Since this varies quite a bit for each person, I’ve anonymized and listed below several of the questions I’ve received and responses I’ve written thus far.

Equity Research vs. Trading

“Thanks for the site and all your help. I’ve received an offer from a bulge bracket equity research division, as well as a trading offer from a well-known international investment bank that is somewhat less prestigious.

I’m not sure which to take, as the bulge bracket offer is more ‘prestigious’ but I am personally more interested in trading. However, I am still considering the research offer because I think it might be easier to leverage into other opportunities and because I might be able to switch into trading at the bulge bracket at the end of the internship.

I’m afraid of burning bridges and not sure what to do here.”

Inquisitor:

Congrats on both offers - sounds like you have some very good options this summer.

Personally I would go with whatever you’re more interested in (sound like trading from this). Equity research on the whole is in somewhat of a decline due to Elliot Spitzer’s reforms and the diminishing role of equity research relative to banking. So I would lean toward doing trading instead.

The bulge bracket offer is definitely more prestigious, but I feel it would actually be easier to leverage a trading job into better full-time offers and exit opportunities vs. a research job. In general it is easier to switch across different banks in the same industry vs. switching into different groups at the same bank, believe it or not.

That said, you can’t go wrong with either one. I would go with your gut and pick the one you’re most excited over, as that is usually the right approach to take.

Bulge Bracket vs. Bulge Bracket In Asia

“I recently received summer internship offers at 2 bulge bracket banks in Asia. Could you give me some input on these two banks to help with my decision? I’m concerned because one of these banks has suffered writedowns and been in the news a lot recently, even though its Asia division still appears to be strong. Any opinions that you have on those two banks would be greatly appreciated!”

Inquisitor:

Great news on the offers - congrats! Unfortunately I know relatively little about the Asian offices of these banks - personally, I would err on the side of picking the one with a stronger business that has been less affected by the credit crunch and writedowns.

Even if the Asian branch of a particular bank is strong, if its overall business has suffered greatly there’s no telling what will happen in terms of layoffs or future opportunities.

That said, I think you should base your decision on more than the strength of each bank’s overall business. As I’ve written about before, your investment banking team and the people you work with are more important than the “prestige” of the group. Figure out which group has the best dealflow, the best opportunities and the best people to work with and go there.

Other Thoughts

I feel I should also point out that “prestige” for summer internships does not matter nearly as much as it does for full-time banking jobs. Yes, working at Goldman or Morgan will put you in a better position, but I’ve seen people leverage internships at boutiques or middle-market banks still wind up with bulge bracket full-time offers in the fall.

For summer internships at least, doing investment banking vs. not doing investment banking matters more than Goldman vs. JP Morgan.

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January was the second full month of operation for Mergers & Inquisitions, and I’m proud to say that visitors and pageviews more than doubled over December levels! I hope you’re continuing to find the site useful. Some of you have sent emails and resume review requests and I will get back to you, it just takes awhile to respond based on my schedule and how much else is going on at the time.

In terms of content, I focused on tips for resumes, internships and getting those investment banking jobs you’ve been after.

Investment Banking Resumes

I wrote 2 articles on resumes - one covering common mistakes in investment banking resumes, and one on how investment bankers read resumes and decide who gets interviews and who doesn’t.

If you want to send me your resume, please make sure to read those 2 articles first as many of your questions will be answered already. If your resume suffers from problems mentioned in those it may take me longer to respond to you as well.

Investment Banking Summer Internship Tips

With recruiting season in full swing, everyone was also very focused on getting investment banking summer internships. To address reader questions, I wrote articles on how the investment banking interview selection process works and on how to improve your offer success rate.

These were both in addition to my already existing guide to getting an investment banking job, published back in November. If you haven’t already read it and want to break into investment banking, be sure to check it out!

Some readers have also asked me about how to do well in their summer internships and improve their chances of getting full-time offers, so I wrote another article about that - How To Dominate Your Investment Banking Summer Internship.

