Lateral Hiring 101: How to Look Before You Leap, and Then How to Make the Leap
“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:
- You won’t necessarily have access to “better” exit opportunities at the top 2 firms – in fact you may be worse off.
- 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:
- Even if bonuses suck, you still want to get your money before leaping away.
- Right after year-end bonuses, a lot of Analysts leave and banks scramble around to find new, experienced people.
- 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:
- Headhunters
- Friends
- 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.
Break Into Investment Banking
Free Access to Exclusive Content for Members Only!
Sign up for The Banker Blueprint today and enjoy:
- Free Report: 37-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews.
- Exclusive emailed bonus material.
- Free Banker Blueprint newsletter with more in-depth advice.
- Unlimited access to all articles, videos, and advice - and free updates whenever new content is added to the site.
Good read! It makes me feel that WSO is a little misleading on this topic in that people rank groups in BBs as if you don’t go to certain group, you have no chances for a good PE opportunity, looks like it ain’t so true after all.
However, it’s been reported that some offices/groups have near 100% PE placements (UBS LA, but hellish life). Not sure what your take on that, would love to hear from you, brian!
thanks!
You have to be very careful here because you’re not really comparing apples to apples with different groups… quality of analysts, deal experience, etc. is way different. If Analysts in one group are twice as smart as another and they have a better PE placement, is it because they’re much better or because their group is better?
The other problem with “rankings” is that things just change too quickly for these to be of any use – just look at what happened over the past year since the crisis.
Agreed. On that note, the ranking on this post is misleading in itself.
I would say the strongest firms coming out of the crisis are definitely GS and JPM. The new top two. MS got owned.
UBS,CS are also screwed and set to focus more on private banking. Citi, BAML well.. no comment.
That may be true – I think most people still mentally put GS and MS in the “top” category though. But that may change soon.
Hi M&I,
Just wanted to send some appreciation your way. I just got an offer from GS/MS and your interview guide was a key part of my success. Definitely well worth the $50 for anyone on the fence.
Cool! Congrats, glad to hear it. And we’re upgrading it with 2x as many questions very soon…
I think the most important question you want to ask for lateral switch, summer internship, full time, etc. is not how “prestigious” a firm/group is or whether or not it’s PE/HF/VC… it should be, “Do I like the group? Do I like the people?”
You’re going to be spending most of your awakening moments in the office working with the same people and on the same product. So the choice should really be not how “prestigious” or “legendary” this group/firm is, but will I like the people/culture/product enough for me to stay on top of the work hours.
The exit opportunities will follow there after…
But how prestigious is it? Can you rank the banks? PLEASE can you rank the banks?!!!!!!!!!!!
As someone about to step in to banking next year, and not wanting to do it for more than 2 years (I like what I learned as a summer analyst, but disliked the life), I am confused what I should be keeping in mind when it comes to exit opportunities.
With the long list of PE firms out there, a lot of them low profile, how does one know where to start? Do you base it on your interest and look at the kind of companies that the PE firm deals with, or does the brand name always matter more?
I know you said that looking around 2-3 months before the end of the first year is ideal but what if you are clueless to begin with?
Thanks in advance, and this was quite a helpful post!
I’d say it mostly depends on what industry you’re interested in, what types of deals you want to do, and how you like the people there.
PE firms are all VERY small compared to banks so fit is even more important – if you hate everyone you work with, it’s going to be a lot more miserable compared to banking.
So I’d start talking to different firms, see who you like the best, and narrow down your initial list by what you’re most interested in.
Brand name is less relevant for PE because even at most bulge brackets the majority of analysts will end up at firms that you’ve never heard of.
Hey Brian, after doing my undergraduate degree here in in London, will it be easy for me to transition to working in New York at a bulge bracket firm? Are there are problems I will encounter that I should know about? Is it a good idea?
Ya I have a question about the London to NYC move as well. Working for a top M&A house in London, whats the best way to get to NYC?
urmm… Brian are you going to answer our questions yet???
You need to meet with people in-person in New York, or if you absolutely can’t afford the time to make the trip, get referrals and try to speak with them on the phone.
Another approach: if you just want to move to NY internally at the same firm, then get one of the MDs to set you up and make the move… if you know them well enough and they have the power to do that, it’s not that difficult.
You really need to go in-person for both networking and interview purposes if you want to make the jump. So yes, it’s harder and you need the time and the budget to travel for a few weeks to network there and then ultimately interview there.
