I’ve already covered quite a lot on the topic of summer internships, whether it’s how to dominate them, what not to do, a summer intern success guide and even what to do if you get transferred.

In the spirit of these previous articles, I would like to solicit feedback from readers on topics you want to read more about.

This is directed both at interns who are working in banking / private equity / related areas this summer as well as those who are interested in doing so next year or further in the future.

I’m not going to set up a survey or anything (this will be informal), but here are a few ideas to get you started thinking about what you’d like to see:

What You Wish You Knew

If you’re currently a summer intern in finance, what do you wish you knew beforehand that you didn’t? I’ve covered mostly tips on how to perform well once you’re on the job - here are a few more topics I could write about:

Recruiting

• Summer analyst selection vs. full-time analyst selection
• How full-time offers are given out to summer analysts
• Actual accounts of how summer interns broke into the industry
• How to get other finance internships (aside from banking)
• How to decide between multiple summer internship offers

Preparing

• What to expect (e.g., a day in the life of a summer investment banking analyst)
• Insider tips from current/former summer interns (one reader contributed his tips before, but there’s always room for more)
• How to prepare for summer internships - recommended modeling and finance resources

Providing Feedback

Either email me or leave a comment here with your feedback on future summer intern topics you’re most interested in reading about.

The Vacation Ends

I’m also back from “vacation” now (if that’s what you want to call working intermittently in between sitting on the beach and taking calls from former co-workers) and am focused on my new ventures as well as expanding this site. Many of you have already written in with feedback and suggestions, but feel free to continue as we move toward the fall recruiting season.

I’ve given some tips in the form of a summer intern success guide and an avid reader gave some tips from his firsthand experience, but it’s often easier to give advice on what not to do (as with fashion).

Without further ado, here are the top 10 summer intern gaffs I’ve observed, both at my office and from friends’ stories.

This list applies to both Summer Analysts and Summer Associates - your role is the same, except Associates will get a bit more responsibility.

1. Argue with me over something financial/modeling-related

I see this more with Summer Associates than with Summer Analysts. Look, I understand you learned a lot about finance and accounting in business school and know all sorts of concepts that I don’t.

I also understand that you have several years (or more) of work experience and know a thing or two about how to perform well in a corporate environment.

But if you haven’t done investment banking before, you don’t know how we do things and you probably don’t realize the difference between what you learned in school and how financial work is done in the real world (corners are often cut).

Last year a Summer Associate spent 30 minutes arguing with me over how to calculate foregone interest on cash in a merger model and I said, “Yes, your way is correct but it makes a difference of less than 0.01 and would take time to change, which is why we don’t do it.”

So don’t even think of starting a debate.

2. Call me late on a Friday or Saturday night with non-urgent questions

Not that I’m bitter or anything, but this one always happens to me, and usually interns are at fault. If I’m out on a Friday night, I don’t want to be bothered with questions on Excel shortcuts or anything else that can wait until the next day (or next week).

Sure, ask questions when I’m around, but don’t go out of your way to contact me at odd hours unless it’s truly urgent.

This also brings up another point: within the Analysts at a bank, you generally want to ask questions of 1st Years first before going to 2nd/3rd Years.

Especially if the 2nd/3rd Year in question is leaving shortly.

3. Dress better than me, especially on your first day

I’m not going to lie; I tend to be a minimalist when it comes to clothing, especially compared to some other bankers out there.

Although it’s actually pretty easy to dress better than me, you still don’t want to come in wearing a $5,000 suit and gold watch on your first day.

Every office has a different culture, but most places will think this is really odd… it’s much better to wear standard business casual attire that doesn’t raise eyebrows.

Save your good clothes for when you start full-time or get a promotion.

4. Be overly enthusiastic - it’s just creepy

Look, attitude is very important as a Summer Intern… you want to be eager to learn and help Analysts save time on projects.

But there’s such a thing as being too enthusiastic as well. It would be pretty weird if I gave you an assignment that required you to pull an all-nighter and you were happy about it.

Even if you are somehow happy to pull an all-nighter, it comes across as fake and people will assume you’re lying.

5. Fail to invite me out drinking or to social events

The best part of having summer interns is that some are actually cool to hang out with. My life as an Analyst is usually pretty mundane: Excel, PowerPoint, research, rinse, wash and repeat. Having summer interns provides a great break and a chance to get to know new people.

Usually firms spend a lot of money on summer recruiting events and such, so if there’s an event/party/outing and you don’t let me know about it, I’m going to be annoyed.

Forget about just saving me time, enhance my lifestyle and you’re golden.

6. Say you’re too busy to get coffee

Similar to #5 above but from the opposite side. As Analysts, Starbucks is our lifeblood. So when we go out for coffee for 5-10 minutes and invite you to come along and you say you’re too busy, a couple things come to mind:

1) I know you’re probably lying because I give you work and determine how busy you are.

2) I think you don’t want to hang out with us and are not going to fit into our group.

Unless you have a true fire drill and really need to send something important out (unlikely as an intern), you have time to grab coffee.

7. Pretend that your internship is longer than 8-10 weeks

Personally, I am extremely nice to summer interns and rarely give them annoying work unless I’m so busy that I can’t finish everything myself.

Some Analysts have a different philosophy and as soon as they get summer interns, they turn into “Managing Analysts” and start giving all their underlings the dumbest work imaginable.

It’s unfortunate if you end up in this situation, but also keep in mind that your internship only lasts a matter of weeks - a lot less than 2-3 years. So no matter how bad you have it, it’s not worth complaining about because it’s over and done with quickly.

8. Hook up with other interns/analysts/secretaries

This one may cause some controversy, but I think it’s a really bad idea to get involved romantically with anyone else at your office, especially as an intern.

Friends have done this before but typically it’s at the end of the internship; otherwise there’s just too much risk of bad things happening and offers getting revoked.

Don’t think you can keep anything like this a “secret” - there are no secrets in an investment banking office.

