by going on to the SHL website and trying the sample exams. If you check on Google, you might be able to find a few other samples and free tests too. If you find SHL tests very difficult, it may be worth buying some of their guides. My advice is to try all the easy questions first, and come back to the hardest ones later.
This is often a quite standard assignment, in which you will be asked to prepare a presentation in a group or individually on a banking-related topic. For example, you could be provided with a case study that includes extensive information on several companies, and be asked to present and decide on which one should merge and why. You may also be asked to create a SWOT analysis. Those exercises can be either individual or in a group, oral or written, and usually involve some form of debate between applicants. The best way to prepare is to read finance publications regularly and simply use common sense! You should also be familiar on how to use PowerPoint and with basic Excel.
This will be similar to the first assignment, except that this topic will not be finance-related. If the first one was individual, the second will be in a group, and vice versa. It will usually be a logic problem requiring you to make logical assumptions and demonstrate some judgment. You could be asked for ways to sell a bike, or how you would organise an event. This is essentially to test your common sense and ability to think logically, and also (if this is a group exercise) your ability to work in teams.
Those usually come at the end of the process, right after lunch or on the following day. Some banks choose to cut people from the process before going to the interview stage to narrow down applicants. Those will be interviews from senior investment bankers, associates, Vice Presidents, and even Managing Directors. Bankers will test your motivation and your answers to "Why Investment Banking" or "Why our firm?" They will test your understanding of finance and also try to find out about your personality to decide whether it fits with the bank's culture. The best way to prepare is to practice answering the two questions above, practice some brainteasers, research the banks well, and just be natural.
Banks will cover travel expenses, accommodation expenses and meals, subject to a maximum cap.
Wear business formal suits at all times. Dress to impress, while remaining conservative. Don't try to stand out by wearing unusual colours or fancy suits. Essentially, dress as you would expect bankers to dress; black shoes and dark suits should be matched with conservative shirts and ties, or conservative business dresses for women.
While the process itself is competitive, you should not see yourself as competing with your fellow candidates. While interviewers will compare candidates, trying to be aggressive toward other candidates is the best way to be eliminated. Therefore do not feel obligated to criticize each other or play any tricks, as this will only damage your reputation among the students (many of whom will become bankers in the city, future colleagues and bosses), but also your reputation among investment banks; recruiters from different banks do talk to each others.
As a student, you may be wondering about the importance of European Languages. Is it a big weakness to only speak English or non-European languages? As an international student, what can you do to excel in interviews? From what we've experienced, here are our observations:
Speaking 1+ European languages does give you an edge over other applicants
London-based banks cover the entire European continent, and often, they also cover Middle East. If you think in terms of the most active economies outside of the UK, three countries (Germany, France, and Italy) spring to mind; therefore, those languages are often in high demand. As an analyst, you often need to go through research reports, financial statements, and other data, which for some countries are only available in the companies' native language. In some cases, teams will focus on hiring a specific language speaker if they often deal with a specific country (i.e. a Russian speaker for Oil & Gas teams), because hiring the services of a translator would be too complicated.
The other very popular languages are Nordic and Eastern European languages, as those regions have been very active in terms of M&A activity, and also because the supply of native speakers from those smaller countries is much lower than for bigger countries such as Germany or France. Additionally, speaking various languages means that you will be a more "transferable" resource. For example, if you are a French speaker, it would be possible to send you to work in Paris or Brussels for some time if the need arises.
While speaking European languages is an edge, but isn't the critical decision factor
Between two very similar candidates, you would pick the one that has something more than the other. It could be better grades, more extra-curricular activities, or speaking more languages. This is to say that speaking multiple European languages is an advantage, but will not guarantee you the job. The most important criteria for hiring an investment banker still remain i) a good attitude, ii) good personality, and ii) analytical skills. You could be fully trilingual or quadrilingual, but the person who only speaks English and nothing else will still get the job if he/she is doing better during the interviews and has a more pleasant personality.
Given that banks are such large institutions, they will always be able to find French, German, Swedish, or Spanish speakers in other teams who can help if needed. In a worst-case scenario, they will ask people from the local offices to help them with translation and research or ask a junior banker if she/he wants to transfer to London. The evidence is that many analysts in London investment banks are from China or India, and they do get hired despite their inability to speak any additional European languages. As long as they do well during the interviews, and they are liked by the hiring team, they will get an offer.
Remember that "cultural awareness" is as important as the practical use of languages
Banks are very global and multicultural organisations. Therefore, you will need to interact with people from different countries and different backgrounds on a daily basis. This is why investment banks, when hiring people, look for a "multicultural" dimension, that shows you are able to deal with those different cultures. If you are British, they will look for evidence that you spent some time abroad: as an exchange student, for an internship, or for some personal travel. If you are from outside Europe, this will be a positive as they will know that you will be knowledgeable about different cultures.
Be aware that whatever language you speak, you can be assigned to ANY deal
Even if you are a native French speaker, you will still be assigned to work on German deals, Turkish deals or Greek deals. Do not expect to be constantly assigned to deals based on your language ability. It is common practice to assign at least one or two native speakers to a specific deal at the junior level to help with some translation, but that may be a more senior associate or even an intern.
As a student or junior banker, you will typically find yourself interviewing with multiple investment banks, sometimes in different regions, divisions, or even industries. If you're lucky and good enough, you may end up with multiple offers. If you get your top choice, you would simply accept it and refuse the others. But should you really care about other firms? And for internships, would refusing an internship offer destroy your full-time opportunities?
How to refuse an offer - the etiquette
This seems like a straightforward question; however, a lot of people handle this very badly. First of all, make sure you do reply - don't ignore them or take too long to reply. Second, don't be tempted to be arrogant or cocky in your reply, such as "Sorry, I'm not interested as I received an offer from Goldman Sachs". Always reply in a very positive and polite way, such as: " Dear James, it was nice meeting with the team two weeks ago, and I would like to thank you for this opportunity. However, after careful consideration, I have decided to join the Goldman Sachs TMT M&A team. Thanks again for the opportunity. Best Regards, XXX."
Especially for interns, this is extremely important because you might need other internships in the future - what if you decide to do an MBA later and need an MBA internship? Refusing won't impact your chances for full-time or for another internship provided you handled the rejection well.
Can you refuse an offer when you've already signed?
Imagine this situation: you've signed with a second-tier bank, but a week later you get a call from a top-tier bank, saying that there is a spot for you. For interns: be aware that this is a very risky move. You'll definitely be blacklisted at the second-tier bank, and the word might spread that you went back on your promise. You have to make a judgment call - is it worth taking the risk? You will need to consider the difference in prestige between the firms, the difference in the offered roles, and the reputational impact. In theory, you are contractually bound to accept the terms of the offer, although you could possibly resign on your first day. In practice, you should try to find a compromise with the bank that gave you the offer.
Besides your degree, grades, internships and other experience, there a several ways to improve your CV to make it more attractive to investment banks. Below are few extracurricular activities that we recommend to improve your CV and stand out when applying to investment banks.
Sports/Games: Investment bankers like people who play sport/games at a competitive level
This looks good on the CV, and is a great way to find a conversation topic when discussing with Human Resources and investment bankers. Sports or other competitive activities such as chess not only show leadership and team playing skills (for team activities) but also that you are not afraid of competition. Mentioning that you play football, tennis, or any other sport on the CV is usually not enough; it’s best to mention competitions where you achieved impressive results, mentioning that you are captain of a team, or that you reached an expert or high level (i.e. black belt in judo). Also, be prepared to discuss the latest about your favourite sport/activity during interviews - don’t mention that you are a strong tennis player if you don't know who won Wimbledon last year!
Student Clubs: become an active member of a Club or Society, not necessarily business- related
Club memberships are great if you can demonstrate that you are "active". This means that you need to show that you have been organising events, holding a position of responsibility within the club, or anything that shows your leadership or organisational skills. You don't have to be a member of a business-related society (unless if you are studying for a non-business degree, to show interest in finance). The point here is to show initiative and leadership potential.
Volunteering: take part in off-campus activities
Volunteering for a good cause is not only a great way to give back to society but it also looks great on the CV. It typically shows that you have good interpersonal skills and initiative. Often, volunteering will also allow you to show leadership if you coordinate fundraising, help a group of children, etc.
If you are interested in a specific business, why not ask a finance teacher to help on some research, or even propose a research topic to him/her? Similarly, you could offer to do some free industry research for venture capital funds or screen potential targets for them. This will be a great addition on the CV, will be a great source of learning, and might even lead to a potential job offer or internship.
Launch a Startup
Thanks to the Internet, online businesses are easy to launch nowadays and require minimum capital. Anyone can start a small business with a good idea. This is a great way to learn, it shows business acumen, and is a great opportunity to generate some extra cash. You can use this experience to demonstrate your understanding of finance during an interview; for instance, a talk about cash flow generation, working capital needs, margins, and growth is a perfect way to impress an investment banker.
Virtually all investments banks and boutiques will ask you for a cover letter as part of the application process. But how important are those cover letters and what should you really write in investment banking cover letters? Below is some key advice:
What are cover letters?
A cover letter is a one-page document that accompanies your CV and is aimed at summarising the following points:
(i) Which job you are applying for
(ii) Why you are interested in the job
(iii) Your strengths and competencies that make you a good candidate for the job
Who reads cover letters?
Given the large volume of applications that investment banks receive, very few people actually do read cover letters. If they do read them, bankers or HR personnel will likely only spend no more than 10 seconds reading a cover letter. At smaller firms (i.e. small boutiques), bankers may spend more time reading cover letters because the application volume is lower and also they may want to find out the motivation of the applicant to apply to a smaller firm.
If not many people read them, what is the point of cover letters?
The reason why almost all banks ask for cover letters are the following:
- It adds another "barrier to entry" to the application process. It simply means that you have to spend more time on every application for every bank, which is some test of your motivation. That is also why graduate applicants need to answer so many questions and write essays.
- It prevents random "CV bombardments". If banks were simply to ask for CVs, they know that students would just send the same CV to every single bank irrespective of their real job interests to maximise their chances. Because cover letters need to be tailored, this prevents mass-scale applications.
- It forces the applicant to research the company and think about why they want to apply. It is good for the company because only students who are genuinely interested will apply, and it also creates some natural advertising; not many students may have heard of some of the smaller boutiques before they started to look for a job!
- Finally, it remains a test of your ability to write concisely and do some basic research. If you write a good cover letter, it may not help your application much, but writing a poor one will definitely hurt your chances! So you still need to pay attention.
What should be the structure of investment banking cover letters?
There are no "investment banking" specific structures for cover letters, though a typical structure is as follows:
Paragraph 1: Summary of the job you are applying for and where you heard about this job.
Paragraph 2: Why you are interested in the job, and why the company in particular.
Paragraph 3: An explanation of your relevant skills for the job that make you a strong applicant.
Paragraph 4: Thank the company and say that you are looking forward to hearing back from them.
Can you give me some tips, Do’s and Don’ts?
- Do: spell and grammar check, be specific to the company (not too broad), mention your unique skills/selling points, make sure the skills are relevant to banking
- Don't: exceed an A4 page, sound too arrogant when selling yourself, rehash your resume (highlight the very key points instead)
- Students who want to break into finance, especially investment banking
- Experienced professionals who want to break into investment banking
- Investment bankers and strategy consultants who want to break into Private Equity
How is AskIvy different from any other review service?
For investment banking reviews, guarantee that your CV will be reviewed by an experienced bulge bracket/ investment banker at the associate level or above (e.g. minimum of three years’ experience in investment banking). For private equity reviews, guarantee that your CV will be reviewed by experienced private equity professionals.
Details of the service
1. Full CV review based on your career ambitions, which includes comments on CV content + suggested changes
2. Separate recruiting strategy advice i.e. best type of firms to approach, gaps to fill in the CV and experience, advice on "positioning" yourself
3. Cost: £75.00 / review + career advice commentary (PayPal payment)
Please enquire at email@example.com for details, and provide (i) CV/summary of your background and (ii) type of job you will be looking for.
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Many students who we have talked to think that the "personal interests", "other interests" or "hobbies" section is not the most important thing on your CV. Here is a CV tip: while your academic performance and professional experience matters, this section at the bottom of your CV is often quite important too. Why?
1. Your interests show the bank how well-rounded you are
Being a "well-rounded" person is a recurring recruiting theme among investment banks. Nobody wants to hire an academically gifted person who would not be able to hold a casual conversation with a senior banker or a CEO for a few minutes. This is often called "the airport test": interviewers will ask themselves, "Would I like to be stuck in an airport with this person?" Showing that your interest in sports, interesting hobbies, or anything else outside study and work indicates that you are a well-rounded person. Therefore, pay particular attention to showing that you are neither a nerd, nor a workaholic.
2. They show the bank your potential leadership skills, creative skills and open-mindedness
This section at the bottom of your CV is not there to look nice or to fill some space. Every aspect of this section, every hobby, needs to show something about yourself that will improve your candidacy. For each aspect, it will need to either show: leadership, creativity, stamina, or intelligence.
- Sports: If you were the captain of your rugby team, this instantly shows the bank that you have great leadership skills and will be able to manage teams in the future, which is an extremely important skill for a banker. If you won competitions (or at least ranked in the top three), this will also show leadership skill and stamina, as well as a competitive spirit. This will score you a lot of points during interviews. More unusual sports such as rock climbing or diving tend to attract much more interest.
- Hobbies (outside sports): Do not list a range of common, boring hobbies. Definitely avoid mentioning reading, watching movies, chess or travelling. This is something that everybody does.
- Extra-curriculars: activities such as managing small businesses (i.e. online businesses) or being managing members of clubs will score you many points.
- Languages: Do mention linguistic ability following these categories: native, fluent, intermediate, or beginner. Never overestimate yourself because you WILL be tested at some point, even if you speak a rare language.
- Warnings: Watching movies is generally not a good hobby to mention (everybody does it). Chess is a very common hobby, as students often try to use it to show "intellect" or "strategic thinking," but only mention this if you are part of a club or won some real competitions. Finally, art is an excellent topic but choose carefully and make sure you know about the topic, because you will likely be quizzed about it.
- Final warning: do NOT mention fluent English in your application.
3. Interesting personal activities will give you an edge at building a relationship with the interviewer
If a person lists as interests "jogging, travelling, and fishing", it will be hard for the interviewer to connect with the applicant; the conversation will remain very formal, and they will probably spend the extra time drilling you on harder topics. However, if somebody mentions on the CV, "ran London marathon twice" or "climbed Mount Kilimanjaro in 2007" or "launched a small online florist", the conversation will flow naturally and easily. In fact, more time will probably be spent on talking about your hobbies than banking, and this will leave a very positive feeling with the interviewer. Overall, our advice is to use the personal interest section to differentiate yourself from other applications.When writing your CV, do ask yourself: "How does this hobby add value to my application?" and "What does this hobby says about me?"
If you would like your CV to be reviewed by AskIvy, please see our CV Review Service here.
Jobs in M&A are among the most contested and competitive in investment banking. But beyond the potentially large bonuses, what are the advantages of working in M&A - does it make sense to start in M&A if you do not want to be banker for life? Below are a few additional reasons why we think the idea of starting your career in M&A is compelling.
1. The money is great
As a junior banker, you will accumulate money rapidly because of bonuses and because working 24/7 means that you are not spending money. Many use the money to live the high life: expensive holidays, dinners out, clothes, cars, and gadgets. Wise junior bankers tend to keep the cash to realise bigger dreams. Examples include saving to invest in a startup for wannabe entrepreneurs, use it to finance a top MBA, invest in property/other assets, or simply build a safety net before taking a more high-risk, high-return type of job.
2. It builds your resilience and stamina
Working in M&A teaches you how to consistently deliver under very high pressure. It's a bit like going to the Army. After a couple of years in M&A, you should be able to handle last-minute situations, keep your cool at all times and produce high-quality work at 3 a.m. in the morning without a problem, which is a great asset in any job.
3. It teaches you discipline and attention to detail
Those long hours spent checking models and presentations and making everything perfect to the tenth decimal point will transform you into a highly efficient analytical machine. You will leave M&A with a lot of built-in automatisms that will be an asset throughout your future career. Ex-M&A bankers can make sense of complex data intuitively and rapidly, and they have extremely high quality standards.
4. It develops your people skills
M&A is a very tough environment to navigate and requires a lot of street smarts - there is a strong hierarchy, people are stressed and tired all the time, the stakes are high, people get fired every year, and it is highly competitive. The thick skin and "political skills" you will learn in M&A will be a great asset in any other environment.
5. It gives you early exposure to "big picture" corporate strategy
Apart from management consulting jobs, no other job can give you the same level of exposure to corporate strategy at such a junior level. You'll be working with CEOs and CFOs on corporate restructuring, strategic acquisitions, and IPOs; the learning curve will be unparalleled.
6.You will learn to multi-task and manage projects
"Multi-tasking" sounds easy. But when you are working on three deals at the same time, it is 3 a.m., and you still need to work through another 15 urgent requests to be completed by 9 a.m., your skills are really put to the test. M&A bankers are great project managers. Learning to prioritise, break down tasks, and stay cool under any circumstances are some of the skills you will develop in little time.
7. M&A is a stepstone to any work you choose to do next
Corporate strategy, private equity, hedge funds, startups, you name it. M&A is one of the few jobs that opens the door to practically any other job in the business world. If you are not sure what to do next but want to keep your options open, M&A is the ideal start to your career.
8. The downsides
The job has its downsides, of course. Apart from the fact that the hard work might reduce your lifespan by a couple of years, many junior bankers do turn into obnoxious individuals after a stint in M&A. If you lose perspective, M&A could turn you into a narrow-minded, arrogant, money-driven machine that only measures life success in number of deals closed and year-end bonuses. The secret to avoid this is to maintain hobbies outside work, keep your ego in check, stay in touch with the real world as much as possible (i.e. have non-banker friends), maintain a healthy lifestyle, and don't forget your long-term goals and dreams you had before signing for the job!
