Lateral Hiring 101: How to Look Before You Leap, and Then How to Make the Leap

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lateral_hiring“Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.”

-Niccolo Machiavelli, The Prince

Except with lateral hiring – where “mistakes of ambition” are sometimes just not worth it.

Look Before You Leap: Should You Do It At All?

This is the first question you need to ask yourself. I get about 10 emails per week saying the following:

“I’m set to work at Deutsche Bank / Credit Suisse / JP Morgan / UBS next year and feel like a failure because I did not get an offer at GS or MS. To improve my self esteem and get better exit opportunities, I want to make a lateral move to a better bank 2 years from now. How can I do this?”

This is a flawed plan for at least 2 reasons:

  1. You won’t necessarily have access to “better” exit opportunities at the top 2 firms – in fact you may be worse off.
  2. Once you’ve been working for a year, the “prestige” of your firm will be the last thing on your mind – getting more than 2 hours of sleep per night will be priority #1.

There are only a few good reasons to make the move:

New Geographies

It’s difficult to move internally unless you know someone in the location you’re interested in – but if you know someone at a different firm in the location you’re interested in, it may be easier to move there.

It’s especially helpful if you’re trying to move to New York/London from elsewhere, or vice versa.

Your Group Makes You Want to Kill Yourself

There are some groups (and jobs) that are “beyond repair.”

Trying to improve them would be like trying to remove a tumor by applying band-aids: it might look better for awhile, but you’re still going to die.

If you have violent thoughts every moment of the day and fantasize about beheading your MD, it might be time to move on.

Unknown Boutique to Better-Known Boutique / Middle-Market Firm

Regional boutiques are great for getting experience and getting your foot in the door, but they’re not great for finding exit opportunities.

You’ll have much better access to recruiters at well-known boutiques and middle-market firms, and you’ll have access to more co-workers and “alumni.”

Luckily, this type of move is one of the easiest and most useful to make of the possibilities on this list.

Boutique / Middle-Market Firm to Bulge Bracket

Similar to the move above, you’ll get better access to recruiters and large-cap PE firms and hedge funds if you go to a bulge bracket.

Surprisingly, this move makes less of a difference than going from unknown regional boutique to better-known boutique – there you’re going from “almost nothing” to “something,” whereas here it’s just “something” to “something better.”

So Why Not a “Lower” Bulge Bracket to GS/MS?

“I’ll have a much better chance of getting into KKR / Blackstone / TPG because I looked on their website / asked around and saw that they hired FOUR bankers from GS but only ONE from my bank! My chances are 4x higher there!”

But this reasoning is flawed. All these firms hire very few people to begin with – and yes, they might hire “more” from GS/MS but there are also more people from GS/MS applying in the first place.

And they don’t necessarily have a “preference” for certain banks/groups – they want the strongest Analysts overall.

Maybe you have slightly higher “chances” at the top places, but the marginal benefit is not worth pissing off everyone at your current bank, losing potential references, and then having to wait another year for buy-side recruiting.

How to Make the Leap

Once you’ve looked, here’s how you leap.

Timing

Wait until near the end of your first year before contacting recruiters and your friends elsewhere, for 3 reasons:

  1. Even if bonuses suck, you still want to get your money before leaping away.
  2. Right after year-end bonuses, a lot of Analysts leave and banks scramble around to find new, experienced people.
  3. You won’t look too impressive with less than a year of experience and no solid transactions to speak of.

You probably want to start this process 2-3 months before the end of your first year – that way you’ll have time to make a good impression and you’ll be on their mind should they suddenly need someone else.

How to Do It

You have 3 routes to getting interviews at another bank:

  1. Headhunters
  2. Friends
  3. Alumni / Referrals

In theory, headhunters should be a good way to do this: they should want to help you out because they get a commission if they place you.

But in practice, large banks don’t rely on headhunters too much – they’re more common on the buy-side, where companies are smaller and where HR departments are non-existent.

So your best bet is to go through friends at other banks, or to go 1 degree further out and use alumni or get referrals via anyone else you know.

Rather than emailing them, call first (assuming you know them decently) and start off by asking what they’ve been up to, talking about recent events, then casually bring it up and say, “By the way, you know if your group is looking for anyone new right now?”

