Help! MD is asking me to come with him
Hi WSO Community- greatly appreciate some thoughts on my situation. My MD has asked me to leave with him to start his own firm. What's everyone's thoughts?
Background: I'm a second year analyst at a specialty boutique. Did my first year at an EB, then transferred to get more of a WLB. Currently, love my role at the boutique- not trying to brag but considered the top analyst and all the MD's go-to analyst, numerous VPs have told me I'm on the track to being the youngest senior banker at the firm, I really like the other analysts/associates and well respected by all of them, and aim to be compensated at market rate, despite working at a boutique. Only work 60-70 hours a week, sometimes 80-90 if its crunch time. Hours will only go down as I get promoted.
Regarding my MD- he's the best banker I've worked for. He's a former attorney and worked at a BB, so he's extremely knowledgeable and has great experience. I have very strong personal connection with him, and he tells me numerous times in confidence that I'm his favorite analyst. He's definitely my favorite banker to work for- very firm but fair mindset. I've learned the most from him and he'd back me no matter what.
Reason the MD is leaving- he is undercompensated. The way my boutique is structured is the partners get 50% of proceeds no matter what. The MD isn't a partner, and won't make it for a long time. He's sick of being the rainmaker at the firm (brings in ~15mm a year) and not getting a big enough cut (only takes home ~1-2mm). He also doesn't really like other MDs because he considers them too soft. He wants to go off and start his own firm, with compensation structures being placed more heavily on transaction success fees (i.e., junior bankers will be awarded more % of the success fee rather than a pre-determined bonus).
My concerns- joining a startup bank. I feel like I may not earn a competitive salary for a few years, which I'm more of a conservative budgeter in nature. Also- I'm not sure how the hours will shake out. Obviously, we'll be pitching a lot, so hours will most likely ramp up. Last, being as a senior analyst / associate, I'm not sure how much support I'll get from junior analysts, if any. I'm guessing we'd bring on more personnel (an analyst), but I feel like I'd be playing both roles.
My opportunities- joining a startup bank. I've heard it's always good to take a risk or two in your career (obviously when your young rather than old). I'm only 24, so I have a lot of time left in my career. I'll learn so much working more directly under my MD- much more than working at the boutique. We haven't talked about equity comp, but I'm sure that'd be part of the deal.
Sorry, this is not beneficial to your question, but as an incoming IB analyst who is nervous af/pertrified, can you please share your tips/experience on becoming the best analyst at your old firm? Seems like you did it right. Thanks man.
Shut the fuck up pussy don't hijack the thread
rough day at office? relax bud its an online fourm page lol you def felt like a beast after typing "shut the fuck up pussy" didnt u
Please don't derail his thread.
Not really the point of this thread, but I'll help you anyway. Fundamentally, your job is to add value to your MD and make his/her life easier. This can be done dozens of ways, but you need to apply this concept to every aspect of your job if you want to be a top bucket performer. But don't be a kiss ass- nobody likes one of those, there's a fine line. If you're a value contractor to your MD/higher ups, you're useless to the firm. I'll list a few below to help you out that I've learned being top bucket at an EB/boutique:
- Take detailed, structured notes on every call (broken down with action items). No exceptions.
- ALWAYS print your decks out and go through them with no distractions.
- Be hyper attentive to your email, but always make sure you're answering all parts of the email. I've gotten several complements from buyers, client executives, etc. how attentive I am all hours of the night (if your client is up doing diligence at 2am, you should be too). I do this by setting my phone's ringer on every night if I want to go to bed before 11pm to hear all overnight emails come in.
- Know how to model inside out, even if it's the associate's role to model. We all have downtime no matter where you work, in this time build models from scratch, learn how to LBO, etc. Extremely experienced modelers are a rare commodity in IB since the majority go to PE. You'll become insanely efficient at a model if you do this as well.
- Understand debt (more applicable to an industry group). You should know what typical leverage levels are in your client's industry, what typical covenants are, etc. Financial markets are largely influenced by debt, and it's important to understand that. Often overlooked, especially in an analyst role. Pull public credit agreements of your comps and read the terms. Even though PEs will do their debt modeling, learn how to do debt covenant/capacity analysis. You'll become extremely valuable to your team.