Due to its position as a natural gateway to a fast-growing China, Hong Kong has now become one of the most important financial center in the world, and is attracting a number of high-flying financiers. For investment bankers, the combination of the low-tax environment, a different lifestyle to that of London or New York, and most importantly the possibility to take part in China's considerable economic rise are key factors that drove many to investment banks based in Hong Kong.
Hong Kong as a financial centre - a brief history
After being ceded by China to the British in 1842, the colony of Hong Kong rapidly became a regional hub for trade with China and South Asia. Hong Kong initially started as a shipping and textile export center, but China's open-door policy (in 1978) was the year that marked the new era of Hong Kong and its re-birth as a major economic and financial center. Manufacturing moved out to mainland China, was replaced by services, and Hong Kong GDP boomed as trade and investment links with China exploded. Hong Kong has been handed back to China in 1997, but it is still the
favoured place to do "China business" for many financiers. Hong Kong maintains a sound British-style legal system, has had a stock market since 1891 (the largest in Asia after Tokyo), English is spoken fluently, overall markets are well-managed, and the Chinese government is not too involved with its business (yet).
Finding a an investment banking job in Hong Kong
If you want to get an investment banking job in Hong Kong, you should note that China's economic rise hasn't gone unnoticed by top students and investment bankers across the world. More Chinese students and investment bankers now want to go back home as opposed to staying in the U.S. or Europe, which has significantly increased the supply of qualified candidates with local knowledge and language skills. On top of that, competitive salary packages, low taxes (max. 17%) and opportunities to work on mega-Chinese IPOs are attracting top-notch investment bankers from
London and New York. In other words, if you do not speak a local language (Mandarin, Cantonese) or do not have useful experience or local contacts, competition will be very intense.
There are basically two cases:
1) You are a foreigner or don’t have local languages and networks. In this case, hurdles are big and you will not be received with open arms given that:
- As a junior banker (analyst, associate, even VP), you won't really bring any industry or deal experience to the table.
- Not having local language skills means that you won't be able to attend some meetings and won’t be able to perform certain tasks, such as drafting documents in Chinese or be on conference calls. Essentially, somebody else will have to do your work.
- Finally, foreigners are rarely committed to stay in the region long-term for either personal or career-related reasons. Because of this, you won't be taken seriously by clients or senior management. What can you do about it? Try to start in London and ask for a transfer later on, or network very very hard and start to learn an Asian language!
2) You are local or a "returning" resident. Job hunting is much easier if you have local ties in China or Hong Kong, but you will still face intense competition. For London-based students and bankers, the best way to move to Hong Kong is often to start in London and ask for a transfer or look for a job at the associate level (after two to three years). A London experience will certainly give you a strong edge and earn you respect from colleagues and clients alike! In addition, analyst training is substantially better in Europe so you'll stand out compared to your peers, and analyst lifestyle is also much better in Europe so you'll avoid some suffering.
Investment Banking Professional Experience in Hong Kong
Investment banking in Hong Kong will be an entirely different experience to that of London (or anywhere in Europe and North America), and is usually considered to be a less prestigious location for investment bankers. The main reason is that Hong Kong and China are less sophisticated markets. Getting deals done relies more on "network" than strong execution skills or original ideas. Also, China is not a big M&A market, but is largely ECM0driven: there are a lots of big IPOs, but not much M&A going on, and even fewer LBOs. This means that you will spend less time doing complex models and executions, and much more time writing prospectuses and travelling to talk to clients about latest market and industry trends. The conclusion is that technically, you will never be as good as your London counterparts, but it’s not all bad. If you intend to stay in the region for the long-term or move on to another job locally, you don't need to be a modelling star anyway, and it is the network you are building over the years that counts.
If you intend to go back to Europe, you will still be able to catch up on those skills and having the "China experience" on the CV is an interesting differentiating factor. Finally, IPOs tend to be very profitable and this will be reflected in your year-end bonuses.
Investment Banking Lifestyle in Hong Kong
> Working hours and Work-Life balance: Investment Bankers in Hong Kong work extremely hard and competition in the office is fierce, so prepare yourself for very long hours, especially as an analyst. On top of this, you need to add frequent travels (Hong Kong is a small island - your clients will mostly be in China) and a good dose of "socialising" with your colleagues and clients after work. Face time is also more common in Asia for cultural reasons, so working 100 hours a week is commonplace, but it gets somewhat better as an associate. On a positive note, clients tend to be relatively respectful of weekends so you'll eventually get some down time.
> Quality of living: All will agree that Hong Kong is fun, and this is the key attraction for many. The food is great, the city is lively and exciting, China is just a subway ride away and it is a fantastic place for young singles to have fun.
There is a strong financial community and plenty of Western and Chinese-style entertainment which can rival the offerings in London and New York. The only issue with Hong Kong is that it is heavily polluted (it’s right next to China's manufacturing heartland). and space is scarce, so everything is intensely small and packed. If you like the green, quiet and open spaces of London, Hong Kong may not be the place for you.
> Cost of living: Your main cost in Hong Kong will be a decent accommodation, which can get very expensive. The issue is space. Prices do vary quite a bit but it is not uncommon to pay anything from 30% to 50% of your salary on a small one-bedroom flat which is a close commute to work. In this regard, Hong Kong is much more expensive than London and New York. Nevertheless, many banks do subsidise housing to some extent. Other than that, food is especially cheap and other expenses (commute, entertainment, travel, etc.) are also cheaper than in London.
Investment Banking compensation in Hong Kong
While salaries and bonuses at the junior level are pretty much in line between the two cities on average, on an after-tax basis, Hong Kong bankers will earn much more due to the very low tax rate. On top of that, because housing is so expensive, many banks do subsidise housing in the form of a housing allowance. For locals and native speakers, after a couple of years, there will be many opportunities to work in mainland China at some point or for mainland Chinese banks, which can prove to be incredibly lucrative.
Investment banking is often perceived as being synonym with long working hours, weekend work, and very little sleep. A natural question therefore often follows: do bankers have a social life?
Based on our experience, of course they do. London-based investment bankers tend to have much better hours than bankers in Hong Kong and New York, and more holidays; in general, Europeans are much more concerned about junior bankers' personal lives. However, do not expect to be home by 7 p.m. every day, and do not plan to enroll in Saturday yoga lessons. This is a view of what you life as a junior investment banker will be like:
Your social circle will quickly start to revolve around other junior bankers
It is a fact that most bankers' friends are themselves bankers. Your friends will often consist of other junior bankers in other teams (i.e. different industry groups, or departments) and junior bankers in other banks.
First, other bankers will be the only ones who can understand your hardworking lifestyle (working very long hours, weekend work, emergency calls to the office) and the only ones who can share with you "war stories" and rough experiences. If you start to talk about the pitchbook you had to re-print at 5 a.m. last night because another analyst messed up the minority interest calculation in the comps, you will only receive blank stares from non-banking friends. Since this job can be hard emotionally at times, you will need to share your experiences with people who understand you.
Second, they will be the only available ones. The social life of investment bankers consists of weekday dinners at the office, 15-minute coffee chats, weekend dinners that are always organised at the last minute because you can never plan in advance. If you cancel a dinner at the last minute, your banker friend will understand. If you have to rush back to your desk while having coffee, they will also understand. The harsh reality is that you will only be able to organise events at the last minute. And because banking is a fast-paced environment, you will most likely only have time to spend with people that are immediately next to you (ie. a few desks away).
But this is not as bad as it sounds. Making friends with other bankers is part of the experience, and this strong network will help you tremendously in your career going forward. You will also make some of your best friends during banking training and while on the job, because you will be able to share tough times together, and good times together (i.e. when you close a deal!), Also, for most bankers, when not on deals, you may have extensive "quiet" periods, and free weekends that will allow you to catch up with "non-banking" friends. The question is, are your non-banking friends nice enough to accept not seeing you several months in a row?
You can have a social life, but it will be well-organised and planned at the last minute
Bankers do have social lives, take holidays, go to museums, go to nice restaurants, etc. The main difference is that you will not be able to plan ahead very often, and you will not be able to take part in regular activities such as yoga classes, tennis classes, etc.
Dinners will be planned a few hours beforehand. Trips and holidays will be booked a week in advance at best, if you are lucky (except for Christmas and August holidays, which are typically very predictable). Be ready to be very flexible!
If you have a boyfriend/girlfriend, you will need to plan your time carefully and make him/her accept that you may have to cancel your plans at the last minute, and may not see each other much during the week, only on weekends, but sometimes not at all.
Quality of your social life will depend on your bank
In general, the higher-profile the bank, the less time you will have for social activities. Working at a Goldman Sachs or a Morgan Stanley means good experience and very good pay, but very little time to yourself. If you work for a BNP Paribas or a Commerzbank, you will have much more free time and much less weekend work, but you will probably not work on many deals and be paid (sometimes substantially) below the market rate.
Also, some banks have a better reputation than others in terms of work-life balance, and some teams within banks also have different lifestyles. Usually, this is mostly driven by the team size, the deal flow (success of the team), and the style of your team head.
It’s not all bad: the UK is one of the most work-life balance friendly city
In the UK, you will typically get about 25 days’ holidays per year, and it is unlikely that you will be working every weekend, every week. Generally, people are more respectful of your personal life, and periods such as Christmas and the month of August are very quiet.
Therefore, compared to your Hong Kong or New York-based counterparts, you will be very lucky. They only get two weeks of holidays, and most of them are not able to take all of those days. In general, they also work much harder for much longer working hours. This is not related to the business itself, it is more related to the local culture.
There is hope: banking gets better every year
The more senior you are, the better the hours.
As a junior analyst, you will be slower with more things to learn. Also, because you are the most junior, you will be assigned the most tedious and time-consuming tasks. When you become more senior, you will be much faster, and you will "know the ropes", and will be able to manage your time much better.
As an associate, work become easier generally as you will have analysts to support you with your work, and you will typically start to leave earlier (though still not at 7 p.m.!). By the time you get to VP, things start to really slow down (getting closer to that 7 p.m., almost there). Finally, by the time you make it to Director and Managing Director, going home by 6 or 7 p.m. becomes the norm. The pressure for them is not on completing 100 tasks anymore, it is on generating deals and bringing in new clients.
One of the key question students and future bankers ask themselves is "how bad are the hours in investment banking"? It is quite often difficult to get a real answer to this question. If you ask banker friends, they tend to exagerate their working hours (this is what we call the "superhero factor") to show how tough they are. And if you want to ask HR or recruiters at banking events, well...its probably not a good idea to ask if you want to get the job anyway. And the truth is that is really depends. Here is the unbiased answer from AskIvy
How many hours do analysts work per week, on average?
Its difficult to generalise as it depends on various situations (further explained below), but in Europe expect a minimum of 70 hours per week during slow times and up to 100 hours per week at busy times.
Investment bankers usually start quite late (because they finish late), at around 9.30am or even 10am. A quiet day means going back home at 9pm or 10pm, a more standard day would be finishing at anything between 10pm to midnight, and a busy day can stretch until the following morning. At peak times, it is not uncommon for analysts to finish past 4pm for several days or weeks in a row.
Weekend work is very frequent - this can be a few hours of catchup work on saturday or sunday, or at busy times working the all day on saturday and sunday.
But the most important point here is that working hours are totally unpredictable. You will have very quiet days or even weeks where you just spend your time browsing the internet and having coffees with friends. But you can also get suddenly dragged into multiple important transactions on a friday night and not see the light of the day for months. Also, most of the day is usually relatively quiet (between 10am to 6-7pm), but it often gets busy in the evening. Why? because senior bankers are in meetings all day and like to give tasks to junior just before they go home in the evening, all to be processed by the morning.
Which banks or teams are the worst?
Working hours will depend on three main factors: the bank, the team, and the situation
- The bank: people at bulge brackets, and in particular US investment banks, will on average work much more than bankers at European banks and boutiques. No surprise there, because big banks will have more deal flow, and that means more work. But it's also a culture thing - people in the US work much more than in Europe, so banks with a strong US culture will make you work much more.
- The team: teams within the same bank can have very different cultures. It is related to the working style of the team head (some bankers can be more easy going, especially UK and some European bankers) , and also of the deal flow of the specific team. If the team is very successful, that will mean very long hours but if you end up in a team that only closes one or two deals per year, you'll have a more relaxed lifestyle.
- The situation: working hours are usually better in economic downturns, when you are not working on deals, and also during the summer and around Christmas time. That is simply because clients are not active, which means less meetings.
Does it get better with time?
It does get a bit better with time. When you are a fresh graduate, you will spend a lot of time learning the ropes, so you will stay late. Also, you won't have anybody below you (except interns) to share the workload. Most importantly, fresh recruits are not familiar with the politics in the office (i.e. who are the "bad guys" who will make you work a lot, and how to "manage" your capacity), so you it is likely that you will learn the hard way. Unfortunately, it does get better but not that much - you will still work long hours throughout your analysts years. When you become an associate, the workload is slightly less, but you have a higher responsability so what you loose in working hours you gain in stress!!
Why do bankers work that much? Can't the banks hire more people?
Two reasons: because the work is non-divisible and because work patterns are unpredictable.
- Non-divisible work means that adding more people to the work won't speed things up. The best example is building financial models. It is not possible to have many people working on an excel model at the same time. So when you are working on urgent deals, you need to work throughout the night to finish the model as fast as possible, and only when you are done can somebody review and check it. Simply put - most of the investment banking tasks just can't be split.
- Unpredictable workflow: client demands are extremely unpredictable and workflow comes in extreme "peaks". You could have nothing to do for a week, but suddenly a client may call to ask for urgent advice on a large M&A transaction. And with M&A work, everything is always urgent - deals must happen fast otherwise they may be leaked to the press or the parties may loose their time advantage. Because bankers are expensive, you simply cannot have an army of bankers on standby "in case" to meet peak time requests. Overall, it is cheaper to stretch resources (and pay them a lot of compensate for the "stretching") rather than hiring more bankers that would be idle most of the time.
London and New York have long been and still remain the financial capital cities of the world. For many Europeans and others outside the US, New York always sounds like an attractive destination to learn Investment Banking from the best and have a "US experience" on your CV. For Americans and many from Asia Pacific too, London is also attractive given the more comfortable lifestyle it offers, and opportunities to work on deals across multiple European countries. Based on our experience of working in the US and in Europe, here are our thoughts on Investment Banking in New York vs. Investment Banking in London.
London vs. New York as financial centres - a brief history
New Yorkers often imagine their city at the centre of the world. But it isn’t - London is. Look at a map. America is on the left, Asia on the right, and in the middle is Europe. More precisely, London is in the centre. Why? London has always depended on trade and immigration, which have been the key drivers of the city's status as a financial centre. Even as far back as in the nineteenth century, the City has always been dominated by foreigners in the business of banking and trade. But after war engulfed Europe in 1914, Europe had to recover and the City lost its place in global finance to New York. As the US was untouched by the war and the started to industrialise rapidly, it quickly filled the gap left by London and took the lead in financial innovation.
But London eventually caught back in the last decade as the influx of so many sophisticated French, Italian, Spanish, German, Chinese and Indian immigrants started to dramatically improve the quality of London's workforce. While after September 11 businesses suddenly had to struggle to get visas for employees to work in New York, or even to visit on business trip, visas for Britain have always remained easily available. Also, with the numerous scandals and high-profile bankruptcies in the US (Enron, WorldCom, Lehman Brothers, Bear Stearns - all US firms), investors started to think that the US environment might not be the best, after all.
Finding a an investment banking job in London vs. New York
Overall, investment banking jobs are easier to find (and to keep) for international students in London than compared to the US.
The main reason is due to visa issues: for non-Americans, it is very difficult to obtain work visas or even visas for internships in the US. The immigration process in the US is lengthy, complicated, and very expensive. Therefore, most investment banks in the US will not bother to look at CVs of international applicants: the United States is a very big country, and the talent pool in the US is sufficiently large for their needs. In comparison, the immigration process in the UK is much simpler, cheaper and more transparent: there is a special "Tier I Visa" for highly skilled migrants (it is granted based on a system of points that will take into account your education, age, current salary and any previous experience in the UK), and studying at a good university in the UK will also quickly open the doors to jobs in London, which is not the case in the US.
The other reason is that languages and multicultural experiences are not as valuable as they are in the US than in the UK. The US is a very large country, and therefore investment banks will mostly do domestic business (as well as South American business), and will not require bankers to speak many languages. In Europe, speaking various languages, especially Europeans but also to some extend Asian languages, is highly valued.
Investment Banking Professional Experience in London vs. New York
On your CV, a stint in New York will always look very good and tend to impress people more than a similar stint in London. This is mostly because New York has had an established reputation as the leading financial centre for the last 70 years, the fact that the US still is synonym with the "American dream" for most people, and also because working in the US tends to be so much more intense.
Investment banking in the US tends to be a 24/7 job, literally. Americans work extremely hard and long hours - there is often no distinction between private life and professional life, especially in New York. Therefore, you are more likely to close more deals and work on more transactions in the US compared to the UK. Also, the domestic market is very active: M&A volumes in the US are always larger that what you can see in Europe. Therefore, from a general perspective, Americans tend to be better at financial modelling due to their more extensive experience, and they are used to handle a lot of stress compared to their European counterparts.
A significant downside of working in NY however is that working in New York will not give you a "global" perspective of the investment banking business. For example, you won’t work on many cross-border transactions. You will only know about the US financial system and regulations, and you will only know about the "American way", which will be extremely different from what is done internationally. Working in London, the majority of your deals will be cross border or outside the UK, you may work on IPOs in Russia, deals in Middle East, mergers with Chinese companies, etc.
