Confessions of a former second year IB Analyst

Wrapping up My Stint at an Elite Boutique Investment Bank

For reference, I finished my second year as an analyst in May 2016. I did M&A at one of the top EBs and work in one of the toughest groups at my firm. I do not say this as a badge of honor but rather out of frustration -- I've had notably worse hours than most of my fellow analysts within my firm as well as friends from college working at other banks. I am heading to a PE job this summer after my two years.

There are a lot things I have grown to appreciate at my firm -- most of them have been things I have realized in the past few months as my end date has become more and more of a reality. I've boiled down my two biggest positives from my experience to two ideas, culture and learning, which each have a flipside of also being the two things I will miss the least. I'll add one more preface -- this is my reflection from my experience at a bank.

You may not agree, you may think I am conceded or cocky, but I have been through plenty to make me feel the way I do. I am not here for a @#%^ measuring contest to tell you how rough I have had it (a la "bro how many times have you had to clock 140+ hours?! Have you ever stayed at work for 5 days straight?!).

These are simply some thoughts from someone who has given 110% for almost two years now and is glad to be parting ways with his current firm. I don't blame you for skipping over this -- it's long and includes a lot of things you've probably heard before (both good and bad). But they are my experiences and for the most part things I have never shared.

Two Main Positives of My Time in Investment Banking

1. Workplace Culture

While culture varies at banks and even at groups within each bank, I have had the benefit of being in a group that is a close community. For instance, in my group senior bankers are relatively understanding of near-term/last-minute personal obligations (e.g., getting out to do things last minute rather than putting some wedding you need to go to on your staffer's calendar three months in advance).

As a young employee, I suppose I don't have enough experience in the rest of the corporate world to say this in confidence, but my gut tells me that the close and often times "unprofessional" (I mean that in both good ways and bad) culture at a bank is very different with "regular" offices. I could see myself missing a lot of the positive qualities of that culture down the road depending where my career goes. The camaraderie among the analysts in my group during my first year is one of the few things that made my first year on the job bearable, and I doubt I could have had a similar experience outside of banking.

2. Learning (for the first six months)

"Drinking from a fire hose" or "thrown right into the fire" take whatever banker lingo you see fit -- my ramp up as an analyst was very rapid and I found myself having the same responsibilities (live projects, etc.) as the second year analysts in my group within weeks of being on the job (I think this tends to happen more at EBs where groups are much leaner on a junior level). In hindsight, the amount I learned in the first six months is something I am very proud of. The key part of this though is "first six months" -- which will come up later in my "negatives" section.

As a tangential point, with learning early on also comes the skill of time management -- something else that I learned a great amount of while an analyst. When I think about what I have had to juggle in the past (or still do) at any given time it makes me a bit more judgmental of friends outside of IB as they complain about what is keeping them "busy" at work.

Two Main Negatives of My Time in Investment Banking

1. Workplace Culture

When I first started recruiting for private equity during the traditional period of my first year, I had a few lengthy discussions with a close senior banker at my firm regarding what that career choice may mean for me long-term. I remember at one point he told me, in so many words, "I don't blame you for what you are doing. I will say, if you stay here you will get used and things won't get any easier."

Early on it became evident to me I was getting staffed on more challenging and higher quantity of work than most of my peers. Bottom line -- I got rocked hard and regularly faced horrible sprints for some last-minute fire drills because our group's senior team knew I was reliable and could get the complicated work done quickly and accurately.

Weekend plans regularly blew up on me, I lost my girlfriend over my job (after trying my absolute hardest to make time for her whenever I had it; although its not like I wanted to be going to Lavo with work people on weekends :P), and I had to cancel vacation plans three times during the summer of my first year. What really irked me was I was not planning and re-planning these trips while in the middle of live projects.

When our new first years came along, things didn't lighten up at all -- and it seemed like there was no real improvement in my work-life balance. Part of this is my fault for not pushing back more -- I wasn't out chasing nightmare projects but I also wasn't speaking up when I thought I already had more than equitable amount of staffings.

Was it fair for me to get stuck with much more work, spending just as many weekends in the office as my early months while our first years were never around? Probably not. Could I have done more to combat this? I'm sure I could have at least tried. Our first years' performance is very disappointing from my perspective, and their lack of dedication just makes me more confident I made the right choice a year ago deciding to look for another opportunity in PE while the window is open.

