I just left IB and went entrepreneurship way, so this is a bit of a rant post and a throwaway account, but felt like I need to share.
With all do respect to hard-working individuals out there - investment banking industry is broken and absolutely worthless. The advisory side is the most useless, pathetic and ego-driven things in the business world, over.
The Materials
Where do I start. Creation of those meaningless memorandums, pitchbooks, bake-off presentations, company and industry profiles was the one most laughable thing I have ever done in my work.
Sell-side info memo? Oh, you mean we are putting bunch of bullshit on 50 pages, make it pretty and send around the world to people who either won't look at it or spend 15 sec skimming through? Fuck it, sign me up
The presentations, decks, materials, whatever you call it in M&A are beyond my logical thinking. Why in the name of God would you do a ten-page product overview section with bunch of screenshots and retarded texts, like "seamless login process"? Who reads that? And those pitchbooks? This is a mf joke, which investor even looks at it?
Materials, the thing juniors slave away and spend so much time on - are 99% useless, deleted, not looked at. This is the harsh truth. The only thing that matters from the creation perspective is modelling - advanced operating models are actually useful for the buyer and provide at least SOME value (given all the assumptions are probably bullshit anyways)
Do you know how deals are being made? By talking, by high-level numbers, by synergies, by adding actual value. What value add for the biotech company is the sleazy banker with his stupid industry deck?
The Ego
Everyone has the ego. Interns have ego, cause they work in a big fancy firm. Analysts have ego due to spending nights on meaningless documents and thinking they are big swinging dicks. Associates have ego, cause they think they can manage juniors now, but in reality just kiss their superiors asses. VPs have ego thinking they are almost MDs, while they still work nights. MDs have ego, cause they believe they are financial Gods, but in reality they are kissing clients asses, skipping kids birthday due to another useless video call and lying to everyone around.
The Chaos
It's beyond me why IB is so poorly managed. Literally every single MD I worked with has been a terrible manager. No time management skills. No respect to employees. Zero logical thinking. I know everyone is busy. I know they are doing billion dollar deals and we are just slaving away over Excel and PowerPoint, but for the love of God it's JUST BANKING. I have friends in biotech, field oil, doind business functions in military, government and NOWHERE is as bad as in banking. This is just laughable. Oil engineers can split work and manage time, but two analysts cannot work on the same model? Give me a break.
Now don't get me wrong - IB is needed. They are matchmakers, connecting investors and companies together. But the industry from the inside - is a fucking joke. Better management skills and this would be a 1000% better job than it's now.
I stopped reading at " with all do respect"
I stopped reading when I remembered I have a fucking term paper do
.
"investment banking industry is broken and absolutely worthless. The advisory side is the most useless, pathetic and ego-driven things in the business world, over."
"Now don't get me wrong - IB is needed. They are matchmakers, connecting investors and companies together. "
Something doesn't line up here....
Yes, sorry probably ranting too much - I meant that most of the work is useless, ego-driven and absolutely not needed. Decks no one looks at, industry slides just to prove a client you can copy stuff from reports, etc.
The actual IB value is in knowing investors and connecting them to buyers. But not in the meaningless pretty slides.
Dude, finance stopped “adding value” years ago. This shit is about hanging out in beautiful offices and collecting big-ass pay checks.
I’m other words, get over yourself. If you want to “change the world”, go be an “entrepreneur” and design some app or some dumb shit. This is all just a big fucking game. Enjoy it.
That's not all of it.
IB is a sales job and the fundamental middleman, but it isn't going away for a pretty simple reason.
It feeds off human psychology. Specifically the biggest that fuels IB is the egos and elitism that exists within business. Doing a deal by buying a company listed for sale on a database is well....boring. Doing a deal that involves lots of meetings and conferences at Goldman Sachs with Partners in very expensive suits makes you feel like you're very, very, important and prestigious.
Your title had typo:
"Investment Banking Is Broken" should read: "Another Banking Analyst Broken"
Pls fix. Thx.
You're an Analyst and disagree with what I say? Do you like creating logo pages? Sugarcoat it as you want, you are a glorified graphic designer with a bit of Excel skill, that's it
Haha you're not wrong. I hear you - I think most people giving you shit in this post have probably felt the exact same way a number of times... I personally waver between: job is very sustainable - job sucks every couple months or so.
I just try to keep my head down and trudge on. But btw, I have dope PPT skills too.
NOWHERE. pls fix. thx.
