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Mod note (Andy): "Blast from the past - Best of WSO" - while Eddie is away this month in his place we'll be posting up some of the most popular posts from the past. This was originally posted on 12/26/09

I received a number of PMs asking for advice for analysts as to how to successfully position themselves for PE interviews. Instead of PMing responses, I figured I'd just make a post. So, here it is:

The best way to position yourself for PE recruiting will be to develop strong relationships with the senior bankers, particularly the MDs. During PE recruiting, if your MD is not the one who sets up the interview, they will still most certainly be called as a reference. In the PE world, your reference is extremely important. A "luke-warm" reference is instant grounds for dismissal, even if you've successfully navigated the entire interview process.

How do you make the MD like you? The most important thing is attitude. NEVER, EVER complain about the work or how much sleep you didn't get the night before. It will not reduce your workload, it will destroy your mental well-being / efficiency, and no one will like you. Plenty of other analysts will bitch late at night, but its important that you keep a low profile and just agree with everyone. The other analysts don't like the "happy-go-lucky-all-the-time" analyst, so keep this in mind as well.

In addition to maintaining a positive attitude, there is obviously not substitution for high-quality work. Everyone finds their own style, but every successful analyst is well-organized. Try to always have every detail at your fingertips and maintain a well-organized workspace. This gives the impression that you're on top of things and have your shit together. It makes a difference. Oh and -- ALWAYS DOUBLE CHECK YOUR WORK. If the experienced analysts don't tell this to you every day of training, they are doing your a disservice. You will find mistakes almost every time. Even if they are silly spelling mistakes or poor formatting, these mistakes will give the impression of sloppy work. People will ignore the content, even if its great, simply because of misspellings and formatting. Sounds dumb, but that's the way it goes.

Lastly, make sure you know what you're doing and why you're doing it. It is so easy to be so deep in the weeds that you fail to see the big picture. When work piles up, you turn into a processing machine and ignore everything else. When it comes time to interview at PE firms, you'll be scrambling to remember all the details of the deal, even if you spent hundreds of hours working on them. While I don't have BB modeling experience, I know a lot of MM analysts fall victim to templates. For example, if you're using a template to do an accretion / dilution analysis, that's fine, but take the time to understand what it is your analyzing. Knowing that the deal is accretive in year 1 is great, but you'll be expected to know what is driving the accretion. Is it a low cost of capital, the substantial use of cash on the balance sheet to fund the acquisition, or something else? This is the difference between a good analyst and a great analyst. The good analyst produces accurate work, the great analyst can interpret it.

There are obviously dozens of other minor factors that play a role in your job hunt, but I've found these to be the most influential. You can't change your resume once you start work, so you have to rely on relationships and experience to seperate you from your peers at that point.

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Comments (68)

  • Mayor Quimby's picture

    Thanks - very helpful.

    Most is applicable to summer analysts as well. Obviously the double-checking and positive attitude, but also seeing the big picture so if you interview at other firms after the summer, you can speak about the details of your work rather than just saying you spread comps all day.

  • monkeyjunkie's picture

    Great post, thanks a lot for the advice. Question regarding what you said about relationships with MDs:

    I'm starting in 2010 as a FT analyst at a BB bank that is known to openly discourage analyst recruiting for PE/HF/VC/etc. (the bank has been making a firm-wide effort to promote more analysts to associates, break out of the two-year analyst turnover mentality, etc).

    Older analysts I've talked to in the office that recruited for PE said they had to do it without help from any senior bankers in the office. Even letting MDs/VPs know that you're recruiting is a big no-no. Several said they interacted mostly with headhunters, but I can't say I know much about that process either.

    Any specific advice for a situation such as this one? Thanks in advance

  • lullaby0001's picture

    Very useful post, thanks a lot.

    I have 2 questions:
    1. Are your MDs generally discouraging you from moving to PE if they really like you and want you to stay in the team? given that, how would they give the PE / headhunter positive feedback on the person? I just don't quite understand how this works with the MDs.

    2. I am a bit scared about that "complaint" point. I think I very very seldom mentioned the hours I worked, but I can recall once or twice I mentioned I worked till 6am last night but it's ok not bad blah blah (when they asked me what time did you leave yesterday etc) still a bit concerned whether I have already left them an impression of "weak mentality". any advice?

    Thanks.

  • In reply to nextbigthing
    CompBanker's picture

    nextbigthing:
    How about undergrad GPA? 3.5 from decent state-school, but very good bank-- too low for PE?

    I can only speak to MM PE as I did not go through megafund recruiting:

    While PE shops definitely want to see a track record of success (undergrad institution, high GPA, etc.), the bank you worked at and the experience you gained is FAR more important. While undoubtedly you will be in a less advantageous position compared to your honor roll ivy league peers, it is definitely something that you can overcome. Unlike most interviews out of undergrad, PE interviews are focused on both fit AND technicals. By technicals, I don't mean things like "define WACC." I mean your ability to analyze an industry, do a modeling exercise live, and articulate about transactions you've worked on.

    For example, when myself and my peers went through recruiting, a number of us were put through onsite modeling tests. Essentially, we were put in front of a computer, given some financials, and told to build an LBO, a merger model, or some other related model. Sometimes you're given 30 minutes and its quick and dirty, sometimes you have 3 hours, and sometimes they email it to you in advance and you show up with the model at your interview. One of my interviewers flipped over my resume and had me build a very high level model with pen and paper.

    Another example: I was given an Offering Memorandum a couple of days before my onsite interview, with no instructions other than to read it. During the interview, I needed to speak to the strengths / weaknesses of the company, articulate what the investment thesis would be, decide if it was an investment I'd make, and give my leverage assumptions. I wasn't told whether or not notes were allowed, but I just assumed they weren't.

    I have numerous other examples of technical-like questions that PE shops inevitably ask their candidates. My point is: Once you've gone through all the interviews, the PE shop will have tons of data from which to assess your candidacy. Your GPA becomes a very marginal factor. In fact, from my experience, there is usually 1 candidate to stands out far beyond the rest -- and that's the guy who usually gets the job, regardless of their undergrad school or GPA.

    CompBanker

  • In reply to monkeyjunkie
    CompBanker's picture

    monkeyjunkie:
    Great post, thanks a lot for the advice. Question regarding what you said about relationships with MDs:

    I'm starting in 2010 as a FT analyst at a BB bank that is known to openly discourage analyst recruiting for PE/HF/VC/etc. (the bank has been making a firm-wide effort to promote more analysts to associates, break out of the two-year analyst turnover mentality, etc).

    Older analysts I've talked to in the office that recruited for PE said they had to do it without help from any senior bankers in the office. Even letting MDs/VPs know that you're recruiting is a big no-no. Several said they interacted mostly with headhunters, but I can't say I know much about that process either.