Follow-up is essential in this situation because your own fate is at the bottom of any other banker’s priority list, even if you’re “friends” with them. You need to be more persistent than usual and keep calling them until they outright say, “No, sorry, I really can’t help you at all.”

What If You Don’t Know Anyone At Other Banks?

Your next best bet is to ask around and get referrals from friends, or to go to your alumni directory and see what that turns up.

Cold-calling can work but it’s not the best move – it’s not effective at large banks, and it works better for undergraduates and recent graduates as opposed to full-time bankers.

You could also try getting in touch with HR or recruiters at banks if you really don’t know anyone else.

One advantage of HR: they’ll know with more certainty whether or not the group is hiring. The disadvantage is that they won’t “go to bat for you” in the same way that real bankers would.

You could also try looking online and consider sites like Doostang if you’re coming from a top school and have a solid resume with at least a year of work experience – but don’t rely on this, because talking to people always trumps applying online.

Keeping It Confidential

You might be wondering how you can prevent word of your planned move from leaking.

Should you use fake names on your resume? Set up a wire tap to monitor all communications? Have Chloe monitor conversations, email, and IM at other banks?

The short answer: no matter what you do, people will find out what you’re doing. Rather than worrying about that, just avoid telling others – even “trusted” friends – what you’re doing and use your personal email account if at all possible.

Oh, and don’t use fake names for companies on your resume or you will not get any interviews.

The Market

Lateral hiring is even more sensitive to market conditions than normal hiring. Banks always need a certain number of new 1st Year Analysts each year – but whether they need more than they planned for depends on deal flow.

When we’re in a bubble, hopping around is common and relatively easy – but in leaner times, large banks don’t do much lateral hiring unless someone happens to leave unexpectedly.

Lateral Hiring for Associates

For Associates the process is tougher and more selective because fewer people leave unexpectedly – and banks hire fewer Associates to begin with.

The process isn’t much different from what Analysts would go through, but the odds of success are lower and firms make fewer lateral hires all around.

At this level it’s almost pointless to bother with cold-calling or applying online: you really need a friend or referral to the group you’re interested in.

1st Year vs. 2nd Year

This is more applicable for Analysts making the move, but some banks may “demote” you and make you a 1st Year Analyst once again. This is common when you’re making a “big move” – say from an unknown boutique to Goldman Sachs – and less so if you’re jumping from one bulge bracket to another.

You have no leverage to “persuade” them otherwise, but it also doesn’t matter much: no matter what your title is on paper, the real downside to making a lateral move is that you need to wait another year for buy-side recruiting.

The Interviews

If you’re interviewing as a potential lateral hire, interviewers will focus more on your deal experience and on more advanced technical questions than they would for undergraduates/MBAs.

Case studies, modeling tests, and other types of assessments are all possible – but they’re less common in North America compared to other regions.

They’re more like private equity interviews than standard banking ones, so make sure you know how to write about your deals, how to talk about your deals, and how to dominate your case studies.

You also need good answers to the “Why us?” question and you need evidence that you’re sticking around in finance for the long-term – otherwise, why else would you want to make the move?

Ready, Fire, Aim

Before making the leap, you need to spend most of your time thinking about whether or not a lateral move makes sense – because for most bankers it doesn’t.

But if you’ve looked and decided to make the leap, now you know how to do it.

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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153 Comments to “Lateral Hiring 101: How to Look Before You Leap, and Then How to Make the Leap”

Comments

  1. cse says

    Hi,

    I am a new associate in the M&A group at a decent bank (think Wells Fargo, Jefferies) and would like to jump to a bulge bracket bank as an Associate 2. I have a decent network in place at a few BB banks but am curious if I would be forced to lose a year if I were to move laterally. Also, given that interest in banking is not as hot as it once was, are my chances better than you suggested above?

    • M&I - Nicole says

      It depends on the bank. Some banks may do that but others may not depending on your negotiation skills and their hiring needs. I can’t comment on your chances not having worked with you on this forum.

  2. Mikey says

    I took a job as an analyst at a hedge fund right out of school, been there a year. I’m not thinking I’d prefer to eventually get into PE. Is it possible to lateral to ibanking (I don’t mind being a first-year) without going to b school?

    • M&I - Nicole says

      Of course, though you’ll need a very good story on why you want to do banking from HF, and you need to demonstrate your ability to value companies as well as do/source deals.