Seems to me like the OP just sucked at his job
Oh yeah, I made a typo = I sucked at my job Classic IB mentality, glorify pretty pages and surgical attention to details, but don't think for a second that this whole deck could be a short email and the company doesn't give a shit about your 'potential strategic suggestions', because it's simply never gonna happen.
Dude you are easily the crankiest poster on this forum, never fails
Pitchdecks are not just an IB thing. Everyone in business uses them. And while just 1 slide might be useful to 1 person/team/group, the other 15 will be useful to 15 different groups/teams.
Absolutely disagree. You create a useless M&A pitchbook and crank 5 industry pages. What for? Why the fuck would you do it? Just to prove a company you know your market? They know it 10000x better than you, and know very well that you just pulled the data from the industry reports.
99% of presentation work in m&a is just recreation of existing data and making it pretty. Tell me this isn't fucked up.
Like members of a cult, most of the people on WSO are in too deep to admit the massive flaws in their industry and that they spend countless hours working on, as you said, completely meaningless bullshit. The more you try to disabuse them of their delusions, the more ardently they will defend them.
I, however, enjoyed your rant and wish you great success in the future.
This post has some merit, but a transaction process needs materials. Clients needs something to present with, underwriters need something to work off, bankers need something to win a mandate with. And someone has to make these.
Decks are “useless” until a banker is presenting to a client and the deck is shit or someone passes on a deal because a CIM is lackluster or not coherent. And end of the day, perception matters. Things have a “feel” and “look”. Compare a top banks decks to a small, local boutique. Tell me the heft of the pages, gloss, color coordination, etc doesn’t give you an impression.
And what exactly should junior people do? If your opinion is correct, analyst and associates should be canned, not given higher level work. Junior staff does the grunt work because finance is largely an apprenticeship.
Little mistakes also cause people to wonder if there are mistakes elsewhere. And when a decimal point determines millions of dollars of value either way, yeah, precision is key.
EDIT - OP, best of luck. Life is about doing what you want. Plenty of good paying jobs and no need to be miserable either. I do think opinions change over time. I remember meticulously preparing signature pages for a partner and obviously being annoyed. Years later you realize how much time someone doing that shit for you saves you when you run around doing other things.
That useless deck you make could play a part in winning a mandate or selling the firms story. You won’t see it now, but when your page flipping with clients and someone else makes your deck, then you’ll see it.
The tasteful thickness of it. My God, it even has a watermark!
I see your point, but in my opinion the main dealbreaker is exactly this type of thought - 'decks were in banking since forever, we use them to impress clients with our fancy graphs and that's how it's going to be'
Why? Just tell me objectively, which client gives a shit about some made up industry page? Or those 17 company profiles you send as potential acquisition targets (which usually make zero sense for the buyer)?
Let's say you're 'exploring strategic add-ons' for Disney. You make a 5-page profile on Netflix. What for? Do you really think Disney people don't know Netflix? They know it ten times better than you ever will. Why spend a night on creating a useless material? Why not just bring it up in discussion? Or do one rough page with stuff that really adds value (some high levels numbers, creative syngery ideas, etc)?
Same goes with those weird deadlines. How in earth is it possible that an Analyst has to work over xmas? What could possibly happen if the work is submitted a bit later? Nothing, it's not a fucking open-heart surgery, just a few powerpoint pages. Client's won't care. No one works over Christmas. It's just those sleazy MDs trying to prove the client how diligent and hardworking they are, throwing their own people under the bus. There is zero self-respect and confidence in banking.
My point is banking is not innovating at all. Same old weird ego-driven mentality and showing-off to impress clients (?) who usually couldn't care less.
Everything you said here is 100% truth. The clients/corporates NEVER work over important holidays. They barely even check emails. I used to laugh when the banks would send me crap over Christmas, new years, etc. Was such a joke. Some douchebag completely manufactured a timeline and we're like "why"
We would go to management presentations and the clueless bankers would go over their stupid decks. As soon as they got to the useless fluff (about 95% of the material) the EVP or CFO would cut them off and say "we dont need to give through all of this." They would basically takeover.
The funny thing is when the CFO did takeover, the overly rehearsed bankers would pull back and defer to management. Was such a joke. The banks job was to basically put together a pointless deck, set up a data room, and try to hide material, adverse information from buyer (but in a legal way).
Someone basically already hit the nail on the head: it is this way because it has always been this way. Things are done certain ways more out of a sense of tradition than anything else.
It's true in the Bulge Bracket.
What you said is NOT necessarily true in MM or lower MM. Those markets are significantly more diverse so an IB that knows the space, has connections, and can perform industry research to matchmake clients who may not necessarily be familiar with each other due to being in different geographic markets or product verticals can be a significant value add.
