Investment Banking Recruiting

Fellow GMATclubbers,

I wonder how the rest of you aspiring IB professionals are doing in IB recruiting. At Yale, we still have 8 bulge banks coming to campus with 2 middle market and a few small firms. We are hearing they are still hiring about 15 with about 20 to 25 total offers from the class out of 25 interested in Corp Fin (class size only 190). This number seems high considering the market.

How are other members/schools doing?

That is very interesting. I would have thought the number would be lower as well. Hopefully, others will chime in.

That's pretty surprising that only 25 people at Yale are interested in finance. Most of the top schools send about 1/3 into banking and finance, with somewhat more than that interested but ultimately choosing other career paths. Looks like 53% of the class of 2007 at Yale went into finance, with 26% into banking and 27% into other finance.

Yeah the number has really dwindled down as the semester has progressed. Many have switched to consulting or are looking at S&P or investment management. I have final round interviews at two firms tomorrow so we will see how it goes.

Best explanation I've seen for IB recruiting (from Mergers & Inquisitions). Basically all the kids who thought IB was their sure shot to riches are no longer interested. The madness of crowds has wained and now what's left are the people who 'truly' wanted to do banking because they loved banking, not because it was a get rich quick scheme.

Why You Should Stop Reading BusinessWeek and Start Using Common Sense Instead: What the Mainstream Media is Missing About Recession Recruiting

“Wall Street is over.”

“Students once interested in finance are now thinking about moving to nonprofits and pursuing other interests.”

“Investment banking is so over.”

While I was on my lovely 24-hour flight and airport adventure (don’t you love it when you miss connections?), I had the misfortune of reading some recent headlines.

As usual, though, the mainstream media is getting a few things wrong about the current environment.

What’s happening now is no different from what happens in any market cycle. So don’t pay too much attention to BusinessWeek.

A History Lesson: What Happened from 1996 to 2000

Spurred on by the Netscape IPO in 1995, suddenly everyone in school wanted to join a startup - and those already working wanted to quit their jobs and join startups.

If a 24-year old kid could create a $2.6 billion company (on only $16 million of revenue and no profit) and get rich overnight from an IPO, it couldn’t be that hard to replicate, right? Right?

Computer science and engineering departments saw a huge increase in enrolled students; even those who couldn’t figure out how to use Microsoft Word were jumping into these programs.

Investment banks even started to compete with startups for top talent - students could no longer decide which would make them more money!

History Lesson, Part 2: The 2001-2003 Era

Following the market implosion, enrollment in technical programs at universities plummeted. I remember reading stories about confused professors wondering what was happening.

“Do they no longer care? Do they think everything is going to be outsourced?”

Nope. It’s just that the money had left the room and people stopped thinking they could get rich quick.

There was always a core group of students interested in technical fields - the bubble just added tons of people who really had no business trying to be the next Marc Andreessen anyway.

And when the bubble burst, so too did this influx of newcomers.

History Lesson, Part 3: What Happened from 2003 to 2007

Driven by bonuses growing to record levels and a few lavish parties thrown by Steve Schwarzman and his friends, finance became the dream destination for students, accountants and yes, even Chinese gold farmers (I admit it, I am obsessed), from 2003 to 2007.

I was almost part of this wave as well. I entered for somewhat different reasons (that’s another story for another day), but I hadn’t seriously considered banking until it was rather late - and after I had already eliminated consulting and technical work as possibilities.

I don’t have the exact numbers, but I remember reading how firms kept expanding their hiring each year… every year… over those 4 years - until recently, of course.

You had lab researchers who never gave finance the time of day suddenly start wondering if “investment banking might be something they would be interested in” and others who wondered if investment bankers had “hot stock tips” start pursuing the field.

They got caught up in the hype before investigating what was actually involved.

What’s Happening Now

The current situation is similar to the 2001-2003 period for the tech industry, when the bubble burst and all the get-rich-quick guys dropped out.