Other Reader Questions And Investment Banking Lifestyle Posts

With all the news of layoffs and the downturn in the economy, some have also asked me if it’s even a good time to get into banking. The short answer: you really have no choice, so do it now anyway. For the longer answer, see my post on signs of a recession in the financial services world.

A couple readers also asked about the “best” groups (despite my insistence that your team matters more than the prestige of your group) and specifically about UBS LA, so I addressed that in a brief post outlining the rise and fall of UBS LA.

Although it was not a commonly asked question, I also looked at a bulge bracket vs. a boutique and went through some of the reasons why I strongly recommend going to the best name you can.

Finally, in another reader Q&A post I covered questions about sales & trading resumes, breaking in from the pharmaceutical industry and the relevance of international experience in China when applying to investment banking jobs.

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Todd paused and collected himself. “Yeah, I mean, I just really wanted to be closer to the deals, you know. Get more exposure.”

-The Boutique, Leveraged Sellout

When most people out there decide they really want to do investment banking, they usually go for the big names first: Goldman Sachs, Morgan Stanley, even UBS LA.

But occasionally someone asks me about the boutiques out there, whether they’re referring to the “top” ones like Evercore and Lazard, middle-market banks, or true regional boutiques that just have 1 or 2 offices.

Going to a top name is just not an option for everyone. If market conditions are bad, if you have no previous finance experience, or if you are trying to switch into investment banking from engineering or law or other fields, you might have to go with a boutique.

But are there any cases where a boutique would actually be preferable to a bulge bracket? Should someone actually want to go to one?

The Main Difference Between A Bulge Bracket And A Boutique

People most commonly cite the size of deals as the difference. While Goldman Sachs may advise on multi-billion dollar acquisitions, a boutique will usually stick to deals under a billion dollars and often far less than that. In the world of corporate finance, $50 million is chump change.

Other commonly cited differences are working in smaller groups, getting more responsibility, and being more than just a “number-cruncher” at a boutique.

While these can be true sometimes, the main difference at the Analyst level is that your boutique experience will be much more random.

Fooled By Randomness

Make no mistake: you can get tremendous experience at a boutique and learn more about actual deals than you might at a bulge bracket. But you might also spend all your time creating pitchbooks and doing useless work if the senior bankers can’t make rain.

I’ve seen both scenarios. One friend at a boutique basically learned the entire job in 3 months because he was effectively running a deal by himself.

Another friend spent most of his time making pitchbooks, making coffee (no administrative staff, thank you very much) and did deals that were so small he never learned much.

Don’t assume that you will get a “better experience.” Your chances of getting good deals to work on and having good exit opportunities are much higher at a bulge bracket.

Ok, But Is It The End Of The World If I’m Working At A Boutique?

No. But if you do go that route, you should very carefully investigate the work environment, dealflow, and everything else before you jump into it blindly. To get a more accurate view, try speaking with Analysts and Associates rather than higher-ups.

No matter how much diligence you do, however, the sad fact is that there will be time lag between when you interview and when you start, and a lot can change in a year… or even a few months.

Even at a great bulge bracket office like UBS LA, the departure of a few “stars” caused much havoc, and the effect is only more pronounced at a much smaller investment bank.

Still, you should do your homework as much as possible.

But Still, Is There Any Reason I Would Want To Work At A Smaller Bank?

I strongly recommend that you spread your net wide and consider all your options. Unless you have some kind of personal connection at a boutique, though, there is little reason to prefer it to a big name bank.

Lifestyle is typically not much better. Yes, sometimes there are one-off cases of Analysts only working 60 hours a week… at certain offices. But at the “top” names like Evercore, investment banking analysts work bulge bracket hours. And once you get up to around 80 hours a week, there’s honestly not much difference between 80 vs. 90 anyway.

You will have exit opportunities, but you are more limited because certain firms always go to bulge brackets first, so Analysts there will get preferential treatment.

At top boutiques and middle-market banks, the pay will be comparable to bulge brackets, but at smaller regional places, it can actually be significantly less… as in, 50% less in some cases.