I don't mean to belittle any current associates, but the last thing a good analyst wants to do is become an associate who has to deal with terrible work product from an analyst who doesn't show the same dedication to his/her job after spending 5x too long to do it. And when I read about all this jazz about the same talent not coming into analyst jobs anymore, I feel better about not staying around as an associate.

2. Learning

I went into IB for three reasons: learning, comp, and future opportunities. I was not a kid who has been lurking on WSO since freshman year of college, planning out a "BB -> Mega fund -> MBA..." career before getting a SA internship, but I placed a lot of value in the fact that two solid years as an analyst could make me a viable candidate for a lot of different jobs -- which is pretty cool when you don't have an entire career mapped out in college. I was also attracted to the field by the learning curve. I have always considered myself the intellectually curious type, and thought some of the complexities of analyses conducted at an M&A advisory group at an EB would be perfect for me. This held true for awhile as I learned new things on the job.

After about six to eight months though, I started realizing how similar everything I did was. I wasn't inputting numbers into model templates, but I found myself building the same types of analyses over and over again, no matter how "company specific" we thought it was. I also got jaded, thinking all the mega-deal fire drills I got staffed on had a lower likelihood of happening than me winning the lotto.

Most importantly, I reached a point awhile ago where I stopped looking forward to coming into work. It wasn't from the frustration of being overworked, but rather no longer feeling excited about the possibility of learning something truly new. And while there is always something to learn at my level from listening to senior guys in meetings (tactics, etc.), it wasn't enough "new" stuff to keep me happy.

The past year or so has felt like a routine of processing the same types of requests over and over again that aren't intellectually challenging. I think some people find comfort it getting good at something and sticking with it, and that's okay. But at least at my level, and for the foreseeable future if I stayed at a bank (i.e., three more years as an associate), I simply don't find the work gratifying or rewarding enough for me to stay.

Mod Note (Andy): The above was a informative/helpful comment originally posted in the thread Anyone else fed up with the banking/finance industry? and received 15 silver bananas so we thought it deserved its own spot on the frontpage. Below is the update:


UPDATE - 11/17/16

- Hi everyone. Haven't been as active on WSO the past few months (new city, new job, etc.) but signed on yesterday to see that Andy featured this post. Some of you have asked for an update to see how things are going since moving on to the new job in PE. As a preface, I did not enter PE with judgement clouded by the wishful "grass is greener" thoughts a lot of people may have. In terms of lifestyle, there has certainly been a significant improvement from where I was versus my current firm. I have been making it to the gym a lot more regularly, and often find myself leaving in time to have dinner at home (say around 8-9PM) with not a lot of weekend work unless its something serious like a deal we where we have exclusivity. Cutting to the chase, I am very happy right now with the new job.

Investment Banking to Private Equity

I mentioned in my original post that one of the primary reasons I stopped liking my IB job was because I didn't find myself learning all too much anymore. That being said, when I went through PE recruiting my goal was landing at a top MM shop with strong operations focus (luckily I was able to secure such an offer), so a lot of lower-multiple purchases with turnaround stories. I wanted this because I thought it would provide me with the opportunity to learn a ton of new things about how businesses really operate and how to make them better.

I had spent my banking days doing a ton of creative excel modeling with all sorts of structured transactions, and wanted my start in PE to be an opportunity to really evaluate businesses with some new perspectives. That being said, I have been learning a lot about how businesses really operate, and most importantly, find myself truly growing as a professional with a lot more responsibility than I had at my last job (I'd say in banking terms its obviously the analyst/associate responsibilities with a fair amount of VP level work as well).

After doing banking for large-cap clients for two years, you really do get desensitized to numbers ($B everything creates such an abstraction); this has totally changed now for me, especially when we are deep in a process and doing things like insurance cost diligence, compensation diligence, etc. even if its for larger MM deals (e.g., $500M+). Happy to answer any questions you guys may have based on my original post or where I am now and what else is different!

