WSO Community,
Firstly, I want to thank you for all of the insightful questions and the great advice/counsel that is posted here. I have used WSO over the past few years to navigate my career in finance. This is the first time I am posting on the forum, primarily because I would like your advice on something that has been on my mind over the past few months. I would appreciate if you only provide your advice if you are a full-time finance professional (i.e. please don't give your advice as a college student).
To set the context, I have been working now for 4 years since graduating college. I summered at a bulge bracket investment bank in the TMT group in New York and came back to the group after college to work as an investment banking analyst. During my first year at the bank, I spent a lot of time speaking with current and former analysts and realized that I really wanted to move to the buyside as I enjoyed digging deep into transactions and felt it would be very interesting to be on the decision-making side of the table. Additionally, many of my mentors in the group (primarily Associates/VPs/Directors) were quitting so I was losing a lot of my initial support system there. After my time as an analyst (I completed the full 2-year program at the bank and left on very good terms), I joined a middle-market technology-focused private equity firm ($2-$5B AUM) in the Bay Area as Private Equity Associate. I was learning a lot and did get to work on exciting deals but the culture at this firm was very bad and the hours were much worse than banking (over 60% of the associates had quit before their 2-year Associate program). Additionally, the firm's partners were not very helpful in placing people into other firms or helping write reviews to get into business school. Realizing that I din't really want to stay at this PE firm long-term, I started to look at what other buyside opportunities might be open. I was always interested in technology and it was always a dream of mine to work in venture capital to really understand how to grow companies. After 1 year at the PE firm, I was able to secure an Associate role at a VC firm in the Bay Area focused on early and late stage deals. It was a unique role with a strong brand and the opportunity to work with a group of professionals who had spent time both in top-tier BBs and in PE before beginning their careers in VC.
I have really enjoyed my time working at the VC firm and I am doing a good job and the team has informed me that I can stay on long-term (and given me a "partner track" opportunity). Although, this is a very exciting opportunity, I still have three worries:
1) I went to an East Coast school so many of my friends are primarily in New York and I don't really enjoy the Bay Area
2) Most buyside firms (including mine) are very small with very few professionals, primarily skewed towards the older age group. Therefore, work cultures are quite formal and you don't have the camaraderie found in big bullpens
3) In the buyside, your work is very focused into one area for your entire career (e.g. technology-focused VC) unlike at a big bank where you can move around groups, divisions, countries over a longer career (assuming you are good of course)
Based on a lot of thought, I have decided that I do want to head back into a BB IB in New York. Despite the long hours, I enjoyed the camaraderie and the sense of working for a large organization with thousands of employees globally. Unlike many others, I have now been fortunate enough to work across the spectrum (IBD, PE and VC), so really can make a very informed decision about where I would like to build my career.
I wanted to get your thoughts on how to go about the process of returning to a large investment bank in New York. From my understanding, I have one of two options:
1) Go to business school and then re-enter banking as an Associate
2) Recruit for an experienced hire role as an Investment Banking Associate
I would prefer not to go to business school if I don't have to as there is a large cost plus an earnings loss of two years. Unlike others who join IBD from B school, I already have an Ivy League undergraduate degree in Economics, worked at a BB as an IBD Analyst and worked in the buyside as an Associate. I would prefer joining an investment bank directly as an associate and don't mind starting as a 1st year associate (and taking the pay cut) because in the long-term it saves the cost of going to business school. My preference would be to work at a bulge bracket and in the TMT group and I am aiming to make the move in the early-to-mid 2017 (giving enough time to speak with my current team).
I would love your thoughts on how to go about the investment banking associate experienced hire process (i.e. how to apply, will they consider me without B School, etc.) as well your thoughts on what you recommend I do given my experience.
Thank you!
You can avoid the b-school route. I would stick with networking, reach out to people in the various TMT groups at the banks you are interested in directly and meet with them over coffee and discuss your interest in joining as an associate. Use your own network and linkedin to find people to have coffee/phone calls with.