One time when I was interviewing for buyside jobs, somehow not only my entire office but also multiple other offices found out and asked me how it went afterward.

If something as small as that becomes the talk of the Analyst class, you can guess how quickly news of a rendezvous with your MD’s secretary will spread.

9. Show up to work with a hangover

Control yourself when drinking and going out with other interns/Analysts. If you do anything really stupid (e.g. getting violent with an MD while drunk), your chances of getting an offer are pretty much 0.

Similarly if you show up to work with a hangover (or are still drunk), people will notice.

If you ever have to think about whether or not to do something, you shouldn’t do it.

10. Badmouth the firm/office to anyone else

This one actually came up this past year. One of our top summer analysts did very well and got an offer, but decided banking was not for him and went into another field.

That’s perfectly fine and I respected his decision. But then I find out he was going around to others interviewing at my office and telling them not to work there and such just because he personally didn’t like it.

The world of finance is very small and if someone knows something, chances are everyone else knows it too.

Openly badmouthing a firm or office to others is just unprofessional and pretty much ensures you’ll have no chance of working there in the future (I know, I know, you don’t want to, but still…).

Like this post? Subscribe via RSS and start understanding investment banking.

He has some additional tips for everyone about to start their investment banking jobs / internships - these are great overall so I don’t have much to add, but I will throw in a few comments here and there so it looks like I did some work.

“I did a 10-week internship at a bulge-bracket investment bank last summer and will be returning there full-time in July. I’ve read a couple of the “Summer Analyst Tips / Success Guides” but I thought there might be a few additional tips that I could add.

Balance Between Being Proactive and Annoying

My process for finding this balance was simple:

1. If I was assigned a task, I got it done on time.

2. On quite a few occasions, I finished my task and was left with nothing to do. This usually happens when Analysts/Associates/Vice Presidents are busy with meetings, conference calls, attending to fire drills and forgetting about you.

I typically went up to the Analyst and asked, “Hey, is there anything you want me to do / get done?”

There’s a clear difference between that question and “Hey, is there anything I can do?”

The second one is a bit pushy and if that Analyst is busy, he/she might even get annoyed. (How do I know this? I found out the hard way because I used the second line at first and got some negative responses like “Uhh not right now.” “Umm, let me get back to you.” “Dude, come back later.”)

The first question almost always resulted in a favorable response because the Analyst was thinking in terms of how I could be of benefit to THEM, not the other way around.

Inquisitor Note: This is dead-on. I think of interns in terms of benefits - how can you benefit me, right now? If you emphasize this I will give you useful work.

3. On occasions where there was nothing to do, instead of browsing around aimlessly, I’d just access the team’s files on the shared folder and read about previous deals - pitchbooks, models, etc.

This actually helped when I got staffed on similar types of deals. Be careful not to flaunt this or everyone will think you’re a tool.

Inquisitor Note: I’ve actually done this before, mostly when I first started. BE VERY CAREFUL to keep it to yourself or else people may indeed laugh at you. I certainly will.

I also browsed the Internet and if I found any articles that could be helpful to the Analyst, I would summarize the article in bullet points and send it to him.

Inquisitor Note: Good idea but don’t go overboard here. If you send me 5 article summaries a day I’ll make you get my dry cleaning repeatedly.

Seeking Feedback, Especially Constructive Criticism

I received several reviews over the summer from different groups. Most of them were positive, but I sought out constructive criticism - things I could improve upon. Although they resisted at first, my groups eventually gave me the following feedback:

• You need to listen more carefully when we’re explaining instead of jumping to conclusions.
• Don’t be so entrepreneurial. Just execute.
• Don’t rush your work. Review your work by printing the documents and then giving them to me.

Inquisitor Note: Remember when I said “don’t do investment banking for the ‘entrepreneurial work environment’? (or the models and bottles?)” Yeah, I thought you did.

I solicited constructive criticism for 2 reasons: 1) I genuinely wanted to improve. 2) When the bank decided who to give full-time offers to, they would probably discuss my “flaws.”

Knowing my flaws allowed me to fix them before offers were handed out.

I believe that I got my offer because I made constant improvements over the summer, even though I wasn’t necessarily the best Summer Analyst there.

Finding An “Informant”

When I first started, I was clueless when it came to recruiting - luckily, early on I found a mentor from my school who told me the details of how my group recruited and selected Analysts.

He told me who the key decision makers were and how I could best position myself to get an offer. I didn’t ask these questions the first time I met him, but I made an effort to see him at least once every 2 weeks to stay in touch.

Over time, he trusted me enough to share some insights. Your “informant” can be anyone - an Analyst that’s close to you, a fraternity alumnus, your school alumnus mentor, assigned mentor, a friend that you already who worked there, or anyone who you befriend.

Reliability Is Key

My last piece of advice: BE RELIABLE. Your job is to make the lives of Analysts and the higher-ups easier so they can get an extra hour or two of sleep. If you screw up and they have to fix your mistakes or face the scorn of those above them, they won’t like you very much (and you probably won’t get the offer).

One day, I had to carry 5 boxes in 98 degree weather from building to building at 2:30 PM. I didn’t go to a great school to be a UPS boy and I hated this kind of work. But I did even grunt work and manual labor like this reliably, so I had a chance to do more meaningful work as well.

On another day, I was the lead guy on a conference call with MDs and executives to examine a potential purchase of a large international finance company. The reason I was the lead guy? Because what was originally a “project” to keep me busy turned out to be a potential deal for the group and no one had worked on it but me.

So you never know.”

Like this post? Subscribe via RSS and start understanding investment banking.

-(Not Quite) Layoffs (But Considered By Some To Be Just As Bad If Not Worse) ‘08: JPMorgan CHASE, Dealbreaker

With news last week of JPMorgan transferring over a third of its incoming investment banking analyst class to the commercial banking side, there are some extremely panicked, recently graduated seniors running around.

If you have been affected, what do you do? What if you lost your summer internship or full-time job entirely?

Who’s Affected

Some have theorized that JPMorgan and other banks hand-picked people to be transferred based on work experience, GPA, university and other criteria.