Finally, another downside of working in the US is that future career options in the US will be limited as a foreigner, because things in NY are so US-centric. US companies tend to hire local staff, and being an outsider it will be much more difficult to have the necessary professional network and cultural connection required to climb the hierarchy fast or change jobs. But if you intend move back to your country in the medium term, this is not a problem.
Investment Banking Lifestyle in London vs. New York
> Working hours and Work-Life balance: Expect 100+hours/week to be the standard in New York, very few weekends to enjoy, with a maximum of 2 weeks holidays if lucky (more likely to be a week). In London, hours are more reasonable (70+), a good number of weekends can be free of work, you will have at least 5 weeks holidays, not to mention that August and December are very quiet.
> Quality of living: New York is more fun than London for the young, party-going types because of the club and bar scene. However, New York is a big block of concrete, extra cold in winter, extra hot in summer, and if you are a nature-lover or a family-type person you will be very disappointed and it can be very exhausting. Native New Yorkers are not the most friendly bunch either, and can be very rough. The London party-scene is also good but London is more quiet overall, with lots green spaces, and much more family friendly. London is also unique in that you can travel all over Europe very cheaply for weekend breaks. So if you plan to party a lot, go to NY, and if you want a more "settled" lifestyle, go to London.
> Cost of living: a flat in Manhattan costs roughly the same as a flat in London. Both will be small, overpriced and likely quite old. Other cost are also about the same, except from transportation which is more expensive in London (but you'll use taxis to go back and forth to the office anyway).
Investment Banking compensation in London vs. New York
Salaries and bonuses at the junior level are pretty much in line between the two cities and this will remain the case so as not to have a massive exodus to one of the two cities.
On an after-tax basis, tax rates are roughly the same, except for very high salaries, where NY has an advantage given the new tax system in the UK (50% tax above £150,000 earnings). If you take into account currency exchange rates, then it all depends on your home country and what you plan to do with the money
Life as an investment banker will be a dramatic change from your student days and your usual lifestyle. No more free time to play sports with your friends, eat healthy home-made food and get 8 hours of sleep.
As a banker, unless you are good at avoiding work, you'll sit 16 hours a day in front of your computer, and the only exercise you will get will be performing super-fast excel shortcuts, going to the printing room to get pitchbooks, and fetching 200 calories lattes at Starbucks. Combined with the lack of sleep (a direct cause of weight gain) and the fact that with your big dinner allowance you feel compelled to eat as much junk food as you can for dinner, weight gain is inevitable.
Create exercise routines
Most banks have in-house gyms or have discounts for gym memberships. Take these.
As a banker, you may not have the time to go to the gym: you are too sleepy in the morning, too busy during the day, and have no energy left during the night. But in fact, the best times to go to the gym are before lunch or before dinner. First let your collegues know that you'd like to go to the gym at a certain time, and they'll know where to get you. Second, because its at times when people are usually out, it makes it easier for you to sneak out for some exercise.
Use sports as a networking opportunity
Bankers like squash – it makes them feel cool. Ask the members of the team if they play squash. Often, MDs and VPs will play, and this may be the perfect opportunity to socialise and get to know your colleagues better (just try not to hurt them) by playing every Thursday night, which will become handy at appraisal time.
Watch out for unhealthy food habits
Always eat breakfast, and don't stuff yourself at dinner time. Best is to order some light food such as fish, sushis, salad and some soup. Use the extra allowance to buy some fruits, nuts, yogurt and snacks to eat during the next day. This will help you avoid burning out during the day, and make you less dependend on caffeine to stay alert.
If your friends always go to Starbucks, go with them but you dont need to order anything, or just get some tea. Cappucinos, lattes and mochas are very fattening and unhealthy. Also be careful of evening drinks as beer is very fattening, try not to go for drinks more than one or twice a week, and, as a general rule, it is always better to avoid alcohol (there is no shame ordering orange juice or a diet coke!).
Every year, thousands of fresh MBA graduates join the ranks of the investment banks across the world. Some of them used to be investment banking analysts and decided to come back to the industry after earning their MBA. However, the large majority of MBA associates do not have any prior investment banking or even financial experience. Below is a list of tips for those fresh MBA associates.
1. Do not be fooled by titles - there is not much difference between analysts and associates
MBA associates are usually disliked by investment banking analysts. One of the reason why is that MBAs are usually not keen on doing grunt work that they consider “below their level”. In reality, beyond title and pay, there is not much difference between the work done by an analyst and an associate. Even if you are much more experienced, older, and have graduated from a top business school, you still need to do your fair share of grunt work - see tip #2.
2. Analysts will control your life - treat them with respect
Analysts know better than MBA associates; they are better technically and they know how to work the system. This is why they often dislike MBA associates’ arrogance (sometimes); they are more senior and paid more, but often clueless when it comes to building models or dealing with senior bankers. They truly resent wasting their time explaining everything to MBAs. So analysts need to be your allies; buy them lunches, get to know them, learn from them, and praise them in front of senior bankers when they do a good job. This is a good investment; your analyst friends will probably save your life by fixing your models and helping you navigate office politics.
3. No one cares about your Harvard/Stanford/Wharton MBA
Sure, a top MBA is impressive. This is partly why you got the job in the first place. However, now that you have joined the ranks of investment banking, your degrees are irrelevant. In banking, an MBA associate is synonymous with ‘lack of technical ability’, so it’s best not to mention your degrees, especially to junior bankers. The only thing that will get you paid in investment banking is hard work, a great attitude, and strong social skills.
4. Get up the learning curve ASAP - MBA associates are the first ones to get fired in a downturn
Don’t avoid the grunt work - get involved in models and technical aspects of the job ASAP, even if this involves staying very long hours at first. Investment banking is unforgiving; if you still can’t build a model one year into the job, you won’t last long. Banks cut staff every year, and remember that you are at a significant disadvantage compared to those who have come up through the analyst ranks.
5. If Banking is a stepping-stone to something else, start planning your exit on Day One
If your goal is to stay in banking for a couple of years and then move to the buy-side, back to the industry or anything else, plan early. It’s very easy to get “gobbled up” by investment banking so you should be constantly talking to people and remind yourself of your ultimate goals. Having an objective also makes the lifestyle more bearable.
6. Use your MBA network internally
Use your MBA to build a support network internally. Ask your alumni for advice and introductions to other people. A support network is particularly key at bonus time or redundancy time.
7.The MBAs has its advantages!
MBA associates tend to have a tough first two years. However, they tend to perform very well once they make it to Vice-President level and above, when soft skills become much more important than technical skills, and when the focus is on building relationships with clients and managing people.
As much as we may dislike it, investment banking is a very political world. This can be overwhelming for junior bankers or new recruits who do not know how to navigate the culture of the firm, and often the best way to understand all the "hidden rules" of investment banking, and maximise your career options, is to have a mentor.
A mentor is another person in your workplace, typically much more senior than you (i.e. at least 5 to 10 years ahead of you in their careers), who is willing to use their own experience to guide you through the organization, and provide guidance for your career. For example, if you are an analyst or associate at an investment bank, a mentor could be a good friend who is a VP in another team, or a senior associate alumn, an MD who is a family cousin, a director you play football with on weekends, etc.
A mentor will be an immensely valuable asset for your career. Drawing on their experience, they will be able to explain to you the best way to solve disputes, tell you what is really important to get a good appraisal, advise on the best teams to join, give you advice on what to do if you want to move into PE, hedge funds or study for an MBA, or even tell you about the mistakes they made that you should avoid. Also, you can ask your mentor questions you would never dare to ask to others: "How much do VPs/MDs really get paid?", "What are the working hours for a specific team I'd like to move into?", "Can you give me a recommendation for a hedge fund or for business school?", or even "Do you really enjoy your job as a VP / MD?" Most importantly, mentors can be a good platform to help you build an internal network, which is essential in investment banking. Getting introductions from them will be extremely helpful at appraisal time and for your overall career, as more information and a stronger network will only help you get where you want to go.
Here are a couple of guidelines to pick the right mentor:
1. Do not choose a mentor in your own team or from people you work with frequently, because this won't help you broaden your network; it could even create potential conflicts.
2. Pick somebody you can learn from! I'd say that people 7 to 10 years ahead of you in their careers make the best mentors. Less than that and they won't be able to give you the "big picture"; more than that and they could be too disconnected from where you are and some advice might really be outdated and impractical. Once a high-profile CEO told me: "I'd like to give you more advice and introductions to people, but the only people I know are other CEOs."
3. Pick somebody you admire. This means they should be successful in their field: a star VP, an MD from one of the strongest teams in the bank, a director in a team you would like to join at some point, or anybody who you feel has really "made it" and is someone you aspire to become one day.
4. Pick "nice" people that you feel would be willing to spend some time talking to you. One way of finding that out is to ask around: "How is that VP/MD?" Alternatively, watch the way they behave and talk to other people. Are they friendly, funny, and nice to assistants? Good to go. Are they always in a rush, loud, aggressive and mean to some people? Try to find somebody else.
Do not to be over-aggressive. Remember that senior people are busy individuals with families and lots of other preoccupations in their lives. I recommend that you send a brief email to the person you have identified, introducing yourself (two lines maximum: "My name is xxx and I have worked in x team since graduating from xxx.”). Also, explain why you would like to meet them. For example, mentioning you are very interested in their field and would like to know a bit more. Or because you are an alumn, or because you are related somehow, or come from the same city/country, etc. Be very clear and honest in what you want to do. Propose a coffee (usually works best), or breakfast, lunch, or just stopping by their office for ten minutes. The majority of people will be flattered by such an approach so don't be shy - the worst that can happen is to have your email ignored.
It is important to maintain a professional attitude with your mentor. That means staying polite at all times (always thank them if they give advice or do anything), not overusing their time, no gossiping or criticising of anything (the firm or other firms, your colleagues), no whining, and no asking of favours that would create a conflict of any sort (i.e. asking them to intervene in a situation that is not related to them, for example). What they should be offering is advice and introductions to people - nothing else. Finally, if you leave the firm, or move departments or end up reaching your goal, do not forget to thank them for all their advice. Let them know where you end up and do some follow-up. In the end, the mentor’s benefit out of the relationship is the satisfaction to see their advice bearing fruit and turning young people into successful individuals.
Exit opportunities at the Analyst level
There are plenty of exit opportunities at the analyst level! Investment banking analysts are a very hot commodity (especially at the top investment banks) and you will get calls from headhunters after a few weeks in your new job, and they won't stop calling. This is because analysts are young, well-trained, ambitious, work very hard and can handle stress. The more deals you have closed and the more prestigious the bank you work for, the more frequent the calls will be.
> Many analysts simply go to another bank after a few years, trading for a better brand name, a better team or faster promotion and bonus opportunities.
> Some analysts simply switch departments to go work in equity research, ECM/DCM, or corporate banking, often in search of a better lifestyle.
> The best analysts at top investment banks often leave to work for hedge funds or private equity funds. This usually happens in their second or third year with the bank, and the process is highly competitive. Essentially PE funds and Hedge Funds are using the banks to train their juniors.
> Some analysts leave banking to go work for clients or other corporates, often within business development or M&A departments, but this is not a very common exit.
> Other exit routes include starting their own businesses after having accumulated some money, joining the family business, or going back to respective home countries to do a variety of jobs.
> Finally, the best analysts often decide to go do an MBA at some of the most prestigious schools in the world (Wharton, Harvard, Stanford, etc.) to change careers or boost their prospects.
Exit opportunities at the Associate level
Exit opportunities at the associate level also abound, but are somewhat narrower than for analysts and include:
> Switching banks or switching departments
> Working for a private equity or hedge fund. However, after a year or so at the associate level, the switch to private equity and hedge fund becomes increasingly difficult. This is because associates start to specialise deeply in investment banking, and their skills start to become less and less relevant to the buy-side.
> Working for a corporation is a more common exit at the associate level, either because they are in search of a better lifestyle, because they cannot manage to go further up the investment banking ladder, or simply because they want to work for a company that is actually making things happen as opposed to simply providing advice.
Exit opportunities at the Vice President level
Exits for Vice Presidents are not many. On one hand they are very specialised and have client responsibilities, but on the other hand they are not senior enough to go into senior management positions. Also, they are highly paid and have a relatively good lifestyle, and few other companies can afford to match their lifestyle. Therefore many Vice Presidents will stay on and try to be promoted all to way to Managing Director. Some exits include:
> Switching banks. For the reasons mentioned above, this is the most common exit. They are high in demand because the number of VPs in investment banks is relatively low, therefore good VPs are highly sought-after.
> Working for private equity and hedge funds. This is not a common exit although it does happen. It is usually the case when bosses and colleagues join a fund or set up a new fund.
> Working for Corporations. For the reasons mentioned above, it does happen but it is not the most common exit.
Exit opportunities at the Director and Managing Director level
Exit opportunities for Directors and Managing Directors are not many, and will largely depend on their network, client base, and ability to generate fees. In addition, if a Managing Director is good at his job, he/she will be earning millions at an investment bank, therefore the incentive to quit is quite small.
> Switching banks. This is the most traditional exit opportunity for a Managing Director. Usually they leave to become the head of a team, or for a promotion to senior management (i.e. becoming the head of M&A) and continue to go up in the investment banking hierarchy.
> Starting their own business. MDs sometimes leave to start their own boutique investment banks, consultancy, or even their own private equity funds.
> Joining senior management of a corporate. Some successful MDs will leave to become CFOs of large companies (such as Vodafone) or in some case even join as CEO.
> Finally, many MDs who have earned sufficient money choose to leave to pursue their own interests, joining the public service / government, travel the world and enjoy their life!
When students arrive to do a summer internship in the investment bank, what do we look for, and how do we evaluate them at the end of the summer to decide whether or not we want to give an offer or keep them into our "strong potential" database?
Investment banking interns need to demonstrate the following qualities:
Interns shouldn’t sit at their desks and wait for work to come to them. Summer is usually a more relaxed period with less deal activity, however, there is always something that needs to be done. If you don't get assigned much work and find yourself idle, don't just browse the Internet and wait. Be proactive in approaching your team to ask if there is anything that they want you to get done. A good way to find some potential work to be done is to go around the team’s folders and look at files and databases to see how the team is organised and what kind of things they are working on at the moment. Rather than asking "can I help with anything", try to suggest something to the analyst or associate such as "I have seen you with this precedent transaction database in folder XYZ, do you need any help in keeping it up-to-date?" More often than not, the full-time analyst will be more than happy to have somebody taking care of their tedious work.
Always check, re-check, and re-recheck your work again before submitting it to anybody. Reliability is one of the most important qualities of an analyst. Do not be seen as someone who produces sloppy work with typos and other mistakes.
If you are in doubt, always ask an analyst to check things for you. Always come to all meetings fully prepared; that means, bring a notepad, a pen, and a calculator and always take notes.
#3 Good attitude
As an intern, you may be assigned very tedious, repetitive, boring tasks. Remember that you have to prove yourself and go through this type of work before being trusted enough so that you can do some more interesting things. Go through it with a smile, and always be eager to take on more work, any kind of work. This will pay off in the end. Needless to say, never complain to anybody about the type of work you are doing, even to other interns. You never know who is listening.
#4 Hard Work
Come in early (never after 9 a.m., even if you went back home at 5 a.m.), and don't leave before your analyst, unless they clearly tell you to go home. If you are frequently going home before 9 p.m., you are doing something wrong. If you have not been assigned any work, and that you have already asked, spend your time reading brokers’ notes about the industry, reading presentations and pitches that you can find in the team folders, etc. If you can show to the team that you have a good understanding about what is happening and your understand the sector and the industry, you will score a lot of points.
#5 Network, network, network
Ask your teammates for coffees if you see that they have time. Go for lunch with them. Say hello to them when you arrive in the morning, and say goodbye when you leave (in theory, you should be saying goodbye when they leave before you!). Make an effort to engage in small chats from time to time, but do not pester them. If they ask you to go for drinks, go to the pub, and have lunch or dinner or anything else with them. Try to leverage friends already working at the bank and your alumni network if you can, try to have coffees with them to get some inside information, but do not be seen always having coffees during work hours! Just be smart and sensible about it. Also read our article on networking during your internship.
#6 Find a mentor
Try to identify the person in the team who is most receptive to you. Some people may just not enjoy talking to interns, or they may just be too busy. Try to identify the most friendly who will answer your questions patiently, and ask them for advice. In the end, they may be the one who will fight on your behalf to give you a full-time offer.
This is an extract from Merrill Lynch's best practices and behaviour that is used to give to its Investment Banking Associates and Analysts. This is a great summary of how you should behave as a junior banker to climb the ranks quickly.
1) Have a great attitude
This means that you should not complain, even if the job is very intense and very demanding. This also means that you should have a positive attitude in difficult situations and have a "let's solve this problem" attitude. It also involves being proactive and always being friendly with all of your colleagues, secretaries, and admin staff, below and above in the hierarchy.
2) Work hard
This is obvious; investment banking is a tough job and hard work will be required. In practical terms, this means that you should manage your image as a banker – don’t pretend to be busy when that is not the case.
3) Get in early
Most analysts tend to finish very late, and therefore come late to work. Being late means arriving at the office anytime after 9:30 a.m. It may be the case that many analysts or your colleagues arrive at 9:45 or 10:00. This will always be noticed by your seniors and is not a good sign. Ideally, you should be at your desk at 9 a.m. sharp every morning. Try to follow the unwritten rule of the team: if everybody comes in at 9:15, just try to arrive five minutes before that. It’s a small effort that pays off.
