Ask CompBanker
WallStreetOasis,
At the request of Patrick and a few users, I have agreed to start an "Ask CompBanker" thread. The purpose is to share responses to my historical and future PMs with the community while keeping the question asker anonymous. Anyone is welcome to send me a PM or post below with a question and I'll respond in this thread.
For those who are new, below are some of my other explaining my background. I'll do my best to answer any question posed, but my background is in the middle market and I've worked exclusively on M&A and Leveraged Buyouts my whole career. I've also taken the GMAT and applied to b-school, though I didn't matriculate.
http://www.wallstreetoasis.com/forums/how-i-got-in...
http://www.wallstreetoasis.com/blog/qa-with-compba...
http://www.wallstreetoasis.com/blog/qa-with-compba...
http://www.wallstreetoasis.com/forums/graduating-i...
http://www.wallstreetoasis.com/blog/breaking-into-...
Note: Comments in this thread will be deleted after I've responded. I will attempt to answer follow-up questions by editing my original response. Please look back at the original response if you find your follow-up question deleted.
Quote: I'm a 2nd-yr Analyst
I'm a 2nd-yr Analyst at a BB and have my 1st private equity interview this coming Tuesday with a MM PE. Just wanted to know what do you think are the most important characteristics that I should portray in this interview. I already know about the PE industry and know the basic technicals; having done banking for a while I'm not that worried about being asked specific valuation questions. I'm more concerned about the BIG PICTURE fit questions and qualities they are looking for.
I think overall, confidence is one of the most important things you can demonstrate in an interview, particularly in private equity. How you deliver your response is just as important as the actual response itself. If you are already comfortable with the technical questions then the most important thing you will need to focus on is being articulate and confident. This is the single most critical thing that will set you apart from your peers and what the senior guys tend to look for the most.
CompBanker
Quote: Question, I'm looking
Question, I'm looking at corp dev jobs now... I want to put a case study together to show I know modeling inside and out (i'm an analyst). I've already identified a potential target who isn't a client of my bank...But I don't want to put this M&A case study together to come off as a "pitch." Do you think I can get in trouble if I clearly state this is purely to showcase my skills and has nothing to do with my current full-time position?
My alternative would be to do a case study of a past transaction they completed in say, 09 and do it as of 08 or something, but I feel like it's kind of "cheating'' since all the information regarding that deal is already available..
Honestly, I'd be careful about putting together a case study on an industry that they know very well. If they start to grill you on it, you may come off looking foolish and uneducated on the subject. It can be really hard to impress someone in their area expertise so I'd stick to impressing them with your finance skillset rather than your industry knowledge. What I have seen someone do successfully is put together a case study for a totally unrelated business to prove to the employer that this particular person had talent. It was very well received and this person got the job despite being totally unqualified in every other aspect.
As for your MD, this is going to be tricky no matter how you look at it. Not much advice I can give you other than to try to lay low and have a good excuse ready in the event you do get caught.
CompBanker
Quote: From what it seems
From what it seems like, life at MM funds outside of NYC seems to be a bit less stressful, where the average non-live-deal work week ranges between 50-60 hours. Is this correct, or am I just dreaming of a fairytale land?
Lifestyle outside of NYC is usually much better, however there are exceptions. In the PE world, the lifestyle is largely determined by the senior folks. If they are hardcore, you will be expected to be. If they value lifestyle, you'll have a much better balance. You likely won't know until you've started interviewing and start to get a feel for the team. From my experience, many of the MM firms in NYC are very intense and most of the MM firms outside of major financial cities are incredibly laid back.
CompBanker
Quote: How do PE firms view
How do PE firms view analysts who stayed on for a third year rather than jumping to PE after year 2? Were I in these firms' shoes, I would assume that something was inherently wrong with the candidate who didn't land a job during his first process.