That's especially true once you start getting into areas like PE owned firms, founder-operated growth companies, and ones like that who are expanding rapidly but don't yet have a fully built out corporate development function.
Although not in the IB world, there are some parallels. Vividly remember from 15 yrs ago a large estate planning case (which resulted in a 30M life insurance policy). The rep, my rep, went in with his "pitch book". This guy is a CFA type (actually has passed a few parts) and put together a bound thick document discussing the history of taxation, rates, loop holes, effect on client's overall estate, lost opportunity cost, etc.) He was meeting with client and client's tax team. I told him going in there was no way they would read or remotely care about any of this crap. Keep it high level, etc. Of course he didn't listen and didn't get the sale. We went back a year later (they still hadn't done anything) and focused on what their pain points were. No pitch book. No prepared material at all. Just a conversation ( which I led because the rep isn't that type). Spent the whole time talking about them, not about what we can do for them (nobody cares about that in any level of selling - too many sales guys in every industry make it about them instead of the client - never understood that). And like it usually works regardless of sale size, they told us their concerns, goals, what they needed to move forward, etc. Ultimately got the case and a fat 6 figure commission (the rep- he should have split it with me but whatever). I did OK too.
Consultative selling is the goal. Even more important with larger, more complex scenarios like IB. The whole pitch book thing is kind of crazy. Let's throw a bunch of stuff at them, regardless of their issues, and see what sticks. That's purely a numbers game and produces very low conversion rates. Consultative selling is about problem solving and vastly moves the percentages in your direction. Wish the banking world would realize that. They'd actually have greater success with less manpower.
While true, the most laughable part about this post is the assumption that the "entrepreneurship way" or those friends in other industries have it any differently (Hint: Your friends are lying). Substitute IB for any other career of choice in your rant and every single point applies without distinction. Congrats on finally realizing that the world of work is a dumpster fire full of BS. Considering it took you 20+ years of life on this planet to figure it out, I imagine you have a rather long and bumpy road ahead.
On a more inviting note, I welcome you to a world of truth and cynicism. A world where we don't lie to ourselves that the grass is always greener and one where we sleep at night knowing that the garbage we produce at work just pays the bills.
"So this is a Harvard bar, huh? I thought there'd be equations and shit on the wall."
I largely disagree with this. There is a difference between pragmatism/practicality/efficiency and doing what’s been done in the past simply because it was what was done in the past.
Anyone that can take that and innovate to become more efficient and add more value while having the depth of understanding and foresight to know what is truly necessary and not fluff will always beat out those who don’t.
That is true for any industry and any company. What complicates this whole dynamic is that this tone needs to be set by those higher up in the food chain. The levels below where this stops becoming the case is where your job will suck.
They aren't better managers because they've never had to be.
A few of the reasons are dead horses at this point: firms like Goldman, BAML, etc. haven't had to innovate due to regulatory environment that (partially due to regulatory capture) harms smaller competitors and favors large players with increasing consolidation.
Second is that the "prestige" mindset pervasive. You have a vicious cycle where these firms get the most "prestigious" applicants, who then get into that mentality themselves, and it loops again infinity. I can guarantee you from knowing some non-target guys in IB that there are a LOT of them who will absolutely demolish any of their target peers in terms of corporate finance competency.
To that point, IB firms could dramatically improve both their value add and their overall level of competency if they stopped hiring fresh undergrads completely. Were I running an investment bank I would do my analyst/associate hiring entirely from the pool of corporate finance departments with 1-2 years of experience at the appropriate level, from firms that match each group's coverage. These guys will often be from "prestigious" backgrounds but more importantly they will be dramatically better than any undergrad hire at the actual analyst/associate work. Most will also have some friends at that company that give them a networking advantage over fresh undergrad hires for those that stick around into higher ranks at the company.
If you want to get away from people with inflated egos working on ultimately useless self-promoting nonsense and obsessed with looking sexy, you did the right thing by joining the startup industry.
No need for an irony. You're partially right, but I've met so many smart entrepreneurs and VCs that banking does not stand a chance.
Most important thing? They do not care about bullshit. They care about metrics, numbers, operations, REAL STUFF. Not industry positioning on a slide.
Real metrics and numbers like Community-Adjusted EBITDA
I think that there are a many kernels of truth to the rant and the subsequent backlash in the comments. Sorry for the long response but here's my take.
I remember having similar thoughts when I was analyst: "Who's going to read this?" "I'm being paid to copy/paste logos. This is useless, I'm not getting any skills", etc. I can say that I was unequivocally wrong.