4) Triple-check your work before passing it along
Accuracy is a key skill that analysts and associates need to develop. Take a habit to triple-check your work, and cross-check every number from several different source. Always ask yourself: "Does this number make sense?" Also, be careful with smaller details such as spelling and formatting. If you make many spelling mistakes, people will assume that you will also make mistakes in valuation models and more important tasks. Never pass on work to your seniors without triple-checking everything.
5) Tick and tie numbers across all documents
When you prepare a presentation, you will refer to the same numbers several times in different places. Do not say that revenues in 2011 are forecasted to be £100 million in one page, and then use a £98 million figure in your valuation model on another page. Make sure the presentations and models are consistent as a whole.
6) Have supporting evidence for all number
Always reference all your sources for every fact and number in your valuation models and presentations. This is the most important job of an analyst and the associate. If somebody asks you, “Where did you get this from”, the analyst should be able to provide the evidence within a few minutes.
7) Clean, consistent formatting matters
Pay attention to the small details. Presentations in PowerPoint and Excel need to be accurate, but they also need to look good, while remaining simple to modify and understand. If you prepare clean work, people will be impressed and you will gain their trust.
8) Always take notes; bring your deal files, notepad, and a financial calculator to every meeting and call
To be professional and get the chance to be invited at client meetings, always be ready. That means: wear a tie, carry your notepad at every meeting, and bring your calculator to double-check any number on the spot. Also, have the important files printed and ready to show to seniors.
9) Be efficient and ask questions if you don't know, at the appropriate time
If you don't know or understand something, you always need to ask. In your first year, people will accept that you have to learn and you may not know much. However, if you wait too long and people realise you don't know much when you are in your second or third year, this will create trouble. However, be thoughtful when asking questions; identify the person that is the most open and friendliest to answer your questions, and do not ask questions in front of everybody. Instead, go to your associate or VP’s desk afterwards and ask privately.
10) Network with other analysts and associates in your team and across the bank
To survive your analyst and associate years, you will need to rely on your colleagues to give you a hand, explain you complicated concepts, check your models, send you templates, etc. Therefore, networking is key to your success in this industry.
11) Know why you are wrong
It is fine to make mistakes from time to time. However, do not make the same mistakes twice. When you make a mistake, be sure to understand the reason fully and master the concept so that it doesn't happen again.
12) Build and grow from criticism, do not dwell on it!
During your time as an analyst or associate, you will receive a fair amount of blame and criticism. People will criticize your Excel models, your formatting style, your communication style, and everything else. This is part of the investment banking culture and you need to accept it and not take it personally. Take criticism as a chance to improve. If you feel frustrated, vent your anger and frustration with trusted friends, and never release your anger at the person criticising you, even if they are wrong. In the end, you learn by making mistakes. Also, if you are criticised unfairly do not worry about it - most bankers are a smart bunch and can realise when somebody is being criticised unfairly, even if they keep quiet.
A question that often comes from students and investment bankers is "How do I do to be ranked in the top tier?" and also, "What happens during the year-end investment banking appraisal that will decide my bonus and promotion?"
So let's plunge into the mysterious depths of the year-end appraisal process. At most investment banks, the process moves like this:
1- A few months before bonus time, you are asked to pick people (usually about 10 people) who worked with you, and they will review you. Sometimes they will show you the reviews, sometimes not. The review will be based on various criteria such as: teamwork, technical skills, performance on transactions, accuracy, integrity, reliability, areas of improvements, etc. In most banks, they will rank you as "performing above expectations", "performing as expected" or "performing below expectations" for each of those criteria with some commentary.
2- The senior management will have a big meeting at the headquarters to fight for the size of their team’s bonus pools. The size of the bonus pool depends on the performance of the bank as a whole, the revenues that have been generated by the team, and other "market forces", which include current salary trends, post-financial crisis, and the political environment.
3- Seniors come back, and figure out a way to rank the analysts and associates in their teams to allocate the bonus pool. The ranking is based on the scores in the review, but most of the time it is actually the team head making the call. You will be either ranked in the top tier (meaning: higher bonus, 20% to 30% more than the others), ranked standard (that is 80%+ of the bankers) or bottom tier (lower bonus or about to be fired).
But how does your performance get assessed as an analyst or an associate?
Let's face it, analysts and associates don't generate any revenues, and the PowerPoint slide from analyst A is no different from PowerPoint slide from analyst B. So basically, you don’t get evaluated on what you do right, but you get evaluated on what you do wrong. What you did not do well will definitely come up at appraisal time.
What can you do to be in the top tier then? Here are a few tips:
First impressions count a lot
When you first join a team, don't be a smart-ass and keep asking for the best deals, even if you are a superstar. Otherwise, you'll be in the "annoying smart-ass" category, and that's a guaranteed bottom-bonus for you. First impressions count and last very long. The Golden Rule is: even if you are very good, never ever be arrogant, and always keep a good attitude even if you are being shouted at unfairly. At the end of the year, a good attitude always pays off, because that's really the differentiating factor between you and your colleagues.
The last 2 months count most
Bankers have short memories, so you'll be evaluated mostly on what they can remember, which is the previous two months at maximum. So two months before bonus time is the best time to put that extra effort and to triple-check those models before you show them to anybody at a senior level. Get your fellow analysts and friends to help you check things and put in the extra care; it will pay off.
Network network network!
Don't be seen as just a pure modelling geek. Talk to people in your team and outside your team. Get introductions from your friends and get to know your alumni, take coffees with them when you can, so that you can get a good feel of what is happening in the office and make good first impressions (see advice #1). The more people you know, and the more people have a first good impression of you, the better. Why? Because people talk, and if your name is associated with something positive, that will directly impact your chances to be ranked at the top.
Finally, don't be obsessed with a number!
While you may not end up getting what you want, think about keeping a positive attitude. Being ranked at the top is great, but what you should really aim for is avoiding being ranked at the bottom. Also, you may not get ranked on top this year, but there is always next year. Remember that investment banking is very much a career that required a lot of patience, and the really big rewards will really start to come at VP level and above.
Every year, a lot of young professionals decide to start their careers in investment banks' back offices. People work in back offices for various reasons: easier hours/lifestyle, because they did not make it into a front-office job and hoped it was the best step towards the front office, or because they simply didn't know the difference between back and front-office jobs. A lot of those professionals become tempted to move into a front-office role after some time, and some ask us whether this is possible and how they should go about it. Here is our view:
What is investment banking back office and front office?
The main difference between back office and front office is quite simple. Front-office jobs involve direct revenue generation (trading, M&A, sales, etc.), while back-office jobs are largely "cost centers" and don't generate direct revenues but are nevertheless critical support functions (product control, IT, HR, risk management, etc.). Front-office jobs will typically be more challenging, be more high-pressure, less stable, involve longer hours, but they will often pay much more.
What are my chances of moving from the back office to the front office?
Moving from back office to front office is quite difficult in investment banking, but your chances will depend on a number of factors, including:
(i) Years Spent in the Back Office
After more than two to three years in a back-office role, it becomes significantly harder to move because your skills become less and less relevant to front-office roles.
(ii) Educational Background and Qualifications
It is easier to move if you have directly relevant qualifications (ACCA, CPA, CFA, etc.) or education (i.e. economics/finance degree) from a good school.
(iii) Network and Communication Skills
This means that you need to show you are able to "network" your way into and outside the organisation. The more you are able to network with your peers and front office people and potential clients, the better.
(iv) Current Performance
It will be much easier to move if you are a top performer within your team and have a good track record and reputation. This will also help your case with the HR department.
(v) Current Company
Your chances will depend on the company's policy and culture. Did anybody around you move from back office to front office? Has the HR department or management said that it could be a potential career development path?
However, the company's prestige doesn't really help - for example, working in a back office role at Goldman Sachs will not mean that you are better placed that a back office worker at a smaller institution to make a move to the front office.
(vi) Economic Cycle
It is much easier to move from the back office to other departments in bull markets, because that is simply when people are needed, when the companies have larger hiring budgets, and when hiring practices are more flexible.
Strategies to move from back office to front office
- Internal Transfer
Moving across organisations from a back office role into a front office role is almost impossible, unless you are a fresh graduate (one-year experience) with a good academic record. The best way to move to the front office is simply to network as much as possible, as early as possible, within your current organisation to find out about potential opportunities and educate yourself on what is required to seize those opportunities. However, one needs to be careful in voicing the desire to move to the front office, as this could well upset your manager and put you in danger – the best way to network is to have "informative" chats discreetly and build some personal relationships with front-office people.
At the same time, if your educational background is not top-tier, acquiring qualifications such as the CFA or the ACCA can be extremely useful to demonstrate your motivation.
Finally - do not give up even if you get negative feedback. Many headhunters, colleagues or front office people will tell you that the move is impossible. A move is always possible - it just depends on how much effort you are willing to put into getting the job.
If you have remained too many years in a back office role, or if you find that your networking efforts are not bearing fruit, going to business school is a good way to transition into front office roles. This is no magic degree however – only degrees from the top 10 to 15 global schools will unlock investment banking front office jobs, so it will not be worth spending large amounts of money and valuable time on obscure schools. Master Degrees in Finance can also help - but again, those will need to be obtained at top tier schools with instantly and globally recognisable brands.
What is the CFA?
The CFA (Chartered Financial Analyst) designation is a professional certification granted by the CFA Institute, which tests and focuses on portfolio management, financial analysis, and generalist aspects of some other areas of finance. To become accredited, the candidate needs to:
1. Pass three six hours exams (which are called "levels": level I, level II and finally level III). The pass rates are typically about 40%-50%.
2. Have a bachelor degree minimum (or equivalent education or work experience)
3. Have 48 months of qualified work experience in a relevant field.
Note that you can still study and pass the exams even if you have no experience, but you will only receive your accreditation after you meet the work experience criteria. There are about 100,000 CFA certified people in the world. Most people taking the CFA are finance and investment professionals, particularly in the fields of investment management and financial analysis of stocks, bonds and their derivative assets.
Wrong reasons for studying the CFA for investment bankers
There are common misconceptions that students and junior finance professionals have when they decide to study for the CFA. The most common misconceptions and wrong reasons for studying the CFA for investment banking are:
> To "fix" the qualifications/education part of your CV or improve "prestige"
Do not think of the CFA as a magic qualification that will turn your CV around. The CFA will not cover for poor academic performance or for having graduated from a less-known university. If lack of "academic prestige" is your issue, we recommend you go study an MBA / Master Degree at a top business school. On the opposite scenario, if you already graduated from a top school, adding the CFA qualification will probably not make a significant difference to potential employers. Unfortunately, there are so many people with CFAs nowadays that even though people will recognise that getting the CFA is a lot of hard work, the qualification has definitely lost some of its prestige. In fact, only very few bankers have the CFA.
> To be a better investment banker or get promoted faste
A lot of the content of the CFA study is not directly relevant to what you will do as an analyst or associate in investment banking, except maybe for the parts about financial analysis, equity valuation and corporate finance. Nevertheless, those are just a subset of the content of the CFA programme, and you should have already mastered those concepts by the end of your training programme anyway. Most importantly, the CFA doesn't teach you about how to model, how to put pitch books together and how to work hard with a great attitude, which are the most important skills for a junior investment banker Finally, studying for the CFA is a lot of hard work, and you'll work hard enough as a banker already - you might want to invest this time in something more productive such as networking (with colleagues, bosses, potential employers), working even harder, preparing an MBA or even getting some rest!
Good reasons for studying the CFA for investment bankers
> To improve your CV if you want to move into asset management, hedge funds or equity research
The CFA is more relevant to and most valued by the investment management industry, as getting the qualification indicates a good understanding of investment management theoretical concepts, as well as a strong degree of interest and commitment to this industry. In some firms, and in many equity research jobs, it may even be a requirement. It is not a requirement for private equity firms however.
> You have time to invest and the company is sponsoring you
If you have the extra time (during a quiet pre-Christmas period or quiet summer, or during an M&A downturn), and find the subject interesting, and on top of that the company is paying for it, getting the CFA qualification will never hurt. A downturn (if you still have a job) is the best time to take advantage of company sponsorship programmes for accounting and CFA qualifications!
What kind of work will you do as an investment banking intern? In order to give you an idea of what to expect for your internship, the work given to summer interns (or off-cycle interns) usually falls into the following categories:
As a summer intern, this will probably take up most of your time. Research in investment banking consists of finding specific information about industries or companies. It could be helping an analyst to find the number of mobile phone subscribers in Czech Republic over the last 10 years, looking for the financials of a subsidiary of a big conglomerate in Turkey, or finding the latest number of Tesco stores in the UK. This will involve using Google and the bank's databases, and asking various people in or outside the team. This may sound relatively straightforward, but is often very time-consuming and can be relatively complex.
>> To score points during the internship, you will have to show how resourceful you are at finding the information, and develop a good network within and outside the team, as well as with the Research Department of the Bank.
Investment Bankers like to show profiles of potential acquisition targets to their clients. A profile consists of one or a few PowerPoint slides presenting a company. This will include a company description, historical financials and forecasts, ownership structure, management description, share price performance (if listed), latest news, and other financial and product information such as revenue split by product or geography. It would not be unusual for you to have to create 10 or 20 profiles of companies for the team.
>> To score points, you will have to present insightful data and present the information in a concise way, and not just simply copy-and-paste information from the company website. You will also have to show that you are familiar with how to use all the databases and resources such as Bloomberg and bank databases.
"Comps" means "transaction and trading comparable". Those are ratios reflecting the price paid or the trading value of a company relative to its sales, or earnings. Examples include Enterprise Value to EBITDA ratio, or Price to Earnings (PE) ratio. As an intern, you will have to learn how to master those, and this is probably one of the first tasks you will be given to do. Comps are boring, time-consuming and very tedious to compile, so nobody likes to do them. To compile comps, you will have to find selected financial data in companies annual reports (Revenues, EBITDA, Earnings, net debt, cash and items such as minority interests and pension fund liabilities), update share prices, compile financial forecasts, and check formulas in Excel spreadsheets.
>> You will score a lot of points if you manage not to include many mistakes when compiling them, and show a good understanding of all the necessary adjustments (i.e. pensions, minority interests, operating leases, etc.). Here, you should also be able to self-check mistakes by identifying any ratio that looks out of range.
Another boring and tedious task assigned to interns. Benchmarking consists of benchmarking a specific operational or financial metric across competitors. For example, the number of mobile phone subscribers for each mobile phone company in the UK, or comparing all the prices for various brands of shampoo. The result could be quite interesting, but the process is very tedious and time-consuming.
>> You will score points for not making mistakes, and also for showing that you are resourceful enough to find the appropriate information. Also you should be able to self-check and see whether the data makes sense.
Various Admin tasks
You may be asked to organise conference calls, take notes at meetings, prepare "Working Group Lists" (the list of the team members in a deal), check spelling mistakes in a document, fax and print copies of books, or process changes in PowerPoint slides.
>> You score points by taking those tasks very seriously and show that you are reliable. Usually, those tasks are done for senior people, and making a good job there is a good opportunity to leave a good impression.
Interns typically don't do much modelling. You may be given some models to work on if you gained the trust of your colleagues by doing the above tasks perfectly, if this is for a simple presentation. If you get the chance to work on modelling, this is a golden opportunity and a very good sign that the team recognises your work, but don't be surprised if you do not get the chance to build a DCF or an
>> Here, you score points if you show that you are eager to learn. Full-time analysts or associates will not expect you to be able to model like a seasoned banker. It would be good to do some financial modelling reading before starting your internship too.
Overall, while a lot of the tasks described below can sound very unappealing, this is what every investment banking analyst has to go through. Only once your have learnt to do those tasks to perfection will you be given more interesting work, and the opportunity to work on interesting live transactions. For good guidelines on how to behave as an analyst, also read our analyst and associates’ best practices guide.
If you choose to lead a life as an investment banker, a very important fact to be aware of is that Investment Banking is a cyclical business and you may end up losing your job at some point in your career. So how do you handle your new job search if you get fired from your investment banking job? Below are a couple of useful tips on how to handle the situation:
Rule 1: Do not find excuses, and never lie
When a potential employer or a headhunter asks you "why have you been fired", you cannot push the blame on your employer or somebody else, and never badmouth a previous employer. Some of the common wrong answers are these:
"They needed people who speak a certain language that I don't speak, so I was fired."
"I was the most junior on the team."
"I was just unlucky, it could have been anyone on the team."
"They had to fire a second-year analyst, and I am the only second-year analyst in the team."
All of these excuses will make you lose credibility. London is a small world and you can be sure that the headhunter or your new potential employer will talk to your colleagues to find out the backstory. If you have been fired because the bank went bankrupt or the division closed down or any external factor, obviously highlight this but remain very humble (you were still technically "fired" in both cases); highlight your strengths, and mention that you still had a positive experience with your past employer. Remember that it is not a disaster to be fired, and most people are very understanding, especially during recessions.
We have seen analysts and associates being fired from second or even third-tier banks and finding jobs relatively quickly at even better institutions such as Morgan Stanley, JP Morgan, etc., if they have the right profile and attitude.
Rule 2: Admit shortcomings, but highlight your strengths and what you learnt
Do not say that you were ranked at the bottom - no need to emphasize the negative - just mention shortcomings but always highlight that you have learnt your lesson. A good way to say this is "I was let go because I believe I didn't have the same level of deal exposure compared to my colleagues". Often, the main difference between a good banker and a bad banker is the quantity of deal they have worked on; but working on the good deals can be a quite random process and driven mostly by luck, and people will recognise this.
Some other valid reasons to justify being fired can be: "Maybe I was not proactive enough in asking to work on deals and reaching out to senior people, but this is an area I intend to improve going forward". Simply put, you screwed up; make sure you understood it, and then move on with a positive attitude.