Private Equity Recruiting:

A few people have messaged me seeking some advice regarding PE recruiting and how to balance the process while getting crushed at work. There is no easy solution here. The job itself is tough enough -- understandably, things become more stressful when you are trying to schedule intro meetings with headhunters, find time to study/practice LBO models, and make time for the real interviews once they finally come.

Three Key Tips for PE Recruiting

  1. First piece of advice here is to be very proactive about keeping in touch with recruiters. This means you should jump on those emails in the fall when they first start contacting analysts about scheduling intro meetings. After that, you should be regularly following up with them about upcoming opportunities, etc.
  2. Secondly, and probably most obvious, have your story down by the time you start meeting with headhunters. I was lucky enough to have a very short interviewing period (~ one week) and I think that was largely because I had a very targeted focus on specific-type shops and had a comprehensive story to support it.
  3. Third, if you find yourself short on time (and you likely will), I strongly recommend purchasing WSO's Private Equity Interview Course. The course is an especially fantastic resource for those already in finance (i.e., banking analysts) who need a concise, time-efficient way to prepare for interviews and modeling case studies (lots of lbo modeling tests too).

Mod Note (Andy): Best of 2016, this post ranks #19 for the past year

 

Hey RX, thanks for your post. Very insightful. Currently in the first few months of my 1st year gig at an EB, and the section you talked about being thrown into the fire really resonated. Could you talk more about the kinds of things you would do to retain all the things you were learning? I've found that sometimes when I'm doing so many things at once and on multiple projects/deals that I'll pick up a lot of new information, but retaining that information can be challenging at times because often there's just not enough down time to really sit down and review everything I've done.

Also, could you expand a bit on your PE recruiting? Since you were always so busy, how did you find the time to go and do interviews with headhunters and PE firms? And what was your preparation process like?

Thanks man.

 

Thank you for the insights, RX. I am glad to hear that things are going well for you. When you went through PE recruiting, were you at all lured by the prestige/comps/etc of megafunds? How did you figure out that your current fund is the best place for you?

Also, might you be able to speak to whether you think the work/learning opps will be poorer for top BB analysts?

 

Some responses below.

Timing/promotion. Apologies if dates above are unclear (the original post was from summary 2016 but subsequently re-posted as a new thread at a later date). To be clear, I put in 3.5 years before getting to VP. During that time, it was essentially a 50/50 split as an associate vs. senior associate. I know the timing and length of this process varies from firm to firm. From my understanding of my shop in the past, I essentially got it ~6 months earlier than "standard" (not much of a standard though given very limited precedent).

Comp. Not going to get into numbers here since there are plenty data sources to look at for this. My cash comp is very competitive vs. comparable funds. No carry at the associate level, competitive amount as a VP.

Megafunds/Recruiting. I missed out the on-cycle wave of megafund recruiting because I was just way too busy on two live projects for work. Not sure how much recruiting for megafunds has changed in the past few years, but back when I was an analyst, one of the big shops would basically kick it off one weekend and all the other megafunds would follow (this was late Jan/early Feb). They would usually be completely done within a week. Upper MM shops typically followed within a few weeks of that initial scramble. I was also planning on moving to a different city for PE, which can make things more of an uphill battle during those accelerated processes (why spend time on candidates elsewhere when you have plenty to pick from in your own backyard?). That being said, there was one megafund that I would have really liked a shot at given their reputation and types of deals they usually complete. Beyond that, I had a very targeted/short list of shops I wanted to go to. This list was based on a few things (before meeting anyone from those firms): general investing style, prior notable deals, current fund/average deal size, and location (only firms in city X). The whole thing was about two weeks for me: one week to prep for interviews/case studies and one week of actual interviews. I made it very clear to seniors at my IB group that I planned on recruiting. After missing out on the initial megafund wave entirely, I essentially reiterated this interest to my team. Essentially told them that I would need some flexibility on time out of the office I would need in the upcoming month (I needed to travel for superdays). They knew they were getting 110% out of me at any other time when I wasn't in an interview, so they were accommodating to this.