    Any specific advice for a situation such as this one? Thanks in advance

    This sounds like a tough situation, but I think you can get around it. When we were interviewing bankers, there were a few that were in the same situation you will be. The expectation was that they would move up through the ranks and talk about exit ops just didn't happen. The solution that seemed to work for them was this:

    As you go through your analyst stint, you will inevitably be spending a lot of time with your co-workers. As a result, it is very likely that you'll develop relationships with a few more senior guys that you can trust. While the institutional culture may be one of "promote from within," there will still be senior guys who will be willing to help you out. I'd recommend that you make a point to find and develop relationships with those types of individuals, whether they are associates, VPs, or D/MDs.

    When the time comes to give references, you'll finally need to let the people who know you best into the loop. Don't get me wrong, this will be tough, and the culture at your future bank will definitely hinder the recruiting process, but that doesn't mean you have to give up on outplacement.

    Besides the above, my advice to you would be to talk to the 2nd year analysts when PE recruiting starts to kick off. They will know better than anyone about how you should go about it and methods that were successful for them. It sounds like you've gotten a high level answer from them so far, but I'm sure they'll have more details to share. On top of that, after a year on the job, you'll have a much better idea of the culture that you're in and will likely be able to navigate the recruiting process on your own.

    CompBanker

  • In reply to lullaby0001
    CompBanker's picture

    lullaby0001:
    Very useful post, thanks a lot.

    I have 2 questions:
    1. Are your MDs generally discouraging you from moving to PE if they really like you and want you to stay in the team? given that, how would they give the PE / headhunter positive feedback on the person? I just don't quite understand how this works with the MDs.

    2. I am a bit scared about that "complaint" point. I think I very very seldom mentioned the hours I worked, but I can recall once or twice I mentioned I worked till 6am last night but it's ok not bad blah blah (when they asked me what time did you leave yesterday etc) still a bit concerned whether I have already left them an impression of "weak mentality". any advice?

    Thanks.

    1 - Good question. It really is going to depend on the professionals. The bank I worked at openly encouraged moving to PE, so I had a very different experience. However, when I was given my 3rd year offer, they were very open with me. I was told: "We'd love to have you stay around for a 3rd year, but we don't want to encourage it if you're not mutually interested."

    Essentially, if you tell your MD that you would like to do PE, he may attempt to convince you otherwise, but he isn't going to throw you under the bus just to keep you around. That said, I'm sure there are MDs out there who care about nothing but their own agenda, but I think this is rarer than you might imagine. If they really do like you, they are going to want to help you out.

    Also on a somewhat related note, as an alumnus of the analyst program, you become a spokesman for your old group. If the MD really likes you, odds are you're doing a good job and not struggling through your analyst years. If he sends you off to a PE shop, he now has a very good spokesman for his group working in house at a potential repeat client. Believe it or not, you serve as a great marketing tool for the MD, and they know this.

    2 - Sounds like you did the right thing here, I wouldn't be concerned at all. If someone asks you straight up how late you stayed, you can give them an honest answer. A lot of it has to do with your tone. If they ask and you say: "I stayed up til 6am cause the stupid printer was busted and I had to email the file to Johnny to print for me and then X happened, etc." -- that's not good. They know that you're staying extremely late to get the job done, and they expect it. Heck, they don't even expect you to like it. What is expected is that you won't go around telling everyone how hard your life is, cause quite honestly, everyone at the entire bank works hard (or at least has convinced themselves that they do).

    If you're really looking to blow off steam, I'd suggest you complain to your other banking friends, your parents (if they don't have a mental breakdown when you tell them what your life is like), siblings, or even your girlfriend. I wouldn't make too much of a habit of it -- they'll eventually get sick of it, but I can be a nice way to maintain your sanity without hurting your career.

    CompBanker

  • In reply to CompBanker
    lullaby0001's picture

    Thank you very much, CompBanker, indeed helpful!

    Another related question is that now many banks are aggressively hiring juniors. Of coz you don't want people to know that you are even in talks with headhunters, but you also want people to know you are also being poached or in demand. What do people generally do to kinda "leverage" a bit?

  • In reply to lullaby0001
    CompBanker's picture

    lullaby0001:
    Thank you very much, CompBanker, indeed helpful!

    Another related question is that now many banks are aggressively hiring juniors. Of coz you don't want people to know that you are even in talks with headhunters, but you also want people to know you are also being poached or in demand. What do people generally do to kinda "leverage" a bit?

    Can you clarify what you mean by aggressively hiring juniors? Juniors are typically hired for Summer Analysts positions for a 2-3 month internship between Junior and Senior year. Given your prior comment, I'm assuming that you've already completed a Summer Analyst stint. I'm not sure why a junior would be talking with headhunters.

    CompBanker

  • CompBanker's picture

    Okay, if you mean aggressively hiring 1st / 2nd year analysts as laterals, then I understand your question. Personally, I would never attempt to use this as leverage. First of all, unless you have an offer in hand, you're just a name on a long list of candidates that could potentially lateral. I don' t think you really have much / any leverage in this situation. That said, certainly keep this as a back-pocket option in the rare event that you have a falling out with your group/bank, but still want to continue in investment banking.

    Overall, I'd advise against lateralling. For the most part, the analyst experience is the same regardless of which bank you work at (within the different categories -- BB / MM / Smallcap Boutique). Also, the pay is generally the same within the bands as well. However, if you do choose to lateral, you end up losing out on a lot of the goodwill that you've built up. By not completing your two years, you'll very likely be burning bridges with your prior group, especially if you head off to another ibanking role. Also, you'll need to re-establish your reputation at the new bank, and all those long hours you put in to please your prior MD will mean nothing. When it comes time for outplacement, you'll be at a disadvantage to your peers, as you'll need to explain why you jumped ship for the same job. In addition, your current group will very likely not have enough time to get to know you and evaluate your work, and as a result, your references will suffer greatly. For those of you who think everyone will understand because you jumped from "UBS" to "GS," senior professionals in the industry certainly don't think that way, and you'll find yourself in quite a tough position.

    CompBanker

  • In reply to CompBanker
    lullaby0001's picture

    Thanks a lot, this is really very sincere and great advice.
    I think it's a good advice for juniors.

  • jimbrowngoU's picture

    As above posters have said, excellent post.

    Though I'm only seven months in, one point I'd like to emphasize is seeing the "bigger picture." The other points (quality work, double-checking, agreeing with everything) are pretty straight-forward and absolutely necessary, but one of the harder things to do is see the big picture. For my first few months, I was nothing but a processing monkey -- I had tons and tons of work piled on top of me, and I more-or-less HAD to process it as quick as possible to avoid being at the office all night, every night. I think that's pretty standard for most analysts. But as you adjust to the way things get done and you become much more efficient (which does happen), it is up to the analyst to choose whether you: (1) crank out the work as fast as possible, essentially remaining a processing monkey, and get the hell out of the office, or (2) work efficiently, but take the time to sit back and say, "what am I doing here? Why am I doing this? etc." It takes a little bit more time, but this makes you a much better analyst and you learn MUCH more -- it allows you to actually contribute valuable ideas/insight, vs. just nodding your head in agreement with your MD/VP/associate.