Honestly, I think you're making it a bigger concern than it is. At least a third of the applicants that we received at my last shop in the past 2 years were folks with 3 or more years of experience. We even had multiple people who were accepting associate promotions after being bankers for 3 full years (one of which we hired). Just be sure you have a compelling but honest answer as to why you stuck around a third year.
One thing to note is that by staying a third year, you were effectively setting your career back by a year. The folks who get hired with 3 years of banking experience get the same level of responsibility and the same pay as the folks with 2 years of banking experience. This isn't a problem at first, but if you continually stick around longer than usual, you'll find yourself falling behind your peers. For example: I manage a pre-MBA associate who graduated from undergrad the same year I did, simply because I took an expedited path while he spent three years banking.
CompBanker
Quote: I've tried to get into
I've tried to get into Institutional Equity Sales in Atlanta and have done all of the following:
-networked on LinkedIn/other ways
-followed up with HR
-highlighted my prior Finance experience/FINRA licenses
-resume done by professional
-applied to every key Atlanta bank with S&T
What else should I do given the circumstances?
Given your situation (or anyone's really), there are really two fundamental ways that you can improve your chances. The first is through networking. Cold calls / emails, or anything else you can do to help build a network in your desired field is great. Even if they don't lead to immediate opportunities, building a lasting network can be crucial. It seems like you've already been doing this extensively, which is great. The second way you can improve your chances is by building your profile. This means things such as taking the CFA, bolstering your GPA (too late if you've graduated), keeping current on the news, learning your technicals inside and out, and other "resume building" activities.
The good news is that there is really no limit to the extent you can work on the two categories mentioned above, so your goal should be to dedicate as much time as possible to maximizing your chances through networking and self improvement. Note that it is also important that you achieve a balance between these two. If you spend a lot of time building your profile, you won't need to spend as much time networking. Similarly, if you've got a vast and dedicated network, you won't need as strong a profile. Balance is key.
That's pretty much the best advice I can give you. Unfortunately, there is no silver bullet to breaking into finance, and now is as tough as ever before. The trick is to keep at it, because you'll never break in if you give up.
For Institutional Sales, assuming that soon I can break into it, I've considered not going to business school for my MBA in the next few years. I know that you mentioned that an MBA can be valuable, but for Institutional Salesmen, I've seen that the vast majority of them don't have MBAs, so for me, my thinking is that it isn't as valuable and that I should just leave it alone in the future. What are your thoughts on the value of an MBA for an Institutional Salesman and also what are your thoughts on the Goizueta Business School at Emory for an MBA for Atlanta S&T?
Let me clarify that while I view the MBA as a valuable degree, it doesn't make sense for every career path. For someone that works in S&T, it is very uncommon to get an MBA as this is generally not viewed as a career enhancing degree. As such, I don't recommend you pursue it unless you have plans to leave institutional sales shortly after obtaining the MBA. As for Goizueta Business school, I don't know much about it because no one I've ever interacted with professional has obtained an MBA from there. That itself may be a telling statistic. However, people obtain MBAs for different reasons, and there are many reasons why an MBA from Goizueta could be a good career move for someone.
CompBanker
Quote: In your experience, is
In your experience, is competition for M&A/LevFIN as tough as WSO would make it see? It seems everyone on the boards is M&A oriented.
I'd say that competition for M&A tends to be higher than the other groups. The truth is M&A is known as the "sexy" portion of the business. Most college grads don't truly know the nuanced differences between each of the groups so it is easy for them to pursue M&A as a default. The only exception is people with connections to a particular group or those that know they have an interest in a particular industry vertical. Now -- the bank I worked at was strictly M&A so I don't have any personal experience in the matter, but this is my take from interacting with other professionals.
CompBanker
Quote: Is that your picture
Is that your picture in the corner?
Nope. It's Christian Bale from Equilibrium. Fantastic movie, I highly recommend it if you enjoyed reading 1984 or The Hunger Games.
CompBanker
Quote: I was hoping you could
I was hoping you could answer any questions about healthcare IB. What is it like compared to other industries?Any specifics?
