college

Networking as a Second Semester Sophomore

As junior year internships are the foundation to securing full-time investment banking roles, to prep for the internship recruiting cycle, sophomores need to begin preparing and networking earlier and earlier. Second semester sophomore year is a good time to begin cultivating and building networks ahead of the junior year fall recruiting cycle, which has actually been accelerated at many investment banks to begin NOW and have superdays as early as this April (read the article we are quoted in, on the new recruiting cycle here). We have received lot’s of questions of how to approach the networking at this stage and have curated the best here as a supplement to our Networking Guide

Q1: How do you suggest approaching Investment Bankers, if I don’t have previous industry experience? 

A1: Ask for an informational interview, say that you are interested in investment banking because of x club you are in (or any other reasons why IB is a genuine career path you want to pursue) and would like to ask if they could squeeze 30 minutes out to talk about their experiences…the key is to show that you have validated your interest in some way, and are now looking for more information.

Q2: What are some of the tips you would give to best prepare for Informational Interviews?

A2: Know the basics of banking. The purpose of the call is to expand on your knowledge not to start from scratch. What does an investment banker do, what the roles of various positions are, etc. Prepare questions that are focused on the banker’s own recruitment process and current experience. Ask what it's like working on a deal versus being staffed on pitch books and marketing materials. What are big standouts about xyz bank, what makes it special?

Q3: How would you suggest finding where in Investment Banking I want to work in? 

A3: Explore and conduct informational interviews with bankers across product and coverage areas. This will also help make your pitch for an info call much more precise as well. Saying hello I’m very interested in investment banking because xyz (experience in IB club, time spent shadowing a relative in IB, books read on the topic) and would love to learn more about the M&A space when networking with an M&A banker is a much better pitch than, just wanting to learn about banking. The more targeted you can be the better. This will also help you understand the nuances of the spaces. Additionally, if you already are involved in a student-managed fund maybe a sector you have explored there can be a good guidepost. This doesn't need to be the answer for what sector you end up in for the rest of your career because you can't know, or plan that out at this stage.

Q4: How would you go about reaching out to a senior level individual (VP or an MD) at the investment bank? 

A4: Same avenues you would use when approaching an analyst - friends, family, alumni base, or you can go completely cold but do your research into what about that MD’s role is of interest to you - this is the same kind of diligence we mentioned in a previous question (you can find a break down of how IB roles are staggered here). Do they have extensive exp in a specific coverage area you are interested in and would love to connect? Do not be creepy with this and list out a person’s work history, just briefly mention that you saw they worked in FIG and you want to learn about FIG. … Linkedin requests will typically go unaccepted by senior level staff so learning a bank's email convention and shooting a direct email is the best way to get on their radars. As with any form of networking, remaining humble and persistent will go a long way.

Q5: What types of questions would be appropriate to ask a VP or an MD? 

A5: What their rationale was in breaking into IB? What they wished they knew when they were in early stages of banking? Why they stayed on when there is typically a lot of turnover? How they make decisions on which banks to work at? What they feel are the qualities that make their best analysts? 

Q6: What are some of the resources I can utilize to learn more about deals that the bank has done, and get insight into those?

A6: Dealbook usually puts out recent deals with language that isn’t very technical, and you can use that to keep abreast of new stuff. If you find a deal that looks interesting then look into SEC docs like 10-ks and S-1s and merger prospectuses to see what role the bank played and more about the deal rationale.

Q7: How do you go about politely making the “ask” after the end of an informational interview? 

A7: The ask at this stage should be if they would be willing to stay in touch, maybe review a resume or give advice as you go through your process or connect with you with someone else in their group to learn more. After a second of third interaction (email or other) it is ok to ask for advice on approaching the recruiting process at their bank. This is different from asking for an interview and is more about how to look at things. If you were recruiting after your summer internship this would be very different and you would go for the ask in your first interaction, and usually if your first call went well enough they will proactively ask you to get involved in their process. However, as a sophomore, do not push the subject in your first call unless the banker does.


5 Keys to Landing a Full-time Offer - the Investment Banking Internship

As most IB internships start the first week of June, thousands of 20 and 21-year-old college students will flock to NYC, Chicago, San Fran, Houston, Toronto and countless other cities, excited, and equally nervous for what they believe is a defining moment in their lives.