    Even still, when I get work piled on top of me, it can be easy to fall into (1) and just process as quickly and efficiently as possible. I often find myself thinking, "what the hell did I just do?" When I get into those situations, I try to go back and figure out the WHY behind it -- and this is the best way to learn. And based on what CB has said about interviews, this is probably one of the most important points to emphasize to succeed in PE interviews. So for you all prospective analysts -- I would say this is one of the more difficult points to focus on, but it is one of the most essential.

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  • Bernanke23's picture

    Hey Compbanker, thanks for this great post, I've found it very helpful. Can you provide some insight on whether there are any disadvantages coming from an industry group vs. M&A and Sponsors when it comes to PE recruiting? Traditionally, M&A and Sponsors offer the best PE exits but is it possible to come from an industry background?

  • lurker22's picture

    thanks for the great advice so far. can you comment how PE firms (MM or otherwise) view restructuring analysts? Would they prefer an M&A analyst? Does restructuring pigeonhole you in the distressed area?

  • In reply to lurker22
    WallStreetOasis.com's picture

    lurker22:
    thanks for the great advice so far. can you comment how PE firms (MM or otherwise) view restructuring analysts? Would they prefer an M&A analyst? Does restructuring pigeonhole you in the distressed area?

    hey lurker, I worked in Rothschild's restructuring group for 2 years and was able to get a PE offer at a MM fund. As discussed above, I think what is more important that you show good deal experience and you are able to relate / translate the skills you learned in restructuring to PE.

    In other words, you are very comfortable around the balance sheet and different debt securities -- you can appreciate how important cash flow is, you understand the financial statements inside and out (a copper wire manufacturer was getting killed bc the price of copper was shooting through the roof in 2003, and even though they could pass most of this on to the customer, there was a 60 day lag so working capital was skyrocketing...for example). I think there is obviously some tendency to pigeonhole you but if you can speak confidently about the details of your deals, LBOs, modeling, and understand how the specific fund is "creating value" (what drives IRR?), what is most important is that first you can articulate what you would bring to the table -- same when you get the interview with the fund (hopefully).

    We are about to start writing a Technical Guide to PE Interviews that will address a lot of the questions you would see in these types of interviews.

    Good Luck,
    Patrick

  • monkeyjunkie's picture

    Thanks again for your answer above! Gaining the trust of a select few individuals in the office is something I hadn't really considered before

  • Stringer Bell's picture

    Hi, I have three questions:

    1)Is being in a industry group put you at any disadvantage? In that, I mean, that PE shops will take M&A, Financial Sponsors, and restructuring type groups before they'll go recruit out of an industry group?
    2)If you work for a MM PE firm pre-MBA are you kind of "stuck" there? Are you still a candidate for mega funds post MBA, or do the larger funds like to take people who only worked on that level beforehand?
    3)Long term (if you want to stay in PE), how important is it to have some industry experience?

  • monkeyjunkie's picture

    I have another related question regarding PE exits. Many posts above provide good advice as to how to be a great analyst, position yourself well for PE, etc. Can anyone--CompBanker or others--speak to the actual PE interview process (megafunds specifically would be helpful, but MM as well)?

    For example, can one expect to gradually come to learn all or most of what is necessary in PE interview, granted you are a good/great analyst? Do you become naturally qualified while on the job? Or is it necessary to spend time prepping for the interview, similar to college recruiting for banking? If the latter, how can you possibly find time to prep during your analyst stint? I've heard of some analysts prepping by building LBO models in their "spare time," but is this necessary or even realistic?

  • In reply to monkeyjunkie
    jimbrowngoU's picture

    monkeyjunkie:
    I have another related question regarding PE exits. Many posts above provide good advice as to how to be a great analyst, position yourself well for PE, etc. Can anyone--CompBanker or others--speak to the actual PE interview process (megafunds specifically would be helpful, but MM as well)?

    For example, can one expect to gradually come to learn all or most of what is necessary in PE interview, granted you are a good/great analyst? Do you become naturally qualified while on the job? Or is it necessary to spend time prepping for the interview, similar to college recruiting for banking? If the latter, how can you possibly find time to prep during your analyst stint? I've heard of some analysts prepping by building LBO models in their "spare time," but is this necessary or even realistic?

    I can't speak to the actual interview process, but I've found the best way for me to learn LBO modeling (and other models, for that matter) is to avoid using the templates if possible. With all the templates we have, it'd be really simple to just drop in the company financials and BAM! it's done. Just adjust purchase multiples, leverage multiples, and other assumptions and it's ready to rock. This is the same for all other models (merger, DCF, IPO valuations, etc.). It all goes back to taking time... Instead of taking the templates, I re-build (whenever I can) from scratch to get me in the mindset of where one thing is coming from, why this is included, how this is calculated, etc. In the end, my model generally looks the same as it would have had I used the template (barring any specific changes for the transaction), but I have a thorough understanding of what is going on in the model vs. if I just plugged in the numbers.

    This helps me avoid having to PRACTICE building models in my down-time/on weekends.

    This, of course, is dependent on the facts that your MD likes to use models for pitches (most of the models I've built have been for pitches -- I've built a few models for live deals, but the variety has definitely come from pitches) and that as an analyst, you are the guy in charge of the model -- I know certain groups where the associate handles 80% of the modeling and the analyst does very little.

    Sorry for the long-winded response.

  • jimbrowngoU's picture

    For anyone with experience reviewing resumes for pre-MBA PE associate positions, quick question: Do standardized test scores help "impress?" Would having a resume with a 1500 SAT and a 740 GMAT "stand out," or is it a moot point?

  • Vz's picture

    Hi CompBanker, I'm currently in corp fin at a big 4 (prior to this worked at a large bank private banking, but not IBD) and I'd like to get into PE. There's some postings starting to come up for IBD at a few banks, but I've only been at the big 4 for 6-8 mths, and the guys I work with are quite connected being ex-bankers. Should I attempt a lateral now? Would I really offend the guys I work with now and risk getting screwed? Or should I wait until I have done a year there and reassess what's out there?

    I think if I stay the year, I should get a promotion to associate (though that title doesn't carry the same meaning here as it would at a bank, it's more like 3rd yr analyst at a bank). I like where I am now, except the deal flow's a bit slow, so I'm worried I'm not building the sufficient skill set.