Other. If you miss out on a megafund during on-cycle recruiting, there are other opportunities down the road. In the past few years I've seen plenty of lateral opportunities at the associate level for megafunds. I thought about one of these seriously two years ago but ended up withdrawing myself from the process at a later stage. By the time I reached senior associate, I knew what track I was on (it was communicated very clearly to me). I'd continue to look at new postings as they came through from recruiters, but they generally became less enticing. I reached a point where I'd rather hold out for the promotion and get that title locked down rather than going somewhere else where I'd have to rebuild goodwill and surely take a little longer to get to the same position. This can be a double-edged sword, as the more senior you get the harder it is to come by lateral opportunities (e.g., VP vs. senior associate). I think if you can show you got the title at a reputable shop, that adds to your credentials and keeps you competitive in a smaller, more competitive environment of job hunters. If you're at a shop with a lot less market awareness/reputation, I could understand why a senior associate (and soon VP) might look more aggressively for lateral opportunities at bigger shops. Once they get the title bump, it might just be harder for them to move around given their competition.

 

Good stuff. Not sure why this doesn't have as many replies as other threads. Life is extremely rough but it's interesting to see how all the hard grinding in IB has netted you a much better job & more optimistic outlook. The camaraderie within a group of colleagues can most definitely offset the brutal hours of IB.

 

The funny thing is I still see many people doing IBD > PE > Business School > something completely random like Finance Manager at Spotify. What the fuck is the point of all that grind if that's where you'll end up? Also don't kid yourself, PE will also become equally boring after a while. Just a better work life balance. My 2 cents.

 
Banker88:
The funny thing is I still see many people doing IBD > PE > Business School > something completely random like Finance Manager at Spotify.

I feel like those people care a lot more about work-life balance so they go with a more cushy job. At the same time, I am very interested in hearing someone's personal reasons for a similar decision.

 
Most Helpful

This is an old thread. I have taken a break from WSO the past few years. Recently logged back on to see some of the subsequent comments to this after having it featured as its own thread. I hope it's provided some helpful color to some people in the industry or considering a career start in banking.

I wanted to share an update on myself. The past few years at my PE firm have been an amazing experience (many differences from banking to say the least). Like many upper MM shops, we run lean teams and as a result I have had endless opportunities to wear many different "hats" when it comes to responsibilities. This includes a lot of processes where I am not working with a mid-level person above me, so I am essentially playing the associate role (excel work, IC decks, etc.) and VP role (deal QB, managing 3rd party DD workstreams, active role in purchase agreement discussions). Separately, we are pretty hands-on when it comes our portfolio companies, so I get plenty of "swiss-army knife" responsibilities when it comes to supporting them.

At the start of this year, I received a promotion to VP. I am looking forward to continuing my career in the field and currently don't feel fatigued or burnt out at all. During that time I have seen other associates at my firm come and go, as well as friends from my graduating class leave PE entirely for plenty of interesting finance/strategy roles at companies or b-school (mostly in the past 12 months).

One thing I've definitely learned from the whole experience is that this field is certainly not for everyone long-term. Plenty like to think the "grass is greener" once you hit the buy-side. I cannot stress enough how much more demanding and stressful the job gets once you graduate from the role of an IB analyst. I'd take that one step further and say this is especially true if you are doing a good job. Yes, plenty of hair-pulling busy work goes away (e.g., updating comps spreads, refresh marketing decks, turning excessive comments) but all of your responsibilities become so much more "real". Hard to describe this in short form, but one example I can offer is we're conditioned to approach everything we evaluate as if it's our own personal money at stake. As an analyst I'd run the most painful excel exercises for illustrative mergers that were in the hundreds of billions of dollars. Between the nature of the engagements and constantly being in an over-worked sleep-deprived state, you easily get lost in how illustrative all the analysis is (that was the case for me, at least). That changes very quickly in PE.

Anyway, the WSO community was an incredibly supportive resource to me back in college when I was trying to get into IB and through my early analyst stint when I was getting smart on PE recruiting. I always recommend it when a family friend, student from my university, etc. contacts me asking for career advice and guidance within finance. As a brief background, I had no relevant experience prior to my summer internship during my penultimate summer in college. My resume back then looked a lot different than my competition (i.e., no PWM internship freshman year plus maybe 1-3 boutique IB part-time internships). Only bringing this up to further attest to the incredible resources WSO and its community offers its readers.