I don’t buy into this for a second. Bankers are lazy when it comes to firing people; they like to make it quick and avoid dragging things out.

Reviewing an analyst class of close to 150 to try and match everyone up with the appropriate divisions would be a massive undertaking, and I just don’t think the bankers themselves or even HR (yes, they might occasionally do something) would take the time out to do this.

It’s more likely that the moves were indeed random and that the analysts were “picked out of a hat.” If you’re affected, you could not have done anything to prevent it.

What To Do

I’ve received email from summer interns and incoming analysts who are panicked about what to do. If you get transferred to private wealth management, should you drop out of finance altogether? Go to another bank?

No, you shouldn’t. Instead, be happy you still have a job. With the layoff count now at, oh, 65,000 or so on Wall Street, most people who have been “restructured” lately are now in job hunting mode.

Personally, I’ve seen many friends get laid off in recent months and not a single one of them has found another finance job yet. Some are (gasp) even moving to “industry.”

Instead of dwelling on how you were unfairly transferred, you should instead use the time to network, get to know people throughout the bank and position yourself so that you can move over when the opportunity arises.

Build It Before You Need It

Turnover in finance is higher than almost any other industry (except for maybe law), and you never know when someone’s going to leave unexpectedly.

Banks may not be doing much new hiring right now, but if people leave unexpectedly they will usually try to replace them - and if they can do it internally, all the better.

This is why it pays to stick around and network as much as possible - you never know when an opportunity to move over to investment banking will open up.

Quitting if you get transferred does not make any sense - it won’t be any easier to find something if you’re out of work entirely, and you should instead use the time to build your skills and resume.

If You Get Cut Entirely

If the worst happens and you get cut, either from your internship or full-time position, you’ll have to consider “strategic alternatives.” I would recommend against sitting around for the summer or doing a typical summer job such as retail or life guarding.

Try to find something relevant that hasn’t been affected quite as much by the downturn - although some poke fun at accounting, it’s a critical skill in banking and working at the Big 4 could actually be a decent experience down the road.

Consulting internships and anything else in finance (asset management, private wealth management, etc.) would be similarly useful, and even a sales or marketing job at a normal company could be spun positively on an investment banking resume.

These are more viable for full-timers who have had their offers rescinded; it would be near-impossible to find a summer internship at this late stage.

Rescinded Summer Offers

If you had a summer offer rescinded, there are still options even at this late stage. As I wrote above, do not sit around doing the “typical” jobs that college students do.

Other, better options: study abroad (great for resumes and investment banking interviews and yes, you might be able to apply, even now), volunteer work (either for a nonprofit or literally volunteering to work somewhere for free), or starting something on your own (doesn’t have to be a company, it could be a student group or organization or even a website).

None of these puts you in as good a position as an actual finance internship, but they’re all significantly better than doing the typical summer job.

The Dirty Secrets Of Investment Banking

Part of the reason I started this site was to give an honest view of what working in investment banking at the junior levels is like.

With all the market turmoil recently, there are 2 conclusions that come to mind that no one in HR or at those cheesy recruiting events will tell you:

1) The industry is cyclical.

When times are good, they’re really good. Bonuses reach record highs; banks are fighting each other to recruit people; and people hop from bank to bank seeking the best offer they can get.

There was a great article in Bloomberg awhile back on this very topic. To anyone outside the industry, the hiring practices in finance would seem absurd: hire an excess of people in boom times, pay them an obscene amount of money, and then fire them all when the market gets worse.

As the article suggests, a better solution would be to adjust hiring practices so that banks don’t hire excessively and then adjust salaries and bonuses - rather than headcount - when the market turns.

2) There are no guarantees.

This one is easy to lose sight of when you’re in school, because there is a fairly obvious correlation between effort and success: study and work hard, and you get good grades.

In the real world you may not get what you’re looking for all the time, no matter how hard you try. This is just one of those things you have to learn, and if you’ve been negatively affected by the downturn, you should be fortunate you’re learning this lesson early in life when misfortune is easier to fix.

I don’t want to end on a depressing note, so just keep in mind that the market will come back eventually. And hey, 2008 bonuses might not be that bad.…

Like this post? Subscribe via RSS and start understanding investment banking.

I have some big plans for Mergers & Inquisitions coming up over the summer and into the fall (amazing what an extra 80-100 hours of free time each week allows you to do), so stay tuned for announcements soon.  In the meantime, let’s proceed to this week’s edition of reader Q&A.

The Age Factor And Part-Time MBA Programs: How Old Is “Too Old?”

“I’m in my early 30’s and about to start a part-time MBA program at a top 20 school. I’ll be in my mid-30’s when I graduate.  Since I’m making a career change and will be above the median age for new Associates, I’m worried about actually getting into investment banking.

How much does age factor into recruitment? Am I going to be at a severe disadvantage?”

Inquisitor:

Make no mistake: age definitely plays a factor in recruiting.  Banks, for example, are unlikely to hire Analysts older than their late 20’s (anyone older than that would never put up with staying in the office until 4 AM and waking up at 6 AM); if you’re over 40 it’s going to be hard to break in no matter how senior you are.

However, I don’t think you’ll be “too old” to get into banking.   Most Associates are a bit younger, but not by enough to put you at a disadvantage.

The bigger problem will be the part-time MBA program - banks recruit mostly from full-time MBAs, and in general the part-time programs are not regarded in the same light. I would do some research and assess the recruiting environment at your school; if there isn’t any recruiting, either consider a full-time MBA program or get started networking with alumni and friends in the industry right away.

Finance Internships Abroad vs. Staying In The US

“I’ve accepted an internship at a well-known European bank. The internship is in London and seems to be very similar to US internships; as an added benefit, I’ll be getting a lot of great contacts in Europe.

What would you think when looking at a resume of someone with my background? I do want to work full-time in New York since I was born and raised in the US - how would US banks react to an internship in Europe? Would it be positive since it stands out from other people or negative since London is much different from New York?”