  3. ER_Associate says

    Hi,

    I’m working as an Equity Research Associate at a boutique firm, and am looking to move to a bigger bank in the next few months, though I’d like to cover the same sector as I’m covering now. I’ve been at my current firm for about 14 months.

    My question is – In the interview, when they ask why I’m looking to switch jobs, while covering the same sector, what would be a good few reasons I could give?

    Thank you!!

    • M&I - Nicole says

      I’d just say that while you love your current role, you’d love to move to a more established platform so you can [insert why i.e. more exposure to institutional investors etc] here. I think as long as you can demonstrate that you were stellar in your previous role and you just want to advance to a more challenging opportunity they wouldn’t be too difficult on you (re. why you want to move) since many people do that and this is pretty straightforward.

      • ER_Associate says

        Nicole, another question along similar lines — if I say that i want to shift to a more established platform etc. (given that i’m coming from a boutique firm), a natural follow up could be that I can get that more established platform at any big firm. So if I’m interviewing at Morgan Stanley, they could ask why MS and why not GS, JPMC etc. What could I say to that?

        Also, if the analyst (I’m in ER) asks “why do you want to work for me”, it’s hard to answer bcoz as a sell-side analyst, you dont have access to other sell-side analyst notes, so you cant say that you like their methodology of analyzing stocks… what could be a few good reasons to give for the specific firm / analyst? Thanks again!!

        • M&I - Nicole says

          You’ll need to research the firm and talk about specific aspects of the firm that interests you, more so than other firms. For instance, if MS is strong at XX platform or YY area, you can talk about that. You can also talk about how you’ve met the people at MS, and you instantly bonded with them, and how you think MS’ culture will fit you better.

          Even though you may not have access to their notes you maybe able to talk to your clients/your peers to find out about their views. And if something they’ve said (from what you’ve heard) strikes you as “interesting/different” you can bring that up. I also think its best to meet these analysts in person at events, etc so you can better understand their style. That way when you approach them for jobs etc you are at a better position.

  4. lee says

    Brian – I am lateraling as a BB 2nd year analyst in credit to a 2nd year analyst position in a BB IB group. Will I essentially be a 2nd year in pay alone? Or will my 2nd year at the firm truly be my “3rd year” and last.

  5. Ryi says

    Thanks for this article, very helpful! Just wondering if you could speak about office transfers (from other regional office to NYC or another regional) after 1 year (at a BB) – how common that is, how to go about it, and how it will affect PE recruiting (would you still be set back a year for PE recruiting) Thanks!

    • M&I - Nicole says

      Yes it is common to transfer from one office to another after a year or two at a BB. I’d say do well at your current role and make sure you network a lot internally. I don’t think this will affect PE recruiting since you’re still transferring internally, unless you’ve been “downgraded” or moved divisions.

  6. Peter says

    Hi Brain,

    I actually left a message here last year about picking offer. Currently I am working at a boutique M&A house (6 people), subsidary of an asset management (MM range), and I have been there for right about a year.

    Now ,I am looking for the move, but it looks the marker does not have any M&A role opening now, but lots of MM ECM/DCM roles. Should I turn to them or stick with M&A/Sector to wait for the chance ?

    Also, since we constantly worked with the asset management firm. Hence if I want to join in buyside from this way, i can make the shift easily.

    Many thanks,
    Peter

    • M&I - Nicole says

      If you like your current role, I may wait till you find an available M&A role before you move. It can be harder to move back into M&A after doing ECM/DCM, unless you transfer internally, because M&A arguably requires more analytical/valuation skills. However if a BB/elite ECM/DCM division gives you an offer, I may take it and try to transfer to M&A internally if this is your longer term goal. Otherwise I may wait till an available opening pops up first before you move.

  7. Harry says

    Hi,
    Currently a rising senior at a non target in midwest
    3.3 gpa. originally started off with a pwm internship in NYC but then found a small boutique focused on emerging markets.
    Looking to go into go somewhere bigger for FT because I’m graduating in 2016.
    Some have said that I should defer my graduation until the winter of 2016 in order to get a SA position next summer.
    Thoughts ?

    • M&I - Nicole says

      Yes this can help if you are over 50% sure you’ll be landing interviews at BB but this can be risky too. With the above being said deferring may give you more time and higher chance of breaking in so it is worth a thought.

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