Learning Curve as 2nd Year Analyst

KS09's picture
Rank: Monkey | banana points 35

I am currently working as an investment banking analyst at a BB and 6 months after starting the job, I feel the learning curve flattens very quickly. I don't learn much from making another pitch book and even in the live deal, I feel the work I do isn't particularly exciting. Since most people say it's important to finish the 2-year analyst program, I am just curious what can you pick up in your second year that you haven't in the first year?

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Comments (24)

Feb 2, 2019

Pick up better projects

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Funniest
Feb 2, 2019

Create an office challenge to see how many admins you can hookup with. FYI, the old crusty ones only count as half a point. The time while fly brotha

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Feb 7, 2019

I guess you are trying to be funny, but I don't think this is at all funny. It's disgusting. Shame on you.

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Feb 14, 2019

... and the fact that so many of you didn't like this comment is also a reflection on you. Grow up, little boys. If your HR department knew you were supportive of such toxic bullshit, you'd be out on your ass in about 5 seconds.

Most Helpful
Feb 2, 2019

It's honestly shocking when I hear analysts say this. After only six months (1-2 months of which were spent in 'training') you barely know how to do anything. At best you can make charts, go through filings, make profiles, and ideally know how to set-up the pre-made model templates.

How many full sell-side processes have you done? How many buy-side ones? IPOs?

Agree if you are only doing pitch work by updating industry slides, making profiles, spreading comps, etc. then your learning curve is going to taper off quickly. That said if I dropped you into the middle of an auction process right now you would likely be useless in terms of understanding next steps, and being to function independently without very clear guidelines.

You need to get on live processes because that is where you begin to see significant deviations from your standard models, have to start working with more detailed/less refined company financials than high level public filings, etc.

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Feb 4, 2019

Just to add a bit to what Quaneaser is saying, there is a great deal about dealmaking you can't possibly yet know. As an analyst, you have to start by mastering useful technical skills before you get involved more heavily in what I'm going to call 'process-based knowledge'. It's unlikely after 6 months that you're a total master of financial modelling, are the company's ace on PowerPoint, and know the ins and outs of all the data sources you may need. There is always another level of knowledge you can add on top of your existing skills (VBA for Excel or SQL for database queries, for instance).

Even if you're great at all those things, there are depths to financial modelling you almost certainly haven't encountered yet. Financials can get a lot more complicated than what you're likely to have seen thus far, and they can also get a lot less structured. If you were to move to a mid-market PE fund, a venture fund, a growth equity firm, or a corporate development role at start-up, you might be shocked how unstructured the data of your target universe is.

I'd bet both my nuts you couldn't list the majority of the documents I'd want to see in a data room, which means you wouldn't know to ask about them in initial diligence calls, which means you'd be wasting my time. The reason I'm talking mostly about earlier-stage or mid-market funds is because the guys who seem to want to pull the ripcord on banking in the first few months tend to have more of a sales-bent to themselves. And in any of the types of funds I mentioned, you'll have to help with sourcing. But you have to be able to do that intelligently, and part of that is understanding the full diligence process.

Once you're familiar with the process for various types of deals (acquisitions aren't the same as divestitures, which are different from capital raises, which are separate from IPOs, etc.), you can start to get more deeply involved with the legal aspects of negotiating terms in an SPA or APA. I find this part of the process to be a gigantic ball ache, but some people seem to enjoy it. It's mostly sitting on the phone or in the office with the lawyers for FUCKING hours and hours as you work line-by-line through documents no one else will ever read, so you have to. In any case, if you leave too early, you'll miss at least part of that tutelage. In my experience, you only really get trained once, so you should make the most of it.

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Feb 4, 2019
brotherbear:

Just to add a bit to what Quaneaser is saying, there is a great deal about dealmaking you can't possibly yet know. As an analyst, you have to start by mastering useful technical skills before you get involved more heavily in what I'm going to call 'process-based knowledge'. It's unlikely after 6 months that you're a total master of financial modelling, are the company's ace on PowerPoint, and know the ins and outs of all the data sources you may need. There is always another level of knowledge you can add on top of your existing skills (VBA for Excel or SQL for database queries, for instance).

Even if you're great at all those things, there are depths to financial modelling you almost certainly haven't encountered yet. Financials can get a lot more complicated than what you're likely to have seen thus far, and they can also get a lot less structured. If you were to move to a mid-market PE fund, a venture fund, a growth equity firm, or a corporate development role at start-up, you might be shocked how unstructured the data of your target universe is.