Inquisitor:

Working abroad anywhere is a positive, especially in today’s world.  Over time experience outside the US will continue to grow in importance, especially since the US is no longer the center of the world (see: investment bankers flocking to Dubai).

Even if the European bank is less “prestigious” (I hate that word) than its US-based counterparts, the internship itself will still be a huge positive and won’t hinder you from working in New York, especially since you’re from there originally.

I might have mentioned this before, but my experience abroad is one of the reasons I got into investment banking in the first place - it made me stand out compared to everyone else applying for the same spots.

Fall Analyst Recruiting At The Bulge Brackets

“I graduated from a top 20 university last year and have been working at a well-known (but not M/B/B) consulting firm for the last several years. I really want to switch into investment banking, but I know it will be hard given the current hiring market.

I’ve been thinking about trying to squeeze into the fall analyst recruiting cycle and interview alongside undergraduate candidates - do you think this will work? And do you think bulge bracket banks will even be recruiting analysts this year?

Inquisitor:

That seems to be the question of the hour - well, that and 2008 bonuses (I will write about my views next week).

Banks will almost certainly recruit in the fall, but I doubt that it’s going to improve much compared to 2007 - it will either stay the same or get worse. I hate to sound depressing, but people are getting laid off left and right and business is… slow… really slow. Most of my work lately has been pitching deals that will never happen.

Putting aside market concerns, many consultants do transition into investment banking and private equity. However, given your circumstances it’s more realistic to consider 1 of 2 options:

1. Go to a boutique or middle-market rather than aiming strictly for bulge bracket firms - it is extremely tough to come in with a non-traditional background in a bear market.
2. Go to business school and start banking as an Associate. By then the economy should have recovered (or else we’re all in a lot of trouble).

I’m not sure what you mean by “interviewing alongside undergraduate candidates” - you can’t do this since lateral hiring is a completely different process. If I were you, I would start networking and contacting friends in the industry right now and take advantage of any unexpected departures in the summer season - Analysts sometimes leave after their first year and you take advantage of this to land a job.

More Investment Banking/Finance Summer Internships

In other news, some other sites out there picked up my Summer Intern Success Guide feature on Tuesday and I saw many great contributions. Here are a few sites that featured my guide and some of my favorite tips:

Prince Of Wall Street - Advice for Summer Analysts Hitting the Desks

Besides linking to several of my posts in this post (always a good way to get my attention :), The Prince also goes into a few tips of his own - I think it’s a great idea to find the best analyst.  There is a huge difference between the top analysts and those who don’t know much, and befriending the smartest guy in the room is a great way to get ahead (as long as we’re not talking about Enron).

I also like his advice to develop relationships with your staffer and the higher-ups as well as with the Analysts - Analysts often decide who gets offers and who doesn’t at the end of the summer, so you need to heed this one.

Finally, working out and eating healthy food are critical - I’ll write a few more articles on how to stay fit as an investment banker since there’s a lot of interest in this topic.

Financial Rounds - Some Quick Tips For Summer Internships (Investment Banking and Otherwise)

Besides complimenting my name (another good way to get my attention :), Financial Rounds also offers up some other useful tips for summer interns.

I especially like his tip to avoid badmouthing the competition; I’ve seen this happen with summer interns and it’s never a pretty sight.  As I’ve mentioned before, summer intern competition is not nearly as intense as you probably think, so there’s no reason to badmouth others.

And never try to suck up to someone above an Analyst - we notice when you do this and will always find some way to screw you over, even if you’re not aware of it.

Like this post? Subscribe via RSS and start understanding investment banking.

-..and Some More Investment Banking Summer Internship Donts, The All-Nighter

Despite explaining what you’ll actually do as a summer intern and even how to dominate your investment banking summer internship, summer internship questions have continued to roll in.

Sure, you want to do as much deal-related work and modeling as possible, but how do you get there?  How do you avoid just going to Starbucks and the dry cleaner for me all summer?  (Not that I would make a summer intern do that, of course)

How Work Is Assigned To You

Senior bankers and staffers are more hands-off with Summer Analysts than they are with full-time Analysts and Associates.  Sometimes interns are “assigned” to an Analyst over the summer; in other banks and groups Analysts will “claim” interns to help out on certain projects.

In any case, though, the full-time Analysts give you work and decide what you do.  So you need to keep us happy.

I always have a list of unfinished tasks, but only a few of them are high priority at any given moment.  And as I’ve mentioned before, there are basically 3 types of work in investment banking: deals, pitches and random stuff.

When a summer intern starts working, I will most likely give him or her whatever is at the bottom of my priority list: the random stuff.

Sometimes this means profiles (compiling information on companies and making it look nice in PowerPoint), sometimes it means comps (reviewing financial statements and inputting numbers into Excel) and sometimes it means finding the projected rate of oil production increase in the Alberta oil sands over the next decade.

What To Expect At First

Don’t expect to build an LBO model or draft an IPO S-1 registration statement right away.  You have no technical training, no one knows how competent you are, and who knows, you could have gotten the internship just because your dad is the CEO.

I would laugh if an intern asked about learning an LBO model his first day on the job.  I don’t care how many accounting or finance classes you’ve had or how many $3,000 “learn investment banking” seminars you’ve taken, you’re not going to know how we build models right away, and you will therefore not get that type of work at first.

Take the work you’re given, put a smile on your face, and do it without complaining.  When you’ve proven that you can do the basics well, you will be given more interesting tasks, and when you have proven yourself with those, you will get even more responsibility.

Don’t Screw Up

Screwing up repeatedly will kill your progression toward doing more interesting/useful work.

You might think, “If I’m just starting how can I possibly NOT make mistakes?  I don’t know anything yet.”

The short answer is “ask a lot of questions.”  No one will fault you for asking questions - as long as you ask the right people.

Never ask anyone above the Analyst level a question.  Bothering your MD with a question on comps will invariably make him think you’re an idiot.  Restrict your questions to other summer interns and Analysts.