So basically it all waters down to the individual’s quality, not the specific groups. Does it make sense though to lateral over to a better group?
It can, but you need to verify that it will actually be better than your current group first… which most people never do.
If I was already denied an interview at the Chicago office of a bank and I know someone at the New York office, can I still try to get an interview at the New York office?
It’s worth a shot – never hurts to ask.
Know a kid who got dinged by NY, but got an offer in regional office.
I was offered an interview at a middle market M&A firm in Chicago about 2 weeks ago but they have not yet contacted me again to set up the date for it. What should I do?
Follow-up with them and call to ask what the next steps in the process are.
What do you think of doing internships in the summer after graduation?
I’m a senior now, and it is a bit of a stretch to relate my previous internship to banking. Could I use that as a last resort if firms are hesitant to hire me?
That could work, but it’s usually difficult to get finance internships once you’ve already graduated.
At a target school like Wharton, where there are many juniors with 3.5+ GPAs and previous finance experience, what are the differentiating factors on resumes for people to select them for first round interviews for summer internships?
Also, is your investment banking interview guide comprehensive enough to cover all technical questions you might get if you say you’ve had a previous banking internship? I’m thinking about buying it, so I’d like to hear more of what you’d have to say :)
It’s mostly based on who knows you – if the people reviewing your resume know your name and like you, you stand a much better shot of getting selected. It’s almost like rushing a frat.
Interview guide: the current version covers most of what you can expect in interviews. The next version, set for release in a few weeks, covers truly advanced/obscure questions that most bankers don’t even know (e.g. why you can’t use Section 338(h)(10) in an LBO most of the time). If you sign up now you’ll get that, or you could wait until it’s out.
will BBs ask for references/call up your bank? thanks
That’s rare – they understand it’s a sensitive situation. Wouldn’t make any sense for them to do that.
I’ve got a finance, but non-banking, interview coming up; how useful do you think your interview guide would be?
This is an on-campus interview for which I sign up for a time. Any recommendations as to when to choose? (first, middle, last, irrelevant?)
Helpful for equity research/private equity/corp finance/corp development but not relevant for PWM or S&T except for maybe parts of the fit questions.
Signup time: doesn’t matter too much but I would try to go earlier if you can as interviewers tend to get tired near the end.
Hi Brian,
Could you please comment on analysts staying in IB as associates? How easy it is and how many do it? Those who don’t do it and leave for business school or something else… what is the approximate percentage of analysts that leave because they are already ‘sick’ of banking vs. the ones that leave because they didn’t find a spot to stay as associates? Thank you!
Very few do it. Less than 10%. I would say 90% of IBD analysts go on to do something else in finance, maybe 5% stay on as Associates and then 5% do something completely different. If the market is good its extremely easy to stay on, otherwise it’s tough and very competitive.
Hi Brian,
Thanks for all the help. Having all theses resources (guides as well as free resources) has given me a major edge in the process.
How difficult would it be to move from say the Boston/Chicago of an elite boutique to the NY office after a year. The regional office is small. Think Moelis Boston / GHL Chicago.
Also, is it possible to move from such an office to BB NY. I am very concerned about my PE exit opps due to the fact that there is no precedent for this office.
Thanks!
It’s difficult – you will need a very, very strong connection in the NY office and an improved market.
You can move to a larger bank’s office as well, but once again you need a great connection to be able to pull it off correctly. I would set aside time each week for networking if you’re serious about doing this.
Hi, I love your site! What do you think about the newly merged Wells Fargo/Wachovia? They are pretty dedicated to growing IBD and they are doing quite well so far in the league tables (top 10 for equity and M&A for U.S.). What do you think the exit opps are for this new firm, they seem right smack between a BB and a top MM so what would you say it is? Everyone that I talked to at the firm says its a BB but I’m not quite sure. What would you say exit opps are for this top 10 bank?
Too new to say. I would guess better than middle-market / boutique firms but not as good as the actual bulge brackets.
Is there ever a time you would pick a top MM like Harris Williams over a “lower/failing” BB like UBS?
Same question as above but would you ever pick a decent boutique like HLHZ over a BB like BoA? Thanks M&I, I love your posts.
I mean if you like the team or group better, sure go ahead. It all comes down to how much you want to continue working 100 hours per week at a large-cap PE or HF. Most people start out wanting to do that and then realize that it’s not that great so they end up at smaller firms anyway.
