Investment Banking Recruiting - Q&A

In simple terms an investment bank matches providers of capital with users of capital. Investment bankers in coverage groups maintain relationships with institutional clients (usually large businesses), and provide them with strategic advice. This advice can be around certain products, such as M&A or raising debt/equity. Some bankers focus specifically in these product areas, and usually the debt and equity product functions are called "capital markets" groups.

An associate is the quarterback of this whole process. They need to check the analyst's model, and really understand the key drivers and all assumptions made so they can tell the story of the valuation to the VP/MD. They need to make sure that the process is running along smoothly, so that could mean scheduling meetings, making sure NDAs are collected and distributed, and all of the little details that come up. I'll probably know more after the summer, and can fill you guys in then.

A good associate is someone with quantitative, organizational, detail-focused, teamwork, and leadership skills, and is someone who has a genuine knowledge and interest in business. A lot of the interview questions I got were along the lines of, "tell me about a deal you've been following," "pitch me a stock," "what's a deal you think should get done," "what are your thoughts on the situation in Europe," "what is a company you admire, and why," "tell me about some of the strategic issues surrounding [your last employer]." These questions are no-brainers if you are consistently following the markets and have a huge interest in business and the global economy. If you are following the Wall St Journal every day, you should have no problem commenting on a deal you've been following. If you think like a businessperson, you should have no problems opining on a variety of topics. This, I think, was one of the biggest ways I was able to differentiate myself in the process -- by demonstrating a real love of business and an ability to think strategically about them.

The good thing about that last point is that it can be learned. If you do a lot of homework on banks and read up on deals, you'll gradually form a bench of knowledge that you can draw from to have thoughts and interest on anything. So if you've been accepted to business school, get yourself a subscription to WSJ or start reading Dealbook daily, or go into Barnes & Noble and grab The Economist and get to work!

Awesome post!

Hi Moss,

Thanks so much for this initiative. Will it be possible for you to provide your guidance re: the below questions:

1. Does group selection come up at all during the internship recruiting process? Are you expected to know which group you want to be in right from the beginning, or is it something that you have decide on once you actually get the offer?

2. Lets say an individual comes from a consumer/retail background, but wants to do healthcare banking (essentially, the person is from background A but wants to go into industry B). Assuming that this individual learns as much as possible about the industry while in business school, how feasible is making such a transition?

3. As an associate, would you suggest going into a product group or a coverage group. For analysts, I have heard that getting into a product group presents better exits to PE. But for an associate who wishes to build a career within the banking space, would getting into a coverage group be a better choice?

4. I currently have offers from Fuqua and Darden, and I am going back and forth between the two when it comes to ibanking recruiting. If you had to pick between one, what would be your choice? Both seem to have similar strengths in banking - does it essentially come down to fit, or do you believe that one school has an advantage over the other?

Thanks once again for taking the time out of your schedule to answer these questions. I am sure several prospective students will benefit from the advice you provide in this thread.

Group selection comes up during the recruiting process quite a bit, for various reasons. Most banks will give you a "firm" offer and then engage in a matching process which pairs you with certain groups. Some will place you into these groups full time, while others have rotational programs that will allow you to move through a few groups before finding a final home. I applied to quite a few firms, and only one that I had researched had a system of "group offers," where your offer comes from a specific group versus the firm generally. So in only that case is it absolutely vital to have groups selected prior to interviews.

While in most cases you don't have to have decided on a group prior to applying, banks are not so creative as to imagine you in a variety of roles and guess which one suits you best. You really have to give them some direction. It also helps when networking through informationals -- you probably should target a handful of groups for these efforts and learn the people and deals related to those groups. These groups of course can be different depending on the bank -- I personally didn't have strong industry interests and usually targeted what I felt to be the strongest platforms at the respective banks. Ultimately though, you want to allow the bank to picture you in a group and get feedback from the members of that group that they like you. Showing interest in a few groups and getting that buy-in from the members of those groups is critical to being successful in recruiting.



I came from a particular industry and really didn't target that group much in recruiting for various reasons. It did draw quite a few questions -- especially from members of the group. I think they almost saw it as a bit insulting on some level that I was "abandoning" their industry, but certainly not a deal-breaker. Like I said, bankers don't have unlimited creativity, and if they see "retail guy" they'll probably think "retail group" just because its easy and doesn't take much if any brainpower to connect the dots.

That said, when you start recruiting and ask people about their backgrounds, you'll notice that on an extremely frequent basis, the experience the banker had pre-MBA is completely different than their industry group post-MBA. They get it. While it can be easy to explain interest, if you can quote a few deals in the Healthcare industry and show that you've been following it closely, you most certainly can make the switch. I would guess that "industry switchers" are probably more the rule than the exception.



The M&A product specifically has the reputation of being good prep work for PE because you are doing nothing but execution work, which can involve a lot of modeling.

Generally, I would say that the only time when one really is truly different than the other from a career banker standpoint is when you get to the MD level. For MDs, the coverage bankers in industry groups will have client contacts and industry knowledge that M&A MDs may not have as much as. That said, generally MDs in M&A will have focused their work into a particular industry. There could also be factors at play such as how many MDs already exist in the converage group, leaving you wondering what clients there are to go around (ie, are you getting all the crappy clients nobody else wants?).