On a side note: if you worked at a top-tier investment bank and are interviewing for a new job at another top-tier investment bank, expect intense interviews. But if you are interviewing with second-tier institutions or boutiques, they will probably ask you the question once but not spend much time on it.
Rule 3: Take a break - do not look depressed or beaten down
Many junior bankers feel ashamed or angry that they have been fired, and really look desperate during interviews or when chatting to headhunters. Keep your chin up and have a positive attitude, this could be your golden opportunity.
Rather than talking about why you were fired, talk about the great experience you had there and the deals you've worked on, and the fantastic training you've received.
Rule 4: Don't take it personally
You can be fired for a whole lot of reasons, but sometimes, you will just be unlucky. This happens, and people in the industry all know it. If your interviewer (or the headhunter) is aggressive in asking about the reasons why you were fired, just repeat your story again and again without losing your patience or being irritated, highlighting your strengths; they are just testing you. If you do feel upset about having lost your job, it’s best to take a few weeks off to cool down, so that you can manage your future interviews with a positive attitude.
Rule 5: Leave the firm on a good note, and don't forget to network at all time!
Often, on this website, we mention the importance of networking with colleagues and headhunters, both in the case of being fired or quitting. Being fired is one situation where networking comes in handy. When fired, do not burn bridges, even if you want to punch a few of your bosses and colleagues. Very importantly, if you are part of a restructuring or firing round, you have to realise that a lot of your colleagues will enter the market at the same time, and they will have a very similar experience to yours. The way to differentiate yourself is through your own connections.
After a while, it is fine to reach to some of your ex-colleagues who are still employed and ask them to recommend you or let you know of any opportunity they might hear about. Often, people are more than willing to help. Do not feel shy about asking MDs or VPs for advice and potential contacts, and when you are working, always make a list of the people who have left the firm to go somewhere else. Don't be afraid to reach out to them to enquire about any openings in their new teams. Finally, you can try contacting your school alumni and employer alumni (use LinkedIn, and register to LinkedIn if you haven't yet) to enquire about opportunities!
Securing a good investment banking internship is not an easy task. However, an even more difficult task is to either convert this internship into a full-time offer, or, if you decide that the job is not for you, to effectively use your time to better position yourself for your dream job or next internship. Performing well is typically not sufficient, as you'll be competing with other smart and ambitious graduates from top schools, and it is difficult to stand out.
To maximise your chances and get ahead of the masses, you'll have to learn how to network effectively. Networking is really just a fancy word for meeting and talking to people, but building strong networking skills will be of tremendous help throughout your career. Why does networking pay off? A few reasons:
- The more people know you inside and outside the team, the more chances that somebody will stand up for you when they decide whom to hire. Also, there may not be a spot for you in the specific team you interned with, but there might be a spot in this other team you happened to talk to!
- If people remember you, they will be willing to give you more advice and contacts when you'll be looking for your next internship or full-time job.
- Talking to as many professionals as you can in different areas will increase your financial knowledge, open up some potential cool job ideas you hadn't thought about (leverage finance? principal investment?) and prepare you for future interviews!
- London is a small world. You never know who is going to end up where, and how you will bump into them, their friends, ex-colleagues, or need their help or advice some day.
Here are a few good habits to take:
1. Be proactive in approaching people early on
This is stating the obvious, but most people tend to stick with their immediate colleagues and do not dare introduce themselves to people they don't know. Know this: there is no downside for asking people for a coffee or for introducing yourself (even if they are in a different team - there is no rule that says you can't talk to other teams), but there is unlimited upside! Especially if you are new or show interest in people's work, they tend to be receptive and willing to help and discuss. In the worst case, they will just ignore you or say that they don't have time. Your boss won't view you talking to other teams as something negative, after all, you are there to learn! You just have to force yourself to do it.
A few tips to make things easier: try to get to know the junior people first, because they'll be able to give you an overview of the team and identify the more senior "cool guys" who will have time to talk to you. You can ask junior colleagues in your team for an introduction to people in other teams or departments (i.e. “I'm interested to understand how team XXX works, do you know anybody there?”). You can ask other interns in other teams to ask you to join them for coffee next time they go with the people in their team. You can approach recent alumni, friends of friends, people from your own country if you are from overseas, etc.
2. Don't be a nerd
It’s fine to ask some technical questions of people. But don't overdo it, otherwise they'll view you as an annoying pest. Try to be more casual and personable sometimes. Sport is a safe topic, and there is plenty to say over the summer with football and tennis.
3. After you've settled in, talk about your future plans and ask for advice
If you are passionate or curious about a specific area, share this with people around you. Most professionals will realise that your goals are not set in stone yet, and that you are still trying to find your way. For example, if you say that you are interested in working for a private equity firm in the future, they will be able to tell you the best team for joining in the bank (i.e. leverage finance, financial sponsors, Consumer M&A).
4. Nurture your relationships
Stay in touch with people – having coffee or saying hello when you walk across their desk goes a long way toward making people remember you. When your internship is over, send an email with your contact detail to each person you've met. Ideally, you should try to meet each of them and say goodbye in person. This will leave a nice last impression. A few other tips: note down the names/email addresses of the key people you've met for future potential emails. If you haven't done so yet, create a LinkedIn account and invite those people in your network so you'll be able to track them if they move to another bank.
Directors are Vice Presidents who have been promoted to the next level, usually after three years at the VP level. Managing Directors are Directors who have been promoted to the next level as well. But while the promotion to director is quite straightforward, the promotion to Managing Director is a highly competitive process and many Directors do not make it to the top. Also, there is no automatic promotion to Managing Director after a set number of years - they will only get promoted when they have shown the ability to generate substantial fees for the firm. This can take a year or two, but sometimes much more.
Director-level bankers' role is very much client-facing, and they now take direct responsibility for profit generation and also for setting the strategies that can help maximise those profits. Their main roles is as follows:
- Directors will be involved in the critical parts of the M&A transactions such as fee negotiations, deal tactics, senior-level client meetings, etc.
- Directors will also be involved in day-to-day marketing to clients and potential clients. They will be in charge of deciding which ideas to pitch to clients, and on which clients they want to focus.
- Managing Directors have very similar responsibilities; however, they are typically in charge of the most important clients and have a larger responsibility for managing their own teams and setting the overall strategy of their team.
Vice Presidents are the usual point of contact for Directors and Managing Directors when on an M&A transaction, but they do interact with everybody in the firm. Most importantly, they also interact with the senior management of the department (Head of Investment Banking), Country Heads, Managing Directors of other sector teams and other geographies, and also Managing Directors in other departments such as Equity Capital Markets, Debt Capital Markets, and many others. Their role is not only to generate fees for their own team and department, but also to sell all the products that the bank has available to maximise overall revenues, for which they get partial credit.
Managing Directors and Directors usually do not spend much time in the office, and typically leave quite early. They might spend most of their day meeting or calling clients, and the rest of their job can be managed over the phone or Blackberry. However, this is not a relaxing lifestyle. Managing Directors are under constant pressure to satisfy their clients, manage great numbers of relationships, and are constantly communicating by phone, Blackberry, or on the plane. In addition, they are ultimately responsible if anything does not go to plan; their job will be on the line if they do not generate sufficient profits. While they do not have to work on models and pitchbooks overnight, it’s a different kind of pressure that can be quite intense as well.
Managing Directors' goal is to generate as many fees as possible, which will be directly reflected in their bonuses. The natural next step for successful Managing Directors is for them to become team heads, country heads, product heads, and ultimately head of M&A or investment banking; potentially, they could make it to the CEO level. Of course, not many Managing Directors can arrive at those senior positions. Many are satisfied by simply staying at the Managing Director level and enjoying multi-million bonuses in good years.
Investment banking associates are typically fresh MBA graduates with a few years of professional experience (not necessarily in banking or finance), or analysts that have been promoted to the next level. In the U.S., MBAs are the majority but in the rest of the world and London, promoted analysts are the majority. Associates from MBA programmes go through a very similar process to analysts, but the interviews are much more focused on technical skills and leadership abilities, which are key skills for an associate.
Checking analyst work and teaching analysts.
Analysts and Associates are often paired together when working on presentations or deals, and Associates are responsible for “quality control”: checking financial models, checking accuracy and quality of PowerPoint slides, multiples, spelling and making sure the requests are properly addressed. Because they rely so much on analysts, they will spend a lot of time training them and showing them how things are done.
Project management: allocating work and chasing up people.
Associates will receive requests directly from a wide range of people: VPs, Directors, and MDs. Their job will be to divide the work and allocate the tasks between themselves and analysts, and chase up various people to make sure that everything is produced accurately and on time. Associates spend a significant amount of time on the phone and sending emails around, getting things done.
Handling the more complex financial modelling.
Associates also do a lot of analyst work, creating slides and producing financial analysis. But they usually handle the more complex financial modelling and difficult tasks. This is especially the case in live transactions, where their work will be reviewed by the VPs.
Associates will deal directly with internal legal and compliance teams in live transactions, liaise with other banks, accountants, lawyers, co-advisers, etc. They will create agenda topics ahead of meetings, and participate in analyst recruiting.
Dealing with clients
Associates spend time facing clients, but mostly talking about “the numbers”, i.e. financial modelling issues.
Associates work at all levels, and occupy a critical in-between position. They deal with analysts to whom they give work, and get requests from VPs, Directors, and MDs. They often interact with other teams in the bank and have some meaningful client interaction.
Yes, but not as long as analysts. A good day starts at 9:30 a.m. and ends up between 8 and 10 p.m., while a busy day finishes at midnight to 2 a.m., but this is more unusual. Expect 70 to 80 hours per week as a guide. There is often weekend work but it tends to be a few hours in conference calls and checking analysts’ work. However, this is not an easy lifestyle at all - Associates are under tremendous pressure as they have to manage analysts (i.e. pressure to make sure the work gets done properly, on time, and that the analyst understands what needs to be done), and they have to interact with the senior bankers, some of whom can be extremely demanding. Also if anything goes wrong on a deal or for a presentation, the Associate is always the person who will be held responsible.
Associates are promoted to the VP level after three to three-and-a-half years. Becoming a Vice President is a competitive process and promotion is not automatic; in many cases, third-year Associates can be asked to leave the firm. Associates will have to demonstrate that they can manage transactions, that they have fully mastered the technical aspects of the job, and they need to be well appreciated by people in their team and other teams.
In the large majority of cases, Vice Presidents are Associates who have been promoted to the next level (usually after three to three-and-a-half years at the associate level). The promotion to VP is highly competitive, and it is quite common for Associates to be fired in their third year if they do not display a strong enough potential. In a minority of cases, senior managers from the industry can enter banking at the Vice President level. This is especially true for senior Business Development professionals working with large clients of the bank (for example, senior M&A managers at British Telecom could be hired as VPs in the Telecom M&A team of a bank, if they have worked on several acquisitions).
Vice President occupy critical functions in investment banking and have a dual role:
Vice Presidents are leadership figures in the execution of M&A transactions, and have a "project manager role" For example, once a Managing Director has obtained an M&A role for the bank, he will let the Vice President handle the execution of the deal. "Executing a deal" essentially means "making it happen". The Vice President will divide the work that needs to be done, and allocate it to associates and analysts. He/she will make sure that every step of the deal process is completed in time and accurately. Vice President will be the main contact points with the clients, the potential targets, the accountants, lawyers and any other party working on the transaction including the financial regulators, internal compliance and legal teams, co-advisors, etc. Therefore, Vice Presidents are really running the show.
Vice Presidents also have to start trying to generate deals While analysts and associates will work on "processing" deals and not talk to clients much, Vice Presidents will be allocated a portfolio of clients that they will need to meet regularly and propose ideas to. They will either go to those meetings with Managing Directors for important clients (so that they can watch and learn "marketing skills" from them), or will go by themselves for less important clients that Managing Directors do not have time to follow. Therefore, Vice Presidents spend most of their time on the phone, writing emails and at client meetings, either coordinating work on deals or proposing ideas to clients. They will do less and less "technical" work and typically are not much involved in financial modelling and the making of presentations, only providing high level reviews for important transactions.
Vice Presidents will work with everybody in the organisation, from analyst level to Managing Director level, also work across the organisation (i.e. coordinating marketing efforts with other divisions of the bank when proposing ideas to clients) and also with many parties outside the organisation such as clients and co-advisors.
Working hours spent "in the office" are becoming much lighter at the Vice President level. They have a stronger degree of freedom because they are getting things done by others as opposed do doing things themselves. Most Vice Presidents tend to come in at 9 and leave the office between 7 to 9 pm. Nevertheless, despite the apparent lighter schedule, there is quite a bit of "hidden" workload because they need to take phone calls, meet clients and answers emails very frequently, which of course involves frequent blackberry checking on late evenings, weekends and holidays.
Vice Presidents are typically promoted to director level after three years (sometimes this level is also called "Senior vice-president"). The promotion is somewhat more straightforward than for associate to Vice President, and the main difference is more emphasis on meeting clients and less "M&A execution" work.
In London, most of the analysts are hired from the best undergraduate and masters degree programmes at top universities across Europe - everyone except MBA programme and some PhD programme graduates (who will join as Associates). Analysts can get their offer after a successful internship completed during their studies, or directly after going through investment banking assessment centres. Students who get an offer will start as a “first-year analyst” and join an intense training programme called the “analyst graduate programme” before starting at their desk, typically in August or September. Generally, banks will try to hire at least 70% of their first year analysts through their internship programmes, and the remaining 30% will come from the assessment centers and also headhunter referrals (some headhunters specialise in helping banks finding junior analysts), and from applications from experienced professionals who spent one or two years in non-M&A jobs but who have relevant skills for M&A (i.e. accountants, lawyers, traders or equity research analysts).
Research work: Finding and organising data, in Excel or PowerPoint, from the Internet and the multiple databases that the bank has access to. This can be finding the number of mobile phone subscribers in Lithuania, finding the shareholders of a specific company, or finding out names of the top five companies selling oil pipes in Europe.
Benchmarking: "Comparison" tasks such as comparing the Revenue growth EBITDA margin of the top 25 companies of luxury goods retailers in the UK, or comparing the number of hospital beds of all European hospital companies.
Profiles: Preparing a PowerPoint presentation (usually one or two slides) about a specific company, including business and product description, market shares, latest financials, share price performance, key management bios, calculation of trading multiples, etc. It is not uncommon to be asked to do this for twenty companies, or even more.
Preparing “Pitchbooks”•. A 'Pitchbook' is a fancy word for PowerPoint presentations that are shown to clients to try to obtain their business. As an analyst, you will be asked to create slides that will include various financial analysis, profiles, a presentation about the bank, and recommendations to the client.
Financial Modelling: Analysts will take the first shot at building merger models, discounted cash flow valuations, and LBO models, but associates will always review them extensively once the “architecture” of the model is laid down.
Comparables ("comps"): Analysts will have to create and update large databases of "comparable multiples", such as price-to-equity ratios and EV/EBITDA ratios for a wide range of companies. This involves updating share prices, updating new financials when they are released, calculating net debt, and doing a number of accounting adjustments.
Admin work: Taking notes at meetings, organising conference calls, preparing internal documents, literally running around to print and carry the books before presentations, printing and checking documents for associates, VPs, Directors, or Managing Directors.
About 90% of the time, you will receive work from an Associate who will be in charge of giving you guidance on how to do the work, checking it, and giving you further comments to process. You may end up working with more senior people, but this will be more of the exception than the rule. Depending on your relationship with your assigned Associate, they can be your best friends or worst enemies. Some associates will dump a lot of work on you (you will quickly find out that every person who is your superior has the right to dump work on you), but almost all of them will teach you how to do a good job as an analyst and will be very valuable resources. They are usually tough, but don't forget that while Associates may dump a lot of work on you, they have tremendous pressure from VPs, Directors, and Managing Directors.
Of course, a typical analyst’s day starts at 9:30 a.m., and ends usually around 10 to 11 p.m. on a good day, or 3 to 4 a.m. on a busy day. An “all-nighter” is when you do not go back home and work through the night until the following morning; this will definitely happen to you at some point. You will also spend most of your weekends in the office (not all of them -,you will get a break from time to time), although weekend work is much lighter and you will only be in for 4 to 5 hours. Overall, expect to work a minimum of 70 and up to 100 to 110 hours per week. The better the investment bank (from league table perspective) the worse the hours, because they will be extremely busy. However, every year that you spend in banking will get better working-hours wise. You can maintain a social life, but spare time will be scarce and you will have to learn how to manage your time efficiently. What usually happens is that other analysts will become your best friends and you will support each other through the difficult times.
The standard is after three years, at which point you become an Associate. Some of the best analysts can manage to get promoted after two years (this is called being “fast-tracked”), but it is quite exceptional.
Below is a selection of books that are "must-reads" for investment bankers and also people interested in investments. Most of those are recommended by top business schools and finance professionals alike - you can read the recommendations and comments on the Amazon links. These books vary in difficulty, so we rated them: (*) means that this book is for everyone, (**) has some more advanced finance topics in it, and (***) means that the book is more technical.
John Rolfe, Peter Troob: A very entertaining story about two fresh graduates of Wharton and Harvard who start their investment career at the hottest investment bank at the time, DLJ (bought by Credit Suisse later on). Overall, it is a gross exaggeration of the life of an investment banker (and very very NY-centric, can be vulgar at times), but it will give you a very good idea of how tough the job of an investment banker can be; it is will worth reading. Most investment bankers will have read this book, and it is a fun read before you embark on your investment banking career, highly recommended!
Bryan Burrough, John Helyar: A very long book, but also a mandatory read for future investment bankers, especially for those interested in hostile takeovers and private equity. This book relates the true story of a bidding war for RJR Nabisco (one of the largest consumer goods companies in the U.S. at the time), who was ultimately acquired by KKR.