Do you mean such as picking a better PE feeder group at a MM such as lev fin over a BB (real estate banking)? Would MM’s and boutiques ever allow you to place into larger PE funds (1 billion aum)… not the elite ones like KKR but something respectable.
You can still get into >$1B AUM places coming from a solid MM/boutique group. And yeah, if the MM group has sent more people into PE and the BB group is weak / most people don’t go into PE, then you might want to pick the MM firm instead.
Hi Brian,
I’ve just started a job 1 month ago as a graduate in a big institution, yet not sure whether I’ll stay for long (not many deals here).
A well-known partner in a big institution just started his own boutique together with 7 other MDs. They’re currently looking for junior analysts.
As I’m really interested by the challenge, do you think it’s wise to go interviewing there even if I plan to stay where I just started a job for the next 1-2 years. Basically, I want to go and tell them I’m interested, not currently available but I want to be in their recruiting pipe.
I was also thinking about eluding my new job and pretending to be a fresh graduate, but I doubt it’s a good idea. Another option would be to wait and see what happens, and then contact them at the moment I want to move.
What do you think?
(and congratulations for the website, it teached me a lot about networking and played a great role in being successful my job search!)
Personally I would not meet with them until you’re more interested in moving over. Maybe just stay in touch for now and trade emails, but I would not go in for an interview until you want to make the move.
I’ve accepted an offer from a top group (M&A/Lev Fin) at a BB in London, but I want to get to NYC. Would it be possible to lateral internally after one year? Should I ask HR NYC is there’s availability beginning this year? Would it be worth giving up the “top group” status in London for a coverage team? Will I get locked into London (i.e. PE/HF recruiting)?
Thanks!
It’s possible but hard because you have to fly across the Atlantic for interviews / possibly networking. I would ask HR NYC as soon as you can. I don’t think there’s much difference between a “top” group in London vs. a coverage team in NYC.
Hi Brian,
I’ve been referred for an immediate hire position at a BB for an analyst position by an analyst. I’ve already graduated but so far only have M&A internship experience which wasn’t very quantitative at all. I have taken coursework, and have studied myself to understand all the basics of investment banking finance, including Wall Street Prep, but hope I don’t get overlooked for an interview. Do you know who selects resumes in this situation and if I should be trying to network with these people at the bank, perhaps via linked in, since I haven’t heard back yet. Thanks.
Yes, definitely network with anyone at the bank you can, using whatever means you can. Selection is usually based on what analysts from your school / similar schools say but exact people are impossible to predict.
I had a discussion with a friend recently about the lateral hiring process. I’ll be working up in NY with an up-and-coming advisory services boutique starting in July. I feel like there are a lot of growth opportunities within the firm since it’s on the smaller side (<10 analysts in my class), which means more responsibility. However, my friend mentioned that I should try to lateral over to some of the "elite" BBs (GS/MS/JPM) during my first year at any cost, simply because of the brand name. What are your thoughts on his assertion? Does the GS/MS/JPM name really carry more weight than a having a lot of good deal experience with a lesser-known firm? I'm particularly hesitant because there's no guarantee I'd be placed in the group of my choice if I made the lateral transfer. The goal is to get into PE 2-3 years from now.
It depends on what type of PE firm you want to move into. If it’s KKR / Blackstone / TPG etc. then yes, a lateral move is a good idea. But if it’s just any PE firm and you don’t care about the size, it’s not necessary.
Thanks for the quick response, Brian. My “dream goal” is to get into a KKR/TPG/BX/etc., so I’ll definitely look into lateralling once I’ve gotten a few months of work experience under my belt.
that “Dream goal” thing just made my day. i’m a first year analyst at a BB and amuse myself by reading these comments…
You have no idea how funny it is to read comments after running this site for years… the amusement might be wearing thin, though.
Hi Brian,
Thanks for the post. Can you please explain what you mean by having to wait for another year for buy-side recruiting even if you do not get demoted? If I, for example, work for a year at a BB and then move to a boutique and become a 2nd year analyst normally, why can’t I just do the regular buy-side recruiting and not miss a year? Wouldn’t I still normally apply at the end of my second year as analyst to a PE firm?
Thanks a lot in advance
The issue is that buy-side recruiting starts in March/April at the mega-funds, concludes within 1-2 months, and extends throughout the summer for smaller places. So let’s say you move to a different firm in the summer after you get your bonus… it would be hard to jump in then and get started with buy-side recruiting because it’s already in progress. You would have to wait for the next cycle – and there is some risk with that because if you don’t get a 3rd year promotion you might be out of work as the recruiting process progresses.