  • In reply to Bernanke23
    CompBanker's picture

    Bernanke23:
    Hey Compbanker, thanks for this great post, I've found it very helpful. Can you provide some insight on whether there are any disadvantages coming from an industry group vs. M&A and Sponsors when it comes to PE recruiting? Traditionally, M&A and Sponsors offer the best PE exits but is it possible to come from an industry background?

    Sure. I worked at an M&A shop, but the majority of my closed deals were in the healthcare space as I became an industry M&A analyst about 8 months into my analyst stint. So, my experience is limited in terms of the experience of someone coming from a pure industry group.

    Overall, I'd say that you will be at a disadvantage coming from an industry group compared to M&A analysts when you interview at traditional LBO shops. PE shops are looking for people who can hit the ground running, and there is no better way to "hit the ground running" than to be familiar with all the documents in the M&A process. I'll be honest, I don't know how much exposure industry analysts get to documents such as merger agreements, management presentations, etc., but I know it is generally less than M&A analysts. As a result, there is already a bias towards M&A analysts over industry analysts.

    I will say that, for our PE recruiting process, we interviewed a number of industry analysts. The disadvantage is not so significant it can't be overcome, and in certain situations it can even be an advantage. Healthcare is a great example. There are a number of PE shops that focus exclusively on healthcare companies, and understanding the nuances of the industry can supercede M&A process knowledge. The same can be said for industrys such as technology and energy. If you look at a lot of PE shops that focus on technology, you'll notice that their associates generally worked in TMT groups as analysts. It's been awhile since I looked, but ABRY Partners may be a good example of this.

    CompBanker

  • In reply to Stringer Bell
    CompBanker's picture

    westfald:
    Hi, I have three questions:

    1)Is being in a industry group put you at any disadvantage? In that, I mean, that PE shops will take M&A, Financial Sponsors, and restructuring type groups before they'll go recruit out of an industry group?
    2)If you work for a MM PE firm pre-MBA are you kind of "stuck" there? Are you still a candidate for mega funds post MBA, or do the larger funds like to take people who only worked on that level beforehand?
    3)Long term (if you want to stay in PE), how important is it to have some industry experience?

    1) See above answer to a prior question.

    2) I really don't know the answer to this question. My assumption would be that someone with MM IB experience and MM PE experience would unlikely be successful obtaining a job at a megafund. The reason I say this is that the roles are extremely different. Megafunds place a heavy emphasis on modeling, something that MM funds care less about. As a result, your experience in MM PE, while definitely relevant, does not give you as many directly transferable skills as a megafund would. I would also guess that if you did BB IB and MM PE, you'd still potentially be qualified. Honestly, again, this would just be a guess, so don't put that much weight on my advice.

    3) Most Private Equity shops are generalist shops. The vast majority of the deals that come in house are general manufacturers and business services. I'd say that you absolutely don't need to focus on any particular industry to be successful, either long term or short term.

    CompBanker

  • jimbrowngoU's picture

    CB, question for you. What do you find yourself spending a majority of your time doing? If there's not a heavy emphasis on modeling, and the fund you're at is not based on a "sourcing" model, what do you do?

  • In reply to monkeyjunkie
    CompBanker's picture

    monkeyjunkie:
    I have another related question regarding PE exits. Many posts above provide good advice as to how to be a great analyst, position yourself well for PE, etc. Can anyone--CompBanker or others--speak to the actual PE interview process (megafunds specifically would be helpful, but MM as well)?

    For example, can one expect to gradually come to learn all or most of what is necessary in PE interview, granted you are a good/great analyst? Do you become naturally qualified while on the job? Or is it necessary to spend time prepping for the interview, similar to college recruiting for banking? If the latter, how can you possibly find time to prep during your analyst stint? I've heard of some analysts prepping by building LBO models in their "spare time," but is this necessary or even realistic?

    See my post in the PE forums regarding the actual interview questions asked (link below). I can't answer for BB PE recruiting, but I imagine it is somewhat similar.
    http://www.wallstreetoasis.com/forums/deal-discuss...

    I went through all my interviews with almost no "prep." The most I ever prepped for was for questions such as "Why PE" and "Why our shop." Outside of that, I kinda winged it. I did spend 1 saturday building LBO models from scratch, but I only built 4 models total and probably spent 6-7 hours max. By the time your second year rolls around, you'll likely be in a position to spend a few hours to do any prep necessary. If you're asking if you can take 2 days off work to "study," then absolutely not. You'll just have to find the time on your own.

    CompBanker

  • In reply to jimbrowngoU
    lullaby0001's picture

    Cannot agree more, have the same feeling.

    I think whether being able to see the big picture and provide some valuable questions or even suggestions is one the things that will set a bunch of analysts apart. The difference is quite obvious and also you learn a LOT more. It keeps you thinking and not feel like a machine crunching stuff all day long.

    But still....to get the work done flawlessly is quite essential....

    jimbrowngoU:
    As above posters have said, excellent post.

    Though I'm only seven months in, one point I'd like to emphasize is seeing the "bigger picture." The other points (quality work, double-checking, agreeing with everything) are pretty straight-forward and absolutely necessary, but one of the harder things to do is see the big picture. For my first few months, I was nothing but a processing monkey -- I had tons and tons of work piled on top of me, and I more-or-less HAD to process it as quick as possible to avoid being at the office all night, every night. I think that's pretty standard for most analysts. But as you adjust to the way things get done and you become much more efficient (which does happen), it is up to the analyst to choose whether you: (1) crank out the work as fast as possible, essentially remaining a processing monkey, and get the hell out of the office, or (2) work efficiently, but take the time to sit back and say, "what am I doing here? Why am I doing this? etc." It takes a little bit more time, but this makes you a much better analyst and you learn MUCH more -- it allows you to actually contribute valuable ideas/insight, vs. just nodding your head in agreement with your MD/VP/associate.

    Even still, when I get work piled on top of me, it can be easy to fall into (1) and just process as quickly and efficiently as possible. I often find myself thinking, "what the hell did I just do?" When I get into those situations, I try to go back and figure out the WHY behind it -- and this is the best way to learn. And based on what CB has said about interviews, this is probably one of the most important points to emphasize to succeed in PE interviews. So for you all prospective analysts -- I would say this is one of the more difficult points to focus on, but it is one of the most essential.

  • In reply to jimbrowngoU
    lullaby0001's picture

    Hey JimbrowngoU, I am also ~7months into my 1st year, similar to you. I also built quite a few very specific and interesting models in pitches but definitely not as often as your post said. Thus far I haven't got hands on real models yet (I mean building DCF / LBO from scratch by myself). I understand it definitely depends on team and team structure as how to delegate the modelling responsibility.

