From State School to IBD to MM PE: AMA

THE PsYcHoLoGy's picture
Rank: Neanderthal | 2,911

Mod Note (Andy) - this AMA originally went up last December but @THE PsYcHoLoGy wrote and said he could still answer questions

WSO, I joined this site during my junior year of college, and it has proved to be a great resource time and again. There is a wealth of information on this site ranging from first year analysts to industry veterans, which provides a robust and diversified view of many areas in finance. The playbook for success is on the site, but it's up to you to decide how to use it. I'm grateful to have come as far as I have, and am always looking for ways to help others that were in my shoes - so I am posting an "ask me anything" ("AMA") to answer questions and provide any advice / insight that can be useful to the WSO community.

I'll outline my story below for your reference to provide some context. Looking forward to answering your questions!

My Story

Education
I went to a large state school and studied finance and entrepreneurship. I was very active with one of the top finance clubs, which was critical in helping me land both of my internships and my full-time position - can't stress how important it is to get involved. My internships included a wealth management role my sophomore year and a financial analyst role my junior summer with an F500. While in school, I also: i) was a business finance teaching assistant; ii) placed 2nd in a national F500 team-based case competition; iii) wrote an honors thesis; iv) competed in olympic weightlifting; and v) graduated with a 3.9. I've always been a pretty intense competitor (mostly with myself), so I took my collegiate career very seriously.

Landing My Investment Banking Analyst Role
During my junior year, I organized a trip with my finance club to go meet with a few investment banking firms. At this point, I had no desire to work in banking - I had read Monkey Business and thought the hours and lifestyle sounded absolutely insane. However, when we met with one of the banks (a top MM firm), I took a sharp 180. Walking out of that meeting, I turned to my friend and said: "I want to work for them." Mind you, I had already accepted a summer position with an F500, and I'm not the type of person to undo myself from a commitment. So, I went into the summer with the mindset of wanting to pursue investment banking, and spent the time I had outside of my internship networking, reading books on IB and researching (side note: I also watched American Psycho and Wall Street several times a week because I was obsessed). The key resources I used were i) the WSO investment banking interview Guides (technical and behavioral); ii) "Investment Banking" from the Wiley Finance series, by: Rosenbaum and Pearl; iii) the WSO forums; and iv) "Polished" by Scott Morris. That summer, I kept in touch with the banks I met with my junior year, especially the MM firm that inspired me to do banking initially and began to drop resumes online and reach out to people.

When I returned to school in the fall, I was in full recruiting mode - studying the guides whenever I wasn't studying for classes. Thankfully, my school has a pretty strong MSF program that attracts a few banks each year, but they typically only hired a few (if any) underclassmen. When these banks came to campus, I was at the info sessions and all of the networking events with the MSF kids. I knew I was disadvantaged from a credential standpoint, so I also reached out to 5+ alumni from each bank to learn more and to show that I was passionate - it's also great to reference that you spoke to several people proactively outside of the interview process. Note, I also had a few calls with the aforementioned top MM firm, speaking with everyone in the office and offering to meet the MD for coffee. I ended up getting first round interviews with three large MM banks, followed by 3 super days. However, one of the banks didn't initially give me a first round interview, despite going to all of their networking events and showing my interest. So, I sent a fairly aggressive email to one of the directors asking why I hadn't received an invite, and I basically told him that I would run through walls for X bank and would go sell ice cubes to Eskimos in Alaska if they wanted me to. They proceeded to invite me to the process.

When all was said and done, I went through three super days and had an unbelievable interview experience and met some very fascinating individuals. Thankfully, I received an offer from the firm that initially inspired me to do banking. I was ecstatic and incredibly thankful. It was the start of quite the adventure.

My Term as an Investment Banking Analyst
I completed three years in banking with a top industrial-focused group at my MM firm. Year one was exceptionally tough - from the hours and learning curve to dealing with associates, it was an absolute grind. I'll admit that I was by no means a strong first year analyst - I was in the bottom of my class (and bonus tier) my first year. However, I maintained a very positive attitude and showed my passion through my work ethic and willingness to learn. There were often times I thought though, "Is this for me?" or "Can I make it?" My first year was a very humbling experience.