Most come in with some sort of meager advice, like network while you are there, don't make out with another intern, or keep your blackberry on loud...but how many are told do this and you will have an offer?

We decided that it was time for there to be candid advice for every intern on all range of topics on how to do well on the internship, so we started this summer series - "the Investment Banking Internship" - (yea I know, not too catchy, but it gets the point accross) with weekly posts on everything you could imagine or wish you knew how to do as an intern.

To start lets walk you through the 5 Keys on Landing the Full-time Offer:

What is it like to be an investment banking analyst?

A lot of misconceptions exist regarding the life of an investment banker, from the day-to-day to overall lifestyle, relationships, and personalities. We decided to break down how things actually are for an Investment Banking Analyst.

Day-to-day

Let me give you an example of what kind of deliverables you may have at any given time,

Commands come from various Managing Directors along the lines of : “I need xyz pitch deck in a week”, “we need to update that merger model by tomorrow morning”, “can you summarize the notes from that 6 hour diligence call and send it out to the rest of the deal team tonight”.

So let's start with just the pitch deck due in one week from the above scenario. The MD will tell you and the rest of the team what he/she wants to see in the deck. You start working on it and then your work gets pushed up to the associate, who wants to see a draft of the deck before the end of the day. He then checks it and sends it back down. It then moves up to the VP and then it is sent back down to you, and the associate checks it again and then it goes to the VP again. Eventually it gets up to the MD (usually a couple days before the one week deadline is up), by which time you hope it's perfect but only to learn that the MD wants to scratch a 1/4 of the deck and do something different. The whole process of going up each wrung starts over again. As you can see because of the redundancies there is a significant amount of time that goes into checking and redoing, and as you wait for each person to check the work, you must know they will do it on their own time. Even if you finish your first draft of it by 3 pm for your associate, no one might send you comments till 7 pm.

Now add on the other two projects mentioned above (working on 3 projects at any given time is actually quite light in terms of workload), imagine the same up and downs of the work chain (more or less), and you can start to see the picture of how a day that should end at 5 pm ends up running till 2 am.

Non-work Related: Social & Lifestyle

Alot of people think investment banking is this sexy world of making lots of money at a young age, becoming an expert at understanding stocks, living lifestyles that include fancy cars, and bottle service at the hottest clubs…

This is all wrong.

Investment banking is long hours of predominantly un-rewarded hard work. You miss out on opportunities to spend time with your friends, family, and loved ones. People either think your bad-ass or think your a selfish a-hole based simply on your title. You make lot’s of money you have no time to spend. While living in beautiful cities you never get to see. ex. living in Manhattan for 3 months and only seeing Central Park while you ride in a cab to go drop off a pitch-book at an MD’s house.

Invisible Side-Effects

Investment bankers are typically type-A go-getters from the start, but investment banking fine-tunes there skills. You’ll meet some of the best young minds, who think about problems in a completely different way from the average person, and you yourself will refine your own skills.

  • You learn to stop procrastinating. No task on the job or off the job is worth putting off when a little time now will put it to bed.
  • Picking up on things quickly. Investment bankers learn fast. They voraciously consume knowledge because it is a requirement for the profession, the ability to become an expert in something overnight.
  • Entitlement. This is something that is unfortunate but very common. When you work such long hours on multi-million dollar transactions you start to believe that your time is worth more than other peoples. The kid who is lolly-gagging on the metro while you rush into the office becomes your worst enemy because his time isn’t worth as much as yours, why is he wasting it…

Long-term Professional Effects

Investment bankers typically become friends with other investment bankers because who else understands what your life is like than someone who has walked a mile in your shoes.

Many of these connections they make will move on to private equity or hedge fund jobs, or corporate finance roles at Fortune 500 companies and unicorn startups…next time you see a job for corporate development at Google read the minimum requirements, it will read something like; “2 years of Technology Investment Banking or MBA from top university”… you’ll find alot of high finance roles in the buyside and corporate world are reserved for former investment bankers.

Conclusion

Long story short, banking is alot of hard work that helps you refine skills that will help you in all aspects of your life, however the cost is something that you need to think long and hard about, and not take for granted.

How much does an Investment Banking Analyst make?

