Interview season is finished.
You got 30 first round interviews, made it to 5 Superdays, and came away with an offer at a middle-market bank – which you quickly accepted.
But 5 minutes ago, you just received a call from your recruiter at a bulge-bracket bank: “another spot opened up” and they’re extending a summer internship offer to you.
So you renege on the middle-market offer and go to the better bank, right?
Should You Renege?
If you look around online and ask your friends, you’ll see that there’s no consensus on the “ethics” of reneging and whether you should do it.
There are 2 main schools of thought:
#1: Bankers Are Vengeful and Want to Kill You
This one is more common among senior bankers who spend time recruiting you – they’ve seen cases where someone reneges on an offer and then ends up losing his other offer(s) as a result of angry phone calls from bankers.
The industry is very small, everyone knows each other, and any banker can quickly find out about your move if he wanted to do so.
They would also point out that the upside when reneging is usually much less than you expect.
#2: The Labor Market Works Both Ways – Look Out for Yourself
In camp #2 are many current Analysts and Associates, who point out that everyone is replaceable and that banks have a habit of rescinding or downgrading offers without notice.
The world’s not a nice place, and you have to do what it takes to get ahead – if you get a better offer, you need to accept it and renege on the other one because no one else is looking out for you.
They would point out that in a week from now, no one will even remember what you did.
So, Who’s Right?
Neither side is “right” or “wrong” here because reneging on job offers can go either way.
But my own view is this: the potential downside of reneging on a job offer usually far outweighs the potential upside.
So there are some cases where it might make sense to renege – but most of the time, you’re taking a big risk by doing so.
The Potential Upside
It’s the same as when you move from one bank to a “better” one: you may get a better experience, more deal/client exposure, and better access to recruiters.
This upside is significantly better if you’re reneging on an offer in a different industry (e.g., Big 4 accounting) or you’re reneging on a back office offer and moving to the front office.
The upside is also much better if you’re reneging on one full-time offer and taking another one – you’ll probably be there for at least a year or two, whereas with internships there are no guarantees.
The Potential Downside
The worst-case scenario: your would-have-been-employer calls around and finds out where you accepted, then they notify that bank and you instantly lose both your offers.
Oh, and of course you won’t be able to recruit again at the bank you reneged on.
If you relied on on-campus recruiting and the bank you reneged on notifies your school (they will), they may cut off your access to the alumni network, on-campus recruiting, and anything else career-related.
Which is especially bad news if you’re reneging on a summer internship offer and taking another one.
So what about the legendary “Blacklist” that banks maintain to tell them who reneged on offers?
Individual banks may have such a list, but rumors about a universal list are heavily exaggerated.
It’s not because bankers are “nice” or because they “forgive” you – it’s because banks and HR departments tend to be poorly organized.
There is some risk of reneging on an offer following you around for awhile but most of the potential downside will be in the near-term.
Will Any of This Happen to You?
That’s the fun part about reneging on an offer: you have no way of knowing.
Maybe you’ll tell a VP when he’s already having a bad day, and he’ll take out his anger on you; or maybe you’ll catch an MD in a good mood and he won’t sink your career with a few phone calls.
The risk of bad things happening is reduced if you’re reneging on an offer in a different industry or from a significantly different firm (e.g. tiny 2-person boutique vs. bulge bracket).
But there’s always some risk, no matter what type of move you’re making.
When NOT to Renege
Since the downside is so high and so difficult to predict, there are many cases where reneging makes no sense:
- Bulge Bracket to Bulge Bracket – This is just stupid, even if one is “more prestigious.”
- Middle Market / Boutique to Middle Market / Boutique – See above.
- Internship Offers – Bad idea because you’re not guaranteed a full-time offer and you could be destroying your FT recruiting chances.
- Larger Firm to Smaller Firm – This really makes no sense and will make you look silly to everyone involved.
When You Might Consider Reneging
There are some cases where it makes more sense:
- Boutique / Middle Market to Bulge Bracket – This one is actually still quite risky, especially if they’re in the same location – but it does make more sense than the other possibilities above.
- Completely Different Industry to Banking – There’s a big step-up if you’re going from Big 4 accounting to a bulge bracket bank, and not as many people know each other across industries.
- Back Office to Front Office: This one can be risky as well, but moving from IT to PE or IB is another big step up and it’s hard to make the move otherwise.
None of these is a “slam dunk” – each one is still risky, but they’re at least worth considering.
How to Do It
So you’ve decided to renege on your offer – how do you do it, when do you do it, who do you tell, and what do you say?
How to Say It
Keep it very brief and to the point – you’ve received an exciting opportunity elsewhere and have to take it or you’d be kicking yourself later.
Don’t lie, but don’t tell the whole truth either.
Do not tell them where you’ve accepted the other offer – if they ask, just say the industry it’s in (“finance”) and maybe the location.
If you’re really accepting an offer elsewhere, don’t lie and say you’re reneging for “personal reasons” – that will come back and make you look even worse.
Use the phone rather than email – email is just too impersonal and at least if you call, you may not completely burn your bridges.
You want to do this as soon as possible rather than waiting until 2 weeks before you start, unless you really want to make enemies.
Who to Tell
At the minimum, call the recruiter at the firm you’re reneging on and maybe speak briefly with other bankers you interviewed with there.
There’s no reason to tell your school or to tell all your friends – this is not something you want to openly advertise.
Should you tell the firm you’re accepting the offer with that you reneged elsewhere?
My view is that you should never accept an offer or even start interviewing without telling a firm you have accepted an offer elsewhere first.
This just reduces the potential downside: some firms will get really, really angry if they find out you reneged elsewhere, while other places don’t care.
But as long as they know what you’ve done before they give you an offer or before they even start interviewing you, there isn’t much to be angry about.
There are a few special cases here worth addressing:
Deferred or “Downgraded” Offers
Is it “better” if you renege on a deferred offer (e.g. you start 2 years from now rather than next year) or a downgraded offer (you interviewed for the front office but were transferred to the back office)?
No, not really, because most of the downside is in the near-term.
The risk may be slightly reduced here, but it’s not that much different.
The advice above applies to recruiting practices in the US, but not every country in the world does it the same way.
In some regions it’s more common to go around interviewing even when you have offers lined up or accepted.
So you need to ask people at your school and anyone you know in the industry and see what common practice is where you live.
Actual Personal Reasons
Maybe you have actual, legitimate personal or family circumstances that have led you into reneging on an offer… they can’t get annoyed at that, right?
No, sorry – once again it doesn’t matter what your reasoning is.
But in this case you do have another option: instead of reneging on the offer, just push for a deferred offer instead. That lets you keep your hard-earned offer and keeps you from burning bridges.
Banking to Completely Different Industry
If you decide to join the Peace Corps at the last-minute, no banker will call the organization to sink your career and prevent you from saving the world.
In this case it’s less about ruining your entire career and more about limiting your options if you ever want to go back into finance in the future.
The problem with reneging on an offer is that the downside outweighs the upside and there’s no way you can predict how bad the downside will be.
There are some cases where it makes sense to consider, but 90% of the email I get on this topic is of the “Should I renege on my offer at one bulge bracket to move to another one?” variety, and that just doesn’t make sense.
So if you have a dramatically better offer and you need to renege to accept it, proceed with caution.
But don’t say I didn’t warn you.