If you ask questions on anything and everything you’re not sure of, you dramatically reduce the chances of screwing up.

Also, always print out and check your work before submitting it to anyone.  Mistakes are much easier to see when you print out your work, so you should always do this.

A Tale Of Two Summer Interns

Here’s a brief story of 2 interns in my group last summer:

The Worst Of Times

One intern arrived and, due to my workload at the time, he actually got a client-related project to work on.  It consisted of around 20 comps, and although I consider anything with the word “comp” in it to be grunt work, it was at least going to a client for an actual deal.

His task was straightforward: look at financial projections from equity research and enter in a few numbers on a spreadsheet for each company.

He finished and sent me the file - and the numbers were completely wrong.  I don’t mean “off by 0.1″ wrong or “forgot to add back one-time charges” wrong, I mean “revenue jumped around from $4 million to $400 million to $40 million in the span of 3 years” wrong.

Unless it’s a biotech company (and it wasn’t), you could tell something’s off by looking at that for 2 seconds.

After that incident, I rarely gave him much substantial work.  If he couldn’t even copy numbers correctly, there’s no way I could trust him to draft 50 page documents or build multi-property models for casino companies.

The Best Of Times

Another intern, by contrast, had a lot of grunt work at the beginning.  One time I had him do about 20 profiles because I didn’t have time and it was already well past midnight.

Although he had a lot of boring work at first, he rarely made mistakes and when he did, he always fixed them and never repeated the same mistake twice.

By the end of the summer, I had taught him so much about modeling that he knew more than some of the full-time Analysts.

I knew that he was reliable and that if he had more advanced skills he would save me days of time; as a result he learned a lot and performed the best out of all our interns.

The Consequences

Screwing up repeatedly has a chain reaction - no one at an investment bank gossips more than the junior guys, so if the work I give you is completely wrong, every other Analyst will know about it.

Usually the Analysts order dinner and go to a conference room to gossip and discuss the events of the day (you don’t just get fired in conference rooms).

Intern performance is a common discussion topic during the summer.  And don’t worry: even if we don’t discuss interns during dinner, we’ll do it over instant messenger or forward emails to each other all day.

But the real consequence of not doing well in your summer internship is not getting a full-time offer.  In a bear market this can be the kiss of death, though you can sometimes find a way to spin it favorably.

The Good News

The good news is that no matter how poorly you perform in a summer internship, it’s rarely the end of the world.  You can usually still find another internship the next year or a full-time job in the fall when you go back to school.

Still, it’s to your advantage to do as well as possible so that you have more options down the road.

And so that you can avoid being the Starbucks/dry cleaning delivery service.

Like this post? Subscribe via RSS and start understanding investment banking.

Law School Student To Finance

“I just read your article on breaking into finance from law and had a question on my own situation. I am a 2L at regional law school and am in the top third of my class. I’ve written published law review articles on M&A and corporate finance, and have become more interested in finance over my 2 years here.

I know you suggested doing Corporate Law as a transition into finance, but since I am attending a smaller school, this is not really an option. I do have some extracurricular activities related to finance, but no formal jobs or internships.

What can I do to solidify my resume to target not only banks but any type of finance job? Would a CFA or other certifications help me at all?”

Inquisitor:

Certifications such as the CFA would indeed help your case, but they’re huge time commitments and your efforts might be better spent elsewhere. So think through it carefully first.

Ultimately, work experience is the most relevant item on your resume and the key predictor of whether we’ll pick someone for an interview. A CFA would never make me say, “Ok, this person should definitely get an interview.”

Anything extracurricular related to finance/business is also good, but again it suffers from the same problem: work experience is what really counts.

I realize this is a circular answer: to get finance experience, you need finance experience first. So what do you do?

• Start small. Even a relevant part-time job or internship during the school year is a better use of time than CFA study, in my view.
• Go local. Regional and local firms often struggle to find the right people - even if your qualifications don’t exactly match, enthusiasm can go a long way.
• Offer to work for free. This may sound crazy, but any amount of money you get from an internship is not going to be significant in the long run. Focus on future benefits rather than immediate gains.

In your case, I would also strongly recommend networking with fellow authors and law review publishers and seeing if any of them have leads for Corporate/Securities Law jobs or internships.

How Summer Analysts Are Judged

“I have a summer internship coming up at a bulge bracket bank. I understand that most summer analysts receive offers, but with the tough market and hiring slowing down everywhere, I’m concerned about actually getting one this year.

In your experience, are summer analysts awarded offers more based on individual performance or on how they compare to their peers? I’m not sure how worried I should be about the competition.”

Inquisitor:

The short answer is that personal performance is most important. People tend to greatly overestimate just how much competition there is among summer analysts looking for offers, just like they incorrectly assume that full-time Analysts are also all killing each other to get top bonuses.

For Summer Analysts the logic is very simple: most interns perform quite poorly and have no chance of coming back anyway.

Some summer interns just don’t know what they’re getting into; others realize they don’t like it a few weeks in and just give up.

Your #1 priority during your internship should be performing well, getting people to like you and getting an offer (more on how to dominate your investment banking summer internship).

One caveat: At some groups/firms, it is indeed harder to get full-time offers and there is more competition among interns. Goldman, for example, is famous for giving out fewer full-time offers to summer interns compared to other banks.

But overall you should be most concerned about how well you do, not how well you do vs. others.

Turning Down Summer Offers: Trading Up

“I got a summer offer at a boutique bank and liked everyone I met there. The offer is a verbal one so I’m a bit nervous about accepting.

Recently I’ve been getting calls from larger firms that I had applied to before, so I’ve been thinking more seriously about trying to go to one of those. They would pay better and give me better opportunities for full-time recruiting in the fall.

Although it would look bad “reneging” on my boutique offer, the bank never even gave me a formal, written offer in the first place - so I’m wondering if telling them “no” and moving to one of the larger firms would be a good idea, or if it would burn too many bridges.”