A first-year investment banking analyst's compensation is a combination of Salary and Bonuses

Salary:

$85,000 - base salary is pretty uniform across the street

Bonuses:

$10,000 -15,000 - signing or relocation bonus

  • signing bonuses typically come with a 1-year clawback, so if you leave the bank before your first year is up you pay the signing bonus back in cash
  • some regional and middle market banks will pay as low as $7,500 and some elite boutiques can go all the way upto $50,000 (these come with a 3-year clawback)

$35,000 upto 100% of salary - year-end bonus (summer bonus cycle)

  • Bulge Brackets are known to be on the lower-end of year-end bonuses with a narrow range usually around $35,000 - 50,000, elite boutiques are known to pay on the higher end ranging upto 100% of salary

All-in Compensation:

$130,000 - 145,000 is the standard range, and ranging higher for elite boutiques

What skills make a great investment banking Analyst?

Financial knowledge and math skills are great but the real drivers of a “Top Bucket*” investment banker are:

1. Detail Oriented

Accidentally bold a single letter on a 42 page pitch book, and your associate will catch it!

2. Analyze Large Amounts of Information Efficiently

You are going to be developing models for companies that will have different drivers. You are going to have to be able to understand, "what makes this company tick"…quickly, and correctly

3. Ridiculously Driven

When you're putting in 90 hours a week, you have to have a purpose, or you will burnout…contrary to what alot of people think, MONEY ALONE CANNOT KEEP YOU IN BANKING.

4. Team Players

You're going to be spending long hours with the same group of people. If you aren't able to work well with others, it will make it one hellish ordeal

*Top Bucket refers to when Bankers are given bonuses they are separated into different buckets. Top Bucket analysts are the top performers, who receive the largest bonuses.

7 Steps to become a banker? - Highschool to Wall Street

From when you are in High School you can follow a series of steps to find your way into a career in Investment Banking:

1. Target University

Get into a target university (universities that investment banks recruit at)

2. GPA

Maintain a very high GPA (minimum 3.5) while in college, but note that taking business courses is not extremely important (use step three to show “why investment banking”)

3. Show Interest

Get involved in clubs, and societies that show an interest towards high finance and investment banking in college

4. Leadership

Show leadership in your activities from step 3

5. Network, Network, Network

Reach out to people in the industry to learn as much as you can - these relationships will help you during recruitment. Find our guide on networking here

6. Internship

After your Junior year land an internship in Investment Banking for the summer

  • if you are at a target school investment banks will recruit at your school, so just be prepared for interviews and start networking during your sophomore year to be recognized at information sessions
  • If you didn’t follow step one and are not at a target school, how well you networked will determine how many interviews you get....everything you need for interveiw prep is on ibankingfaq.com , and the Vault Guide to Investment Banking

7. Return Offer

Get a return offer from your internship

  • Accept your offer to work full-time after graduation at the investment bank you interned with
  • or try to interview with other investment banks in August after the end of the internship and get an offer somewhere else...note that if you didn't receive an offer from your internship no other bank will even consider you

What do Investment Bankers do? - the Deal Team

Functions

Investment Bankers perform two main functions for client companies: help Raise Capital, and provide Mergers and Acquisition Advice.

Deal Team

There are different tiers of seniority and at each level responsibilities change, it is good to look at a holistic picture of how a deal team functions:

Analysts: They work 80+ hour work weeks conducting due diligence, developing presentation materials, and preparing financial models on excel that provide the valuations for raising capital and advising on M&A transactions. They also prepare pitchbooks, which are essentially the Powerpoint presentations that present the banker's recommendations to companies that they want to hire them (pitching ideas). Pitchbooks are a large part of many analysts jobs as you can’t be working on deals 100% of the time unless you are at a boutique that doesn’t pitch. Even in that rare scenario you may have to conduct research and analysis to present to clients like industry overviews...visit our Models page if you want to get a peak at how the financial modeling is done.

Associates: Do similar work as the analysts but now carry the additional responsibility of handling the analysts and checking their work.

Vice Presidents: This is when the investment banker's begin to transition from working on the models and pitchbooks to managing the projects. Begin to also get more facetime with clients.

Senior VP: A combination of project management like the VP's and client facing work where they manage their own business.

Managing Director: Winning clients, and making sure the clients continue to bring their business to the bank. They find out what the client wants and push it down the ladder to the VP's to work it out of the analysts and associates.