Year two was probably the most intense in terms of hours worked - we closed the largest deal my office had ever done and had unprecedented pitch activity (13 pitches in 12 months). I recall my January-February was absolutely brutal, working 100-120 hour weeks for two months straight (80-90 outside of that). Year two I was in the lower middle of my class and bonus tier.

Year three, I was a senior analyst and had fortuitously come significantly up the learning curve and was frequently doing associate-level. I attribute a lot of my success to the great people I worked with that acted as my mentors and my positive attitude (one of my greatest strengths, especially at 3am!). My third year was much more enjoyable, though I still worked 80+ hours consistently. At the end of my third year, I was in the top bucket for performance and bonus. During my three years in banking, I met a lot of very talented and intelligent people, learned a ton and closed five sellside transactions.

My Move to Private Equity
After three years on the sellside, I was ready to switch over to the buyside and try something new. Where to start thought? I had a great deal of success with WSO resources for banking, so I knew that was the place to start. I purchased the new private equity guide, updated my resume and hit the networking trail. I used CapIQ to screen for PE firms in the areas I was interested in living and started cold emailing people at funds (typically start at the analyst / associate level and move your way up). To be efficient, I drafted a template email to use (below for reference).

[Name of individual],

I hope this note finds you well.

My name is [your name here], and I am currently a 2nd year investment banking analyst with [Name of bank]. I joined [Bank's X] team in [location] during the summer of 2012 and recently accepted a third year / Senior Analyst position, which I am very excited about. During my time with [bank], I have worked closely with [couple senior banker names], on multiple [industry] sellside transactions. The experience I have had thus far has been both challenging and extremely rewarding, but I am beginning to consider opportunities for a transition into private equity in the summer of 2015. I have strong ties to the [region] with [my family and friends], leading to a preference to [move / stay] in the [region] to pursue private equity.

If you have time over the coming weeks, I would enjoy the opportunity to learn more about your experience with [PE firm].

I have also attached my resume to give a sense of my background and interests.

Kind regards,
[Your name]

I probably sent ~50 notes in the above style and had ~20 informal informational interviews and a couple lunch / coffee meet-ups. However, I landed my interview process with a firm I only did an online resume drop with. Once their interview process started, it moved very quickly. The interview process consisted of four rounds: round 1) phone interview with behaviorals and technical; round 2) skype interview; round 3) technical interview with a partner; round 4) super day with 6 interviews, including an hour defense of a case and three-statement lbo model prepared based on a CIM they sent me a few days prior. I thankfully secured a full-time offer with a solid firm ($1-2b fund size) that had a great reputation in the industry.

http://www.wallstreetoasis.com/guide/private-equit...

Life on the Buyside
I've been in my new role four months and have closed two platform investments. So far, it has been a much better experience than banking - the work is more rewarding and you have more flexibility / control over your life. Also, you are treated like an adult, which wasn't always the case in banking (nor should it have always been). Given my deal activity, the hours have been pretty intense, but the type of work I'm doing and how it is actually used, makes the overall experience more enjoyable. Looking forward to the next 2.5 years and what they bring! Then, it's off the business school! ?

That's a bit about me - feel free to ask whatever you'd like to know that would help you on your own path!

Region: 
United States - West

Comments (53)

Dec 9, 2015

Did you feel your schooling or regional preference held you back in recruiting?

Dec 9, 2015

Good question. Yes from a mathematical sense (i.e., applying to less firms so odds are worse), but I do not want to live in NYC so I took a more focused approach where I knew I would be happier.

Schooling - maybe. The other two associates in my class went to U Penn and Northwestern... so, my diploma isn't nearly as shiny.

Dec 9, 2015

You mentioned lifestyle a bit in your post, but do you think you could expand on what a week might look like? Any tips you could give on navigating the interview process. What do you think you did to stand out? Also, if you don't mind sharing, what does your comp package look like?