No matter what job you have or what industry you're working in, putting together pretty PPT decks will almost certainly be involved. It's not limited to just Finance roles either. Sure, it may not be the most "exciting" or "fun" aspect of a job, but the secret here is that very few (if any) jobs are "fun." It's a job, you're being paid to perform a task. And if you don't want to do it, your company doesn't care. There's a line of applicants waiting outside that will do it with a smile.
I remember that when I was in banking I wanted to "work on deals"...meanwhile I had no idea what that even meant. I had no clue the amount of work that goes into getting a deal signed, dealing with lawyers, negotiations, finding financing, and closing it. I was short-sighted because I was mad that my role was putting together a deck with a bunch of graphics and little to no real analysis.
However, since leaving banking I've worked on M&A, capital raises, board decks, etc. from a corporate perspective. It's amazing how something from years ago that I thought I'd never use or remember comes back to help me. When I'm sitting in meetings with a CEO or CFO of the public company I work for, and they are weighing the prospects of an acquisition, I've been able to contribute by remembering something a VP or MD said or did during a meeting I was in years ago. When my CFO needs Board slides in a matter of hours and I am the only one getting them done on time, those PPT skills came back to help. When we're trying to close an M&A deal and it requires weekend hours, or 18 hour days, those long nights in banking serve as a precursor. I know that I can do it because I've done it before.
What I am trying to get across is, there are a lot of fringe benefits/intangible skills you gain in banking that I don't think you'll get many other places. Banking, like a lot of jobs, has a big sales component, and psychological element to it. Learning to interpret what people are "really" saying, reading the room, learning how to negotiate, etc. are all things you can gain sitting and listening to a VP at a bank.
I would disagree with someone if they said "you can get that experience anywhere." If you take a corporate route like I did, most CEO/CFO won't even bother to learn your name until you've proved yourself useful to them in some way. As much as it may not seem so, VP/MD's at banks rely on the Analysts a lot. That's why they include you in meetings.
The last thing I'll say is that many firms will respect someone who has banking experience. Everyone knows it's a tough job and lifestyle, and I think people have a level of respect for people who go through Analyst programs, etc. It's also a reason why many companies require IB or Management Consulting experience for FP&A, Corp Dev, and Investor Relations roles.
I wouldn't recommend banking as a career per se, but I certainly think it's the best job (or one of the best jobs) one can take right out of college. You'll be gaining a lot more skills than your friends who took sales gigs making $40K a year but were told "you can easily make your salary in commissions bro. We're a dynamic company." Please. Banking was a hard part of my early 20's, but I'm glad I did it for a lot of reasons.
You forgot the number one thing: about half of all deals destroy value / it's a coin flip
(I personally intend to stay in finance anyway)
Is this really "beyond you"? It's pretty obvious. Most, if not all, MDs are former VPs, who were former Associate, who were former Analysts. No one has time management skills because every single person in a position of authority on a deal has the experience of working all the time. They never had to learn time management skills, they just had to learn to be in the office all the time, with the understanding that at every level you move up, you get to leave a little earlier and dump the remaining shit down a level.
Being an investment banker doesn't take any hard skill. It takes a maniacal obsession with always being present for your clients and base-level people skills. You can't be a moron, of course, but there is really almost no room for "genius" at an investment bank, just hard, monotonous, meaningless work. Every team is equally capable of executing every deal. As someone else said, it's just that clients like the prestige of associating with the "best", so everyone tries to show themselves in that light. Hence, league tables.
It's why the people who want a challenge don't stay in IB. They want more risk/reward. They want something intellectually stimulating. Most of the old guys at IBs are people with very few original ideas. The innovative and creative ones either get promoted to positions of real global corporate responsibility, or leave to do something else.
There are important sociological reasons for analysts at banks.
1) Just as a lot of monks are needed to ensure the sanctity of the word of god, so too are the analysts to create the artificial appearance that your appeals to shareholder value are true and made with devotion.
2) Great waste displays great power, not excellent craftsmanship or correctness. (A ugly baleciaga t-shirt is worth more than a durable shirt that a tailor might make.) Without the wasted money on a Patek watch, is the Patek of value? The point is to display to the world that you are powerful enough to throw away $20,000. Here too, it is important for the powerful to waste the lives of the young, as it displays status and power. all the better if the young are bright and have potential. (Here it is the executive hiring the bank that enjoys the display of waste.)
3) For purely normal reasons, banks are competing with one another for business. So it does make sense to try to win. Banks win by being try hards.