Q&A: Investment Banking Associate

***4/9 UPDATE: This is taking a little more time than I expected, and while I do appreciate and welcome all the questions, I will be a little less active on this starting tomorrow. Will still try to get to all questions though. Feel free to ask, comment and discuss though. Thanks all. *** ------------ Decided to post a Q&A, why not? Some background - I graduated from a semi-target. Networked my way into banking and was lucky enough to secure an internship in IB my sophomore year. Returned for my junior summer; realized I liked IB but not the firm. Went through the FT IB analyst recruiting cycle and moved over to my current firm after undergrad. Did my 2-3 analyst years and learned a ton. Went through the entire PE recruiting cycle and received offers, but ultimately decided (for a long list of reasons), that A2A at my current firm was a much better fit for me. To be honest, not really sure how this Q&A will turn out. Figured there's someone out there that wants to learn about IB, recruiting, networking, etc. Definitely wished I utilized this blog more when I was in school though.


 
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When I was an analyst, I was spending anywhere from 65 to 85 hours a week at work. Currently, as an Associate, I spend around 60 hours a week on average. WFH has become much more flexible for evenings and weekends.

A2A was my ultimate decision even though I received offers from PE firms (think HIG Capital, Carlyle) for the following reasons:

  1. I have a strong and supportive team here. I work directly with the Group Head, and he goes to bat for me. He pushes for me and I would go as far as calling him a mentor. Even as an analyst, I was in meetings with CEOs and UHNW individuals. It felt weird being the youngest guy in the room, but people respected me for it and I eventually got used to it. I don't think you'll find that at many shops, even on the buy side.

  2. My work-life balance is pretty good now, especially for IB. To be honest, it's largely due to management style. My Director or MD rarely ever sends me a last minute 9PM email asking to see something the next morning. I'm looped into emails and know exactly what is expected and when. Having this has made my day so much more productive (I'm not sitting around waiting) and easier. I really do believe there aren't as many 2AM nights because of this. Of course, there's the occasional fire drill, but I think I'm in a great spot. I felt that I would give this up if I moved to a new shop, and probably have to work longer hours too.

  3. Compensation. You will be paid very well in IB and PE. I am a very simple guy and my lifestyle isn't going to change much if I make $500K, $1M, or $10M+. My firm paid me well during my analyst years (~150, ~180, ~215). There is a very significant bump for A2A, and a lot of the buy side shops weren't paying as much as I would make if I stayed on (I was surprised), and those that were, I wasn't sure I would have a team of analysts helping me, as well as the 60 hours work week there.

Overall, I stayed for the people, my boss, and my team. A lot of people move to PE because it's "prestigious" (honestly, prestige stops being important after you turn 23), because everyone else is doing it, or they hate their IB jobs. I feel that I'm one of the few that got lucky and figured it out. I'm very happy with where I am and have zero regrets.

 

Honestly, it can be tough, but not impossible. I say it's tough because you'd be competing head to head with other IB analysts who have years of experience and MBA graduates. At the end of the day, good experience is good experience, and it seems like you have that. Some groups are willing to look past the fact that some candidates didn't start out in banking. Hiring the right person is more than just their experience. Personality, attitude, compatibility, adaptability, etc. are important too.

Probably not the most optimistic answer, but I never like to sugarcoat things. Keep hustling, and I am sure you'll get there.

 

Hours are strongly dependent on firm and group. It can range anywhere from 55 to 100 hours a week. Try to join a firm that values work/life balance, as well as a senior banker that manages his/her time well.

The learning curve is definitely steep, and life does get better. You'll know how things work, what people like, and where everything is. Of course, it also means heightened responsibility.

I work at an EB. Unfortunately, I am not sure if there are internationals (we have people from all parts of the world, but it never really occurred to me whether they are internationals). I think the potential legal obstacles a firm has to go through is the main driver behind some firms not sponsoring internationals. Wouldn't quote me on that though.

 

Appreciate you doing the AMA!