The biggest difference for me was trying to understand and stay up to date on the many regulatory rules that constantly change the healthcare landscape. Any changes in reimbursement for Medicaid or Medicare usually meant I was stuck doing research that my peers never needed to worry about. In an ever-changing environment such as healthcare, this creates substantial additional (boring) work over and above the typical analyst experience.
Who are the big players in healthcare IB/PE? Is there a lot of dealflow?
In the middle market, William Blair was constantly heralded as the leader in healthcare services deals. There are a bunch of niche players, but they are the ones who really stand out. Do a search on the boards for who the lead BB healthcare players are -- I think Jefferies is generally viewed as the best now due to a defect from Credit Suisse, but I'm going from memory. Deal flow is ridiculous, probably better than any other industry. There are an endless amount of healthcare deals to be done.
Can you get into other industries or are you stuck in a niche industry for the majority of your career?
No limitations.
Are the HRS/ Comp any different as oppose to other industries?
From my experiences and those I've spoken with, Healthcare hours are generally the worst of any industry vertical. Comp is in line with other industry verticals.
CompBanker
Quote: If you could change
If you could change one thing about your career path what would it be and why.
Tough question. I've been surprisingly happy with the path that my career has taken, although I admit that has largely been due to luck. If I had to choose something, I suppose it would be to pursue roles with more international exposure. I find international work fascinating and love opportunities to travel abroad for both work and pleasure. Unfortunately, MM IBD and MM PE offer little exposure in this area. As I get further along in my career, I recognize that it gets more and more difficult to transition into such a role (for example, an emerging markets focused investing firm, or an international transfer within a fund). I've always held out hope that one day I would be able to move to Europe or Latin America to practice PE there, but as I do more research this seems less attainable. I've come to view this as icing on the cake and don't let it frustrate me -- the reality is that my "dream job" likely doesn't exist and I don't want to be unhappy when I'm already in a pretty fantastic position.
CompBanker
Quote: What are your thoughts
What are your thoughts on going to b-school if you land a BB analyst gig right out of undergrad. Is the MBA still worth it or would two years of higher level work experience be more valuable?
I think an MBA from a top ranked program is incredibly valuable for all the common reasons cited -- network, experience, career acceleration, prestige, etc. What I think is overlooked is the value of an MBA as a safety net. The reality is that your career almost never goes according to plan, often times for reasons outside of your control. I'll give you two examples:
1) You're working as an analyst at a BB investment bank. Things are good -- deals are getting done and your team likes you. Three years later you're offered a direct promote from analyst --> associate. Not wanting to forego two years of earnings nor pay for a costly MBA, you accept. A few years later, shit hits the fan. You don't get promoted to VP, or maybe you start to suffer from extreme burnout because you've been working non-stop for six years. Governmental regulation may restrict your pay, and all of a sudden the job isn't as attractive. Maybe you meet the girl of your dreams and want to start spending time with her; perhaps settle down and start a family. Whatever the reason, if you find yourself in a position where you want to start pursuing career alternatives, your options are far more limited without an MBA.
2) Say you work in a PE firm and have been absolutely crushing it. You're given an opportunity to "skip" the MBA and are promoted directly to a post-MBA role. The partners love you -- you get along great with them and do good work. Your future is looking bright. However, over the course of the next five years, the fund's investments aren't performing well. When the team goes to fundraise, they are unsuccessful (this is happening a lot these days). Even worse, maybe the partners' plane goes down and a number of key employees are lost. All of a sudden you find the fund is winding down and you're off looking for a new job. You don't have an MBA network to tap into to help find a job, and what's worse, you're searching for a Vice President / Principal job without an MBA. Hiring will be significantly more challenging. While the partners at your shop thought you were a rockstar, this isn't something that you can convey on a resume. As a result, you're going to face an uphill battle. Having an MBA in this circumstance wouldn't save you, but it would certainly start to feel like a good investment.