    But generally speaking, a question to all of the people here, how much actual modelling experience shall we / do you expect to gain in the 1st year? I have voiced out to my staffer that I want to build model if the timeline for project is not too tight (becoz it def. takes time for 1st year) but still not really building one comprehensive yet....so I am a bit worried...

    jimbrowngoU:
    monkeyjunkie:
    I have another related question regarding PE exits. Many posts above provide good advice as to how to be a great analyst, position yourself well for PE, etc. Can anyone--CompBanker or others--speak to the actual PE interview process (megafunds specifically would be helpful, but MM as well)?

    For example, can one expect to gradually come to learn all or most of what is necessary in PE interview, granted you are a good/great analyst? Do you become naturally qualified while on the job? Or is it necessary to spend time prepping for the interview, similar to college recruiting for banking? If the latter, how can you possibly find time to prep during your analyst stint? I've heard of some analysts prepping by building LBO models in their "spare time," but is this necessary or even realistic?

    I can't speak to the actual interview process, but I've found the best way for me to learn LBO modeling (and other models, for that matter) is to avoid using the templates if possible. With all the templates we have, it'd be really simple to just drop in the company financials and BAM! it's done. Just adjust purchase multiples, leverage multiples, and other assumptions and it's ready to rock. This is the same for all other models (merger, DCF, IPO valuations, etc.). It all goes back to taking time... Instead of taking the templates, I re-build (whenever I can) from scratch to get me in the mindset of where one thing is coming from, why this is included, how this is calculated, etc. In the end, my model generally looks the same as it would have had I used the template (barring any specific changes for the transaction), but I have a thorough understanding of what is going on in the model vs. if I just plugged in the numbers.

    This helps me avoid having to PRACTICE building models in my down-time/on weekends.

    This, of course, is dependent on the facts that your MD likes to use models for pitches (most of the models I've built have been for pitches -- I've built a few models for live deals, but the variety has definitely come from pitches) and that as an analyst, you are the guy in charge of the model -- I know certain groups where the associate handles 80% of the modeling and the analyst does very little.

    Sorry for the long-winded response.

  • Marcus_Halberstram's picture

    Great thread.

    Regarding getting pigeon holed in restructuring, I think it has a lot to do with the types of deal/engagements you're working on and how you sell yourself. With a little bit of luck landing on sexy deals, you can easily make a case for why your experience at XYZ Restructuring was far more valuable an experience than if you had been doing M&A. A quick recap of what I've told people in the past:
    Restructuring vs. M&A:
    - typically boutique/MM more so than BB, which means you don't have an industry group stepping in and carrying the ball on industry/company/market intel, which correlates to better exposure
    - much more comfortable with credit and capital structure than your typical M&A analyst
    - I've always thought restructuring is VERY analogous to PE investing... a sponsor enters an investment, restructures the operations/BS, exits the investment. In restructuring, the company enters bankruptcy, you restructure the operations/BS, company exits bankruptcy
    - what restructuring lacks is the deal perspective, thats something that can be had with the right experience
    - you become very accustomed to the legal/negotiations side of deals, i.e. reading credit agreements, merger agreements, reading the fine print and understand what it allows/disallows you to do, etc...

    However, all of the above are very dependent on the type of experience you get. Obviously, being from a restructuring background, I'm probably biased. But these are some of the ways you could sell yourself if you're feeling a bit self-conscious about a restructuring background.

  • SirBatalot's picture

    Great posts CB and lullaby0001. Thanks a lot for taking the time to answer our questions. Since you mentioned lateral hire, I was wondering if you could comment on latering from MM to BB. Obviously the analyst experience will be very similar within the same categories (MM/BB), as you suggested, but BB brand name certainly helps in terms of having large deal experience and getting into a bigger fund. I know a few friends have done it, but is it common to lateral from a decent MM to a BB? What is the process people typically go through?

    Thanks a lot.

  • In reply to SirBatalot
    Marcus_Halberstram's picture

    SirBakealot:
    Great posts CB and lullaby0001. Thanks a lot for taking the time to answer our questions. Since you mentioned lateral hire, I was wondering if you could comment on latering from MM to BB. Obviously the analyst experience will be very similar within the same categories (MM/BB), as you suggested, but BB brand name certainly helps in terms of having large deal experience and getting into a bigger fund. I know a few friends have done it, but is it common to lateral from a decent MM to a BB? What is the process people typically go through?

    Thanks a lot.

    Most of the laterals in BB are VIA a head hunter to fill an immediate need. But I would expect if you have a contact in the know and there is an immediate opening, you could skip the head hunter process (which is generally a complete fucking waste of time, but necessary step absent a contact).

    Some of the names thrown around on the forum for PE recruiting also handle immediate BB openings.

  • In reply to lullaby0001
    jimbrowngoU's picture

    lullaby0001:
    Hey JimbrowngoU, I am also ~7months into my 1st year, similar to you. I also built quite a few very specific and interesting models in pitches but definitely not as often as your post said. Thus far I haven't got hands on real models yet (I mean building DCF / LBO from scratch by myself). I understand it definitely depends on team and team structure as how to delegate the modelling responsibility.

    But generally speaking, a question to all of the people here, how much actual modelling experience shall we / do you expect to gain in the 1st year? I have voiced out to my staffer that I want to build model if the timeline for project is not too tight (becoz it def. takes time for 1st year) but still not really building one comprehensive yet....so I am a bit worried...

    I should have stated this is my post, but I'm in a pretty unique situation -- I basically work for one MD with no one in between. So when modeling needs to get done (or anything else for that matter), it's my job. For all other analysts in my group, there is ALWAYS an associate and/or a VP on a deal team, so a majority of the modeling falls to the associate. The analyst will go over the model and sometimes assist in building the model, but the associate is the guy who signs off.

    As CB has suggested, as an analyst at a MM bank, you are generally not going to see a great deal of modeling -- certainly no where near the amount a BB analyst will see. This can be an issue for megafunds, where a pre-MBA associate is basically a modeling monkey, but MM funds are generally much more focused on the other aspects of the transaction vs. building a huge model. They'll expect you to come in understanding the concept of a basic model and valuation techniques (specifically, LBOs), but won't expect you to build a 50-sheet model in your first week on the job.

  • In reply to SirBatalot
    jimbrowngoU's picture

    SirBakealot:
    Great posts CB and lullaby0001. Thanks a lot for taking the time to answer our questions. Since you mentioned lateral hire, I was wondering if you could comment on latering from MM to BB. Obviously the analyst experience will be very similar within the same categories (MM/BB), as you suggested, but BB brand name certainly helps in terms of having large deal experience and getting into a bigger fund. I know a few friends have done it, but is it common to lateral from a decent MM to a BB? What is the process people typically go through?

    Thanks a lot.

