Rapid-Fire Q&A: Restructuring, Relationships, Bonuses, Offers, Regional Offices, the CFA, and Summer Housing
Today we’re going to try something different: I’m going to answer each of your questions in 100 words or less. Why write 500 words when 50 will do?
1. Can you elaborate on restructuring recruiting?
Yes – it’s highly selective and typically limited to the top “banker” schools such as Wharton and Harvard, at least at Blackstone and Lazard. If you want to improve your chances, go to a less well-known restructuring group first (at one of the smaller banks I mentioned) or get some experience in a related field, like restructuring at a Big 4 firm.
2. Ok, so why is it bad to get in relationships with co-workers again? I saw this cute girl…
I feel like this site is turning into a dating column lately, but here we go…
There are 2 distinct problems:
- You’re around the person all the time. You work together 18 hours a day, go back home and you’re together for another 6 hours. Everyone needs some personal time/space.
- If you break up, that’s really bad news because you’re still around the person all the time at work. And take it from me, there’s no situation more awkward than sharing a lot of friends and/or co-workers with an ex.
3. What do you think of private equity or hedge fund funds of funds?
I’m not a huge fan because the work is far removed from the interesting parts of deals (i.e. the details “close to the ground”). You also don’t have a huge array of exit opportunities when you go to one of these rather than something more traditional.
But if it’s down to this or unemployment, take whatever you can get.
4. Is there a big difference in bonuses between Fixed Income, Equity and M&A?
Yes, typically bankers in Product Groups (M&A, Leveraged Finance, Restructuring) and Industry Groups (Technology, Retail, Consumer, Industrials, etc.) earn the highest bonuses and other groups such as Equity Capital Markets and Debt Capital Markets work less and therefore earn less.
See the articles I linked to there for some estimates.
5. I have offers from Goldman, Morgan, Blackstone, and Lazard. Which one is the best?
Those are all great names, so don’t stress about this too much – see this article for how to decide between investment banking offers.
6. How do the different Product Groups and Industry Groups work together? If a company you’re selling wants to raise capital, would the M&A group or Leveraged Finance group do it?
It depends on your bank and group, but where I worked, different groups stayed fairly separate. In the scenario above, the Leveraged Finance guys would handle all the memo writing and debt modeling and they might just request information on the company, financials and industry information from us.
Obviously there are exceptions: Goldman, for example, doesn’t have Product Groups at all and their Industry Groups do all types of deals.
Click here for more on industry groups vs. product groups.
7. How does restructuring differ in an “up market?” Does everyone get fired?
Work and deal flow are definitely slower, and your experience won’t be as good. Surprisingly, though, everyone does not get fired, for 2 reasons:
- There are a very small number of Restructuring bankers anyway; firing 10 people won’t make much of a difference to your bottom-line vs. the 500 M&A bankers you have.
- Banks don’t want to be caught flat-footed when the market comes crashing down, so they always keep Restructuring bankers on hand.
8. What do you think about regional offices vs. going to NYC?
Obviously a financial center such as New York or London offers more firms to interview at and more networking opportunities; beyond that, working at a regional office means you’ll likely go to other firms in your region rather than moving across the country. The “quality” of your exit opportunities depends more on the bank itself rather than which office you’re in.
9. I work in the front office doing equity research for a boutique, but attended a state school in the Midwest. Can I still get into top business schools?
Yes, but it will be an uphill battle because of your undergraduate school. Most of the top business schools have students who went to the Ivy League and other top universities.
I would recommend developing one of your hobbies or interests outside work and coming up with a good angle that sets you apart from all the “blue-chip” candidates.
10. I’m a rising senior and have offers to work at a well-known middle-market private equity firm as well as a regional boutique bank. What do you recommend?
I would almost certainly go with the middle-market PE firm. There’s nothing wrong with boutiques but generally when you start out, you want to work at the largest place you can, and your PE firm is much more well-known than the boutique. You’re also more likely to get more “real work” at the PE.
(This question/answer would be more meaningful if I hadn’t deleted the names, but I must do that in the interest of privacy)
11. I remember you mentioned that Transaction Advisory Services is a good way for accountants to switch into banking. However, there are a lot of TAS groups – PricewaterhouseCoopers, for example, has a whole array of groups. Which is best for getting into finance?
Corporate finance and M&A specifically would be best. The other ones listed there “help out” on transactions in the sense that they assist with due diligence and such, but they’re much less similar to what bankers do than corporate finance/M&A are.
12. Should I study for the CFA? I really want to get into investment banking!
This one has been answered dozens of times in different formats on this site before – see this article for the pros and cons of the CFA.
13. I have an upcoming summer internship in New York, but I have no money. How can I afford an apartment?
Consider NYU student housing – most interns in NY live in housing at one of the nearby campuses. Columbia also has housing I believe. Failing that, ask your firm what interns typically do for housing and get in touch with former interns to see what they did.
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Wow!
Eventually you came out with some name AJ.
I hope someday this blog could be treated as an “self-updating bible” for
prospective investment bankers :D
Although I know it would be really sensitive to write about, but could you do som composition regarding how many portions of Wharton, Harvard, Columbia, or other top undergraduates are in the field?
AJ is just the name of the guy in the video. Not sure I understand your question, but data on % of bankers from each school would be almost impossible to get simply because it changes so quickly since turnover rates are so high.
I was told that if i finish my state school undergrad degree and get into Cornell that this would still, not be enough to land with goldman or any of the big dogs. And I understand that its not always what you know but who you know, but how can this be true. I am persistant and was a late bloomer in the go getter and achiever category but am now, more than ever and think I can, are the ney sayers right?
btw this site is awesome, i really appreciate what you do
what happened to the question section?