I'd like to start spending some more time on this site and giving back to the community when I have the time. To start, I thought maybe a write up on my experience as a PE associate/senior associate and weaving that into what I think is required to get that tap for VP. I am sure it's been a topic covered ad nauseam here, but I could put something together if readers think it would helpful to get another perspective on this topic. Also happy to field any questions people have (maybe in another thread?).

 

Did you leave to get your MBA and come back to the same firm or did you just not get an MBA?

 

Congrats on the promotion, and thanks a lot for taking the time to follow up on this!

If I understand correctly, you went from Associate to VP in a little over 2 years. That's really impressive - is this common in your shop? How hard would you say it is to make the jump, and how do you best set yourself up to do that? Also, if you don't mind, would love to hear any details you can share about comp/carry at the associate and VP levels.

 

See my reply above to JDS07's post. I somehow read those questions and yours and commingled a response together. Been a long few weeks at work (still looking at new deals + second full-time job right now as a "firefighter" for various portfolio companies).

On the BB question, I am sure the experience and learning opportunities is very comparable to a reputable EB. I think name brand counts for something, but once you're at a certain circle of firms, it comes down to the group you're in. All top name shops have stronger and weaker IB groups within.

 

Do you think there are some people you have met in IB / PE who may be super smart academically and in general, but are not very resourceful, fast at their job or take a long time to understand or do things, expecting things to be spoonfed to them or for people to walk them through each step of the process the first time around? Where are those people now and what jobs do you think would be best for them? I have met a few analysts like this who I know are very smart academically but are at the bottom of their classes because of the reasons mentioned above. They aren't really aware of how to fix these issues and neither am I but I do want to help them out. Is IB / PE not the right path for them?

 

Great question and tough to answer. I don't think I have many personal friends/colleagues that fall into this category. The people I know who struggled during their banking programs had issues that would have certainly been even bigger issues at a role in PE. In rarer cases, there are the brilliant minds out there that struggle with IB/PE because they're just too "intellectual" to be a solid work horse that can crank out mundane tasks quickly and accurately. I have a very close friend that fits this mold - he left IB for a biotech-focused VC shop and has subsequently worked at at a few early stage biotech companies since that VC job.

I am going to cover a tangential point here that I think might help answer the "right path" part of your question. I'll caveat this by saying it depends on the PE firm and how "hierarchical" they are when it comes to managing style. Some places, including particular megafunds (based on friends that have worked there), are very structured. Associate does the excel and model work, VP checks the associate's work and oversees the 3rd parties like QoE workstreams, principal and/or MD manages the overall deal and purchase agreement, etc. This makes a lot of sense in many ways -- it's streamlined, everyone knows their role in a deal, etc.

The firm I work at is the exact opposite of hierarchical. As a result, self-starting and finding ways to get things done with minimal guidance is a critical component to success. This can be very uncomfortable for some people - not because they are any less intelligent than others, but solely due to being forced into completing brand new tasks without proper experience or training to ensure accurately completing the end-product. A lot of my job the past few years has been learning new things on the fly, looking back at prior deal experiences to reinforce what I actually learned, and using that knowledge going forward. There are a lot components to the job that are like picking up a trade - you learn a lot of critical things for what it takes to get a deal done that you wouldn't get from being an analyst or going through some excel training program.

I boil the skill set down into two buckets. The first is learning how to actually diligence a company. These are the things your training and interview guides start teaching you. What are the drivers for the business? How do you diligence those? Competitive threads/risks? Most natural areas of growth opportunities? List goes on and on. This is also one of the main ways the best associates distinguish themselves from "good" associates. Instead of getting "spoon fed" analysis to run on a company from a VP or other person from the team, you take the knowledge of what drives the company and come up with insightful analyses (e.g., some sort of historical and projected trend analysis) on your own and can present meaningful findings to your team in a clear and concise way. The second bucket, which I also think is a critical component to getting promoted, is knowing how to actually get a deal done. This is the "picking up a trade" I mentioned above. Learning this live on the job is something that not everyone excels at. You don't need to become a technical expert in every aspect of a deal, but you need to know enough "to be dangerous", i.e., have enough knowledge such that you are asking the right questions and guiding your 3rd party expert advisors (accountants, lawyers, etc.) on the diligence front.

 

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