CompBanker
Quote: Would you say that
Would you say that meeting me was a great moment in your career or the greatest moment in your career?
It was undoubtedly a great moment, and quite possibly the greatest. The second I laid eyes on you, I realized that I didn't want to end up like you, and it motivated me to work hard and be as successful as possible. In many ways, you could say I owe a lot of my success to you.
CompBanker
Quote: Do you agree that the
Do you agree that the most difficult part of the job at ibd is to pick up the industry knowledge, which most of the time are updated fairly quickly, instead of modeling? If so, is there a knack for picking up these industry knowledge quickly on the job?
As a previous summer intern at a BB, I got the feeling that modeling is not the most difficult part of the job at ibd. After all, one can get the hand of it after working on the models after a few deals.
I definitely agree. Modeling is not inherently difficult. Modeling can be very time consuming depending on how complex the situation or the degree to which you are running the numbers. However, in the end it is a very logic oriented task. Numbers are inputted and an output is generated and the model is either working or it isn't.
Industry knowledge, and more generally business knowledge, is completely different. Business knowledge encompasses an ever changing landscape of companies, people, interactions, trends, etc. Having someone on your team who knows an industry cold, such as who the major players are -- their go-to market strategies, their competitive advantages, their product portfolio, etc. -- is infinitely more valuable than someone who can model a make-believe projection scenario.
In terms of picking it up quickly, I believe this is mostly a matter of concentration and effort. When you're an analyst, it is easy to resort to being a "processor." This is someone who essentially goes through the minimal motions to get their work done. For example, they might create a slide in a management presentation that shows the top ten customers and the percentage of total revenue that they represent (a customer concentration slide). Some analysts assemble this without stopping to pay attention to what the data is saying. If a senior banker asks the analyst why the company has such high levels of concentration, a poor analyst will shrug their shoulders because they haven't stopped to think about it. They were only interested in slapping the data on the page and going to bed. A good analyst will have an answer that demonstrates knowledge of the company, that they "get it." Maybe the company's CEO used to work at the largest customer, and therefore he was able to obtain 100% of that customers business. Whatever the reason, the analyst won't know unless (s)he is paying attention, able to connect the dots, and takes the time to assess the "why" behind the data. In reality, few analysts are able to do this.
CompBanker
Quote: I am a 2nd year
I am a 2nd year Analyst at a BB, and want to be in PE long-term. Have already reached out to HHs and landed a few MM PE offers. Can you please give a 5-year (ideally 10-year) outline of MM PE all-in compensation, and promotion scheme?
MM PE comp is highly dependent on the individual PE firm. For someone with two years of investment banking experience, the low end of all-in MM PE comp will probably be in the $125K range (micro funds) up to ~$250K (large cap funds). It is very rare to get carry as a pre-MBA associate, though some firms will offer a nominal amount. You can expect to stay as a pre-MBA associate for 2-3 years (many will tell you that their pre-MBA program is either 2 or 3 years). After that, you're usually required to get an MBA.
Once you have an MBA, your title will either be Senior Associate or Vice President. Expect compensation on the very low end (micro funds) to be ~$175-200k. I really can't comment on the high end, but I would guess it would be somewhere in the $300k-$400k range. At this point, about 50% of funds will offer some level of carry (according to a 2012 PE compensation report I have (--no, I won't share it--)). Promotion at this stage largely depends on performance, deal experience, personnel needs, and overall contributions. Expect a minimum of two years and a maximum of five.
The general organizational structure tends to be: Analyst (pre-banking, some firms don't have this position) --> Associate (post-banking, pre-MBA) --> MBA --> Senior Associate --> Vice President --> Principal --> Partner
Also, can people from Top Law Schools make the move to PE with only IBD analyst experience? I was accepted to Harvard Law School, and chose to defer for my analyst stint. I'm slated to start at HLS this fall, and was wondering if I can land post-MBA PE roles straight out of Law School. I can take classes at Harvard Business School as well (up to 10 credits), will that help me in any way? How receptive do you think firms will be, if I take part in HBS info sessions, and networking events? One of my friends is a 0L at UPenn, and only has IBD summer internships. Can he end up in PE after Law School?