Dec 13, 2015

Lifestyle - over the past couple of months, it has been a bit on the intense side since I will have two deals closed in such a short time period (pretty atypical for my firm). My fund is also notorious for being true diligence hounds, leaving no stone un-turned. So, it has been pretty consistent 80-90 and I've put in a couple 100hr weeks. Though, there is also a learning curve adjustment for the first time doing certain things. For example, the modeling is much more intensive than in banking (e.g., a three-statement covenant model was a bit challenging at first in terms of keeping everything balanced - we didn't do three-statement valuation models at my bank, so I didn't have much experience in the area). However, things are starting to lighten up thankfully, and I should get a nice break for Christmas (taking a few days off). The whole ability to take days off / vacation is nice, because in my first 20 months of banking, I didn't even take a sick day :)

Tips on navigating - this really depends on what your goals are. You should also think about how you can answer questions to show the value you can bring to a fund (e.g., what deals / projects you worked on and how they related to the deal or due-diligence process). Also, don't be afraid to email and call people up to learn about their funds / experience - this is often a great transition into a potential position when one frees up; people love talking about themselves, so they are great resources!

Standing out - For me, I think I was able to stand out given the type of experience I had in banking. I was in a small group / office of a large MM bank - at any time there were 2-3 junior resources (including me) and two MDs. So, I had frequent direct-to-MD experience (i.e., more responsibility). This is pretty key, as you will often work with middle / senior investment staff on transactions and other projects.

    • 2
Dec 13, 2015

Great post, thanks for doing this. What do you mean by a three statement covenant model? I work in lev fin and while I'm familiar with covenants I have never heard the term covenant model. Is this just a typical model wth a more detailed debt schedule to track covenant compliance? Thanks!

Dec 13, 2015

One more thing: when sending networking emails would you send them from your firm or personal email? I've heard it's better to keep job seeking activities away from your employee's eyes but does it help to have the added credit ability of a corporate email vs. Joe [email protected]?

Dec 9, 2015

Did you only interview with one firm? If not, then how did you manage recruiting with a busy schedule?

Dec 9, 2015

I did only interview with one firm. When another MM firm in NYC came knocking, I mentioned I was deep in a process and they told me to reach out if it didn't work out (they couldn't move as quickly to catch up).

Managing recruiting with work was a bit challenging, I remember working on my model / investment case along with work-related projects the weekend before my Monday interview... didn't sleep much to say the least!

In terms of balance, you just have to find a couple hours here / there or stay at the office an hour later to blast out 20 emails. On weekends, I would carve out a couple hours to go to Starbucks and study the guides. It's painful, but you have to think of it as an investment, not a sunk cost.

    • 2
Dec 9, 2015
Dec 9, 2015

Thank you!

Dec 9, 2015

Patrick went to a top LAC.

Dec 10, 2015

licensed acupuncturist?

    • 1
Dec 9, 2015

Love the story and the post. Exceedingly informative and helpful. Can you elaborate a little more about your move to the buyside? When did you begin contemplating a move and preparing? When did you begin your interview process with your current firm?

Dec 10, 2015

I started contemplating the move about 18 months into my banking stint. At this point, I started reading guides, practicing modeling and blasting out emails. I began the interview process with my current firm around July of 2014 (for an August 2015 start). PE recruiting is typically for about a year in advance.

    • 1
Dec 10, 2015

Sounds about right. Thanks mate. Good luck with everything.

Dec 10, 2015

Did coming from a state school ever give you any challenges in PE recruiting?

Dec 10, 2015

In my opinion, coming from a state school may keep you from getting into the room (especially when firms are looking at dozens or hundreds of resumes and are looking for differentiation), but once you are in the room, it's all on you. At that point, your school doesn't matter - it's are you a good fit, will you run through walls for them, do you have what it takes and do they like you.

    • 1
Dec 10, 2015

Looking back what would you have done differently to prepare for your analyst stint? Sounds like you navigated the PE recruiting process mostly by yourself: why did you decide not to use headhunters?