Frankly, if you make it to the MD level, you're going to be doing just fine either way. I would worry less about whether its better to be an MD in a product group vs. a coverage group, and worry more about getting an associate gig and then moving to VP. There are just so many factors at play and its so far off into the future that it simply isn't worth thinking about.



First off, congrats on the offers! I didn't really target those schools for my applications, so I'm not super familiar with recruiting at these schools. A casual glance at the employment reports show basically about the same level of FT banking hires in the 10/11 season. I'd maybe reach out to the heads of the school's respective banking clubs and try to get a better feel for what firms are recruiting on campus, how many were hired at each firm, what % of those recruiting for banking jobs converted, etc. If you have that kind of information, it could really help your decision making process. Best of luck!

This is exactly the kind of information I was looking for! Thanks once again!!

Moss,

please don't use the word "quarterback". I think everyone who did recruiting is sick of hearing that word .

Get off this forum and dominate something else .

- Also interning at a bank and studied with Moss for interviews.

hahaha

Yes, perhaps I should have prefaced all of this with the note that anything I may claim to know that is worth anything of any value I only got from working with SaMoCu!

great info Moss

Thanks Moss!

Couple questions:

If I have a strong location preference (SF), how and when does that become of a part of the process?

Are the recruiting processes for niche areas in banking such as restructuring and public finance completely separate from the normal IBD recruiting process?

Have you seen any shift in sentiment as far as students looking at private boutique investment banks versus public bulge bracket backs as of late?

If you received multiple offers, what were three factors that drove your final decision?

Wow! I was amazed with the information that you posted. It was really a great help for everyine. Thanks for the post!

I know they usually ask you during the firm-wide presentation for what your regional preferences are. I believe most people meet with and attend events put on by the NYC office, and then at some point during the process a bunch of students took a trip out to the WC to meet with the banks out there (LA/MP/SF). It was actually a cool trip b/c everyone doing WC recruiting went out there, not just bankers, so it was a solid group.

At that point, I know for interviews some actually flew out to NYC to interview us, some guys flew out there to meet with the banks for interviews, some did phone for 1st round and in person for 2nd round -- it kinda depends.

That said, even from an East Coast school, there were plenty of guys & gals doing WC recruiting and I'm pretty sure they all did very well.


Recruiting for restructuring or public finance are a bit different, but in different ways. Basically most of the main restructuring groups are in the big boutique investment banks like Blackstone, Houlihan Lokey, Lazard, etc, because of the conflicts of interest that bulge bracket banks have in a bankruptcy (ie, they almost always would have the debt on their books unlike the boutiques who don't have big balance sheets). So to the extent its different, it would just be the set of firms you target. Beyond that, it would just be viewed as another industry/product group that you've expressed interest in, which isn't unlike someone saying they want to focus on a specific group such as healthcare, retail, M&A, etc.


Its difficult for me to see changes over time, because I've just had 1 year of experience looking at the recruiting process from such a close level, but I will say the level of interest in BBs was far greater than that of the big boutiques, and nobody really seemed to change their mind over the process. The boutiques have kind of a unique culture and often attract a particular type of candidate looking for something unique, so I don't think that changes in the industry or a ruling like Del Monte is going to really change that.


I wanted to work for a bank that a) let me work on big, important, newsmaking, exciting deals, b) had either a group I fit in really well with or the opportunity to rotate through a few groups to find my best fit, and c) a culture that I connected with. I know that I and most others spent a lot of time thinking about which banks I liked more than others, but generally kept my mind open and had mental "tiers" of banks, knowing I very well may not have had the opportunity to choose between banks in a given tier because of how competitive the recruiting process was. That said, if you have a top choice, I would vocalize that to a bank, because they generally want to only give offers to people who are going to accept them. Its like asking someone out on a date -- you want to find out if they'll say "yes" before you ask them, creating this weird song-and-dance routine as each partner tries not to get turned down.

For some, by the time they had their choices narrowed down for second round interviews (ie, maybe some banks you were undecided between cut you), they had a clear first choice and were able to confidently accept on the phone right then and there. Others had a more difficult choice on their hands. Most people accepted within a week of getting their offers, typically after sell days, illustrating to me that generally people knew what they wanted.

Banks talk a lot about "culture" and having a good "fit" with the firm, that initially I thought was a lot of BS. I mean c'mon, like you're going to go work for Joe's Bronx Buyout Shop over Goldman just because you fit in well with their culture? C'mon man! Yeah right. Besides, I thought, everyone on the recruiting team is almost always people from your school, so they naturally have a similar culture to you from the get-go.

That said, I really did find cultures that I just didn't connect with and some that I knew I could really fit in well with and thrive. For the particular firm I joined, I was friends with everyone else they took and even did interview prep with all of them -- a stunning and revealing fact considering that I only did interview prep with a handful of people. This showed me that the reason I was friends with these people and associated with them was the same reason the firm I'll be working at liked these people -- we had a shared culture. So as much as it seems like BS fluff, I think the process of doing lots of informationals and having a ton of touch points really does allow you to get to know the people and see where you fit best with.