My guess is if they are looking for anybody you will be in high demand given your previous experience, and honestly it's tough to find good associates in IB these days. If you put in some work networking and reaching out to groups the process itself will be easy if I had to guess (speaking from my own lateralling and other people's experiences with less impressive resumes than you)
I think you can start as a first year associate as well, do not settle for year 0 associate when you jump next year. I've seen this done for some people with capital markets experience that jump over with no real IB experience. Some banks may try to do this but given you have two years of IB already (and lot of banks are promoting to associate after two years) it really doesn't make sense for you to have to do a stub year 0 period given you also have significant buyside experience. Push to start as a mid first year associate when you jump over next year.
1) It's nice to see a different opinion besides buyside is the be all end all. While I'm not in banking anymore, I certainly can see why some people would / do enjoy IB more than PE/HF.
2) I'd aim for Associate 2, but may end up getting bumped down to Associate 1 for 6 months (assuming summer start) before becoming Associate 2 once the new calendar year starts. Banks are starting to promote top analysts after 2 years now in order to compete with the buyside. With 5 years of experience by mid-2017, you'd frankly be an Associate 2 ish anyway. I know GS, JPM, and Lazard have been doing 2 year promotions for a couple of years now (so if other banks haven't done it, they most likely will soon). This again may vary a little depending on how reputable your PE / VC firms are, which BB you're recruiting for, and the job market (I know a couple of guys in TMT groups at BBs who has said it's been pretty slow which has impacted hiring). As far as the banks I've worked in, they loved associates that were analysts, and even moreso the ones that had PE experience but decided to go back to banking for whatever reason (usually because they came out of MBA and couldn't find a PE job like in 2009, found buyside due diligence just soul sucking, couldn't make it to a partner track, or very similar reasons to yours).
I suspect one of the biggest hurdle for you will be your response to why you're going back to banking because (a) it just doesn't happen that someone goes from buyside to sellside, and (b) you'll have had a couple of different types of jobs and people will likely initially question your commitment / seriousness. Nothing you can't talk through, but I imagine that'll be one of the biggest things people are going to have to get comfortable with.
Debating transition: Buy-side analyst to boutique MM IB (non-NYC) (Originally Posted: 11/09/2016)
All, I am a Certified User. This is a throwaway account as I want to preserve anonymity and it wouldn’t be too difficult narrowing me down given previous posts. Currently work as a buy-side research analyst (corporates). Good learning experience, professional autonomy, intellectually stimulating, decent pay.
Here’s the debate: I’m in a lower CoL area and do not want to leave (Houston, Philly, Charlotte). There’s one or two other shops in this area that I could lateral to. But turnover is generally very limited in these roles.
Thinking long-term, I want to position myself for flexibility both professionally and compensation-wise. I’ve researched other credit-related roles like commercial banking. Very limited, if any, corp banking roles around here. I’m debating transitioning to a boutique IB as an associate. There are quite a few boutiques in the area. Most of these suggest an emphasis on work-life balance (relative to IB) and look to promote associates from within. I’m open to IB as a career if there’s a long-term work-life balance. If not, then I could perhaps exit into a corp fin/develop. role (plenty in the area).
I'm not concerned about prestige. I want a relatively stimulating job, opportunities to move within my current city, and solid pay. portfolio management is interesting but I’m not married to investing/markets. Not too keen on the CFA program either. Thoughts from other Certified Users/experienced professionals?
TheDonald2016, I am assuming by "boutique" you mean one of these "no-name" boutiques. I started my career off at a "no-name" boutique and then lateraled to a MM before exiting for corp dev. I typed up a lateraling guide after I made the move, which might be of some help to you.
If your goal is to position yourself so that you can have multiple exit opps, then IB is certainly something to consider. At the very least, the work ethic, attention to detail abilities, and general business acumen developed at an IB are unparalleled in the business world and valued by many firms.