Dec 10, 2015

Preparation for analyst stint) you can read some modeling book / practice your Excel skills - Training the Street has a nice offering of training materials. I remember asking @CompBanker the same question, and he gave me some solid advice. You'll learn everything on the job, so just enjoy the time you have before you start.

I had dealt with headhunters some, but I wasn't a huge fan. There could be extended periods of time where you don't hear from them - I like to control my life rather than have someone else responsible for my fate. However, the other associates in my class came in through headhunters.

    • 1
Dec 10, 2015

Now that you have been on both sides, would you recommend going straight to MM PE versus the traditional banking route? Thanks and gave SB+

Dec 10, 2015

Good question. It really depends though, as most firms don't have an "analyst" role and associates are required to have 2-3 of IB, consulting or related experience. Looking back though, I would not trade my banking experience for something else - I was in an environment that I think was best for me to learn and develop professionally. My firm and group especially, was a great group of people that was a pleasure to work with. It's also good to get a strong foundation before jumping into PE.

    • 1
Dec 10, 2015

Thanks for the reply. Also, do you mind sharing whats the research process like when you are looking at a specific industry at your firm e.g. GLG calls, research databases, googling. Thanks.

Dec 15, 2015
undefined:

Now that you have been on both sides, would you recommend going straight to MM PE versus the traditional banking route? Thanks and gave SB+

I did not go the IB route to PE. The primary downside in not doing so is that I didn't get the modeling experience that those who went the IB route did. When I first started, I thought I was way behind in terms of finance and modeling knowledge (have a strong accounting background and had completed two parts of the CFA at the time but had never created a three statement model). However, I've found that this really wasn't the case. I picked everything up pretty quickly. Modeling isn't rocket science. I'd always been proficient with Excel but hadn't used modeling-centric macros. Now I'm a Macabacus god. I still have that feeling from time-to-time that I'm behind everyone else, but it lessens every day.

    • 2
Dec 15, 2015

Hey,

Thanks for sharing your experience and good to know that things are working out for you. Gave SB+

Dec 10, 2015

Can you walk through how you prepared for buy-side interviews aside from going over the WSO PE package? What the timeline is like, how it is structured, what they look for etc. Thanks!

Dec 10, 2015

Preparation consisted of: i) studying my deals that I had completed - you need to know why they were or were not good investment opportunities, what were key risks, what was the financial profile, etc. ii) studying the guides and iii) speaking with a variety of people at different funds through informational interviews so that you can speak intelligently about PE (and more importantly answer "So, why our firm?").

I decided I wanted to do PE about 18 months into banking, so targeting a start after the completion of my third year. PE recruiting is typically done a year in advance, but it's never too early to start networking! In terms of structure, it varies by firm. Mine was 3 rounds and a super day, with modeling exercise. They look for passion, drive, willingness to learn, ability to get the job done and general fit (i.e., do they like you).

    • 1
Dec 11, 2015

Why did you decide to move to the buyside instead of staying on as an associate? I know it depends on the person, but in your opinion, what type of analysts are better suited for moving to PE versus moving up the banking ladder?

Also, will you have the ability to stay on with your current firm without a MBA? If not, is it fairly easy to lateral to partner track positions at other PE firms?

Best Response
Dec 11, 2015

Why the transition from sellside to buyside - Well, what interests be about business and finance is the strategic decision making process and the ability to add-value to grow / improve a company. In banking, it's a much more transactional role, whereby you go through a process for 6-12 months and essentially just try to tell the story in the most attractive way to maximize value for your client (the seller). In PE, you are taking a much more analytically rigorous approach, whereby you critically evaluate the investment thesis and viability of the business model to determine if in makes sense to buy. Then, after buying, you get to work with management teams to see how strategy unfolds.

I think the latter provides a much better learning experience in terms of learning what drives a business to excel and what can lead them to fail. In essence, you learn about business, rather than how to dress-up and sell a business. It's not really a "type of analyst" question, in my opinion, it's more of a "what do I want to / enjoy doing?" question.

I will not have the ability to stay on without an MBA. If I want to stay i PE, I will do my 2-3 years then get my MBA and look for a senior associate / VP role post-MBA. It's likely difficult to lateral in to somewhere else, unless you want to go to a smaller fund.