There’s always a core group of students and professionals who are interested in finance / banking, and nothing is going to change that - recession or no recession.

Similarly, companies always have a need to raise capital and to buy other companies.

So financial services will continue to exist in order to meet these market needs.

But since the number of jobs has fallen significantly, only those who have a serious interest - who haven’t just heard about it from their roommate’s uncle - stand a good shot at getting into the industry now.

What This Means for You

So what will happen in the near-term?

The number of people applying to finance jobs will decrease, so in theory it should be easier to stand out and get interviews - at least in terms of raw numbers.

But it will be more difficult than ever before to actually land offers.

Why You Should Stop Reading BusinessWeek

I don’t expect you to actually stop reading BusinessWeek.

Just remember that they’re not telling you anything that you don’t already know.

Of course the number of people interested in finance will decrease - when a get-rich-quick scheme no longer “works,” interest fades away - whether it’s startups in 2001 or finance these days.

And that’s both good and bad for your own recruiting efforts.

+1

Great post and sums up exactly what I feel. Banking is not dead. It just doesn't equate to the quick buck anymore.

Hit the nail on the head. I've seen this trend with the technology industry - esp tech consulting when I started in 2000. Right now is a reasonably good time to be in technology - because its impossible to get good young tech graduates. Why ? because they fled to finance after the dot com burst. The grads that we do get are actually seriously committed / passionate about the industry and subjects.

The crowds will flee finance to something else after this crisis. Only the seriously committed / interested will remain.

Lanter,
IB interviews are going on this week. We had a lot of firms on campus, but I'm hearing fewer numbers. Are you sure you're not confusing what they mean by class. 20-25 sounds about right for one bank's class of interns, but that means the class is made up of interns from various schools. At CBS, I think the number of offers that will actually go to CBS students is about 1 for every 10-15 on the closed list. Not a lot, and less than last year.

I thought you guys might find this interesting for IB.

Excellent!!! +1

+1 jb.

Do IB interviewers seriously ask people to write the Black Scholes formula? Seriously, that's pathetic.

This presentation was for McCombs, but under More Sample Interview Questions, one of the questions is "Why did you choose NYU-Stern?"

Oops. Whoever put this together clearly shouldn't be a banker...no attention to detail!

I actually noticed 1-2 references to stern also

Thanks for posting this jb. +1. Of course I knew how involved IB recruiting was, I've heard it again and again, but actually reading through their schedule and all the stuff they expect you to do it does seem a bit daunting.

I saw that too.

I think the real value here is the plethora of interview questions. I mean it covers just about everything you would need to know and the best part is you can begin studying now- will give you a huge leg up on recruiting when school starts. I know for me, I want UBS LA, so it's going to be a long uphill battle to get there.

I think Credit Suisse LA is doing better than UBS after all of the Moelis-related departures at UBS.

You really can't go wrong with CS, UBS, or Moelis in LA, though.

How much more difficult is it to land internships and full-time offers from GS and JPM compared to some of the other big names in IB? Do some students tend to shy away to these banks due to culture, or do you have EVERYBODY who wants to get into IB competing for an interview at these two firms?

I think the traditional top 2 have been GS and MS. JPM is probably 3rd on most people's wish lists.

Here's my plan - go after every bank that recruits on campus, which is most of the major ones, and then target all of the other banks where I have a contact - roughly 10 or so. Focus on all of the banks with a major presence in LA or SF, which is most of the ones on the above list.

In the past I would say you are correct, but now I would actually put JPM above MS because JPM seems healthier right now. In this market, a bank's viability is a massive factor. BofA initially said it didn't need TARP, but look at the news from yesterday--$20B! Interning at Merrill does not seem so attractive now. You don't want to put in all the recruiting efforts only to end up working for a bank that has to downsize, split, or, worse, goes belly up. Of course there are no guarantees, but JPM is certainly faring relatively well.