It takes a special person to work at a boutique. While your work is very similar to what someone at a BB might be doing, just smaller, it is also very different. I would highly suggest doing some real diligence before making the move. Try to get some color on the deal flow, average size of the deals, how much pitching is done, your responsibilities, etc. The amount of pitching that is done is important to consider because if the boutique does no pitching whatsoever (this is how mine was), it means the MDs are just working off of referrals and their existing book of business. This presents a problem if you are hoping to one day make MD as you will not have the ex-BB or ex-operator acumen and "prestige" that the MDs do, which could make it tough for you to bring in business. There is a big difference between an ex-GS MD working at Joe's IB Shack and an MD at Joe's IB Shack who worked his way up there from being an analyst.
Some key/unique/important things to note about working at a boutique vs. working at a larger bank:
*Clients: At larger banks, clients view you as just another professional services firm. You are performing a service that the firm either needs for compliance purposes (so they can point the finger at you if the deal turns south) or because the firm does not have enough time. For the clients at a boutique, you truly are a financial adviser. Many boutique clients are highly unsophisticated financially and are frequently the founders or family members of the founders of the company. This can result in a lot of hand holding and a lot of emotions in the transaction, especially when it comes time to value the company. Many boutique clients are also run by working class people. They don't care about you being a fancy banker and constantly question why they are paying you such a large fee, why you are trying to get them to ignore net income and focus on EBITDA, why an adjustment for the cost of their wife's uncle's brother's next door neighbor's Mercedes will raise a few eyebrows, etc. Some people appreciate this role, others do not. Just something to be aware of.
*Transaction intricacies: I will happily work on a $100BN deal instead of a $10MM deal any day of the week. At a boutique, your lbo model might only have one tranche of debt, you might only have ten BS line items, you might only have two EBITDA adjustments, etc., but the amount of hand holding, prepping management (we hired a communications coach for one management presentation because the business owner was unable to speak publicly), convincing management that the price offered for their business is fair, etc. can be very tough. The toughest part, though, is actually finding buyers for these companies. Almost all transactions that I was staffed on involved us putting together a list of 500-1,000 potential buyers, whittling it down to around 100, sending out 50 or so teasers and NDAs, and praying that we get five signed NDAs back. It's easy finding a buyer for a $100MM EBITDA company. Every PE firm would line up for that. Finding a buyer for a $1M EBITDA company is much harder. For most PE firms, this is just not worth the trouble, and for most others, these companies do not fit into there portfolio. Not only are many boutique clients small in size, but many are extremely nichey. Do not think that just because your deals are small in size that they will also be small in responsibility. Again, this interests many people, but many are also turned off by this added responsibility.
*Training: I don't know what your career goals are, but if you want to do anything on the buyside or make MD one day, one thing to consider is the level of training that boutiques provide, or usually do not provide. When I lateraled from my boutique to the MM, I lateraled in as a second year analyst. To my surprise, my PP and Excel skill were complete crap. Even my MM's SAs were better at PP and Excel than I was. I would not factor this into your decision, but just keep in mind that boutiques usually do not train you, at least not the way that larger banks do.
*Pay & Hours: I made $60,000 all-in as a first-year analyst at my boutique. At the time, BB analysts made $70,000 BASE. Your hours will be a lot less and it's very easy to say "oh, I don't care about money or prestige", but it can at times be tough knowing that your counterparts at larger banks are making significantly more money than you are, albeit working longer hours. Hours can vary based on boutique. I generally worked 45 a week with weekend work once every few months.
I hope that helps. You're more than welcome to PM me some questions in confidence. Good luck.
Exercitationem nihil quo quo rem consequuntur modi fugit. Voluptas velit in debitis molestiae.
Aut aut quia qui fugiat animi. Nihil saepe eum illo adipisci molestiae a minima a.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...