Lateral Losing 3 Years to become IB Analyst - Worth It?

Have made & communicated my decision, closing thread. Thanks for the input all....................................

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (19)

Mar 3, 2021 - 2:19pm

Waiting for call back, will update the thread, but I fear it'll be a similar response since the other is a more "prestigious" bank

Mar 3, 2021 - 2:15pm

Do you know what type of exit opportunity you would want? You can always do a year as an analyst on that team and then easily bounce to another firm for an associate role. This way you can make associate within a year. I can imagine doing a year of banking will open up a lot of exit opportunities relative to your accounting based role, and help you decide whether you want to stay in banking (if you want to stay then go interview for associate roles at other banks) and if not go interview for other roles.

Mar 3, 2021 - 2:18pm

Not in an accounting role - in more of an investing role and looking @ banking purely because my current role has 0 title progression / promotion opportunities, and I think banking would accelerate this since progression is structured. So you would say it's low risk to take this and bounce? I'm afraid that bouncing as yet another 1st year analyst who quit banking wouldn't bode well for how my future employers view me... I'd be in the same bucket as quitting 1st year analysts who are 5 years younger than me, so in the same dilemma where my pre-banking work exp gets discounted way too much to be acceptable.

If my experience really was in Audit or Tax or something, then I'd totally understand and accept a 3 year reset. Just upset that I'm getting the reset despite how relevant my Exp is, and I certainly can get into other interesting finance roles (albeit with uncertain comp/title progression)..

Mar 3, 2021 - 2:32pm

(think valuation, TS, lower MM PE/VC, with closed deals on CV)... What do you actually do? I would argue that Valuation and Transaction service are glorified accounting roles and do not qualify as "Closing deal"?  If you did VC or PE why do you have no progression? are you at a shitty firm? or did you do a small co invest? 

I am just saying if you did some bullshit VC or PE co invest then you have very limited experience thus a year one analyst title makes sense. If banking is really that much better then yes you have to eat the haircut a little bit, but in the long term it really doesn't matter if you want to be in banking. I think one thing that a lot of people miss is that people may discount your experience but you will have to show them the value is there and then you can get an early promote.  

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
Mar 3, 2021 - 5:18pm

I would say it is low risk. During your first year you'll see how relevant your experience is. If you're hitting the ground running, then your associate interviews should go smoothly after a year. If asked why you're looking to move, you can exactly say that your prior experience wasn't given too much credit although you were hitting the ball rolling from day 1. You can talk about the similarities between your prior role and new role, and why it was a really seamless transition and that you strongly believe you have enough experience to be an associate.

Again, no one will look at you poorly for wanting to leave ib after one year. It's an intense, high turnover atmosphere.

  • Associate 2 in IB-M&A
Mar 3, 2021 - 2:37pm

Most people on here if in your position would take the title hit and go in as an analyst just to get their foot in the door, but most people on WSO want to be in IB or PE so it's a smart move in the long-term. If you have no intention of staying in IB or even going over to PE then why are you even looking to be in IB? The money? Given that you don't plan on staying in the industry or going buyside, title is fairly irrelevant here because it's not like you're adding time onto your career trajectory, which leads me to believe you're only doing it for the money (nothing wrong with that) but you're just being pissy because you won't be making that Associate comp as soon as you would like.

Mar 3, 2021 - 2:45pm

I agree with the above. Typically I would say as long as you're still young (mid-20s) take the hit now and make the move. The last years won't be a big deal in a few years from now. But that's for people that really want to get in to this, either as a lifetime banker or for buy-side exit opportunities. But their is a very clear progression for them that makes it worth it. The fact you are saying you don't really want to do this work or what your exit strategy is, then it might not make any sense at all for you to take a hit on your career progression for something that doesn't get you ahead anywhere else in your career trajectory either. You might be better suited for going in-house with a Corporate role instead. Alternatively, take the offer and after 1 year leverage your current position and past experience to make a quick jump somewhere else for Associate. You'll now have the banking experience on your CV and can play up your other experience better to be more appealing for an associate move to another shop.