So basically normally people apply as 1st year analysts? I thought you only get to apply once you had around at least 2 years of experience. I thought that if I transfer into a boutique and become a 2nd year analyst there and then apply in March/April, as you said, I wouldn’t miss the recruiting season? We’re talking about the first year bonus here, right?
Also, my other question is why can’t I apply to a PE firm in my first year as an analyst AS I wait for my bonus, and then transfer into a boutique and become a second year analyst?
Thanks a bunch!
No, PE firms recruit as you finish your first year. The issue with waiting until year 2 is that you may be out of a job as recruiting progresses over the summer.
You could attempt to apply to a PE firm, then get your bonus, and then transfer to a boutique but that would be extremely confusing and I don’t think either firm would go for it – the PE firm will get very suspicious if you leave for another bank as they’re recruiting you and the bank won’t want you as much if they know you’re leaving soon anyway.
Hi Brian,
Thanks for all your helpful info. I just graduated from college and started working at MBB. However, I want to make the switch to banking and am wondering if you have any advice on how to do so. Would I just apply in September with all the college seniors for a position starting in Summer 2012 or could I just apply now and make the switch as soon as possible?
Thanks.
http://www.mergersandinquisitions.com/consulting-to-finance/
Maybe work for a year or so and then make the switch; you can’t use on-campus recruiting anymore.
Thanks for the response. If I work for a year and try to make the switch to the first-year Analyst class, wouldn’t it be difficult because it’s already been filled with seniors who got FT offers?
You can say so though I’d suggest you to network as much as you can during that one year, and try to get a spot in the first year analyst class before the spots are given to the seniors.
http://www.mergersandinquisitions.com/recruiting-in-a-down-market-part-3-networking-newbie-to-networking-ninja/
What are your thoughts on making a lateral move from a bulge bracket (think DB, BarCap, Citi) to an elite boutique?
Depends on your team, culture, pay and exit opportunities. I don’t know which division etc you are referring to but I’d move to an elite boutique if I like the team, pay is good and the exit opps are promising. Elite boutiques are generally smaller so I’d have more responsibilities and could probably rise up the ranks faster
Out of undergrad my friend worked as a credit analyst at JP Morgan for about a year and a half. Assuming he wants to make a switch to I-banking, does he have a chance at breaking into The JP Morgan IB division? Or should he just try and network his way into a smaller boutique firm? I know that IB Analysts typically come straight from undergrad, however, since he has almost two years of work experience, would he qualify as an associate or would he start out as an analyst? Thanks
He’d qualify as a third year analyst/associate. I think he should network within JPM and see what happens. He should also network w smaller boutique firms too. Do both
Have you ever seen/heard of anyone in a similar situation breaking into IB at the bulge bracket level? Also, while networking, should he reach out to analysts/associates or to VPs/MDs or simply to HR?
“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.”
What do you mean by alumni? People who went to our university? You could still do that even after you leave education?
—
I was under the impression that the pay would be similar in all the banks and that the bonuses would differ…
Yes. Yes.
Would this sort of hiring typically have less academic requirements compared to fresh graduate programmes/offers and internships?
For example: rather than ask for minimum of 2:1 + 340 UCAS points (including A-Level Mathematics at grade B or above) + GCSE grades A/B in Mathematics and English.
Would there be more experience/performance based requirements e.g. “proven skills in …”?
Wondering as say I work at Barclays Capital, then I decide to move to the HSBC. Would I still be expected to generally meet the latter’s minimum academic requirements?
(The grad/internship requirements I listed reflect the latter’s criteria.)
This thing is really puzzling me. :S
What I mean is:
Will lateral hiring still require the academic prerequisites – pre-degree level – that internships and graduate programmes would?
They generally care more about your work experience at that level, yes. So requirements may not be as strict.
But lots of banks are still prestige/grade-obsessed, so it is likely to come up somewhere in the process unless you’re much more senior.
So if I were to decide to move to Mercer (A-Level Math grade B) or HSBC (GCSE level Math and English at grade As), I’d probably have to consider boosting my qualifications in that situation?
(If I’m not senior or don’t make use of networking, I mean)
I’d think so.
Thanks, Brian and Nicole.
One last question: would I be right in assuming that “more senior” is 3rd year analyst+?
It is more like late associate or VP or above
Thanks Brian!