Reneging on Verbal Offer in Investment Banking
What are the potential consequences of reneging on a verbal offer in IB?
For background, I was recently laid off at a BB and accepted a verbal offer from a mid-tier BB a month ago. Until this week there had been no compensation discussions and a contract has still not been provided. HR screening also began this week.
Being unemployed and with the other process taking so long, I kept recruiting in the background and I was fortunate to receive an offer from a top BB in a similar banking space (i.e. both in TMT, at one I'd focus on Tech and the other Media).
What would be the repercussions, if any, for going with the top BB given that 1) Compensation was not discussed and 2) its been a month since my verbal acceptance with no contract in place? Colleagues from both banks know each other, and the top BB is aware of the mid-tier BB offer.
Appreciate any insight. Thanks!
You already know the answer to this. You are probably fine, but it could come back to bite you. It depends the type of person you want to be and what you value.
This forum has two views on reneging and I firmly believe both are correct, but agree more with the second view personally. Most agree with the first view I think, every good culture office agrees with the second.
Again, I think both views are correct and I think you really could probably get away with it. That said, the 2nd way of thinking is real. I remember every person who has ever reneged. Kids in college, people I have interviewed, etc. I’m telling you the correlation between that move and other scummy business moves later in one’s career is near 1. Over time, the people who are honest and do the right thing in business huddle together and violently trash and exclude the snakes. The snakes meanwhile have no idea this even occurs. It’s like a secret club of deal making and investing where all the people that behave ethically discuss amongst each other who should be on the shitlist. You might be able to get to the better bank, but you almost certainly will alert a bunch of people that you are a weasel. Nonetheless, it’s a small amount of people and if the opportunity you think is that different go for it—but again, once you cross that bridge it’s only going to happen again.
Thanks. Both thought processes you mentioned make sense to me, although the second one seems a little intense IMO.
I'm not worried so much about being caught (doubt the banks/recruiters would do anything) as much as I am worried about upsetting other bankers at the mid-tier BB. Given the industry I work in is small, I'm fearfull that the potential reputational risk may not be worth the hit if I need to lateral down the road.
Yeah, the second view is intense, people in finance are that way. I stand by the line that if you decide your word is flimsy today, you will do the same tomorrow. Anyone I know that has reneged I have a mental note to never do business with them/ there are in a column of “slime-ball” that if I have to do business with them I need to be careful.
To your point, I doubt it comes back to you in the immediate term and I don’t think the other bankers will likely go out of their way to make you lose your job. However, your career is so long, I wouldn’t doubt that at some point your name gets brought up and someone might trash it, or you have some interaction with someone that is aware of what you did. Again, there’s 2 perspectives here:
FWIW - I don't remember a single person who has ever reneged on an offer, just forget about them instantly. It's odd to hold a grudge about something like that, especially at the junior level. People make decisions based on what is best for them. I wouldn't recommend making a decision that is not best for you just because you're worried about what someone else is going to think about it. Calling the people you got closest with during the process at the bank you're turning down may be uncomfortable, but is usually worth the effort just to be honest with them. You appreciated all the time they committed to you and were really excited about the job, but decided to take another opportunity and happy to refer a few other folks who would be a great fit, if helpful. Done.
If it's been a month with no contract, I feel like that's on the MM for dragging their feet. Does the top tier know the offer was only verbal? If it's been a month, it's harder to fault you for not wanting to be strung along any more. Reneging should be different if you have a legitimate reason.
You could say that you accepted a verbal offer but are hoping to/due to personal circumstances, need to begin work ASAP; you know that logistics sometimes hit bumps in the road, but due to the delay in the onboarding process you are accepting an offer elsewhere. You're very sorry, but the competing offer is allowing you to sign immediately.
Sure man. If someone offered you significantly more money and a significantly better career opportunity I'm sure you would choose your values. Cut the self-righteous bozo act, if you're actually a decent human being you can still sleep at night after moderately screwing over a company that would lay you off in a heartbeat.
No, I wouldn’t lol. I don’t get how this is complex to people. If you accept an offer, you end your interviewing process—it’s not rocket science.
Big difference between someone offering me a job and me taking a new job and telling someone I am accepting their offer and continuing to interview out of hope of getting a better offer then going back to them and effectively telling them you lied. Like wtf are you even talking about.