We recommend this book because first, it is well-written and relates to a true, very important event of financial history; second, it will give you a good idea of the political fights that occur during large takeovers. You will also get a good understanding of how private equity companies think and work.
Charles D. Ellis: An excellent book about the history of Goldman Sachs - this is a good read for those going to work for Goldman or those who want to know about the firm. It’s rather lengthy, but there is a real difference that makes this book a good read, compared to any other book on banking. It’s not so much that the author worked as a strategy consultant for Goldman Sachs, but that Goldman Sachs agreed to give the author full access to everyone in the company, so that this book is a real inside story rather than just a corporate history.
William D. Cohen: If investment banking and the history of big deals fascinate you, this compelling history of Lazard Freres & Co., from its humble beginnings through its astounding success, is really a fascinating read. It's well-written and entertaining.
A quite entertaining, easy-to-read review of financial history, from the Inca empire and Napoleonic wars to the modern financial crisis. This book is great because it explains complex financial topics in a very simple way; it really helps you understand the origins of modern finance and why the financial world is the way it is today. The book is structured in six sections: Money, Credit/Bonds, Equities, Insurance, Real Estate, and Globalization. The book helps you join the dots in a fascinating way.
Michael Lewis: This semi-autobiographical book by Michael Lewis describes the author's experiences as a bond salesman on Wall Street during the late 1980s. The book captures an important period in the history of Wall Street, and will give you a good overview of the Wall Street culture in the ‘80s. Though not as relevant nowadays (especially post-financial crisis), it will give you a good understanding of the way financial markets work, and the sales & trading activities of investment banks.
Nassim Taleb: A personal favourite and highly recommended read - a very gripping book full of wisdom. The book describes the way that the finance community often mistakes luck for skill, and are thus "fooled by randomness". The author is a Wharton graduate, ex-trader, hedge fund manager, and philosopher who denounces the ignorance of the financial community. The book shot to fame as Nassim Taleb had predicted the financial crisis in this book, which was published three months before the market crash. Some parts are highly technical, but most of the book is funny and understandable to students and those who don’t work in financial sectors.
Nassim Taleb: The follow-on book to "Fooled by Randomness", which goes deeper into the concept of "Black Swans," which the author defined as very unlikely events that have disastrous consequences. Many fascinating stories within this book, which is a highly recommended read, although the style (and sometimes the arrogance of the author) can be hard to follow at times.
A William Poundstone-recommended reading by many financial gurus across the world. It is a somewhat advanced book on "information theory" and probabilities. This is a fascinating book, which is encyclopedic, exceptionally informative, and packed with great stories and characters. We enthusiastically recommend it to anyone seriously interested in investing, the sociology of ideas, or gambling. Indeed, read it twice; once for its theories and practical investment advice, and twice to relish its personalities.
Another must-read for those interested in investments. This is really the biography of Warren Buffet, the richest man in the world. The interesting parts are really about his investment philosophy ("value investing") and is also a good account of stock market history. You can also read about the books we recommend for valuation, for the more experienced finance professionals.
Many investment bankers and students who plan to move into hedge funds or the investment management industry often ask us to recommend books and a study plan for the CFA. When you register for the CFA, you already receive a lot of recommended readings and study notes to help you prepare, so those are materials that you need to read in priority. Below are also a couple of very useful additional books that we recommend:
Kaplan CFA Basics: The Schweser Study Guide to Getting Started
Bruce Kuhlman: Kaplan does publish very high-quality preparation books in general. As the title indicates, be aware that this book is aimed for starters that have not taken the CFA level 1 yet - it is ideal for students and other non-finance professionals who don't know much about finance and accounting. What we like about this book is that it is easy to follow, and provides a very good overview of the concepts of the CFA so that you do not get totally lost before starting your study. A bit expensive, but you can sell them back through Amazon whenever you're done with your study so the overall actual cost won't be that high. If you are a finance professional, just go straight into the curriculum materials and skip this book.
Schweser Studynotes for 2011 CFA Level 1 Exam (Volume 1-5 Plus Quick Sheet)
Kaplan Schweser: Those study notes are the most widely used and most effective to prepare you for the Level 1 exam; they include notes for Levels 2 and 3. They are good for reviews after you go through all the study materials. You can usually find them second-hand from Amazon, just click on the link above and search for "Schweser study guides". If you are lucky, you can get your hands on the latest ones.
2010 Stalla CFA Level 1 Study System (Study Guides, Lecture Notes, Passmaster Cd, Multimedia Lecture Disc, Flashcards) Stalla Review for CFA Exams
Stalla is a CFA study provider that offers preparation courses for the CFA. While you may not need their courses, they do publish quite good books and guides to help your CFA study. The difference-maker about the Stalla books is the software that comes with it. Some people may find reading easier, while some others prefer to use more "interactive" ways of studying. If you are in the "other" category, these books are for you. They also have level 2 and level 3 books, and the links are below. The same as above, you can usually find those guides on Amazon second-hand. Just click on the link above and do a search for "Stalla guides".
Equity Asset Valuation (CFA Institute Investment Series)
Jerald E. Pinto, CFA: A very important and popular book covering the four important aspects of equity valuation: DDM (dividend discount model), free cash flow models, price multiples, and residual income. It is not only good to help CFA study (level 2 in particular), but is also a reference book for valuation as it is done in the investment management industry. This book also scores many points for having clear, worked-out examples to help your understanding.
Quantitative Investment Analysis (CFA Institute Investment Series)
Richard A. DeFusco, CFA: This book is worth mentioning because it does a good job of explaining the statistics part of the CFA exam. It also delves into the other CFA subjects (statements analysis, time value of money, etc.) but goes much deeper into the statistics area for those who are interested in this area in particular.
Here is a selection of books that are recommended by investment bankers to learn about valuation.
Valuation: Measuring and Managing the Value of Companies
811 pages, Wiley (Authors Koller, Goedhart, and Wessels)
This is the Bible of valuation, a book that we often see on bankers' desks and a good reference guide for investment banking analysts and wannabe analysts. It was written by McKinsey consultants and a Wharton professor. While quite a big book (811 pages!), it is a relatively easy read and has some case studies that will help readers understand what is exactly happening in a DCF valuation. If you work for an investment bank, you might be able to request your team to pay for it. If you are a student who wants to go into investment banking, it is a good investment. No need to buy the latest edition so you can save a few dollars (or pounds).
Damodaran on Valuation: Security Analysis for Investment and Corporate Finance
464 pages, Wiley
This is the book written by finance guru and New York University Finance professor Damodaran. Its is lighter than the McKinsey Valuation book, but nevertheless very comprehensive and go through all the key topics in valuation including synergies, cost of equity calculation, CAPM, contingent claim valuation, etc. A big positive is that you can also get additional explanations and free excel models on Damodaran's website here, which is a really fantastic resource.
Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions
304 pages, Wiley (Authors Rosenbaum and Pearl)
This other highly recommended book is a bit more practical than the other two. Its many included links to online models are quite useful. Basically this book is more about how valuation is done "in practice" at investment banks, rather than a purely theoretical book. I would say that if you do not want to bother about fully understanding the academic rationale of valuation and want to purely be ready for an investment banking job, this is the shortcut. Personally, I would recommend getting one of the books above. Maybe buy this one if you want a bit of practice before starting the job - but you'll probably get the same practice during an investment bank's training programmes anyway.
I studied a degree at Cass Business School, which touched upon most areas within finance but had a strong focus on equities, fixed income, and derivatives. I completed two internships during my degree, both with the same European bank. The first was an 11-month long-term internship with the Nordic Debt Capital Markets team and I followed up with a summer internship on the Nordic Derivatives Marketing desk. I truly enjoyed the experience but wanted to move into corporate finance and decided to interview at other banks. I got an interview with my current employer on the back of a tip from an ex-colleague who was working there. I finally joined their Infrastructure & Utilities team as a graduate a year later.
What does your work consist of on a daily basis?
Daily work comprises everything from financial modelling, debt/equity structuring, interaction with lenders and investors together, with a healthy dose of negotiating project documentation, and liaising with internal and external lawyers.
What kind of skills do you need for this job?
You need technical skills as projects demand large and complex financial models. A commercial and extrovert personality is also very helpful, as you are expected represent the bank in external meetings from day one. I also think a willingness to learn is important as the learning curve is fairly steep in the first couple of years, due to the breadth of the business.
What aspects do you like and what aspects don't you like about it?
Long hours, and the fact that greenfield infrastructure projects usually take one and one-half to two years from initial procurement to completion, are not my favourite parts of what we do. The fact that the bank I work for is the market leader, and acts as financial advisor and sponsor on most of the projects we are involved in, has given me an extremely wide and useful set of skills by being part of deal teams closing flagship infrastructure transactions in Europe.
Q. Hello, thanks for taking the time to interview with us, we know that M&A life is very busy. Could you just give us a brief introduction of your background to start with?
A: I first studied accounting as an undergraduate, and then I studied for a masters degree in Finance from LSE (London School of Economics). Before getting a full-time job in M&A, I first did a one-year placement with Citi IBD in Healthcare. After two years with my first employer, I moved to another bank as a senior analyst in Industrials.
Q: What was the interview process like when you first applied for a job in M&A? How about when you moved to your current employer?
A: The interview process for graduates is typically an assessment center. The assessment center was quite long and tiring. It is a bit difficult for students who have no prior banking internship or who don't know that much about banking, which was the case for me. However I found out that it was more thinking style and personality fit tests rather than technical questions. When I moved to my current employer after two years as an analyst, it was a different kind of tough. The questions were much more about technical skills, personal career plan and personality fit. The technical questions I had were about DCF, LBO and Merger analysis, plus a few accounting questions. At the end of the day, it is about your experience, attitude and personality. Even if every candidate answers those technical questions perfectly, interviewers will actually make their decision based on the experience of the candidates and the "chemistry" between you and the interviewers.
Q: How is your typical day like? How many hours do you work per week?
A: My typical day includes working on different things at the same time. I may work on two pitch books and one live-buy or sell-side deal at the same time. On the live deals, I can be involved in modelling, presentations, or admin work. For pitch books, I typically do research, financial analysis, simple modelling, comps etc. Sometimes there is not much difference between working on deals or pitches. However, you have to go to far more detail if you work on a live project. On average, my working hours are between 80 and 90 hours per week.
Q: What do you like and don't like about the job?
A: The good thing for this job is that the work is challenging and we have to develop skills about managing your time.
Also, I can learn many things about corporate finance and business investment, particularly when I work with experienced people and I always feel my brain is not big enough to digest so much information quickly. Of course, the best moment is when we close deals and that is the accomplishment in the career. But life is not full of happiness. My day and week can be also very boring because tasks are repetitive. Of course long hours are not pleasant, particularly
you have to keep working long hours for a few weeks and months. Now banking is tough because we still work very hard even though you may not have lot of deals.
Q: What are the qualities of a good analyst in your view?
A: A good analyst definitely has got right technical skills and is reliable. Team spirit is also extremely important.
Beyond those, you should not only just sit in front of your computer and crunch numbers, gradually you should be able to explain what you have done and what you find from your analysis. On top of that, confidence and managing working relationships with other people are the extra plus factor in your starting career.
Q: Do you have any interesting/ fun story to share with us?
A: The interesting story is that if you are a very good analyst, you can be the boss of your Associates who might not have joined banking from an MBA or the industry. It is actually a great fun if you are in that position as YOU have much power to decide what to put in your pitch book. And they have to take you to the meeting because nobody else understands where the numbers come from in the Excel model!!!
GMAT is a very important part of your Business School application. It is not the decisive factor, but having a good GMAT (700+) will give you a good shot at the best business schools, and having a low GMAT (below 650) will definitely keep you out.
So how do you prepare? There are many many books out there, but it all depends on what you requirements are. We personally recommend those books for those who are aiming at a top 10 business schools:
Personally, I think this is the best. It is clear to follow and it really prepares you best to get very high scores. One word of caution though, it is a tough book. What the book is doing giving you all of the very hard questions that you will encounter in 700+ range. When I first tried the sample exams on the CD, I was actually very depressed because I couldnt get a score above 650. But what this book does is making you study really, really hard and pushes you to the limit. Even though I didnt get above 650 in the practice tests in the CD, the day of the exam I got 720. And without the emergency bathroom break I had to take during the exam (my advice: don't drink anything before the test), I believe I would have scored higher than that still.
This book is fine if you want practice and are not aiming at the 700+ scores. Its a notch below Kaplan but it offers extensive practice opportunities with a quite large database of practice questions on the CD.
My answer is that it depends on what kind of study person you are. I would say no if:
But do take the courses if:
Again, it depends on what kind of person you are. If you are more analytical and good at maths, you can start to practice a few hours every day for a month before the exam. Personally, I took two weeks off, practiced 4 to 6 hours per day, and took the exam. I found this method quite effective. If you are from a non-analytical profession or not comfortable with maths, most people take courses for up to 6 months before their exam date.
Overall, it is good to get your GMAT done quite some time before you apply to business schools. If you get a long break, or even before you start work, you can just get it done. The results are valid for several years (it was 3 years when I applied in 2008, check the latest), so you if you plan to do an MBA, you should try to take the GMAT early so you don't have work pressures when you are ready to apply. As you grow older and get busier and start to have personal or friends commitments, it is hard to motivate oneself to spend every night of the week studying.
Continuing on the pay survey theme, here is another quite good survey conducted by Business Week on MBA graduate pay after 5, 10, 15 and 20 plus years in their careers. The usual suspects Wharton and Harvard are on top, but take with a pinch of salt, as the top schools have a large proportion of students going into finance (banking, Private Equity, Hedge Funds), pushing salaries up.
Most investment banks and even some private equity funds will start their interview process with a numerical test that can either be taken online or on the company's premises. While many candidates are confident in their numerical skills, as many as 80% of the candidates fail to pass some of those tests. Below are some tips and advice to prepare ahead of your numerical test.
Review the basics
Be comfortable with fractions, percentages, ratios, inflation rates, power laws, basic geometry concepts, etc. Take a few sample tests (click here for numerical tests) to practice and then review any concept you have not fully mastered.
You are often allowed to use a calculator - make sure you know how to use it!
Bring your own, and learn how to use it to save valuable time during the interviews.
Questions are designed to confuse you
Some questions can be tricky. As it's a multiple-choice test, some questions may have solutions that are very close to the correct answer, or include some solutions that represent the most common calculation mistakes that can be made.
For example: mixing units (kg with g), confusing different charts on a graph, etc. So make sure that you are 100% confident in your answer and do a rapid double-check before submitting it.
Attention to detail is key
Pay attention to units, scales, etc. Make sure you spend some time scanning the data before rushing into calculations.
Answer questions randomly if you run out of time
It's better to try to answer a question than not answering at all - at least by answering you get a chance to get it right.
To help you with survive your early days as an investment banking analyst, we have put together 5 typical days or scenarios you will likely have to face, with some useful tactics and tips to overcome those situations.
Scenario 1: the "live deal" day
Working on live transactions / working on several projects at once. Tasks are mainly organisational, such as liaising with clients, accountants, lawyers, other advisors, collating and distributing materials and working hard to tight deadlines.
(i) Always remain cheerful however busy you get
(ii) write every task down on a notepad to make sure you don't miss anything
(iii) let you assistant know where you are at all times
(iv) keep team members informed of progress
(v) triple check documents before sending out any confidential information or to client
Scenario 2: the "Hermit" day
Valuation and profiles for a presentation. Tasks involve financial modelling, compiling comps, or making profiles, which are "solitary" tasks.
(i) Prioritise tasks
(ii) Stay focused to avoid important/time consuming mistakes
(iii) Plagiarise - use templates, similar work, and ask other analysts if its been done before
(iv) Always double check and understand where every number comes from
Scenario 3: the "Hell breaks loose" day: the pre-presentation day (and night)
Preparing marketing documents for a pitch or management presentations. Tasks involve processing comments, circulating drafts, waiting and chasing for feedback, managing the printing and checking for typos and mistakes.
(i) Book the printing in advance
(ii) check, check and re-check
(iii) Chase people (nicely), make them aware of dealines (ie. printing times)
Scenario 4: the "Wear a suit" day
Client meeting, roadshow or working with a client on-site. Tasks involve taking notes, and helping the client, often with menial tasks
(i) Be professional and confident
(ii) Be ready to answer any question
(iii) Logistics: bring business cards and always carry the essentials (calculator, laptop, notepads, important documents)
(iv) don't check your bags in
(v) menial tasks earn you brownie points
(vi) expect the unexpected...
Scenario 5: the "Beach" day
A day when you have nothing to do in the office i.e. between two assignments, slow down in activity.
(i) Catch up on personal admin
(ii) Spend time focusing on your development (i.e. networking, private equity interview preparation, MBA essay preparation, catching up with headhunters)
(iii) No face time - go home early
Investment banking interviews are notoriously difficult. Often candidates are very well-prepared, especially for the technical questions. However, many of them tend to overlook some simple aspect that can prove fatal. Based on our experience of interviewing candidates, here are the most common mistakes we see in investment banking interviews.
1. The overconfident candidate - typically Ivy League/Oxbridge, with an impressive CV, several good internships under his/her belt, and strong technical skills. Confidence is a great asset, but investment bankers are looking for humble confidence. Having a large grin on your face, being too relaxed (or overenthusiastic) is definitely not the way to go at interviews; any of these signals equal a huge red flag to the interviewer(s), even if you think that you can answer everything easily. Stay alert and focused; sit up in your chair and do ask questions about investment banking and the firm at the end of the interview, to show that you are interested.