I'd bet both my nuts you couldn't list the majority of the documents I'd want to see in a data room, which means you wouldn't know to ask about them in initial diligence calls, which means you'd be wasting my time. The reason I'm talking mostly about earlier-stage or mid-market funds is because the guys who seem to want to pull the ripcord on banking in the first few months tend to have more of a sales-bent to themselves. And in any of the types of funds I mentioned, you'll have to help with sourcing. But you have to be able to do that intelligently, and part of that is understanding the full diligence process.

Once you're familiar with the process for various types of deals (acquisitions aren't the same as divestitures, which are different from capital raises, which are separate from IPOs, etc.), you can start to get more deeply involved with the legal aspects of negotiating terms in an SPA or APA. I find this part of the process to be a gigantic ball ache, but some people seem to enjoy it. It's mostly sitting on the phone or in the office with the lawyers for FUCKING hours and hours as you work line-by-line through documents no one else will ever read, so you have to. In any case, if you leave too early, you'll miss at least part of that tutelage. In my experience, you only really get trained once, so you should make the most of it.

Hey BrotherBear, where can I learn more about all that you are talking about? Can I read a book to get up to speed on the process? I read Rosenbaum to understand how to do financial models but can't say it taught me alot about processes.

If you dropped me in the middle of a process right now, I would shit my pants.

Thanks.

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Feb 4, 2019

You learn this from experience, not from books... that's the reason companies hire bankers after 1/2 years instead of picking them out of college.

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Feb 4, 2019

As ElGranMono says, it's something you learn on the job. Every deal is a little different than every other deal. That's why your deal experience is so important. I never ask anyone technical questions. You have to pass a modeling test before speaking to me anyway, but I wouldn't ask even if that weren't the case. I want to know exactly what you did on the deals you list on your deal sheet. That's the knowledge and experience you have that someone else doesn't. Besides your personality, it's just about the only differentiating factor an analyst/associate can bring to the table.

I have never run an IPO process, for instance. I've just never had the opportunity. That's a useful skill I lack. If someone gave me the chance to be part of an IPO process, I'd be pretty excited because it's a new thing to learn. Cross-border deals are another area where there is always something new to learn. I did M&A out of Europe for several years, and you learn a great deal every time you do a new deal in a different country. There are some surprisingly different ways of doing business in other countries, and you sort of have to pick that up on the fly.

On large deals where my firm has to pay major fees, I used to request an analyst from our lead advisor to work with me everyday. On the corporate side, a lot of corp dev teams are really lean, and I'm lazy as fuck, so I want an assistant to make changes to the model in real time and take notes in my meetings because I get bored and stop concentrating. For them, it works out great because they work far fewer hours for me than they would at the bank and they actually get to come to real meetings. If you spot a deal where the firm you're advising has no juniors on their corp dev team, you could suggest it to your MD as a way of helping the deal along while being his eyes and ears on the ground.

I don't know why more banks don't do that. If I'm paying $10M or more in fees, my fees are paying for the entire NY analyst class for the year, so I should get an analyst dedicated to my deal full-time. I don't want half a dozen guys doing a little bit each for a couple hours a day. That's bullshit. And I don't need 5 MDs showing up to meetings just to kiss my boss's ass. That doesn't add value and it doesn't move a deal forward. They just show up to make sure they get some credit for the deal when bonuses come around.

Anyway, I digress. The point is that M&A is an apprenticeship business. It matters who you work with and what you work on. You pick up pieces of knowledge along the way. If you get the chance to work for a boss who teaches you and gives you opportunities to learn something new, stay with that boss until they can't teach you or offer you any more opportunities. That's the nature of an apprenticeship model. You learn a subset of your boss's knowledge. If they don't know anything or aren't willing to teach you, you need to move on.

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Feb 5, 2019

between the snarky and whisky posts come this gem. which is why i think you and apae both deserve poster of the year award ;) seriously awesome post.

Feb 8, 2019

Haven't seen many of brotherbear's posts, so I couldn't figure out how anyone was competing with APAE for member of the year. Now I get it.

Feb 7, 2019

+1 This was a top tier post. Gained wicked insights. Thanks.

Work hard, work clean, & most of all do not give up.

Feb 8, 2019

Getting the reps / deal experience matters a lot more than knowing how to make flawless charts - I echo the comments above. You've got much to learn yet, young grasshopper.

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Feb 4, 2019

I understand what you're saying, but I can assure you, you haven't mastered everything there is to know about doing banking.