- IMO- play the politics game. I know this is controversial, but I always do politics. There's a fine line though, you still have to treat your other analysts with respect and don't want to spoil relationships with peers.
- Use the quick access toolbar to create your own shortcuts (even for your outlook). This can cut down on your keystrokes. No exceptions, you should be hands-free in excel. I'm ~85% hands free in powerpoint, only because it'll be faster to use your mouse for some tasks in powerpoint. The others, you should create your own shortcuts.
- Try to be everyone's "go-to analyst," even other analysts. This takes the form of being knowledgeable on lots of topics, projects, models, etc.
- Read and try your best to understand legal docs (stock purchase agreements, commitment letters, etc.). You'll be more responsible for these aspects of the job the higher up you get, so better practice understanding terms now
- Manage your expectations on workload. Treat everyday like you'll be leaving the office at 11pm at the earliest. Every hour before that makes you feel better. Nobody said being an analyst would be easy- you need to have the "survivalist" mentality for 2-3 years.
- For health purposes- eat healthy (salads for lunch, non-carb heavy dinners), exercise everyday (even if its just running a 7 minute mile), prioritize sleep whenever you can.
- For your life- save as much money as you can to give you optionality if you ever want to leave IB. I max out 401k ($19.5k I believe), do a backdoor roth ($6k I believe), $10k emergency savings account, fund the rest to your savings/brokerage account. A substantial portion of your bonus should go to your savings/brokerage.
Follow these steps, along with generally being someone who "gets it." Obviously, there's more to make an excellent analyst, but these are all the actions I live by on the top of my head. Hopefully that helps.
thank u so much for the rundown really appreciate u taking the time to write this out for me. thanks so much man. sorry i know its not the point of ur post and i did not intend to hijack but I really appreciate it.
Did you just say you put your phone on ring mode to hear emails when you sleep ?
dude saw a shitpost and said "let me dump some gold in here" lmfao
Maybe a hot take here but all of this shit is OD and can ruin your life / cause quick burnout. Once I'm in bed (i.e. there hasn't been any work for an hour or two) there is a 0% chance I'm getting back up to some bullshit client email at midnight. Most of this (aside from the obvious ones like taking good notes and printing decks) is not worth it for the incremental $10-20k you get from being top bucket unless you work at a shop with better WLB than usual (which it sounds like you do).
Saving every penny is also fucking stupid, IMO. Banking is a shit job and you already don't have time to spend money. Penny pinching is pointless (esp. with back-weighted bonus comp structure and rapid comp scaling) - don't blow your paychecks on dumb shit, but trying to save every dollar you can will make you hate your life even more than you already do.
I can speak to spinning off with a rainmaker but not in an IB setting. I got hustled so it'll be more of a lessons learned than anything.
1) Get everything in writing. Words mean literally nothing.
2) Do the cost/benefit analysis, and show him what you're leaving behind. This can't just be assumed he'll understand. Then make the numbers make sense for upside considering the risk. Clarity on both sides is key, for compensation, hours worked, expected duties, new headcount, etc. It should feel like an open conversation you'd have with your friend.
3) This isn't about loyalty. This isn't about him being likable. This is about doing what makes sense for your career. Enter with clear eyes.
4) Really, really, really assess this person's character.
I've made the similar move a couple years back. Here's my 2 cents:
1) You are fairly young in your career. This is the time to take risks. When you're ~30 like me, your risk tolerance becomes much lower in life as you have more responsibilities (ie: mortgage, gf/wife, standard of living, etc). I can go on....but the point is that I can't even travel to some parts of the world because my risk tolerance is much lower.
2) You already have EB experience which is fantastic. If all else does fail, you always can fall back on your strong resume/experience.
3) Like the person mentioned above said, have everything on paper and assess the persons character. If you believe in him, then make damn sure you believe in yourself too. NOW is the time to bet on yourself because if you don't, who else will?