    I actually went through a serious process of networking and getting as much info as possible about lateraling from a MM to a BB after my Y1. Assuming a decent network and with many banks understaffed at the junior analyst levels, it is definitely possible. However, it seemed that a lot of banks would want a MM lateral to sacrifice a year, i.e. start as a Y1, which is a definite negative. Also, as CB has mentioned, you'd be locking yourself into an extra year in IB -- you wouldn't be able to get a rec from anyone at the MM bank, and you'd have missed most recruiting at the megafunds. Plus, you'd have to re-establish yourself, gain the trust of your superiors, and hope they would help you in the process the following recruiting season.

    The biggest turn-off for me in pursuing this? Being a monkey for an extra year. Two years will be MORE than enough for me.

  • In reply to jimbrowngoU
    SirBatalot's picture

    Hey Jim, thanks a lot for the insight. I might be missing something here, but I do not see anything particularly negative about latering to a BB

    As you suggested the downsides are:

    1. start over as a 1st yr analyst. Losing a year is def bad, considering you will be a bitch for an extra year. yet it doesn't seem to alter the career path and will give you a leg up in the future as the brand name is bigger on the resume..

    2. No recs from former MM bank. Why is this a negative? Would you just want recs from your bosses at the BB anyway?

    3. I still don't see why you'd have missed the recruiting at megafunds. You work as a 1st yr analyst for another year and then start looking for opportunities in PE. All you sacrifice is that additional year. Am I missing anything here?

    On the other hand, the upside is huge. More modeling experience, larger deal team and deal size, more products exposure, bigger platform and ultimately a brand name. It is similar to transferring from a mediocre liberal arts college to a top Ivy target school IMO.......

    would much appreciate any comment

  • In reply to SirBatalot
    jimbrowngoU's picture

    SirBakealot:
    Hey Jim, thanks a lot for the insight. I might be missing something here, but I do not see anything particularly negative about latering to a BB

    As you suggested the downsides are:

    1. start over as a 1st yr analyst. Losing a year is def bad, considering you will be a bitch for an extra year. yet it doesn't seem to alter the career path and will give you a leg up in the future as the brand name is bigger on the resume..

    2. No recs from formr MM bank. Why is this a negative? Would you just want recs from your bosses at the BB anyway?

    3. I still don't see why you'd have missed the recruiting at megafunds. You work as a 1st yr analyst for another year and then start looking for opportunities in PE. All you sacrifice is that additional year. Am I missing anything here?

    On the other hand, the upside is huge. More modeling experience, larger deal team and deal size, more products exposure, bigger platform and ultimately a brand name. It is similar to transferring from a mediocre liberal arts college to a top Ivy target school IMO.......

    would much appreciate any comment

    Really depends on your goals, I guess. Lateraling from a MM to a BB is almost a pre-requisite if your end goal is a megafund. But if your end goal is PE and you are not opposed to a MM fund, then lateraling will really just delay your career progression. Let me provide insight to your specific questions:

    (1) For me, I have no interest in spending a 3rd year as an analyst. I also have no interest in going to a megafund and working 90 hour weeks -- the prestige doesn't matter to me. Not to mention, I've become a fan of the MM and really feel that it is a good fit for me. So going back a year for the "brand" name, to me, is absolutely not worth it.

    (2) I mean for purposes of recruiting in the late summer right past your Y1 (actual Y1). You won't get recs from the MDs at the MM bank because you left, and you won't get recs from the BB MDs because you have yet to build a relationship with them.

    (3) See above for my response to this question.

    I guess it is personal preference, but you have to be very careful that you keep your intent to lateral under wraps or else you could find yourself jobless. I do think it all comes down to personal preference, though -- if your goals are BB --> MF, and you can live with five years of processing-torture, then go for it.

  • jimbrowngoU's picture

    Also, larger deal team and size is not necessarily a plus -- it makes it easier to miss out on a lot of the things that go into executing a deal that you would generally gain exposure to in a smaller setting.

  • In reply to jimbrowngoU
    CompBanker's picture

    jimbrowngoU:
    CB, question for you. What do you find yourself spending a majority of your time doing? If there's not a heavy emphasis on modeling, and the fund you're at is not based on a "sourcing" model, what do you do?

    I won't go into too much detail, but the majority of my time is spent evaluating new deal opportunities (60%), and portfolio company management (25%). The remainder is internal initiatives whether it be recruiting, fundraising, quarterly reporting, etc. I also sometimes do meetings with bankers or other professionals that come through our office looking to offer their services. I'll give you an overview of evaluating new deals, as that should answer your question.

    New Deal Opportunities:
    The majority of new deals that come in house come through investment banks in the form of a nice, lengthy, overly-repetitive offering memorandum ("OM"). For every new deal that I'm assigned, I need to read the OM. At some point before initial indications are due, our team will get together and discuss the opportunity to decide if its worth pursuing. If we decide its worth pursuing, we will do additional research, run a basic LBO with very high level assumptions, pull together materials into a presentation to the rest of the organization, and sometimes get on the phone with the bankers to answer any clarifying questions. After enough of these, this becomes a fairly quick process. However, I usually have a number of new deals on my plate at any given time (I once had 3-4 OMs dropped on my desk in a single day). This is generally pretty fun though as you get to learn about a new company and industry without putting in much effort (the banker has compiled the whole thing nicely). If there is no banker in the process, you're doing your research from ground zero, and this generally takes much more time and produces less cohesive results, but it's more or less the same.

    If the banker accepts our initial indication, myself and my deal team then go to meet with management and typically tour the facility. We are then given access to the company's dataroom with all sorts of data on the company -- data ranging from corporate minutes to detailed financials to tax returns. I'll sift through the entire datasite and try to learn as much as I can. This includes things such as reading customer contracts, evaluating operational metrics (backlog, efficiency stats, whatever -- it depends on the type of company), and of course, modeling the financials. Overall, modeling the financials is just one little piece within the broader picture. Also, during this time, our lawyers are generally marking up the stock purchase agreement. In conjunction with my team, I'm reading the stock purchase agreement and giving my feedback to the lawyers (usually our team will get together and discuss our feedback internally so we don't have multiple people giving conflicting feedback to the lawyers). In addition to dealing with the lawyers, I'm also on the phone with lenders trying to get them excited about the deal. We'll share our internal materials with them and they will have access to the datasite. Frequently they will barrage us with questions which we will either answer, or turn to the management team to answer if we don't know. While all this is going on, I'm preparing documentation for our deal team to present to the investment committee to gain approval to submit a letter of intent ("LOI") to acquire the company. If all goes well and everything checks out, we'll submit the LOI.