    • 3
Dec 11, 2015

Great perseverance!

Dec 13, 2015

bump

Dec 14, 2015

Awesome thread, thank you for sharing. Was hoping you could touch a bit on geography. Is your PE shop in the same town you did IB, or did you move cities? Any tips for PE recruiting outside of your market? Thanks!

    • 1
    • 1
Dec 14, 2015

Always happy to share!

My PE shop is actually ~1,400 miles away from where I did banking. For recruiting outside of your market, the same playbook as outlined in my post above should be helpful. Google / use CapIQ to find shops in a given geography, go to the website and email the junior people, start scheduling informational interviews and work your way up the hierarchy until you learn about their recruiting cycle and hiring needs.

    • 1
Dec 14, 2015

Great post. I particularly enjoyed your avatar pic of Meddling Mage haha.

If I'm already graduated and working in ops, what hope do I have to pull myself out of this desperate situation? Is there a thread for someone going back office to front office or out of banking to something like GE FMP, then B-School?

Thanks again.

    • 1
Dec 14, 2015

+SB for knowing what Meddling Mage is :)

I'm sure that there are threads out there re your position, but not sure. I'd try running a couple search queries in the search function - lots of good stuff out there. @CompBanker may be able to point you to something directly.

There are a few different career lines in your post - do you know what you are leaning towards long-term, or are you still feeling it out?

Dec 19, 2015

So if you're looking at an MBA - isn't that quite difficult to obtain m7 caliber from a mm pe. Wouldn't it have been easier to stay in a top IB

Jan 6, 2016

I don't think it will be difficult for m7 - my firm is a solid size ($1.5b+) and has a strong name / reputation. Almost every post-MBA individual went to m7 (Harvard, Wharton, Kellogg, Booth, etc.), and several of them did their Associate stints here.

I had the opportunity to stay at my last firm (and they would sponsor my MBA), but I just didn't want to do banking long-term. MBA is definitely the next step, but IB was not a long-term goal.

Dec 20, 2015

I'm interning at a PE firm this upcoming summer. I'm a sophomore at a non-target and got it through networking, and I really want to make sure I make the most of this opportunity.

What should I do to prepare? Any books I should read? Resources? I'll take any advice I can get.

Jan 6, 2016

A great resource would be the WSO guide if you want to practice modeling / tehnicals, while getting a good overview of PE, generally. For books, "King of Capital" and "Masters of Private Equity and Venture Capital" are both good reads. Good luck at the internship!

Mar 3, 2016

Great Story. I come from a somewhat similar background. I am a second year analyst at a regional boutique, hoping to cross over in to MM PE. One of the pros about working as part of a lean team is the interaction I have with the PE firms at all stages of the deal cycle. Do you think it is inappropriate for me to reach out to the associates and VPs I have interacted with on deals? (as long as they are not currently looking at any of our active deals) I feel like it would be advantageous to take advantage of the rapport built up with them, but am not sure if it would come off the wrong way. My bank does not have the traditional two and out analyst structure, so I am also somewhat worried how it would look to my team if it got back to them.

Mar 15, 2016

I don't see anything wrong with this, but is dependent on your group / team. I was very transparent in my group about recruiting and networking.

However, it never hurts to network with people you've interacted with. I would frame the initial conversations as a general "catch up" and follow up a couple / few weeks later with the more pointed discussion. Good luck!

Mar 6, 2016

Thanks for the ama.

Regarding your analyst stint, what do you feel like you most improved on from year 1 through year 3? What specific factors differentiated you as far as work product from other higher ranked performers in your group in year 1 and 2?

Mar 15, 2016

What most improved was twofold:

i) my attention to detail and ability to consistently deliver high-quality work product.
ii) my ability to take the lead on projects and just "do more" with less direction / oversight. Essentially, playing up at the associate level rather than as an analyst. So, being more proactive with idea generation and creation of materials.

Mar 16, 2016
Comment
Mar 6, 2016