Am I fucked?
Hi guys,
Recently landed a job as associate at an IBD, coming from 2 yrs in consulting and a non-business background (master in Pol. Sci.)
I am Starting next month, and my imposter syndrome is already sneaking in on me, so I’m trying to expand my Knowledge further before then. Read and understood “Fundamentals of Corporate Finance”, materials from future employer and a basic finance and investments book in my domestic langauge. Currently 1/4 through McK’s “valuation” (recommended by future employer), and I’m starting run into some trouble, especially when re-arranging financial statements to weed out non-operating items, etc.
How essential a skill is this in IBD, and should I devote my time to get the grasp of it, move on to other subjects, or just start panicking?
TIA
You’re not screwed as long as you communicate well, learn fast, and stay humble. People will understand your background and that you need to learn a lot (as if you were an MBA associate), but the key to not getting fired is learning quickly and communicating well.
And the necessity of your valuation skills will depend on what group you’re in. For some groups (like M&A) it’ll be crucial almost on day 1 (learn the basics within a week or two), for others (coverage groups that don’t do in-house modeling) you should be fine learning a little more slowly (taking a couple of months), but it’s still necessary to learn the skills.
Thanks for the advice! It’s in M&A, so best get reading I guess
It’s still way more important to be humble and teachable (and try to learn quickly) than it is to get on the job and be a hotshot on day 1. People will be lenient if you’re humble, whereas they’ll really hold you to a strict standard (and hold you to every tiny mistake) if you’re a douche
First-year (non-A2A) associates in IB don't know shit. You’ll fit right in.
Depending on what type of IB it is. If it’s something like a Moelis or Jeffries they expect you to know your stuff. If it’s a like a JPM they’ll be more lenient.
A1s don’t know shit at Jeffries or Moelis either, though you’ll have to learn more quickly (moreso at the latter).
Am I being stupid because it's late but what does "when re-arranging financial statements to weed out non-operating items, etc." mean?
Cash flow statement is literally split already to show operating and non operating cash flows. Are you talking about adjusting for exceptional items?
That’s not true. There are a lot of non-operating items baked into the financial statements. Just as an example on the BS you have excess cash, nonconsolidated subsidiaries, overfunded pension assets, tax loss carryforwards, etc. You have to separate these from operating assets when you’re doing a valuation.
Exactly, this.
I believe he is referring to one-off expenses on the income statement, such as legal expenses, merger fees, consulting fees, etc. So, you're "clean" up with EBITDA but adding back all these "one-off" expenses.
If your clients are taking the transaction seriously, they should be hiring a big 4 to undertake QoE / EBITDA normalization on a deal (mainly for buy-side FDD, but in some cases sell side FVDD). As IBD M&A you just need to coordinate those phone calls and pretend like you understand the rationale behind QoE management adj, potential adj, and pro forma adj.
are you an MBA grad? how'd you move from consulting to IB without finance related experience?
No MBA. For context, this is in Europe, so we don’t really do MBA’s that much, and associate is basically entry-level. Have a lot of experience with cost modelling, business case analysis, etc. So that helped. In terms of actually getting the offer, I’d say it was my ability to do a live DCF with no financial experience, that did it. It conveyed a message of being a quick learner, willingess to put in the effort, etc. Also think they wanted someone with a different educational background - May have helped too.
Who the hell is hiring lateral associates with only 2 yrs of non-IB experience? I went A2A last summer but have gone through processes in the last 6 months trying to move upstream where they would set me back at An3.
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