The only situation where you might want to pick a boutique instead is if you have offers from multiple banks, are reasonably confident the boutique will give you good work, and just like the people or work environment a lot more after thorough investigation. Your team is important, and great experience is not worth it if you want to shoot yourself repeatedly because you hate your co-workers.

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Interview Questions For Prospective Senior Hires

“Do you know what types of questions are asked of Senior Associates or Vice Presidents when they are interviewing for lateral positions? I am quite certain that the bulk of questions are focused on deal experience, however, what do you think the most commonly asked questions are? I ask because I am wondering how much I need to focus on the details of my previous deals and if I should review all the documents or look over the Definitive Agreements… I want to be well-prepared but don’t want to waste time on irrelevant material.”

Inquisitor:

First, let me caveat this by saying that I am not super familiar with the interview process for people who are more senior than Associates - I generally only interview Analyst/Associate candidates, basically people with no banking experience. That said, I can offer some insight into what the investment banking interview process is like for these candidates based on what I’ve seen.

In general interviewers focus more on the story around your deals rather than specifics like the terms of the purchase agreement. I would be highly surprised if you even received questions around something basic to M&A like typical escrow %’s or baskets/caps (prospective bankers - read up on these terms and be really ahead of the game when you start!). They might ask these details just to verify that you know your stuff, but they will focus more on how well you ran the process and what the results were. I would not try to memorize all the specifics of the deals - maybe have 3-4 that you can tell a good story around. Obviously know the valuation at a high level and the multiples but I don’t think they’re going to go super-technical on you.

At the Senior Associate/VP level, beyond just the deal experience they are really going to test for leadership abilities and how well you manage Associates/Analysts since that is a large part of your responsibility. Prepare some good examples/stories of conflicts you resolved, how you effectively managed Analysts before and anything else that might be relevant… the key is to be very specific.

The other big theme will likely be your ability to source deals, since the Senior Associate/VP role is a transition into that part of the business. This depends greatly on the bank and group and not all people at this level will necessarily be expected to develop client relationships. But you should emphasize it even if they don’t explicitly ask you: you reinforce that you will be a good long-term hire.

If you haven’t done this before, this point may be difficult to highlight - perhaps consider speaking to your client management skills and any other jobs you’ve had where you had to generate leads or develop relationships.

Cover Letters

“How long do you feel a cover letter should be? 2-3 paragraphs? Would you ever ding someone for it being a little too long or too short?”

Inquisitor:

We very rarely even read cover letters. Typically we decide on someone within 1-3 minutes of looking at an investment banking resume, if not less. That said, if you do want to write a cover letter, 2-3 paragraphs is fine. Two pages would be too long. I don’t know if I’d ever ding someone for having a cover letter that’s too long but we definitely ding people for having resumes over a page (unless there’s a really good reason for making it so long).

If you need further assistance with resumes, check out our investment banking resume review service.

Career Change And Age

“Is 34 too old to be a first-year banking Associate? I’m very interested in the industry but I don’t want to be behind my peers and be older than everyone.”

Inquisitor:

It depends on the type of firm you’re joining and your tolerance for pain. At a bulge bracket, being a first-year Associate is really no different from being a first-year Analyst. If you are married or have a family, this is going to be a problem.

The other issue is that this will last at least a few years; it will get better over time but you’ll be worked pretty hard for at least 2-3 years. So you have to ask yourself if you want to sacrifice a few years with your family or significant other to move up the ladder.

If you don’t want to give up your life, you may want to consider smaller firms or boutique investment banks, which will not work you as hard. It will also be easier to switch into these firms coming from an unconventional background. Don’t go somewhere hardcore like UBS LA without earnest consideration.

I have seen people older than 34 actually go into banking, but these were all fairly special situations; one had significant consulting experience in Asia (kind of a big deal these days) and one had held high-level positions at a corporation and actually came in as a Senior Associate.

In the long-term entering at an older age won’t matter too much; you’ll be a few years behind MDs who did banking their entire lives and never went to business school, but hey they never had fun until they were over 30 either so it’s a trade-off.

Questions On Banking? Finance? Resumes? Life?

Email The Inquisitor and be featured in upcoming Q&A posts.

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