Inquisitor:

I don’t think there’s much harm in reneging a verbal offer and going somewhere else if you think it’s more compelling and like the people more. “Burning bridges” should not be a major concern, especially since this is for an internship without a formal offer letter.

However, moves like boutique to middle-market don’t help much, whether it’s for lateral hiring or summer internships. So I would only do this if the other options include bulge brackets.

If you do decide to make the move, make sure you have a signed, written offer in hand from the other places - do not rely on verbal offers.

And if you turn down your verbal offer from the boutique, don’t tell them it was due to greater pay or prestige - I would instead make up an excuse around location or another non-sensitive issue so they don’t take it the wrong way.

Like this post? Subscribe via RSS and start understanding investment banking.

-MD’s, The Leveraged Sellout

Continuing our series in Investment Banking Lingo this week, we resume today with more essential vocabulary that any good banker must know to get ahead in today’s tough market.

Even Frank Quattrone had to learn the meaning of “Alt Tab” at one point or another (ok, maybe he was born knowing that one…).

Downtime

Typical usage: “I had some downtime today so I was catching up on American Idol.”

What it means for the Analyst: You get a break from staring at Excel and instead get to stare at your web browser.  Just make sure not to do anything too naughty, or your IT department may catch on and alert the authorities.

What it really means: There’s never a constant flow of work in investment banking.  Some days are nightmares and other days you don’t really do much, get to go home early and even watch low-quality made-for-TV movies.  Since your workload is dependent on whenever the senior bankers get around to reviewing what you produced (general rule of thumb: “I need it by tomorrow” = “Will look at it in 2 weeks”), a lot of time is spent sitting around waiting.  And waiting.  And waiting…

Tips and tricks: The key to using downtime effectively is simple: don’t get caught.  Whether it’s using Facebook 4 hours every day like a certain trader at Goldman Sachs, looking at uh, inappropriate sites, installing games or watching that episode of American Idol you missed, you must have a fast way to exit whatever it is you’re doing.  Be alert - don’t listen to blaring music - and avoid suspicion by browsing sites with mostly text.

Alt Tab

Typical usage: “I had some downtime today so I was catching up on House…  VP almost saw me but luckily I Alt Tabbed out of it really quickly!”

What it means for the Analyst: Alt Tab is your lifeline.  Bankers are pretty good at Excel, but we’re actually much better at hitting Alt Tab just before someone notices that we’ve been watching Grey’s Anatomy for the last hour.

What it really means: For those who haven’t yet entered the work world and learned the wonders of Alt Tab, it is a shortcut to quickly switch the visible program on your computer.  So if you have Excel and YouTube open at the same time, hitting the Alt and Tab keys at the same time will rapidly switch between the two.  Brilliant.

Tips and tricks: Alt Tab can be used successfully only when you have advance warning.  If someone pounces on you and sees you looking at Dealbreaker or Leveraged Sellout, it’s all over.  So make sure you don’t listen to blaring music, and try to position yourself in your cube so that you can see any incoming enemies and intercept them with Alt Tab.

Staffer

Typical usage: “Just walked by the Staffer’s office… he saw me and now my weekend is completely screwed.”

What it means for the Analyst: Let’s just say that if you were Spiderman, the Staffer would be Dr. Octopus.  The staffer is your arch-enemy.  He or she can end your life with a single sentence.  Avoid the Staffer at all costs and certainly don’t be anywhere near his/her office on Friday at 4 PM.

What it really means: The Staffer assigns work to Analysts and makes sure work is distributed evenly (theoretically, anyway).  This is one of the most un-wanted jobs at an investment bank, and usually only the most extreme sadists dream of one day becoming the Staffer.  The Staffer is usually an Associate or senior banker who handles this responsibility in his/her “spare time.”

Tips and tricks: Avoid the Staffer on Fridays.  You can try to befriend it, but such beasts are rather difficult to tame, so avoiding it and always looking busy is probably the best strategy.  Just make sure you always have a good explanation for why you’re so busy - the Staffer is a cunning demon and can see through the thin lies you tell.

Closing Dinner

Typical usage: “Sweet!  Closing dinner on Friday in Vegas.”

What it means for the Analyst: Relief.  The Closing Dinner happens after a deal closes and is a celebration for everyone involved.  Usually the finest restaurants, the finest wine, and yes, the finest models and bottles are involved.

What it really means: See above.  It’s a big celebration after a deal closes and you usually get to go to an exotic location (or it could just be Vegas), eat $1,000 dinners and drink ambrosia from the hands of the gods.  And the best part: you’re not paying for it.  It’s one of the most fun nights you’ll have as an investment banker.

Tips and tricks: DO NOT GET DRUNK.  Trust me on this one.  No matter how tempting it is, do not get drunk in front of your entire team and start telling stories of all your crazy youthful adventures.

DD

Typical usage: “Deal is taking awhile… their DD never ends.”

What it means for the Analyst: Waiting and sometimes formatting a company’s financials and other information so you can “add value” before sending them to the buyer.  But mostly waiting to see whether or not a deal is going to happen or not.  Sometimes you get to pretend you’re a consultant too, and you travel to wherever the buyer/seller are located.  Just hope it’s not Alaska in February.

What it really means: Due diligence.  Finding out everything and anything possible about a company you’re going to buy.  This is what private equity firms and VCs do all day.  This is usually a faster process if it’s a financial buyer (private equity) rather than a strategic, where they actually hold onto it for a long time and are therefore quite careful.

Tips and tricks: Remove yourself from the process as much as possible.  If there’s an issue, blame it on your client.  You can’t audit every single bit of information they send over.  Sometimes this tactic doesn’t work so be careful or you might find yourself in the conference room waiting to hear your severance number.

MD

Typical usage: “I completely messed up the numbers in front of my MD… my bonus is gone.”

What it means for the Analyst: If the Staffer is your arch-enemy, the MD is the man behind the curtain.   The Wizard of Oz.  The one giving the orders but not directly ordering the Analyst around.  He has the power to fire or hire you, and he doesn’t play nice.  Be respectful but fearful.