Just tell the first bank they took too damn long to get you that contract and you’ve gotta eat
I am normally adamantly against reneging but until that contract is signed, you’re not really formally reneging on the commitment. Most of the time, verbal offers do not include the salary and sign-on bonus information so I think there’s a number of justifiable ways to turn down the offer, if you’ve received a better offer at another firm (eg can say firm was too slow in giving offer letter and you needed security of firm commitment, salary / sign-on was different from expectation, etc). By the way, these are completely justifiable reasons. A verbal offer means nothing and I have seen banks ultimately not formally offer a candidate who had been “verbally offered” a role pending the firm’s internal vetting and approval process. I have seen this happen for very trivial reasons (sudden change in headcount restrictions; arbitrary “can’t work here because sibling works at bank”, etc).
Appreciate the insight. This was my gut reaction as well, but I'm a bit hesitant to upset some seniors given the banking vertical I sit in is fairly niche/small.
Brother you're an analyst, seniors barely even remember your name now
Genuinely asking, but what prevents you from papering over this 'renege' with those seniors? Can you not still maintain a cordial link with them if it is a big concern of yours that you have joined another firm or is it much more nuanced than I am making out to be.
I had to reread your OP, but they still haven’t provided a contract and took 3 weeks to tell you comp? This all happening while you’re unemployed trying to find a new job? Brother, that’s on them.
You need a job, and none of this should’ve taken that long. I’m generally against ‘reneging’ but this doesn’t really qualify imo.
Until you sign the contract, it’s not reneging. Similar to how people get firms to bid up the comp by having various offers in place. I would not worry about it at all.
I agree this isn’t reneging
your job as a banker is to run a competitive bid process - in this case your first option was too slow and that’s on them
if you want to make it to the top you need to look out for #1 (yourself) . Do you what’s right for you
you can turn the other one down tastefully by saying it was just taking too long
I would totally up this one but run out of bananas ;p
this is the right take. if they wanted to, they could put the work into onboarding you faster. also, a verbal offer has no substance. if another bank puts a piece of paper infront of you, sign it. congrats on the offers man.
Voicing agreement with the above that I find issue with and strongly recommend against reneging if you already signed the offer.
You shouldn't feel good about switching up on a verbal either, but it is several notches below in scummy-ness if a candidate of mine did that to me.
Reneging happens all the time across all levels, and a lot more often than you think. Take it from me, no one really cares after the initial short-term annoyance wears off. It's part of the game.
Agree with others, employers have short term memories. Hopefully you've vetted the culture of both offers though. I would probably take the better culture > worse culture even if it means less money.
Verbal offer means nothing. Though this is coming from the perspective of someone who was given a verbal offer with no contract afterwards, then I was left out in the open for trusting the verbal offer.
Besides, it is partly on them for not giving out a contract with X week decision time (especially if they haven't kept you up to date on what's going on). How long do they expect you to hold out?
If it's not in writing and you haven't signed anything you aren't reneging. You should put yourself first, it's a dog-eat-dog world out here and you have to prioritize your best interest over some company you've never worked for.
No written contract = no worries.
They were slow so fuck them.
It's not reneging if you never sign the contract. I had a offer that took one month to get my offer letter, by the time I recieved the offer to sign, it was already 3-4 months since I first interview and 5 months since I applied. If companies are taking so long to make a decision, I have all right to decline the offer and go with someone else.
I know a candidate reneging offer from a bank and move to other - after 1.5 years he restarted there.
It all ends on how you put it.
I remember that I had received an internship offer from a bank and then it took them quite long to get contract and next steps - meanwhile I receive a full time offer.
Just being honest on your decision
Tell the mid-tier you have another offer, and ask them to upgrade your incoming title by a year to accelerate you. If they say yes. Do it. If they say no, you have your answer.
These places will hold you back a year. Pay you down and say it’s market response. You need to take care of yourself because no one on the planet has your best interest at heart besides you.
This is good advice. I'm not sure if asking for the extra year is that meaningful. I'd just call HR and say that you have another offer in hand. After the verbal offer, you haven't heard back, and you don't even know the terms they are offering. It's time for them to poop or get off the pot.
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