Feb 4, 2019

"True wisdom is knowing what you do not know." - Socrates

As others have stated above, there is an incredible amount of knowledge and expertise required to successfully complete a deal. My speculation is that you haven't had enough exposure to deals to understand / appreciate the nuances. I remember thinking something similar as a 2nd year analyst, but I was not exposed to these other facets - I was in the data bunker or locked in the dataroom.

If you want to try and learn more, then I would proactively work with your associate / VP and ask them questions about process architecture, maintaining competitive tension, etc. You can accomplish a lot of this by asking to join additional internal strategy calls, buyer calls and calls with the client.

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Feb 4, 2019

If an investor called about the deal you are working on, could you talk about why whatever it is you are selling is a good investment? Have you even picked your head up enough to see the big picture about why you are working on anything?

I doubt you have the industry depth or skills to really understand how your specific live deal or whatever you think is important really matches up in the industry and could sell it to somebody that has spent years trying to pick apart little things in whatever sell side process you are pitching to the market.

Get real. You know absolutely nothing beyond the basics. Start by reading 10Ks and understand the legal stuff and language used in the filings so that you can really understand why companies say the things they do. Go read the transcripts of competitors and all of the companies in the space and understand who is doing what and why. Find the PE port cos that might fit for clients and start to develop an understanding of where the industry is in its life cycle so that when somebody with actual industry knowledge asks you something you don't just shit your pants and stammer.

Feb 4, 2019

Thanks everyone for the response. I guess I didn't express my concern clearly. If I have a PE offer that allows me to leave banking after finishing first year, should I leave? In another word, is the deal repetition important enough for me to delay staring in PE?

Feb 4, 2019

I am probably biased because I not only stayed the full 2 years, but left right after being promoted A2A (so total of 3+ years in banking) and I feel like I am a better investor because I stayed on longer than jumping ship immediately. You see more variety and are able to bring in a broader perspective on things instead of jumping to an answer based on a single deal when that might've been very deal-specific but you didn't realize that at the time.

Not just the hard skills, but a lot of soft skills too - talking to potential buyers, talking to management, etc.

Feb 8, 2019

Completely depends on the PE firm you are jumping to and whether there is a path for you there or it would build out skills to get to where you eventually want to go (e.g. is there a path to Principal & Partner or do they specialize in an industry that you have passion around). I knew an Analyst that left after the first year because he had an opportunity to work in a RE PE shop and he couldn't get that experience where he was at with us.

Also, the first comment is true. You will generally get better projects with a bit more responsibility if you stick around for your second year (unless people don't like you and then you will be in comp spreading hell until you leave).

Good luck. Happy to talk offline if this wasn't clear.

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Feb 4, 2019

You still have much to learn young monkey. In fact, in my opinion, you've now completed your basic training so that you can actually learn what finance is all about. I think you're mistaking this "learning curve" with "99% of my work doesn't have some glaring, horrifying mistake in it" and the fact that you don't have to call FactSet once a day.

Now that you don't struggle with basic excel functions and don't have to think about PowerPoint formatting, you can divert your brain power towards learning the actually interesting things about finance.

Why is someone buying this company you are selling? It's certainly not because they have nothing better to do with a few million / billion dollars. Why is some company paying your boss a pretty significant amount of money? What does he / she do well? How can you take that, also do it well or better, and then also be paid a significant amount of money?

Ask to lead calls or work directly with an MD / Director on a book. If people think you can do it, they'll let you, it's less work for them. If they don't...well, that says something too.

Always keep pushing yourself, there's always more to learn

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Feb 7, 2019

Nothing wrong with moving right away, however at the junior level post undergrad it depends which shop you join as it'll always be a case by case basis. Making moves is definitely essential, part of the risk taking as you progress in your career. Putting in solid years of work experience first no matter where you go or decide to stay is also a humbling experience. Try not to be a robot donkey programmed to just do what they tell you to do, grow your skillset take initiative, tackle projects and be the star in your class without kissing ass and be agressive. If there is a buyside offer on the table, make sure to stay there a few years because hopping around young buc fresh in your career you may not get the best and most of it, at least get abump in a salary and title to say the least. Every place, buy or sell side has its drawbacks and upsides. Try to take an offer with a firm that's on the growth side as well where the shop is going in the short and long term.

Feb 7, 2019

If you've mastered your skillset as an Analyst, which you haven't from reading the other comments then why not try to take on responsibilities of an Associate.

Work hard, work clean, & most of all do not give up.

Feb 8, 2019
Feb 8, 2019
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