2. Weak handshakes. Sitting before your interviewer. Not saying hello. First impressions do matter a lot.
3. Rambling. You need to be able to walk the interviewer through your resume in one minute or even less. Many candidates tend to talk too much under stress and describe their life since kindergarden. Be concise, speak short sentences, and be logical. Remember, you are telling a story.
4. Interrupting. When the interviewer is talking, listen. Don't interrupt saying, "Oh yes, that reminds me of the assignment I was working on..." or any other anecdote you want to share. You can do that later if you think it’s relevant.
5. Overexcitement/ stress. Don't try to fill silences if your interviewer is looking through your CV or thinking about questions to ask you. There is nothing more annoying than a candidate trying to talk while I am going through his/her CV.
6. Think before you talk! If asked a question, take a couple of seconds to think about your answer instead of rushing an answer even before the interviewer has finished his question. Taking a few seconds to pause and think makes you look more mature and intelligent, so take your time and slow down.
7. Jargon. Don't try to throw jargon at the interviewer to show off your knowledge. Know about valuation (DCF, comparables, WACC, Free Cash Flow) and you should be fine. Also, if you are trying to bring in complicated concepts, you should obviously understand those in-depth, so why make the interview harder for yourself?
8. If you are asked a brainteaser or a technical question, voice your thinking out loud. Not only will this show the interviewer how you think (which is the most important aspect they want to evaluate), but also if you get stuck or make a mistake, the interviewer will be able to guide you. Also, if you don't know the answer, do say so! but don't give up. Voice your thinking and at least attempt to answer.
9. Not asking questions at the end of the interview. Obviously, you should try to ask one or two questions, but no more.
10. Not having a good story for "Why investment banking?"
11. Clichés. Don't tell me that you are a hardworking team player with great analytical skills and a love for finance. Prove it through your experience and achievements!
12. Boring / no differentiator. After a long day of interviews, everybody starts to look the same to the investment banker. Think about something that you can bring up that is interesting: international experiences, interesting hobby, unusual languages, extracurricular activity, why you became interested in investment banking, etc. Word of caution: don’t make things up! You should focus on the more interesting parts, but don't completely invent something.
13. Exaggerating responsibilities. Do not grossly exaggerate your responsibilities or any other skills (especially language skills) because you will be found out. Investment bankers are experts are dealing and detecting bulls**t, so tread carefully.
Given the omnipresence of social networks and the increased online presence of almost anybody nowadays, potential employers are most likely to perform some type of Google search on you ahead of an interview. In investment banking or private equity, you will need to have an unblemished online reputation and avoid a few fatal mistakes. Below are some tips to manage your online presence:
Google search yourself
Google your name and see what comes up in the first three to four pages. Most interviewers and HR reps will do this. Once you have done this, go into every single link that is relevant to you and investigate for any potential inappropriate content.
Clean up your Facebook page
Have a clean Facebook page, use the maximum privacy settings, and make sure you have untagged any inappropriate photos or comments. As a rule of thumb, don't make any negative comments on anything on the Internet, because those could come back to haunt you.
LinkedIn - common pitfalls
A few fatal flaws we have seen in investment banking candidates LinkedIn profiles:
- Being part of the group "Occupy Wall Street"
- Mentioning "passionate about strategy consulting" in the profile summary. Not helpful if you want to convince the interviewer that investment banking is what you want to do.
- Status update: "Looking for a co-founder for a high tech startup!" Investment bankers want to hire people who will be focused on the job, not people who will quit in six months to launch their own business.
- Experiences, skills, or grades that differ from those listed in your CV.
Be especially careful of what you post in forums, as comments can sometime be tracked back to you. In particular, don't ever bad-mouth any employer.
Good habits to adopt before investment banking interviews
- Set up a Google alert on your name, so that you get notified if your name hits the web.
- Make your LinkedIn profile (or any other online profile) as professional as a CV sent to an employer. Highlight your skills, interests, experiences, achievements, club memberships, etc.
- Try to get your name on the website if you are part of a student club, sport association, or charity, to improve your positive online footprint.
Other good habits once you have got your job in investment banking
- Update your LinkedIn profile regularly.
- Connect with other people as much as you can, but make your connections invisible to others. You don't want your employer or colleagues to know that you just met a headhunter.
- Try to get your name on the web while working on deals, if you are part of professional organisations, or when you are going to industry events. This will help increase your online professional profile and makes you easier to find for potential employers or headhunters.
Studying an MBA is often a must-go route for many financial professionals who want to break into private equity or a bulge bracket investment bank. It is also one of the most standard ways for non-finance or non-investment banking professionals to make their first step at bulge bracket investment banks. Below is some advice on how to get ready with your application and some tips from top MBA graduates.
Pick your MBA carefully
Not all MBAs are created equal. Many investment banks will only target a handful of MBAs: Harvard, Wharton, Stanford, Columbia, Kellogg, Stern, Chicago Booth, Insead and London Business School are typically the investment banks’ favourites. That doesn’t mean that you cannot get into Investment Banking from another school, it simply means that there will be fewer spot and opportunities to network, and it will overall be harder. Banks like MBAs because they do the selection process and they train the students for them, which increases their chances to get strong candidates. For private equity, it gets even tougher. Many PE funds will only recruit from Harvard, Wharton or Stanford, because they can be very selective. If you dream about working for Carlyle, Blackstone or Apax - make sure you pick one of those schools. Even then, it won't be easy!
First step: get your GMAT right
This is your absolute first step. If you cannot score a GMAT above 700, your application will need to be outstanding to be able to get in. Many schools are particularly picky when it comes to applications from highly technical backgrounds (i.e. you are a journalist or work in marketing), and will want to see high numerical scores. The ideal score is a high (700+), balanced score with no major differences in verbal and numerical. Should you retake the score if you are not happy with the outcome? If you get anything below 680, it is probably worth redoing it, but only if you are confident that you can score much better. If you scored a 700 and you are hoping for a 750 - don't bother, it won't make a great difference to your application.
Essays - first figure out what makes specific schools tick
Every school has different areas of emphasis. For some schools, they might look at an international professional experience (i.e. Insead). Some schools may put emphasis on leadership (Harvard), entrepreneurship and uniqueness of thought (Stanford), etc. The only way to find out about each school requirements is to simply read their websites, check the alumni profiles, and talk to current students and attend info sessions. This should become very apparent.
Essays - what are they looking for
1) A track record of success. Every school wants to make sure that their applicants will be successful and go on to a great career after graduation. So make a list of your achievements and brag about it (in a non-arrogant way, but don't be shy about stating the facts). This means that promotions, special achievements, and obvious paths of career progress are key. Do mention that you were the youngest staff member, that you got promoted many times, show that your salary went up, that each job move was a step up, and that overall you are on a fast-track to success. You need to create the impression of a strong momentum in your career. Pitfalls: do not mention or make the reader believe that you need an MBA because you are stuck in your career or unappreciated.
2) Leadership. This is a difficult one that can take several forms. Essentially, the administrative committee wants to see that you are going beyond and above the requirements for a standard employee or business person. Managing large teams, leading projects, and having impressive extracurricular activities are all good. The more impressive and the bigger the projects the better, but it's all about conveying your leadership skills.
3) Have a life story. The story matters most, whether you are planning to become an entrepreneur, are passionate about healthcare, technology, or anything else in your life. This is about showing a purpose and a drive that has affected your choice to date and showing how the MBA will be instrumental in helping you achieve those goals. For example, you may be working in a healthcare company and want to start your own business, but it will require a different skillset to be able to achieve those goals. You could be working for Microsoft but be passionate about technology and want to pursue a career in investment banking to help share industries and create an impact. Plans always change in reality - you may dream to set up a charity in India, but eventually end up working for Goldman Sachs in New York. But whatever your true ambitions are, they need to be credible. For example, if you are passionate about technology, working for Microsoft will not be enough. You will need to show a true passion, i.e. do extracurricular activities related to technology, show that you have done your research, and show real, genuine passion that will be palpable to the reader. It's not all about logical career moves - but more about showing that you have had a deep-rooted desire for some time, maybe even since your childhood, or something that emerged after aspecific experience or encounter. In any case, "purpose" is the keyword here.
4) Be a well-rounded person. An 800 GMAT, top academics and working for top institutions is not enough. Business schools want people who are interesting, have good communication skills and are sociable, so that they will add to the classroom experience. So try to be original and show that you have other interests beyond business and making money: art, music, sports, charities, and so on. Schools do not want classrooms filled with intelligent and nerdy people. So if you have a very technical background, don't forget to show the softer part of you. Similarly, if you come from a "softer" background in art or non-technical professions, don't forget to show your analytical skills. It's all about balance and showing that you will be a pleasant person to spend time with.
5) Be able to craft a logical story. Content is important, but structure is equally important in your essays. Having a clear, logical, step-by-step structure is key. Try not to go back and forth between various points, and make sure that there is a logical progression in your essays and any story you tell. Also - do not forget that every sentence in your essays should have a purpose. Keep thinking "How does this sentence add to my essay and my candidacy?" Also, have your points all in the right places. If the essay is about "why school XYZ", maybe it’s not the right place to mention all your great achievements at work or outside work. Do not try to put all your points in every essay. Mentioning that you are great at work and have good grades once or twice in your essays is enough, since interviewers can also see your grades, salary history, and so on. As when writing a CV, you do not need to repeat similar achievements for every job you've had, but instead just mention the most high-profile achievement - once. Diversify your skills and achievements, and use them in the right places that make sense. Often, essays look like a list of achievements that are not well thought through or that look out of place. Make sure you tie them nicely in your story, and make sure they support your logical conclusion.
6) Know "Why" you want to do an MBA and go to a specific school. Do your homework! There should be a clear reason why you need an MBA. Needing an MBA for the brand, or because it will help you get a great job, is NOT good enough. You need to be able to clearly demonstrate that the school will add to your skillset and potential. For example, don't just mention that Harvard has a great alumni base. Instead, mention that you are passionate about healthcare and Harvard has a strong Healthcare club with XX members that you intend to join, that they have specific classes tailored to your need, that they have alumni X and Y in the country you intend to work for, or that professor X is teaching a class that is exactly related to what you intend to do. Specifics are key! Similarly, do not be vague about adding to your "toolkit". IF you want to work in investment banking, mention the classes, professors, and activities. Talk about the great leadership classes, the overall course structure, the alumni you have talked to (and quote their names). Show your genuine interest and that you have done in-depth research.
7) Be different. There will be hundreds, or event thousands of applicants from investment banks, corporations, and any other industry you are working in. They will all be smart, have good GMAT scores, and probably have very similar stories to yours. You need to find your key selling point, including an unusual experience. Perhaps you speak many languages, have launched a start-up, have had some great and unusual achievement, or a combination of many things. For example, you could be an accomplished musician in your spare time and work in finance - therefore you'd like to move into entertainment M&A / investment banking. You don't need to overdo it though (i.e. work for charity, be a musician and athlete, and be great at work). DEPTH of experience is key. Focus on two or three unusual traits and dig deep into them to show true, genuine passion and a deep level of expertise. Finally - your writing style is important. Essays are boring, and they will read hundreds of them. Be refreshing, use some humour or passion. Make it a good read.
8) Show that you will contribute and add value. Don’t just concentrate on what the school can do for you but also about what you can give back to the school. You need to demonstrate that you will be a good addition to the classroom. Demonstrate that you'll give back by supporting other classmates sharing your expertise, joining clubs, events, or even taking the lead to establish new clubs and initiatives. Make yourself a necessary part of the school, so that they can feel that they will benefit by having you there.
9) Give back to society. Especially for U.S. schools, it's quite important to show that you'd like to give back to society in one way or another. That could be charity, social activities, helping the environment, improving ethics in finance, or so on. You need to show that you'll want to make the world a better place. Essays should not all be about you, but also about your impact on society as a whole.
10) Make it all tie up and be ethical. When you finish writing your essays, review your application and make it all tie up. Do all the stories link together? Have you shown that you are strong at academics, professionally, that you are a well-rounded person, and have a track record of success? How about the school choice - is it obvious that the school is perfect for you? Have you put too much emphasis on some points but not others? Does your CV tie in with your experiences? How about the grades matching with your claimed academic success, and your extracurricular activities matching with your professional / life purpose? Read it back and make sure that everything makes sense. Finally, many applicants will stretch the truth. There is a fine line between smart marketing and lying. It is fine to boost your achievements a little, but making up achievements or outright lies are a no-no. Do not forget that students will also go through your applications; people talk, and they know the back story. If you state that you led an entire deal when you were an analyst at Morgan Stanley, chances are that students will ask one of their mates who used to work there. You worked for a charity in Brazil? Again, chances are that a student will know about it. So be proud and show your successes, but never stretch the truth too far. Interested in our MBA essay review service? Please contact us at firstname.lastname@example.org.
There is more to investment banking than just bulge bracket banks. While most of the bulge bracket banks like Goldman Sachs and Morgan Stanley are well-known to most students interested in finance, there are hundreds if not thousands of small institutions focused on corporate finance activities. Those smaller institutions are called "boutique investment banks". They tend to be much smaller (a couple to a few dozen people), and have a narrower focus. They may only focus on a specific sector (i.e. Arma Partners and the TMT sector), be regionally focused, customer type focused (i.e. Altium and mid-market companies) and try to focus on giving either cheaper, higher quality, or very specific advice. But is working for a boutique a good career move? Below are some advantages and drawbacks of working for a boutique investment bank.
Many bulge bracket bankers that move to boutique investment banks mention culture and lifestyle as a reason for their move. While it is true that many boutiques can be more entrepreneurial and collegial given their smaller size, not all boutiques are created equal. Some boutiques may not get the deal flow that big banks have, and the hours or intensity can be more appealing compared to larger banks. However, smaller institutions also mean a lower level of support. Therefore, you'll probably be asked to do more administrative work or some of the more tedious research on your own; no more assistants to help you schedule all of your meetings, or research department to send you all of the research reports you need. In some cases, no more printer room!
The main advantage of boutiques over some of the larger banks is that the compensation will be all cash. This can make a substantial difference for VP level and above. However, many boutiques tend to pay less compared to big banks, but again this is on a case-by-case basis, as some elite boutiques may be very competitive on pay. While bulge brackets have to follow market trends and your bonus will be fairly predictable (depending on your ranking), boutiques pay may vary much more depending on the number of successful deals they have closed during the year. Given the smaller size, the process may be more political, as well as depend on the quality of your relationships within the firm.
Most boutiques tend to do fewer deals, simply because it’s more difficult to get business or because they may lack the capacity. Big banks are pitching machines, and boutiques need to be more picky given their smaller resources. This is something to take into account, as the deal flow is very important for a banker, especially in junior years. However, you may get more exposure on single deals compared to large banks. Hierarchy in boutiques is usually flatter, which means that you might get more exposure to clients, and be responsible for running a deal even at junior levels. The drawback is that this may create more pressure, as the learning curve may be pretty steep.
The network that bankers build at top investment banks is often overlooked. However, this will be of critical importance in your mid to late career. Working in a large institution will give you exposure to a lot of bright colleagues that will end up in top jobs in the finance and corporate world. The network will definitely be more restricted at boutiques. In addition, bulge brackets tend to carry more prestige on the CV, because the selection process is usually tighter. People in the industry will always look up at somebody who spent a couple of years at Goldman Sachs or Morgan Stanley. Its very similar to your education - Ivy League is always more impressive, although it is not what will define your career success ultimately.
Exit opportunities ultimately depend on the quality of your deal flow in investment banking, although brand names matter. Exit opportunities will be plenty at good banks and boutiques, but the quality and diversity of the offers will be much better at big banks. Most buy-side firms or even corporations feel more comfortable hiring from well-known banks, and headhunters also tend to favour big banks because it’s easier for them to find talent in those big M&A pools.
Below is a selection of the must watch movies for anybody considering a career in finance. Our selection is either based on the accuracy of the movie (educational value) or simply pure entertainment!
A 1987 classic; a young and impatient stockbroker is willing to do anything to get to the top, including trading on illegal inside information taken through a ruthless and greedy corporate raider who takes the youth under his wing.
Based on the true story of Jordan Belfort, from his rise to a wealthy stock-broker living the high life to his fall involving crime, corruption and the federal government.
Chronicles the financial meltdown of 2008 and centers on Treasury Secretary Henry Paulson.
Not as good as the book; the president of a major tobacco company decides to buy the company himself, but a bidding war ensues as other companies make their own offers.
Follows the key people at an investment bank, over a 24-hour period, during the early stages of the financial crisis.
Takes a closer look at what brought about the financial meltdown.
The story of Nick Leeson, an ambitious investment broker who singlehandedly bankrupted one of the oldest and most important banks in Britain.
A college dropout gets a job as a broker for a suburban investment firm, which puts him on the fast track to success, but the job might not be as legitimate as it sounds.
A documentary about the Enron corporation, its faulty and corrupt business practices, and how they led to its fall.
The heads of Wall Street's biggest investment banks were summoned to an evening meeting by the US Treasury Secretary, Hank Paulson, to discuss the plight of another - Lehman BrothersAmerican Psycho
A wealthy New York investment banking executive hides his alternate psychopathic ego from his co-workers and friends as he escalates deeper into his violent, hedonistic fantasies.
Not finance per se, but an examination of the machinations behind the scenes at a real estate office.
Securing an investment banking internship is very competitive. However securing a full time offer after your internship represents the holy grail: it validates your skills to other potential employers (you got the job after 3 months of hard work against other talented peers – must mean you are very good). Therefore, avoiding key mistakes is crucial. Below are some investment banking summer internship for fresh analysts and/or associates tips based on our observations.