What it really means: The Managing Director.  The top of the heap.  The king of the castle.  He makes rain and brings in deals and revenue for the firm.  The only people higher than the MD are Group Heads and the executives of the firm.  The MD is usually a lifelong, battle-hardened banker who has been through it all.

Tips and tricks: Don’t screw up.  If you do something wrong in front of an Associate or VP, that’s one thing, but screwing up repeatedly in front of the MD is one sure-fire way to assure yourself of a bottom-bucket bonus and no recommendations for those exit opportunities you’ve been dreaming of.

Just Wait, There’s Even More (Maybe)

Lingo is one of my favorite topics so expect to hear more about this one in the future.

Like this post? Subscribe via RSS and start understanding investment banking.

Most importantly, however, I want to stress how willing I am to do “anything for the team.” I realize the possibility of long hours exists in such a position, and I am ready to work as hard as necessary. I have been practicing staring at a computer monitor for extended hours; I can currently sit motionless in front of a screen for 28 hours, and I am improving daily.”

-RE: Lehman Brothers Recruiting, The Leveraged Sellout

So, how do you succeed as a young investment banker?  How do you perform best in your upcoming summer internship?  What if you’re a full-time hire and you don’t want to be laid off 3 weeks into the job?

Dressing for success and buying some nice clothes might help (don’t go crazy, though).  And yeah, make sure you network and make a good impression on everyone.  Maybe try to learn some modeling before you start.

But one aspect that advice-giving bankers often overlook is the lingo.

Not the basics, like IPO, M&A and LBO - you can read about those in some book called the Vault Guide.

Let’s just skip to the interesting lingo.  The lingo that determines your life or death as a young banker.

Fire Drill

Typical usage: “Sorry for the fire drill, but we need to get this presentation out in the next 30 minutes - can you take care of it?”

What it means for the Analyst: Your life is going to suck for the next 30 minutes… or next 2 hours… or even longer, but at least it will be over at some point.  No, not your life.  The sucking.

What it really means: A “fire drill” is an emergency where you need to finish a presentation or analysis under very tight time constraints.  Generally it’s client-related (so the firm might end up getting paid something for all the insanity), although often it turns out to be completely useless.

Tips and tricks: Unfortunately, you can’t do much when confronted with a fire drill except extinguish the flames as quickly as possible.  The good thing about a fire drill is that it forces you to focus for a set period, and then all the work is done.  You may lose some hair in the process, though.

Bake-off / Beauty Pageant

Typical usage: “We have an IPO bake-off on Friday - can you work on the pitch?”

What it means for the Analyst: Your life is going to suck until the bake-off is over.  There will be many, many (as in potentially over 100) revisions of the presentation until every last comma is placed in exactly the right location.

What it really means: A “bake-off” (also called a “beauty pageant” or “beauty contest” though that sounds even weirder…) refers to several investment banks competing for the same business, whether it’s an IPO, a financing or an M&A deal.  These types of “contests” involve long and very painful pitchbooks.

Tips and tricks: The best way to deal with an upcoming bake-off is to do as little work as possible and to only do specifically what you’re told without going overboard.  If you don’t need a graph with market share by competitor, don’t do it.  Don’t submit work too far in advance of the actual deadline - this just gives people an excuse to add unnecessary material and increase your workload.

Bandwidth

Typical usage: “We have an IPO bake-off on Friday… do you have any bandwidth?”

What it means for the Analyst: Unless you answer “no” with a compelling reason, your life is going to suck until you finish whatever it is the senior banker is indirectly asking you to do.

What it really means: They are trying to give you work and assess whether you have any “capacity” (bandwidth) left to finish it by a certain time.  If you are leaving before 2 AM every night, you have bandwidth.  If you have 3 other bake-off pitches in the next few days and 5 active deals, you don’t have bandwidth.

Tips and tricks: When you’re trying to convince them you have no bandwidth, focus only on future deadlines.  It doesn’t matter how many all-nighters you’ve pulled in the past week, all that matters is how much work is due in the next 24 hours.  This one is straight out of Monkey Business and is as true today as it was back in the 1990’s.

Face Time

Typical usage: “I’d leave right now but it’s only 9 PM… need to put in some face time.”

What it means for the Analyst: Even if you have no work and no one has successfully detected this and given you work, your life is still going to suck because you can’t go home and risk alerting the higher-ups of this truth.

What it really means: “Face Time” refers to staying in the office until an acceptably late time (11 PM or later, though some offices can be more like 2 AM) so that everyone thinks you’re busy and no one gives you more work.  This concept might seem strange to those of you who don’t work in finance.  Don’t worry - it still seems strange to me and I’ve been doing this for 2 years.

Tips and tricks: Actually, many firms and offices are not as big on face time as they once were.  If you have a bad staffer (the one who assigns work to Analysts), he or she might actually go back to the office late at night and check to see who’s still there.  But even at bulge brackets, most groups have become more reasonable in recent years.

If you are in a bad group or one where a lot of face time is required, I would find other ways to get out of the office, like going to the gym on weekdays.  Also, you can start a blog on investment banking to pass the time.

Below The Bar

Typical usage: “This deal is below the bar… I think we’re going to pass on the business.”

What it means for the Analyst: Your life, for once, is not going to suck because your MD has decided to give up a client that was too small for the firm.

What it really means: Every firm has a “bar” or “minimum size” deal it will do.  The minimum size can be based on either potential fee or potential deal size (the 2 are not always directly linked, though generally a larger deal will result in a larger fee).

Most bulge brackets, for example, will not do deals below $300 million or so in size.  In a tough market this can change, but bulge brackets focus on deals over $1 billion.  At middle-market firms, the “bar” might be $25 or $50 million.

A small deal takes as much work as a large deal and generates a lower fee, so why spend time and resources on the small fish when you can land the whale?