Moss, I noticed your CFA affiliation. Did you obtain the CFA charter? Did you join the CFA program hoping to boost your chances in banking? How is the credential viewed in the industry?

I actually started in with the CFA program right out of undergrad as just a way of investing in my human capital. Also because everyone said it was so tough and I like a challenge . I passed all three levels, but went to b-school before I attained the 4 years of work experience, so I'm not yet a charterholder (although I plan to be very soon after I start working full-time, assuming I stay in finance and don't become a farmer or something...).

I think the credential is viewed positively in banking. A decent number of people I spoke with were charterholders so that was a great point of connection. To the extent someone did comment on it, it was always favorable. I also noticed that I was definitely asked fewer technical questions in my interviews, and my past industry experience with my CFA progress probably had something to do with that (communicating that I probably knew my technical stuff and they would get a higher ROI from asking me other types of questions).

That said, I'm not particularly endorsing or decrying the CFA program as a path to banking. I think it absolutely helped me, but I can't comment on whether its worth the investment.

That makes sense. From what you have seen, and people you have talked to in the industry, is there value for those that want to do the banking--->hedge fund/PE route (do these funds value it)? I realize that portfolio managers for mutual funds tend to have it, but wasnt sure about buy side type funds such as hedge funds and PE.

I mean its hard for an extra credential to not have value. It absolutely does. The question is whether or not that value is commensurate with the time and energy investment that goes into obtaining the charter. This I'm not totally sure of. I'd imagine it would be more useful in a hedge fund context than a PE one, but ultimately for hedge funds I think it comes down to having good ideas in an interview. They usually will ask you to pitch them some ideas, and the strength of those ideas can outweigh quite a bit of everything else.

PE is really difficult to break into without being in a pretty specific path, ie 2 years IB analyst -> 2 years PE -> MBA. If you don't have IB and PE experience before business school, its difficult to break into PE. Heck, its difficult even with these credentials. These PE shops don't hire much, and they can take their pick of the best and brightest at HBS, GSB, Wharton, Booth, Columbia, etc, for maybe the 0-2 spots that they're hiring for this year, so its pretty tough. That said, I'm sure every year someone breaks in without prior banking or PE experience, but you'll have to bring something really interesting to the table and be extremely dogged in your recruiting effort.

Moss,

Thanks for the insight. Coming from corporate real estate advisory and brokerage services, I want to leverage my deal making and client experience to get into I banking post-MBA. I have been accepted to Booth and CBS and have been waitlisted at Wharton. Ultimately I would like to be in PE (either real estate or corporate PE). I'm wondering if you would recommend CBS over Booth b/c of its NYC connections? Or do you think that because I need to spend a few+ years in banking first (which would be in NYC) then hopefully make the transition to PE, if school location really doesn't matter. Most current and past MBAs have told me to go where I fit better and more align with the school's program, culture, etc. Any thoughts would be much appreciated.

First off congrats on the acceptances man! Looks like you're in great shape regardless of how things ultimately shake out.

As far as PE recruiting knows, I don't know it nearly as well as IB recruiting, so much of what I know is through discussions with my many classmates and peers have been doing and not through first hand experience. What I can tell you for sure is that PE recruiting happens mostly off-campus and that few if any (I can't think of even one) actually do on-campus recruiting and events like the banks do. So ultimately your success in PE recruiting is your ability to leverage your network of personal connections, the alumni network, and 1st/2nd year students to lock up internships and full-time offers.

I'm sure there are probably more PE shops in the NYC area than in Chicago, but if you're able to travel out to NYC on a semi-frequent basis this different probably won't matter too much. What would be more important is your ability to network and obviously what you bring to the table. If you look at CBS vs. Booth 2011 FT Employment Reports, CBS put 5.7% of its people into PE/VC and Booth put 5% into PE/VC -- basically the same rate. I'm guessing this has been reasonably consistent over time. If you had a strong preference for a specific region, that would probably help (I'm guessing that, for smaller firms in NYC, Columbia does better and for smaller firms in Chicago that Booth does better), but otherwise its probably a bit of a wash and your past experience, existing network, and most importantly your ability to out-work the competition have more of an impact than Booth vs. CBS in a vacuum.


As far as having some banking experience before going into PE, I think most people will tell you that by the time you get to the MBA level that ship has essentially already sailed. Usually at the MBA level people want you to have not only already received some IB analyst experience, but also some PE experience before making the jump. That said, it is certainly possible for someone to jump into PE after time as an associate or even jump straight there with no banking background at all -- its just far less common and even more difficult than the already challenging road is. Plenty of my classmates were bankers and did PE before and they're still having trouble in this economy. Its just tough, plain and simple.

If I were you, I'd connect with the officers of some of the industry-specific clubs at each school and ask them some questions to see how things are going this year. Definitely go to some of the admitted student events as well. CBS just had Columbia Connect I last week, but CC2 will be in April -- I'd check it out if you want to get a decent feel for what your incoming class will be like. I met a decent number of my current friends at the admitted student events last year.