4) Stay humble. It is extremely flattering to get poached and have gained the trust of an established senior. However, joining a startup with no infrastructure will be a challenging task. You WILL do everything from the ground up and set up all the processes. No job is above you. I personally found this very rewarding because in a couple years later, even if you do decide to leave the organization, you can look back at see what you have accomplished.
I was in a similar situation during my ASO1 days, and was asked to join a startup advisory practice leaving a BB. I liked my boss and trusted him. That being said, I did everything when I joined (this includes all of the administrative tasks) but it was much more rewarding. We have grown from 3 people to 12 throughout 4 years and we DO NOT pitch at all. All of our clients have formed deep relationships with us and so its all returning business and word of mouth. Comp is extremely transparent as I get paid on a % of a deal (this was established when I joined on paper and increased throughout the years); I will be clearing close to $1MM this year as a VP. YMMV. Good luck.
Honestly, the hours initially weren't too bad (~70 hours). A big part of the grunt in the beginning was setting up templates, even IT systems for the company, staffing budgets, market overview templates, drafting agreements, and a bunch of operational stuff as well. Second year in, we also poached our executive assistant from the previous BB who helped out a ton. That being said, the founder trickles down all the profit splits even to the exec assistant to make sure they're paid well.
4 years later, everything is running smoothly and because we don't pitch, we work considerably less (~50 hours). One thing I hated about my previous experience at a BB was all the useless work we were doing. In my current role, the message/culture throughout the whole firm is that we don't do anything that doesn't make us money. Period. If the client wants to give you the business, they're not going to care if xx chart was there...it's all relationship driven. Again, hopefully being one of the early employees of a firm, you'll be able to steer/set up this "culture".
This seems like a good opportunity, but you need to make sure your downside is protected ans this is a strong enough package to justify it. EB -> boutique -> startup firm all in 2 years is a lot of moves, especially when you're downgrading banks each time.
A few small thoughts -
- Equity would be non-negotiable for me, especially if you're taking a haircut on comp and playing both analyst/associate. Assuming there's no other partners and you're employee #2, I'd want a decent chunk as well - don't undervalue yourself as "just an analyst" because you will be doing all of the grunt/admin work for the next few years.
- On the above point, I'd 1. insist on associate title to move, and 2. want more clarity on the personnel structure. If you're playing both roles and getting slammed with work and also underpaid until you close a deal.. bad times. You're going to need help even if that's just bringing on interns on an hourly basis. Separately, will there be some back office/HR/payroll type functions? I don't think the MD will suddenly take those on
- You're going to need a solid contract - equity, bonuses, comp, etc. Maybe even have a lawyer review it for you.
Biggest risk is guy makes $5mm/year for next 3-4 years and quits cause he is fairly set (equivalent of 10-15 years at current place, about how long most MDs last anyway) and you are an associate 3 with no name bank on your resume that people aren’t too excited about hiring and you aren’t senior enough to survive on your own. That’s why people stay on platforms vs go on their own or whole team doesn’t follow rainmaker MDs to next shop.
Update: I accepted an offer at his firm and will be joining in the near term! Reasons why I'm making the switch:
- Thought about it and like others mentioned above, if for some reason or another the firm goes belly up (they're crushing it rn), I can always fall back on my EB experience to go back to a EB/MM bank / land a MM PE / corp dev role
- Coming on as a senior associate with him saying I can be VP in 2-3 years...definitely have good career progression and I'm getting (almost) market pay. When I make VP I can buy a piece of equity. It was always appealing to me to be an entrepreneur, but I knew I wasn't creative enough to start my own thing
- They're crushing it. They sign up $250M-$750M clients for a boutique and I got in writing that I get X% of the deal fees that I'm on, as well as the annual general bonus pool
- They recently hired a few more MDs and other senior bankers, but they're intentionally keeping headcount lower so he can maintain more control on culture and keep bonus pool larger. They also have a number of analysts currently so I won't have to do all the bottom admin work (I know I will have to do some)
- Located in the southern US and I definitely want to stay in that location long-term
- I really miss working for the MD - he's the reason I want to stay in IB rather than exit to PE / corp dev
- Eventually the WLB will get so much better in a few years after we really establish ourselves in the marketplace