Tips and tricks: Just keep your mouth shut and be glad you avoided some extra work.  Small deals are really painful anyway because those involved tend to be less sophisticated and cause an uproar over small issues.  So be glad you got to work on Microsoft-Yahoo, even it fell apart, rather than the sale of some $10 million family-owned business with more leaks than the Titanic.

Low Hanging Fruit

Typical usage: “Currently we only have 1 office in Europe but we’re getting requests from European customers all the time… so staffing up there to meet demand would be some real low-hanging fruit.”

What it means for the Analyst: Your life will consist of many painful PowerPoint charts and you may have visions of being a consultant for awhile.

What it really means: Clients usually use “low hanging fruit” to refer to any easy opportunities to increase sales that will become available only after they get sold… or raise money… or get taken private.

Generally “low hanging fruit” is not low hanging at all and requires substantial time and resources.  It’s just a “selling point” or “acquisition consideration” you might try to sell investors on.

Tips and tricks: Use your presentations department.  Avoid the temptation to do too much PowerPoint yourself.  I’ve seen this mistake in many banking newbies.  Also, try to mentally replace any reference to “low hanging fruit” with “this is going to take a lot of time and money and it’s all a lie.”

More To Come

This just scratches the surface - what other investment banking lingo do you use a lot, or do you want to hear about?  Again, nothing as simple as defining IPOs or M&A- you can read about those in an outdated version of the Vault guide.

Like this post? Subscribe via RSS and start understanding investment banking.

Elite Boutiques

“I had multiple full-time bulge bracket offers but instead opted to go to a recently founded “elite” boutique with a very well-known founder. I thought the experience, exposure and overall environment would be much better.

I had assumed that my exit opportunities would be at least as good as those of most bulge bracket analysts, given the prestige and selectivity of this firm. However, after reading about how well-recruited bulge bracket analysts are, I found myself wondering whether this will work out as I had initially thought.

Moelis hasn’t even graduated its first analyst class yet, and some of the other newly founded boutiques have only had a few years of analysts in their ranks. Given the very “young” status of my firm, will my access to recruiters, private equity firms and hedge funds be as good as I had initially thought?”

Inquisitor:

First, I should clarify one point here: back when I wrote my article on boutiques vs. bulge brackets, I was referring to regional boutiques and small firms that are not widely known.

Places like Lazard and Evercore, though technically “boutiques,” are a completely different ball game and you would get nearly the same access to recruiters there as you would at bulge brackets.

As for your own situation, it’s hard to say since your firm is new and doesn’t have a track record. I would guess that your recruiter access will probably be better than it would be at a middle-market or regional boutique, but not as good as what you would get at a bulge bracket or “prestigious” boutique.

If I were in your situation I would not even rely on recruiters. Since the firm is smaller and the founders are widely known, I would leverage their connections and have them make personal introductions. That will be a much more powerful way to get private equity interviews and get in front of other buyside firms.

Moving To The Buyside Early

“One thing you haven’t talked about in detail on the site is moving to private equity or hedge funds early. You mention briefly that you can/should move to buyside after a year if you know that this is where you want to be, but you don’t say how to go about it, if it is realistic, and what downsides there are. Is it worth applying to large-cap private equity firm after a year on the job or do you just not have a chance?”

Inquisitor:

While it’s possible to move to a large private equity firm after a year in banking, it’s not exactly easy, especially with current market conditions. I had a few friends who did this; the main downside is that you won’t work less at these places (you might actually work more, believe it or not).

If you like private equity more than investment banking, that’s one thing, but you shouldn’t jump over to private equity after a year-long analyst stint because you want better hours - you won’t get them.

If your goal is to work in finance while working less, it’s more rational to go to a hedge fund after a year. It’s also much easier to make this sort of transition, as hedge funds tend to be less structured in recruiting; as an added benefit, you also work a lot less since you’re only there when the markets are open.

“Reputation damage,” or looking bad because you leave a year early, is much less of a concern than you probably think. People hop around so much on Wall Street and turnover is so high that no one is going to care much if you do this.

You probably can’t get a recommendation or reference from your bank if you leave early, but this type of move is not going to ruin your career or anything.

How To Dress For Success As A Summer Intern

“Help! I have a bulge bracket internship coming up and I don’t know what to wear! How many suits should I buy? Is 10 enough?! Should I buy 20?

Is spending $10,000 on clothes enough or should I allot $20,000? How many shoes/pants/shirts do I need?”

Inquisitor:

Summer intern attire seems to be a hot topic (in that I’ve received multiple emails/messages similar to the above over the past week), so before the summer starts I will write a full-length post on this topic.

For now, though, let’s get the basics out of the way.

DO NOT SPEND $10,000 ON CLOTHES FOR A SUMMER INTERNSHIP.

You shouldn’t even spend that much on clothes for a full-time job unless it’s absolutely required.

You don’t need 10 suits, let alone 20. In my experience you don’t even need to wear a suit at most banks, at least as an intern.

Even if you do need to wear a suit each day, 2 or 3 is probably enough. And if you don’t need to wear suits every day, 1 will suffice.

I would suggest enough shirts to last 1-2 weeks and maybe a few pairs of pants. 2-3 pairs of shoes is probably fine. Keep in mind that 1) you will not have a ton of time for laundry/dry cleaning and 2) you don’t actually need a new suit/new pants /new shoes for each day of the week.

I know some people may disagree with me, but I would recommend going to outlets (there are a bunch in the NYC area) or buying clothes on sale to save money - do not spend hundreds of dollars on a single shirt, or even $100 on a single shirt.

Why?

1. Fashion matters less in banking than most people think. Yes, you have to look presentable, but you don’t need to go out and buy a $5,000 suit to get a full-time offer. In fact people might make fun of you for doing this.
2. This is just a summer internship and you don’t even know whether you want to be a full-time banker yet. Why spend $10,000 on clothes that you don’t end up wearing ever again?

I can offer these suggestions because I’ve overspent on clothes for both internships and my full-time job and looking back on it now, wish I hadn’t spent so much.

Like this post? Subscribe via RSS and start understanding investment banking.