  1. How often do you see someone lateraling in after 1-year exp in S&T as opposed to IB?

  2. What are your thoughts on becoming a career banker at an EB vs BB? I'm sure it varies by firm and culture but curious to hear first hand how your firm views grooming analysts or associates to the vp or md level.

  3. Texas Tech or Virginia?

 

Compensation is very similar at the junior levels for IB and PE. The earning potential in PE may be higher as you become a partner and have carry. You are right though, it's hard to get there. A lot of my friends move to PE and realize they're getting similar pay, and won't realize those "gains" they thought they'd get until they reach senior levels, if they do. You will make plenty of money in either, so I think what it came down to for me was the people, and the work itself. Money shouldn't be a main driver, the work and culture itself should be - but that's just my opinion.

IMO, I think the culture is great. At EBs, you have the best of both worlds - great deal flow and resources like a BB, and tight knit group like a boutique. It's hard to define culture at BBs because they are so large. There is less of a standard firm wide culture IMO, and it varies from group to group.

I think what made me stood out (in addition to knowing how to do my job well), was that I was a very presentable person. I lean more towards the social side (which is part of why I think banking is right for me). I did my homework before walking into that meeting, and my MD was totally fine with it. Point is, know your stuff, speak well and dress well, and that client time will come. I was just fortunate enough to have received that opportunity earlier.

 

What is really boils down to is what you want to do. The work in IB is very different, although the skills do overlap. In Investment Banking, you are winning and closing deals, raising capital, and advising clients, etc. In PE, you're backing up an investment thesis through analysis, and working with your portfolio companies to increase value (add-on acquisitions, changing business procedures, etc.), and hopefully, realizing a return over the investment horizon.

The prestige aspect is what attracts a lot of bankers over to the buy side. Most bankers have the Type A / competitive personality, and the potential for higher pay (when you are senior and have carry), less hours is definitely attractive.

I wouldn't say IB is superior than PE, or that PE is superior than IB. If you're leaving for the money, you may end up just miserable. You have to ask yourself what you actually want to do. Don't hop over to the buy side just because everyone else is. You will make plenty of money either way. The only race you're running in is your own.

I thought very long and very hard about this. And what it really came down to was the people around me, and the work life balance I have right now. I would rather work 60 hours with a team of supportive people that push me to grow on a daily basis at an EB, than potentially end up with some douche boss at a top PE shop that won't have my back. One thing I can say (and I have seen other people go through this), is some people leave for a brand name, but lose all their happiness and support on the way. It's really up to you and where your priorities are, but that's how I ended up making my decision. You will still make bank either way.

 

There's really no one right answer to this because something that can be praised at one firm, can be frowned upon on another. However, there are a few things that differentiate a regular analyst from a rock star.

Intellect: I think it's really important that an analyst knows their stuff (and if there isn't a clear solution, know how to get there). That encompasses everything from financials, modelling, knowing where to look for things, how to solve problems, etc. Obviously I don't expect analysts to know everything under the sun, but the more time I spend explaining concepts you should already know, the less confident I feel in your abilities.

Attention to Detail: This is really important. Don't really think I need to explain. Always double check your work.

Curiosity / Thinking Outside the Box: It's good to ask questions. But be careful with this one. Dumb questions do exist. If it can be answered in 10 seconds through a Google search, you should probably look it up. Don't ask questions that make it clear your head is in the clouds - it hurts you more than anything. Also, don't be afraid to think outside the box sometimes (don't be a robot). It always impresses me when an analyst suggests doing something a different way that turns out to be better and saves us time.

Attitude: I know you're working hard. We all are. I don't need your negativity rubbing off on your colleagues and bringing them down with you. A can-do attitude is ALWAYS appreciated, and it moves the needle when it comes to peer reviews and bonus time.

Self Awareness: Know what's appropriate and what isn't.

These are just a few. The list can go on and on, but this is what crossed my mind first. Honestly, and I don't want this to come off the wrong way - the easier you make your senior bankers' lives at work, the more rewarding. You'll get staffed on the best deals, get paid more, and more importantly, build a strong reputation for yourself.

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