Another Round of Layoffs Forseeable?
Hope the title didn't raise your heartbeat too much...
Incoming MBA candidate here. Spent the past 2 years preparing for the pivot to IBD amid COVID
Do you guys think there will be another round of layoffs in 23-24? Given the market and economic outlook.
My second question is, will MBA recruiting be impacted significantly?
Thank you all in advance for sharing insights with the new monkey on the street (hopefully).
more to come
Timeline in mind?
EO 2023 likely. I think we will continue to see weak earnings continuing through to Q4. M&A will probably tick up right around there as well as we hit the bottom of the market and hiring will be back, albeit slower than the last couple years, come Q2 2024.
Yes, at a BB that just did minor layoffs (like 100-200 people across all of Capital Markets and IB, mostly MDs and directors). Was told mid and junior level layoffs would happen after the summer depending on headcount at that point. I'm not expecting more than 2-3 people leaving before than besides 2nd year analysts with PE lined up, I know several who want to stay though. I heard some groups are bring back 3-year analysts programs but really good analysts can still make associate in 2 years.
Any thoughts on spots for MBA interns/associates? For next year and 2 years?
So BofA?
Yes, anyone who thinks this is all we'll see on layoffs is kidding themselves
MBA classes will be reduced and at least in my group, our spots for next year are down. If you are at an M7 you will likely be fine, assuming you network. I would be concerned if going to a non-target MBA though. Some people used to get away with that and somehow land spots, but I think that will become much harder with smaller classes
The other two things that come into play are 1) if you have relevant experience and 2) if you have visa issues. These will either broaden or narrow your options quite a bit
Thanks for answering. I'm going to a Top 10 target school, hope that won't make too much of a difference compared to M7.
I don't have a finance background but have taken the time to gain experience (CFA, FMVA, excel modelling, etc). Work authorization is not an issue for me. And I will definitely do my best to network after matriculation.
My major concern is just like you mentioned -- the impact of reduced spots for MBA interns/associates. I know 23-24 is gonna be bad, and now I started to worry about the 24-25 cycles and potential recession/systematic risk.
If you're talking about next year's intern class, I don't understand why you would already decide to reduce spots.
Given they won't start FT until 2025, wouldn't it make more sense to just not give as many return offers if necessary rather than try to forecast that far out?
My group uses high return offer rates as a huge promotional item so unless something drastic happens, they try to cut the initial SA class over lowering offer rates.
Summer 2024 is a long way away though, especially for associate recruiting which runs much later than analyst - if the market turns around could see more spots added
2023 is going to be worse than 2022. Fed is on track to keep raising rates, and financing markets will continue to struggle. M&A revenue will be even worse this year than 2022 (my BB M&A pipeline is already down like 25% from 2022).
This is going to be a hard year for many. Add in the SVB contagion and I think we get a decent amount of layoffs this year.
100% agree. 2022 was strong in 1H'22 - we don't have that this year.
Even if Fed doesn't raise, that means there's bigger issues. Despite the decline in treasury yeilds yesterday, HY spreads widened = good luck financing your LBO in the HY/TLB markets... and directs are super expensive rn
I highly doubt the fed will raise rates with what's going on with those banks. Wouldn't be surprised if dirt is revealed under the carpet and that will naturally decrease inflation.
Indications that they will raise rates by .25.
I wouldn’t be overly concerned if you’re a normal, English speaking person coming from a T15 MBA, especially if you have a CFA and can speak intelligently to finance.
In years past I would say 90% of people from these schools got offers at some BB / EB. That 10% either didn’t speak a lick of English or were some of the strangest and most socially awkward people you could imagine.
Despite the doom and gloom, there will be plenty of natural attrition on top of the layoffs. New ASOs are considered relatively cheap for banks and it’s a pipeline they compete for and don’t want to lose. Even if that number dips from 90% to 50%, you will likely be fine given your background. It may be tougher for the former teacher who doesn’t know what financial statements are, or the data guy from Mumbai who has every technical memorized but can’t hold a conversation and requires sponsorship.
Thank you! I guess the key is to be in the top 50% of my class, or better. And don't be overly worried about the market, which is not within our control.
Be in the top 50% of networkers and good conversations in your class. School doesn’t matter, you’re there to get a job
"normal, English speaking person" come on man
Hate the game not the player. The facts are the facts and its a massive uphill battle if you’re English is completely broken and you can’t relate culturally. Getting the post-MBA job is overwhelmingly based on building relationships and being someone people want to work with. Not meant to be offensive, but is honest and anyone who’s gone through the process (including international students) would agree.
I also wasn’t just referring to non- native English speakers. I saw plenty of former engineers, compsci, and just general weirdos who had a tough time with small talk not get offers. Plenty of international students who spoke solid English and were relatable humans also got offers. We’re talking extremes here.
Terminal rate expectations have significantly lowered over the past week with even a pause at the next meeting becoming a nonzero probability. Isn't this bullish for M&A activity?
I guess it's one thing to get easy on the gas pedal, and another thing to make a complete U-turn. Nevertheless, it will take some time for the market and economy to bounce back (I was told it usually takes 18 months for the US economy to recover from trough), so it will be challenging for MBA candidates in the 23-24 (and maybe also 24-25) class.
Not saying we need a U-turn to 0 rates, but if terminal rate expectations are down from 5.75% to 5% and potential cuts start later this year instead of 2024, financing terms could be better than expected and kickstart some more sponsor activity sooner than expected
HY spreads widened yesterday....good luck financing your LBO
Layoffs aren’t done. Plenty of pain all over the market - Equity markets still closed, financing shaky, MM flow shops haven’t recovered. Agree with what someone else said, 2023 will be worse than 2022.
Good thing for incoming MBA candidates - should be a good time to enter market and ride the next bull market.
("Ouch" -- my initiation reaction to your user name ;D)
Yeah, timing is important. If all the pain be dealt with in 2023 alone, then it's actually a good thing for MBA candidates of the 24/25 class.
Yes very likely. Deal flow will likely slow down and structural decline to continue
Inevitable
We keep talking about juniors but when is the round for non revenue producing D/MD?
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