I just got back from an interview with a boutique private equity firm for a sophomore summer internship. About 2 weeks ago I talked with a VP on the phone and we got along well, and I made it clear that I do not know how to do financial modeling (I noted that I know the basic process of a DCF and I understand the use of multiples). I stressed the fact that this internship would be a learning opportunity and a great way for me to get my hands dirty with modeling. He seemed to be ok with this and mentioned that they had had interns in the past who did not have any modeling experience either.
I got a callback interview with the firm to meet with the same VP and a senior associate. I got to the interview and it was going great we were talking about some macro trends and why I wanted an internship in PE. Then he mentioned modeling and I told him that I did not know how to do it (further emphasizing that it would be a learning opportunity). He seemed taken aback. He told me that this drastically hurts my chances because the other three interview candidates have financial modeling experience and that basically I would only get the internship if the other three did not want it.
After he said that we started talking about other opportunities that I could pursue. He then told me that I should take a financial modeling course.
I was planning on teaching myself financial modeling over the summer in preparation for investment banking recruitment next year. However, my summer internship search has not been going well. Do I need to take a financial modeling course right away if I want any chance at landing a summer internship this summer?
Sorry for the long story. I am just bummed.
Thanks for the input.
Being able to model is certainly a plus, but almost all of my friends (myself included) got SA offers this summer w/out it. I did the same thing as you (education experience), but countered that I had done case competitions and accounting and finance classes that would allow me to learn quicker than other applicants. Also, dont know if you heard about this site, but I mentioned that I was teaching myself models on macabacus.com so that I would be able to further integrate myself.
Dont worry too much about not knowing how to do it, Its really about how you phrase it in the interview. Next time, just focus on what you do know and avoid saying "I have no experience whatsoever." Also, your a sophomore so dont be real upset, you've got time
good luck
I cannot believe that any sophomore in college would be expected to know how to construct a financial model. I guess it's different for "boutique private equity." For IBD SA recruitment, I don't think a lack of modeling experience will hurt you. It didn't hurt me.
Since BB IBD will train you in modeling and since you're not really expected to know how to model until you've worked in IBD, I see no reason to panic. Nor do I see a reason to plunk down hundreds of dollars on a financial modeling course that you'll have to take again when you go through training.
Here's a blog post that I wrote awhle back for another site that may provide some clarity:
Speaking to clients over the last couple of weeks, I have received an exorbitant number of questions on “financial modeling”. The questions range from the very basic - “what is it?”, “what is the bare minimum that I need to know?” - to the more arcane - “How do I create the debt pay-down schedule in my hypothetical lbo model?”. Invariably, clients with no previous financial exposure tend to bring up the idea of attending a financial modeling seminar. While these classes will introduce the necessary tools, they are expensive, time consuming and ultimately not necessary. While I am happy to dive into the financial modeling specifics, I often find that job candidates spend too much time worrying about this facet of their profile. What’s the right balance?
It is necessary to make a distinction between a demonstrated interest in finance and financial modeling skills. A passion for markets is critical, detailed knowledge of 10-Ks and Excel keyboard shortcuts on day 1 is not!
First and foremost, banks are looking for passionate and smart people with an ability to learn new skill-sets and learn them quickly. Completing an expensive, third-party financial modeling course is a resume bullet point that doesn’t hold much weight!
While being conversant in the basic valuation methodologies, a handful of ratios, and the general theory behind financial modeling is certainly a good idea, I wouldn’t invest any time (or money) on courses that provide “hands-on” experiences.
In fact, banks have such low expectations regarding their new hires’ financial analytical abilities that they send all new hires to a “boot camp” during their first month of employment. I barely remember my “Teach the Street” classes in New York, but between this formal environment and the entirely less-formal on the job training, I was able to get up to speed fairly quickly. I would say that this is a typical experience and you should expect to do the same.
Of course there are many applicants where financial modeling acumen will be essential for landing the job. If you attend a non-target school, intend to transfer from another industry, or have little demonstrated experience or interest in finance, then a deeper understanding of some of these technicals topics will be essential to landing the job.
google:
damodoran
macabacus
and on the upside, they're both free
Thanks for the advice guys.
Great advice in this thread.
To the OP, I am somewhat in the same shows as you, except that I have a few years experience in other financial service fields (not IB) and I'm trying to break in. While I am very proficient with excel, I don't have financial statement modeling experience (building a DCF/LBO/merger model, etc).
The way I've overcome this perceived weakness in my interviews is tell the interviewers that I am actively teaching myself the fundamental modeling skills (which I am). The sites listed above have been very helpful. This shows that I have the desire to learn and am proactive.
Getting good at modeling is all about repetition. But just show you understand the main concepts (be able to walk though a DCF, LBO, etc) and you should be good.
As a member of several analyst recruiting teams for several investment banks over the last 10 years, I would say that expectations of sophomore have increased over the years.
While we historically did not expect sophomore and juniors to have any real financial modelling experience (for example, corporate finance was only available to juniors/seniors at my alma mater), that has changed with the proliferation of modelling bootcamps.
Put another way, if we are looking through 100 resumes, and we see that 10 of the applicants have some modelling experience from one of these bootcamps, those 10 are more likely to be at the top of the call-back list (all else being equal).
It's not necessary to be able to model as a sophomore or junior...probably going to need it for FT interviews though but to expect a sophomore to be able to construct a model is literally insane.
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