I don't know anyone that was successful at transitioning from law school directly to PE, even with prior experience in banking. Without prior experience in banking, I'd say that there is an absolutely minimal chance. I think your best bet would be to do a dual degree MBA/JD as this offers the most flexibility. I don't think 10 credits at HBS will make a difference. Most of the senior PE professionals I've spoken with do not view the actual classroom learning as valuable, so the fact that someone has attended MBA classes is not significant. Investment Banks seem much more willing to hire law school students (in place of MBAs), so my best advice would be to return to banking after school and try to flip over to the buyside through networking.
In reality, I don't know how you'll possibly survive three years at Harvard Law knowing that you don't want to practice law for a living. Law school is absolutely brutal (I've watched more than a dozen friends go through it). Like anything else in life, you won't perform well in the long term if you don't have a passion for the subject. It sounds like you don't have a passion for law school. Even though it is Harvard, I suggest you matriculate in a program that you are actually interested in.
After L-School, assuming I get into BB IBD as an Associate, and move into PE at a post MBA role, how would PE firms judge my law degree? And how many years do I have to stay in IBD before making the switch?
Really difficult to say how PE firms would view a law degree from someone working as a BB IBD Associate. I suspect this sort of assessment will really come down to the individuals evaluating your profile. Some people might like the diversity of skillset, while many might ding you for taking a non-traditional approach. I suspect it will hurt you more than help you as it raises all sorts of questions. Why didn't this person get an MBA instead of a JD? They left banking to get a law degree, only to return to banking? While you may be able to address some of these questions, they will cast doubts and some firms won't even give you the chance.
If you do go down that path, how long you stay will be largely dependent on you. It may sound silly, but I've heard of people lateraling out of the IBD associate role after only a few months in, while others take years to build up a network in order to successfully make the switch. Your results may vary.
Lastly, how difficult is it to get a post-MBA position without having/getting an MBA?
From what I've seen, getting a post-MBA job in PE is extremely difficult even with an MBA and with prior PE experience. I know of two recent HBS grads who had banking/PE experience before attending HBS and upon graduation, they didn't have PE jobs lined up, despite heavy interviewing. They eventually found them, but it took a mental toll and a couple months of unemployment. If you have neither of these, you'll be facing a very uphill battle and will have to rely heavily on your banking experience, interview skills, and network.
BTW, do you plan on applying to B-School down the line? After all, you worked hard to get a 760 on your GMAT.
Yes, that is currently my plan. It isn't required, in fact, the Partners at my shop would even prefer I didn't leave for 18 months. However, for the reasons I mentioned in a post above, I think it is worth it.
CompBanker
To the HLS matriculant: look
To the HLS matriculant: look into distressed debt/ turn-around investing. I think they actually need lawyers there, and it's pretty close to PE
Quote: What's your opinion on
What's your opinion on dating women from other countries?
Fortunately, I have a LOT of experience in this area. In fact, I have more international dating experience than I do work experience -- maybe I've giving advice on the wrong subjects? Anyways, I highly recommend it. The best ones are those who speak multiple languages and have spent significant time in their home countries. This enables you to travel with them and stay with their friends or family. It's like having an international vacation home without the added expense and headache.
CompBanker
Quote: Provided that you
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Quote: What do you know now
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Quote: How can I be more like
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Quote: How much do you deal
CompBanker
Great thread. I actually
Leonidas, I dont want to
CompBanker wrote: While
Check out my WSO Blog
Quote: I'm a 2nd year Analyst
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Quote: Is your post-MBA
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Quote: Comp, we seem to be in
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Quote: Hi CompBanker: What
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Quote: I have an interview
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Quote: What are your thoughts
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Quote: What's a good reason
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CompBanker