Do not bother people with non-essential questions
If your associate/VP is about to leave the office early on a Friday or over a weekend, please do not start to ask them questions about modelling or anything that is non-urgent. What you can figure out by doing your own research, or asking other analyst, should not be something you are asking to more senior people. Of course, asking for tips over lunch or coffee or during the day when there is a quiet time is perfectly fine
Arrogance with anybody
If you get the chance to work on a major deal – do not boast about it. Bankers are easily jealous when it comes to deal prestige. Similarly, do not be mean with the admin staff (secretaries, IT, etc.). Secretaries in investment banking are more powerful than your standard corporate as they work with MDs and have access to a lot of information! Having them on your side will make life easier. Having a friendly relationship with the IT department will also prove invaluable when your excel model crashes down at 3am.
Don’t underestimate the social aspect
Make as many friends as you can. Do not just sit down and do your work. That means asking people for coffee, advice (politely and if they have time), inviting your team to the bank’s social events (i.e. internship drinking events, etc.). Introduce people to each other’s. Your fit in the group matters.
Dress well, but not too well
This probably sounds like stating the obvious, but do make sure your suit/shirts are clean and well ironed. After a few all-nighters or busy weeks, many junior bankers tend to get sloppy or forget to change shirts. PEOPLE WILL NOTICE! Always have a spare shirt and tie in the office. Body spray also highly recommended if you are having a few late nights. However – do not overdo it. A junior banker wearing a gold watch and very expensive suits and shoes will only attract resentment. Just use common sense and don’t raise eyebrows.
Do not argue over the best way to present something or build a financial model
If you have no investment banking experience, do not argue with your associate, VP or boss about what should be in a slide or a model. While you may be “theoretically” correct, finance in the real work is much more of an art than a science. Most seasoned associates and above will have a huge amount of experience at managing a presentation or a deal, and will know what makes sense. It is perfectly fine to point out mistakes, but keep your opinion to yourself while you get more experience. You’re here to secure a full time job, not to impress clients (for now).
Don’t ever complain
You may end up working on mind-numbing tasks, or work on a deal that has no chance to go through, or even work with the worst associate/VP/MD but your internship is only a few weeks long. Therefore, do not complain - if you can’t handle a couple of months without any complaints, then chances are that you won’t be a good fit for investment banking. It’s perfectly fine to go venting when its late at night or you are having coffee with friends, but do be careful about the amount of criticism or complaints you may have. In the end, all of the summer analysts are competing for the same job.
Partying and office dating
It’s a very bad idea to get romantically involved with somebody else during your internship (particularly secretaries, but also with other interns and bankers in your department). Don’t forget that there are no secrets – people will find out and they will talk. If you find somebody you like – best advice is to wait towards the end of the internship. Also – watch your behaviour at parties. Getting drunk or overly friendly with colleagues WILL leave the team with a bad impression. Do not forget that there is a race to get the full time job.
Don’t leave early
If you don’t have anything to do – do not leave early. Ask if you can be helpful. Don’t make weekend plans during your internships. If you have emergency travel, make sure you need your team and boss about it and ask for their approval. You will need to be fully dedicated to the job for the duration of the internship. My personal advice is that even if a banker tells you to go home and go early, the best is to stay and either do some modelling practice, catching up with other bankers, or reading up on financial news / finance theory.
If you don’t get the full time offer…
Get some feedback on why you were not given an offer. It’s not the end of the world but you need to understand what your weaknesses are and if the decision was based on your performance vs. the hiring needs of the team (maybe they do not have enough headcount, or they need a specific language, for example). In the end, feedback is what will help you to grow as a future finance professional.
For many bankers, reaching the Managing Director title represents the holy grail for finance. By the time to make it to MD, you should be earning close to 7 figures, managing a team, and handle many close clients. However, very few analysts make it all the way to the top. Many choose to change lifestyle or pursue alternative careers, however, for many others, the jump from associate to VP, and then VP to Director seems problematic. Below is some advice we have gathered from MDs at the large investment banks.
1. Make learning a lifelong pursuit
Many MDs spend up to 15-20% reading, talking to people or travelling. You can learn more by talking to people than spending hours reading about a topic. Many MDs have taken the habit to constantly learn, and watch good people operate under difficult circumstances and learn from their experiences. Learning by reading, talking or watching is the best way to ensure you won't make large mistakes and is one of the best habit your can develop over your career - so get close to the top Associates, VPS and MDs.
2. Build your brand.
If I talk to your friends, significant other, teachers or colleagues, I will know for sure whether you are a hardworking person, trustworthy or ethical even without meeting you. A personal brand will help you differentiate and thus move up fast. Best at financial modelling? Most reliable analyst/associate? most entrepreneurial? Very knowledgeable about a specif sector, tax/legal/other aspects? Your brand will be created with or without you, therefore you need to take a proactive approach in advertising yourself and be true to the image you want to project. Being memorable is the best way to get those promotions and getting noticed fast within your company and your industry.
3. Learn to deal with failures
Many of you have already dealt with difficult times. Eventually, we all have to get over it and move on. Business is about facing constant setbacks and failures. In fact, if you are not failing, you probably are not learning. Make sure you take (calculated) risks. For example, if you have never worked on an IPO model, try to get exposure as fast as you can so you do not face difficulties later in your career. Uncomfortable with public speaking? Practice and take every opportunity you can to speak up. Not getting along well with your boss or colleagues? Learn how to work with all kinds of personalities, even if this is difficult at first - it will all pay off in a few years.
4. Fight self deception.
It is very difficult to remain objective when you feel you have been wronged. Also, most friends or family members will seek to comfort you. However you must resist the temptation to blame others for your difficulties and look at what you can improve in yourself first, and how to avoid such situations in the future. The boss gave you bad comments in front of the client or the whole team? The best way to avoid such situations in to get to know your boss and understand what is important for him/her. At the same time, focus on triple checking your work and have friendly colleagues to look over areas you are not confident about.
5. IQ is not EQ
Most candidates' IQs are high enough to be very succesful in investment banking or finance in general. Where most people fall short on is the EQ. High EQ people tend to be the ones you notice: you never question their work, they brighten up a room when they come in, etc. Learn from them. Building a strong EQ is a work in process and requires hard work, passion, work ethic, character, and strong observational skill. At the same time, make sure you take care of your friends, family and your own body. If you are not in the right state of mind for the job and don't have the necessary support - you will fail.
6. It is personal
You often hear the sentence: its not personal, its just business. However IT IS personal. Don't forget that you are dealing with people. People have their own objectives, they get stressed, they have personal problems, and their own passion. Spend time finding out what drives people around you - is it money, the challenge, being appreciated? This will help you adjust your style with different people and make your work much more effective. In addition, do not forget that long term relationships are critical - when working on teams or projects, you should be trying to build connections for the next 10 years of your career, so even when amongst tough colleagues and angry bosses, stay likeable.
7. Discipline and patience
Discipline and having a routine is key to not only ensure your survival but also the growth of your career. Set time aside for learning everyday, follow up with friends, colleagues, headhunters, ex-classmates; make sure you exercise properly and, if possible, make sure you get some proper rest when you have some downtime. Sticking to those routines is a lot of work but huge amounts can be achieved by having some discpline for small matters everyday. Finally, investment banking is a long term game and survival is the keyword. Luckily investment banks have very clear promotion patterns, so if you follow the advice and remain passionate about the industry, making it to MD is simply a waiting game.
8. Know where the money is
Keep your eyes open to what is happening around you and in the economy. There are always new growth areas, and opportunities come and go all the time. However, you have to be aware of them and seize them at the right time. The team needs somebody in Hong Kong? Another team is expanding rapidly and needs somebody like you? The top-star MD needs a replacement associate on a project? You could be the best analyst or associate in the bank, however if your team is working on a declining industry or doesn't get enough dealflow (and you can't do anything about it), its time for a change.
Below is a list of investment banking boutiques in Hong Kong
- Asian Capital Holding (www.asiancapital.com.hk) Asian Capital Group is a corporate advisory group headquartered in Hong Kong. The Group has an office in Shanghai, the PRC. Asian Capital Group was established in 1998 and specialises in the provision of a variety of corporate advisory services with a primary focus on companies listed in Hong Kong
- Somerley Limited (www.somerley.com.hk). Founded in Hong Kong in 1984, Somerley is a leading independent corporate finance advisory house in Greater China, having consistently ranked as a top financial adviser on public and private transactions in the region.
- Gram Capital (www.gramcapital.hk/index.htm). We are committed to provide a wide variety of corporate finance services, including but not limited to mergers and acquisitions, financial advisory/ independent financial advisory, corporate restructuring and primary / secondary market offerings advisory.
- Octal Capital (www.octalcapital.com) - Established in 2012, OCL is a licensed corporation registered under the SFC to carry out the regulated activities of dealing in securities (Type 1) and advising on corporate finance (Type 6)
- Kingston Corporate Finance (http://kfg.kingston.com.hk)Kingston Corporate Finance is a licensed corporation under the SFO to engage in Type 6 (advising on corporate finance) regulated activities. The scope of services provided by Kingston Corporate Finance includes sponsoring IPO, advising on corporate finance transactions such as financing strategies in the context of mergers and acquisitions, equity fund raising exercises, takeovers and other notifiable transactions.
- Optima Capital (www.optima-capital.hk) Founded in 1989, he Company is licensed by the Securities and Futures Commission of Hong Kong for Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under Schedule 5 of the Securities and Futures Ordinance. CE registration number: AAH672.
- Yu Ming Investment Management (www.ymi.com.hk/eng)
Wholly owned by Allied Group Limited (listed on the main board of the Hong Kong Stock Exchange), Yu Ming Investment Management Limited (“Yu Ming”) is a licensed corporation under the Securities and Futures Ordinance. It is a merchant bank that provides corporate finance advisory services and investment management services to listed companies, professional and institutional clients.
- Ivory Capital Asia (www.ivorycapitalasia.com).Ivory Capital is an independent boutique investment banking firm that provides advisory services and solutions in Asian markets. Our clients include business owners, private investors, and private and public companies in Asia, Europe and the USA.
- Grand Vinco Capital (www.vinco.com.hk) Vinco Capital is one of the most active local corporate finance advisory firms in Hong Kong which provide its clients with IPO, corporate finance advisory, M&A, restructuring, bond issues, loan syndication.
- The Anglo Chinese Group (www.anglochinesegroup.com) Independent corporate finance advisers and investors
- Sun Hung Kai Financial (www.shkf.com) Sun Hung Kai Financial offers a wide range of corporate finance and financial advisory services in Hong Kong and China.
Askivy: Thank you for sharing your experience in Goldman Sachs with us. Firs of all, how is your experience of working at a top investment bank in Hong Kong?
It is very exciting, especially as I am working in a geographical location aligned to my long-term professional goals. The line between work and life is quite blurry colleagues rapidly become your intimate friends. Despite the long working hours, Hong Kong has a very diverse life with so many exciting things to explore. However be prepared, you will need to travel to mainland China very frequently.
Askivy: What are the key differences between working in London and Hong Kong, for example?
1) Longer hours in Hong Kong. It is normal to work for months without a single day off, depending on the deal volume of your team
2) Higher pay in Hong Kong. This is due to lower tax and a housing allowance from my employer. There are also potentially fatter bonuses when mega-IPO or landmark transactions happen
3) More client exposure and responsibility. Making calls to clients on a daily basis is normal. Even at the analyst level, you are stepping up client coverage responsibilities significantly compared to Londo. The ability to delegate responsibilities is key even at junior level, analyst delegating to interns or even more junior analysts happens every day
4) Work is more administration focused and unpredictable. Asia is an IPO driven market, and the sponsor system in HK means that more work streams need to be managed. I typically spend less time on building complex models and refining power points comapred to London.
Askivy: What was your interview process like ?
I got in through as a lateral hire therefore the process might not be applicable for graduate hire. Two sources for job hunting: Company Website (yes, that works!) and Headhunters. The interview process is quite standard, but they will be very keen to understand why you are moving to HK from London (or anywhere else). The interview can be a combination of Mandarin and English. Lastly, given that Hong Kong is not the headquarter of Goldman Sachs, the process took very long. Once an offer is extended to you, the waiting time can easily exceed 1 month.
AskIvy: What are the key challenges you faced when you moved from London to Hong Kong?
1) cultural shock of living in a different part of the world
2) Longer working hours: working non-stop is expected. Dedication and resilience are very important characters in banking in HK
Normally, I get in the office around 9-10am. First things are usually some conference calls or revising the deck or model sent out last night based on the latest comments. In the afternoon, we normally need to do more client facing work, like requesting information from clients for a live deal or some due diligence related questions. Time after dinner are more discretionary period for us, when we can focus on some long-term work like modelling or working on presentations.
Compared to peers in the UK or the US, since HK has relatively smaller junior resources, it is very common for juniors in HK to be involved in a lot of modelling stuff in their first year and join important client meetings. In addition, in a lot of teams, juniors also need to learn how to work without supervision very quickly since associates here need to take more client coverage work than UK or US. However, the bad thing is that juniors here don’t really have time to go deeply into each piece of work. Our comps set or financial models are usually simplified version compared to those used in the UK or US.
Based on my experience, hours in general are worse in London and HK than NYC in the US since NYC has much more juniors to support the heavy lifting. In addition, the culture in London and NYC values working-life balance more compared to Hong Kong.
What I enjoyed most is the training. Teammates are willing to take time to teach you how to do things properly and quickly. It is very quick to accumulate industry knowledge and technical skills in banking. What I enjoy the least is that sometimes, you don’t have time to deepen your knowledge of certain areas of finance because the team is always fully occupied by chasing different opportunities at the same time.
Mandarin is a must to know in M&A or Corporate Finance divisions in HK. Almost 90% of junior bankers in HK are Chinese. Non-Chinese employees usually work in sales and trading or product team like ECM/leveraged finance.
I broke into PE via my own network. I was in a PE coverage team at my previous consulting firm. This period gave me the opportunity to understand more about this industry and get to know the people in this industry. Since I was determined to move to PE, I spent a lot of time preparing for interviews. I learned corporate finance basics / financial modeling skills. Unlike most other candidates, I don’t have experience in banking and don’t have these basic technical skills. However, some business sense I accumulated by being as an consultant helped the interview process since the process is not only about technical skills but also case studies testing how you think about investment opportunities.
There are some overlaps in both jobs. The major similarity is corporate strategy – part of the PE job is managing existing portfolio or investments. As an owner of a business, you have to think what you want to do with the business and what you can do. And from a shareholder perspective, we are focused on important strategic decisions rather than daily operations, which require consulting/strategic skills. However, I think there are two main differences: (i) the type of tasks you perform is much wider and diverse. For example, as a consultant, I normally covered commercial DD during a transaction. However, this has been widened to legal, financial, tax, etc. on a buy-out deal from PE’s perspective. (ii) In addition to that, I now need to screen companies to identify potential investment opportunities. Before, I would spent some time pitching ideas to the client but not actually looking for deals.
A PE job definitely requires more business judgement since we represent the owners of the business. Consultants typically analyse a business based on market, competitive advantage, etc. and then draw a conclusion on whether it could be attractive or not. I found out that it was pretty academic. Within an investment fund, we often discuss what the business could achieve, where we should focus and who could be a good management team – a very practical approach.
In all, I think all the differences are because the perspective is changed. PE professionals are taking a real ownership of their portfolio businesses, while consultants are selling their advising services.
a. A structured approach to analyse an industry or a company (commercial level) in limited time.
b. Thinking out of box – many businesses require new brains!
(1) Challenge is how to deeply understand key drivers in a sector and any business under a short-period of time – since the DD process is intense during a buyout transaction. In addition, the business strategy has to be executable or realistic – it will not be just a simple analysis on paper. It is an actual strategy which you can start and make things happen and work!
(2) Development area is to catch up on finance technical skills, continuing to build business sense and managing people. I gradually realised that I need to be a very good project manager to be able to manage accountants, consultants, etc. during deal execution. Also, I now need to be able to work with management teams closely to monitor our investments!
I commenced after my bachelor’s degree by travelling to London, where I managed to gain a low level IB position at Goldman Sachs International, where I worked for two years. I then moved to Deutsche Bank International, on Bishopsgate, again in IB research, for two and a half years. I then returned to Australia, studied a Master’s Degree in Finance fulltime for one year, after which I was employed by KPMG Corporate Finance, specifically in their M&A division. After 4 years I was poached by Gresham Partners in Australia, a boutique advisory house, which has advised on some of Australia’s largest transactions. After three years there, I was rehired by KPMG in their CF department for 4 more years. After the tragic passing of my boss there, I took a few months off and was hired by Ord Minnett, a subsidiary of JP Morgan, in their Corporate Finance department. Finally after my wife moved here (she is half Thai), I followed shortly thereafter and secured this partnership position with equity at PKF Thailand, where I am the Partner in charge of Corporate Finance.
I have equity in the business and it is growing. We are also branching out and growing through strategic partnerships with other competing firms, which may sound strange but the environment here is more collegiate and relationships are important.
Thailand is a small market. However, through the right connections and firm, there is enough work to go around. Thailand is run by a few very wealthy people, so you need to understand that and work with it. The relationships at the top are hard to break into, so teaming up and co-advising with other smaller firms who have existing relationships but may lack requisite execution skills can work. Generally speaking, the level of experience and expertise of professional staff is below that of Europe/US/Aus so an opportunity resides there. Most of the large IB’s have rep offices here only, and send teams from Sing/HK to service larger transactions when they transpire. As a smaller practice here, we only need two or three good CF deals a year.
For those wanting to get into the industry, I would stress the importance of a solid accounting base to your knowledge. Sound technical skills are very important, such as valuation and financial modelling skills. These are critical in the early years. I would suggest that the financial modelling test should be something any aspiring applicant should purchase and undertake. It is a very useful test for what is required at the top level.