    If the LOI is accepted by the banker, at this point we'll enter into exclusivity (aka force them to cut off all negotiations with other parties and work exclusively with us) and work towards completing our due diligence. This involves continued digging into the data, but also hiring a large number of third parties to conduct diligence on our behalf. Diligence areas typically include tax and accounting, legal review, an industry study, background checks on key members of management, a review of the company's IT system, insurance, and, depending on the type of company, an environmental review. Each of these areas of due diligence are conducted by a separate vendor, so it takes a lot of management to make sure everyone is getting the information and access that they need. Generally myself and an individual 1 level senior to me will do 100% of the management of the 3rd parties, and between the two of us, we both act as the point person for the different groups. I spend a lot of time going through the materials they produce, and at this stage of the deal, spend a LOT of time onsite at the company conducting my own diligence, overseeing 3rd party diligence, and just spending the time with management. Also, all the while, we're continuing to talk to lenders and I am putting together a final presentation, catered towards the lenders, to enable them to have a day on site with management and hear the story first hand. If all of this diligence goes over well, there are additional responsibilities involved in the closing (preparing the funds flow documentation, reviewing lender term sheets and credit agreements, finalizing the stock purchase agreement, etc. etc. etc.).

    Obviously this is just a quick and dirty overview of the deal evaluation process, but as you can see, modeling, while very crucial, is not a major aspect of my job. Given I work in an extremely small and flat organization, I am generally the #1 or #2 guy responsible for all of the activities above. A good deal of the time I'm the only one on the phone with the 3rd parties, the bankers, or the lenders, and I simply report out to the team afterwards. Note that I am on multiple deals at once, though most of them are not extremely active, otherwise I'd be working around the clock.

    CompBanker

  • In reply to SirBatalot
    CompBanker's picture

    SirBakealot:
    Hey Jim, thanks a lot for the insight. I might be missing something here, but I do not see anything particularly negative about latering to a BB

    As you suggested the downsides are:

    1. start over as a 1st yr analyst. Losing a year is def bad, considering you will be a bitch for an extra year. yet it doesn't seem to alter the career path and will give you a leg up in the future as the brand name is bigger on the resume..

    2. No recs from former MM bank. Why is this a negative? Would you just want recs from your bosses at the BB anyway?

    3. I still don't see why you'd have missed the recruiting at megafunds. You work as a 1st yr analyst for another year and then start looking for opportunities in PE. All you sacrifice is that additional year. Am I missing anything here?

    On the other hand, the upside is huge. More modeling experience, larger deal team and deal size, more products exposure, bigger platform and ultimately a brand name. It is similar to transferring from a mediocre liberal arts college to a top Ivy target school IMO.......

    would much appreciate any comment

    As you can tell from my above post about my work in PE, you can see that associates in MM PE care far less about modeling and more about your ability to understand the deal process and companies. In this way, the modeling exposure gained at the BBs actually hinders you rather than helps you. However, you're right, the megafunds (and there aren't that many of them), need model monkeys. As a result, analysts coming from MM IB are at an extreme disadvantage compared to BB IB analysts given their lack of exposure to modeling. They are simply two entirely different skill sets. As such, don't expect an analyst who laterals to a BB after having spent a year at an MM to have the same productivity level of a 2nd year at a BB, and vice versa is also true (yes -- it's true, we had someone from a BB lateral to my MM).

    In terms of lateraling, you're absolutely right that there is significant upside to restarting at a BB after a year at an MM (the majority of my downsides were if you lateraled during your first year and didn't reset). However, DO NOT underestimate the impact of starting over as a first year. Working 100 hours a week is absolutely and inexplicably painful, and every analyst I knew dreaded it and day dreamed about falling into a 1 year coma so they could wake up and it could all be over. By the end of my first year, I would have gladly forgone my bonus simply to fast forward through year two, it was so bad. Analysts who decided to stay on a 3rd year were ridiculed and laughed at endlessly, because they actually volunteered to stay on an extra year. Typically, very few people stayed on a third year, despite the large number of third year offers, and those who did were the ones who were unsuccessful in PE recruiting and didn't want to go unemployed in a terrible market (although some did choose unemployment).

    How much thought have you really given to your list of upsides? Let's take a look at each.

    1) Modeling Experience -- As mentioned earlier in this post, modeling experience is only useful if you're targeting megafunds, otherwise the MM skillset is actually going to help you get the job.
    2) Larger Deal Team -- Not sure where you were going with this. Smaller deal teams generally mean more exposure to each aspect of the deal process and less likelihood that you become an expert at a single function. I know a guy who left Bear Stearns after a year because his job was to run accretion / dilution models, and that's the only thing he did for his entire year. Also, larger deal teams give you less exposure to senior folks as you're generally just another face in the crowd or name on the list. You also get limited or no exposure at all to senior management when working in large deal teams, as you're frequently the last on the list for a limited number of seats at the table.
    3) Deal Size -- Again, not sure what your point is with this. Larger aggregate deal value doesn't qualify you for anything -- especially if you're only a single cog in the machine. I've never heard of anyone getting a PE job offer for having "the biggest deals." Can you clarify how bigger = better? (Serious question, this is a frequent claim, but I've never heard of good support for it.)
    4) More Products -- Based on my limited understanding of the analyst role at a BB, you only get multiple product exposure if you're in an industry group. On the other hand, the product group guys don't. Also, a lot of the reputable MM shops do exclusively M&A, which is generally one of the few targeted groups by PE firms.
    5) Bigger Platform -- Not sure how this benefits you. You can't work in more than one group or division at a time. I concede that it would make internal networking a lot easier and give you a larger alumni base.
    6) Brand Name -- Okay, you win here. That said, I'd be willing to bet my old MM's brand name carries more weight in MM PE than the BBs, including GS. Outside of MM PE or internationally, the BBs easily trump me. Given my career objectives, this suits me well. For those with different career objectives, the BB brand name would certainly be preferable.

    So, feel free to draw your own conclusions, these are simply my thoughts. Also, given the above, I'd say that your analogy of transfering from a liberal arts colleges to an Ivy league university isn't really a fair one.

    CompBanker

  • jimbrowngoU's picture

    Phenomenal insight and advice, as usual -- thanks CB.

  • masterg's picture

    Thanks CompBanker, that was honestly very helpful - especially for me as a 1st year analyst gearing up for recruiting

  • In reply to CompBanker
    model21's picture

    CompBanker:
    The majority of new deals that come in house come through investment banks in the form of a nice, lengthy, overly-repetitive offering memorandum ("OM").

    Do you prefer deals that come from banks or not? If it comes from a bank, I would assume that the process runs a lot smoother and it takes some of the work off your plate, but if there is no banker advising the target, then there is a good chance that you're not competing with any other buyers, right?

    CompBanker:
    I'll sift through the entire datasite and try to learn as much as I can. This includes things such as reading customer contracts, evaluating operational metrics (backlog, efficiency stats, whatever -- it depends on the type of company)

    How have you been able to get comfortable with what customer contracts should look like and what specific operational metrics (backlog, efficiency stats...) are important? Is that something that you learned a lot about in banking or have learned on the job once you started in PE? I have been in banking for 2+ years (a generalist as far as industries go) and don't know that I'm that knowledgeable in those areas.