Most Helpful
Mar 3, 2021 - 2:45pm

You shouldn't have expected to come in as a 3rd year. At the same time, starting as a 1st year seems a bit punitive and I probably would've expected you to come in as a 2nd year.

Compromise I've seen a lot is to start as a 1st year and then if you prove yourself as being actually competent (people often make the mistake of thinking just because they have a lot of prior work experience, even if relevant, that they're as good as somebody w/ 1 or 2 years of banking under their belt) then you get to skip a level after a certain period of time. Ex: Guy at my old bank joined mid-year as a 1st year w/ 4 years of relevant prior work exp. (so basically the same as you), then as part of the YE review process the group felt he had proved himself so in January he got bumped to a 2nd year, needing only 6 months after that to be promoted to a 3rd year analyst w/ the rest of the analyst class that stayed on an extra year.

All of the above also depends on what prior work experience you had before exactly - valuation is significantly worse than LMM PE, as is VC. The fact that you lumped LMM PE with VC (and think those are comparable to val or TAS), however, makes me think that your experience is not as relevant as you think it is and you really shouldn't be getting that much credit for being an experienced hire.

  • Associate 1 in PE - Other
Mar 3, 2021 - 5:27pm

Valuation, TS, lower MM PE/VC are not on the same playing field. Valuation and TS always in my experience have you start over. So what you helped some sponsor write a QofE, that is not deal experience, that is accounting experience, or ok you wrote a commercial due diligence report that nobody, including the sponsor that paid you, read in detail, that's not that relevant either. MM PE...that is different, but in theory you could just lateral over to another PE firm without losing years, so it doesnt make a ton of sense that you would be trying to lateral to banking at the analyst level, unless theres some hair in your experience, especially when most people do IB to go to PE.

If I did valuation and TS I would totally take the hit, I dont believe TS or valuation to be remotely relevant to IB from a skillset or day to day job perspective and the growth in IB is so much better. Sure you lose 3 years ... but 3 irrelevant years IMO, not like you did IB at a tiny firm for 3 years. If you lose 1 year moving from MM -> top BB, I would think losing 2-3 in your case makes sense.

  • Associate 1 in IB - Ind
Mar 3, 2021 - 5:36pm

Going to echo that Valuation and TS are not equivalent and is common to see them start over completely. Also 100000% agree with what NuclearPenguins wrote in the sense that you should have never expected coming in as Year 3, and that lumping PE/VC together with Valuation/TS is beyond bizarre. Look at the years you spent working as an inverse MBA in the sense that they helped you get your foot in the door, but didn't have to pay any money to do so (in fact you made money). Obviously there's probably a pang of regret given that had you figured things out sooner, perhaps you could've broken into IB day 1 out of undergrad, but everyone does things at their own pace. It's not how you start but how you finish - hopefully your work experience has given you some humility, some professionalism, some maturity, etc, that will carry over and help you succeed within finance

  • VP in IB - Ind
Mar 3, 2021 - 7:27pm

Pretty much our laterals that don't have direct IB experience are at least 2 years to Associate promote with the door open to get promoted earlier if a rockstar. We're trying to avoid the issue of bringing someone in off cycle, and basically needing to show they are ready to get promoted with 8 months of experience. Our current A2s (start class of 2019) will get promoted to 3rd years in July and then Associates in Jan 2022 (decision probably happens in November). To put you there, if you started say mid-March, you have 8 months to figure out the IB analyst job in a remote environment AND work with enough people to vouch for you in promotion discussions. If the bank is a summer promo cycle to associate, you'd come in as a 3rd year now and then get promoted after 3.5 months? No way will there be enough support for you from senior bankers to say, yes I know this person only has 3 months of experience in IB but we feel confident in his ability to drive a deal forward with the MDs and clients as well as manage and teach an analyst. If you really want to do IB but not have a long analyst stint, the normal MBA route is always available. 

Start Discussion

Total Avg Compensation

June 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (206) $232
  • 2nd Year Analyst (116) $151
  • Intern/Summer Associate (98) $145
  • 3rd+ Year Analyst (27) $145
  • 1st Year Analyst (429) $131
  • Intern/Summer Analyst (343) $82