Depends on what you mean by “finish” your degree – if you mean transferring to Cornell, I think that’s fine; if you mean actually finishing it and then going to Cornell for a Master’s Program, you may still run into problems.
What do you mean by “the question section?”
yeah i mean go on to cornell for my graduates in finance….
and i asked a question and had it answered before on here…but forgot how to get there again
I would google your question and “mergers inquisitions” and it should come up in the first few results.
Hi
Great work with the site!
Just wondering if you could tell me about the difference between product groups and industry groups. I know that product groups are groups such as M&A, ECM and what industry groups are.
I also have a fair understanding of what industry group people do – pitch to clients in the industry.
I, however, don’t have much idea what goes on in a product group. I would assume that work would change on a daily basis but can you give me an idea of what sort of work is being done? Deals often last for quite a few months – what responsibility do industry group people have? what responsibility do product group people have?
Cheers
Very dependent on the bank in question, basically industry groups do all different types of deals as well as pitches and general marketing whereas product groups simply focus on one type of deal.. as for the sort of work, Excel, PowerPoint, Word, etc. that is pretty much all you do in finance.
I sent you an email and haven’t heard back..did you receive it?
I typically respond to emails once a week.
If I replied to everyone every single day, I would never get anything done. :) So I queue up all my responses in the interest of efficiency.
oh alright, just didn’t know if you were uninterested..not a problem
Just replied.
Great website by the way.
I just finished college and am planning a career in investment banking in the m&a department. I am planning to become an associate after I get my MBA. Then i would like to change my career after becoming a VP. So what kind of careers would I be looking at after getting 5+ years investment banking. Possibly in finance or something else?
And could you please tell me how many hours I would be working as an analyst, associate, VP and MD. How often do you travel as a VP btw.
Would be hard to switch after 5+ years in the field. You might be able to get into PE or some corp dev jobs but that’s about it. The longer you’re in, the harder it is to move.
Analyst – 90-100 hrs/week, Associate – 80-90 hours/week maybe less as you move up, VP – 60-70 hour/week, MD – 50-60 hours a week.
You travel quite a lot as a VP/MD which is why the hours aren’t really much better.
Hi again,
Do you have any comments or tips for someone looking to get into the financial institutions group at a BB? Is the work an analyst would do there similar to what he might find in any other i-banking group? Thank you thank you. :)
Nothing too different from any other group except that it might be near-impossible to break in these days – the market is so awful they’re barely doing any deals.
I see. Just out of curiosity, what are your thoughts on the market right now? Particularly with financials…do you think that investors oversold? I bought FNM shares back at $12 and then again at $5 and I feel like all these media outlets are manipulating the market big time and profiting from it.
Also, what do you see coming in the future for the structure of financial institutions? Do you think many of the big i-banks will consolidate and what impediments if any do you think regulation might pose on the way investment banks operate?
Btw, I’m going to use your resume review service…just wanted to give a heads up. Thanks!
I’m less than optimistic about the market; I think the state of the US financial system is poor and we have a long way to go before everything is over.
I don’t see many huge acquisitions, but some of the bigger banks may buy a few smaller ones… regulation will probably tighten and the Fed might mandate rules on the types of allowed securitization and such.
Let me know if you have any questions on the resume service – thanks.
What is the compensation for summer analysts?
At bulge brackets it is pro-rated full-time salary so usually in the $10K-$15K range.
So I’ve been reading your site for 2 hours and I finally came across your feeling about the CFA.. I love the site by the way, you do a great job… I graduated from a State school last spring (’08) and I have been interning at a boutique merchant bank, acting as buy side advisers for PE firms, for the past 4 months.. I had no previous experience in Finance Field as I have been running my own Landscaping Company for the past 4 summers (this past summer it was a $50,000 operation over 3 months with 6 employees a day) but I desperately want to break into the IBanking world! I am half way done studying for the CFA level 1 exam in June (because I thought it would be something good for my resume & knowledge to break into the field).
I know you said you don’t think that it helps.. but not at all? I had around a 3.0 GPA (nothing special, I usually leave it off of my resume). I was wondering what you thought would be a good move for myself and if this internship/CFA level 1 would be a good way to break in?? I thank you for creating this site, and anything you can advise me with!!??
The internship will be much more helpful than the CFA… if you’ve already done a lot of work studying, you might as well take it, but ultimately whether they decide to hire you or not comes down to your work experience… so focus on that.
How much less do analysts in Debt/Equity Capital Markets work than analysts in M&A or leveraged finance?
Marginal at best. Once you hit 80 hours per week, 5-10 more or less doesn’t really make a difference.
DO NOT GO INTO THIS INDUSTRY UNLESS YOU LIKE TO WORK A LOT
I just discovered this site, and started reading from /page/98 …and have reached /page/57 in two days flat….never had more fun reading anything else :)
I am amazed at how you manage to respond to every single reader comment on every single page. Godlike!
I’m still reading and just thought I should thank you for providing me with exactly what information I was looking for, but for what no other site/blog managed to provide me with :)
One question I had…perhaps you have answered it elsewhere in the posts I haven’t yet read – if you don’t have an opportunity to start work in a BB, but are instead in a Citibank/HSBC/StanChart in Asia and get into say one of their M&A/LeveragedFin/ECM/DCM etc teams would that be a good start? Do those guys earn/work as much?
Thanks again :)
Yeah to be honest responding to comments gets tiring (imagine doing this for 4 years) so I’ll be hiring someone else to do that soon. Yes those banks are all fine but much stronger in Asia then elsewhere so you would get a discount if you tried to move to another region