  • In reply to model21
    CompBanker's picture

    model21:
    Do you prefer deals that come from banks or not? If it comes from a bank, I would assume that the process runs a lot smoother and it takes some of the work off your plate, but if there is no banker advising the target, then there is a good chance that you're not competing with any other buyers, right?

    It's a trade off, and you've hit on the key areas. When a deal comes from a bank, the data is usually very organized and we have a lengthy document explaining the business. This is extremely helpful for a business that I'm not familiar with. You're right in that the process runs smoother, there are set deadlines and the communication and expectations are crisp and clear. However, there is also a very high likelihood that we don't win the auction due to the competitive nature of the process, which is a major turn off. Also, bankers (and we did this too when I was a banker) like to play games, so you need to sift through any BS they might be sending you. For example, if the CEO can't articulate the growth plan because he doesn't believe in it, but the bankers forced him to put various low probability growth opportunities in the OM, it creates the headache of determining what is real and what is created by the bankers. As a result, we pay far more attention to potential acquisitions that are proprietary than we do in processes.

    model21:
    How have you been able to get comfortable with what customer contracts should look like and what specific operational metrics (backlog, efficiency stats...) are important? Is that something that you learned a lot about in banking or have learned on the job once you started in PE? I have been in banking for 2+ years (a generalist as far as industries go) and don't know that I'm that knowledgeable in those areas.

    I'd say that this is a difficult area for a generalist, as operational metrics and customer contracts look very, very different depending on the company/service/industry etc. While I had exposure in banking, I'd still say I am relatively new in this area and rely on my seniors for guidance. Sometimes even the senior guys don't know if certain metrics are good or not for the industry. As to which are important, I'd say that once I started looking at opportunities through the lens of an investor, it's enhanced my ability to evaluate opportunities subjectively and ascertain which metrics are important without relying on management (for the most part). I wouldn't be worried if you haven't gained that exposure or that level of expertise yet.

    I will note that once you have responsibilities for portfolio companies, it becomes a lot more worthwhile to familiarize yourself with things such as contract structure and operational metrics. It's nice to know that I'll be working with the same companies throughout my years as a PE associate and therefore it is very worth my time to internalize and master material relating to them. In these cases, you would be expected to be an expert regarding customer contracts, backlog, metrics, etc. (depending on the PE shops views towards associate involvement with portfolio companies).

    CompBanker

  • In reply to jimbrowngoU
    SirBatalot's picture

    jimbrowngoU:

    Really depends on your goals, I guess. Lateraling from a MM to a BB is almost a pre-requisite if your end goal is a megafund. But if your end goal is PE and you are not opposed to a MM fund, then lateraling will really just delay your career progression. Let me provide insight to your specific questions:

    (1) For me, I have no interest in spending a 3rd year as an analyst. I also have no interest in going to a megafund and working 90 hour weeks -- the prestige doesn't matter to me. Not to mention, I've become a fan of the MM and really feel that it is a good fit for me. So going back a year for the "brand" name, to me, is absolutely not worth it.

    (2) I mean for purposes of recruiting in the late summer right past your Y1 (actual Y1). You won't get recs from the MDs at the MM bank because you left, and you won't get recs from the BB MDs because you have yet to build a relationship with them.

    (3) See above for my response to this question.

    I guess it is personal preference, but you have to be very careful that you keep your intent to lateral under wraps or else you could find yourself jobless. I do think it all comes down to personal preference, though -- if your goals are BB --> MF, and you can live with five years of processing-torture, then go for it.

    Thanks a lot for the response dude. I guess I was getting too obsessed with "brand name" and did not think thoroughly about what I really want in the long term. Thinking about latering to BB before I even start my stint is kind of childish....

  • In reply to CompBanker
    SirBatalot's picture

    CompBanker:

    As you can tell from my above post about my work in PE, you can see that associates in MM PE care far less about modeling and more about your ability to understand the deal process and companies. In this way, the modeling exposure gained at the BBs actually hinders you rather than helps you. However, you're right, the megafunds (and there aren't that many of them), need model monkeys. As a result, analysts coming from MM IB are at an extreme disadvantage compared to BB IB analysts given their lack of exposure to modeling. They are simply two entirely different skill sets. As such, don't expect an analyst who laterals to a BB after having spent a year at an MM to have the same productivity level of a 2nd year at a BB, and vice versa is also true (yes -- it's true, we had someone from a BB lateral to my MM).

    Hey CB, I truly appreciate all your honest comments and thanks for making this incredible thread. You absolutely made a really good point that MM PE and megafunds require completely different skill sets and experience.

    Please bear with me as I have not started my stint yet and therefore do not have a first-hand view of what banking is really like, let alone the PE world. I apparently have underestimated the painfulness I will have to go through as an analyst (1Y/2Y/3Y). I guess no one would want to stay in banking for an extra minute if he or she is able to GTFO for better opportunities. I was also being naive that I put too much weight on the firm's prestige as opposed to the specific experience I will be getting. After all, even analysts in top groups at top BBs are by no means guaranteed to get an offer from megafunds. At the end of the day, getting good deal experience, developing a strong network, and knowing what I want to do in the long term are the most important, not that "GS TMT" on the resume.

    Thanks again CB for all your time and insight.

  • Mzz's picture

    Great thread CB. And to be honest, your current PE role sounds very interesting.
    Silver B's for you.

  • In reply to CompBanker
    Mayor Quimby's picture

    CompBanker:
    6) Brand Name -- Okay, you win here. That said, I'd be willing to bet my old MM's brand name carries more weight in MM PE than the BBs, including GS. Outside of MM PE or internationally, the BBs easily trump me. Given my career objectives, this suits me well. For those with different career objectives, the BB brand name would certainly be preferable.

    Would you mind sharing what your career objectives are?

  • jimbrowngoU's picture

    Bakealot,

    Whoa! Dude I thought you were in your first year... First, let me tell you, I was in the same boat as you last year. If you asked me what my plan was on Jan. 1, 2009, I would have said, "work at a MM for a year, lateral to a BB as a Y1, get to KKR/BX/TPG, then Harvard." I even went as far to do some SERIOUS networking post-graduation with alumni at BB firms. I had a few guys (couple GS, couple MS) who were unable to help me in the fall tell me they would do everything they could to hook me up -- a lateral is generally easier to get in via connection because the process is far less formal.

    After about a month on the job, my outlook had changed SIGNIFICANTLY. There was no chance in hell I'd stay an extra year in banking if it wasn't necessary. KKR? BX? Psh, they couldn't give me any sum of money (OK... exaggeration) to go there as a pre-MBA associate to get worked as much, if not more, as I do now. Unless you're a masochist, I'd bet that your outlook will change after a month or two on the job.

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