by Brian DeChesare Comments (5)

How to Move from the Buy-Side TO Investment Banking – Without Bribing the Chairman or Having a Well-Connected Family

Buy-Side to Investment BankingWait, what?

Why would you ever want to do this?

Isn’t it the equivalent of dating a supermodel, and then breaking up with her and eloping with your pudgy, pimple-faced neighbor?

Not quite.

There are plenty of reasons why you’d want to move from a private equity, hedge fund, or other buy-side role back TO investment banking…

But it’s also harder than you might expect.

We’ll get to the tactics, the networking, and the interview strategies, but let’s start with the first and most obvious question:

WHY on Earth Would You Ever Want to Do This?

The short answer is that not all “buy-side” roles are created equal, and the benefits can be greatly overstated.

Often, the job looks good on paper but then you join and one or more of the following happens:

  • You realize that associates have a 0.0% chance of getting promoted at your fund.
  • The fund shuts down due to poor performance.
  • It turns into heaps of cold-calling and research rather than analytical / investing work.
  • You realize you don’t like the work because you prefer to be doing deals rather than looking at hundreds of potential deals and very rarely pursuing any of them.
  • Your fund requires you to contribute your own capital once you reach a certain level, and you don’t want to accept such a risky and illiquid investment.
  • You still lack basic technical skills that you would have learned from working on M&A or restructuring deals.

…or you might have joined the firm as a summer intern, or as an “off-cycle” intern, simply because it was easier to get an internship at a private equity firm.

But they’ve already told you upfront that it’s not a permanent position, so you’ll need to move on and win a full-time role somewhere else.

And since you’ve read everything on this site, you want to start out in investment banking to gain a broader skill set and a better “alumni network.”

Finally, you might be in a “buy-side area” such as private equity funds of funds that is on the decline – and you want out.

But with your deal experience, it’s tough to move into direct investing PE directly so you’re thinking about the IB path instead.

Step 1: Lock Down Your Story

So you’ve decided to aim for sell-side roles for any or all of the reasons above.

What’s your first step?

Before contacting anyone or speaking with recruiters, you NEED to lock down your story.

The #1 objection you’ll face from bankers is:

“Wait, why are you moving back to the sell-side? Isn’t this is a step down? Are you sure you want to make pitch books? Are you drunk or high right now?”

Here’s how you might explain why you want to make this move:

  • You spend too much time monitoring portfolio companies or existing investments, and you’re more interested in doing deals – so IB suits your personality better.
  • You spend too much time looking at potential deals and ruling out almost all of them – but you like working on deals and want to spend more of your time on that.
  • Your performance is judged on a much longer timeframe (at least for PE/VC) and you’d rather work in an industry where your work in that year correlates more readily with your performance in that year.
  • You would rather spend more time on the modeling and analytical side rather than sourcing investments, so IB is more appealing to you.
  • You like the “3-dimensional thinking” in IB because advising on M&A deals involves more than a simple yes/no decision – you have to think about competitors’ strategies, unconventional deal types and financing methods, and more (thanks to Frank Quattrone for this one).

You can’t just stop at why you want to move to investment banking, though – you also have to explain what drew you to PE/HF/VC in the first place, how your thinking evolved, and why this specific product or industry group in IB appeals to you.

I can’t give you a universal template, but here’s an example “story” if your background looks like this:

But now you’ve realized the pitfalls of the job (limited advancement opportunities, not much deal exposure), and you’ve decided that investment banking is a better area to start out in.

Here’s a quick sketch of what your story might sound like:

“I was always drawn to transactions and M&A deals, so I took a Big 4 internship initially, and I liked a lot of the analytical and valuation work there.

But I wanted to take a more active role in deals, so I decided to move to a private equity fund focused on the tech/media/telecom sector, since I had a personal interest in the industry and had completed several engineering classes; I later accepted a full-time offer there.

While I’ve enjoyed my time at the firm, we spend a lot of time looking at deals but rarely doing them, and also quite a bit of time monitoring portfolio companies, neither of which appeal to me as much as doing deals.

I’m most interested in IB, and especially in your group, since you focus on the same sector and have advised on a number of high-profile deals, including [Name-drop deals] – in the future I want to be an adviser to companies in the sector, and I see your group as the best way of getting there.”

You’ll get more questions on why you really want to make this move, but it’s easier to convince interviewers if you address these objections upfront in your story.

Step 2: Network and Navigate the Lateral Hiring Process

The biggest mistake here is waiting for the “perfect time.”

As previous interviewees have pointed out, there is NO perfect time for a lateral move – so no, don’t wait for bonus season and then start contacting everyone then.

Turnover is high, people leave at very random times, and you only reduce your chances the longer you stay in your current role.

Since you already have buy-side experience, you can approach networking differently from an undergrad with no real experience:

You should focus on complementary groups: if you worked at a TMT fund, go for TMT groups in banking.

If you didn’t have a particular industry focus, aim for groups like Financial Sponsors, Leveraged Finance, and Debt Capital Markets that are related to PE/HF/VC firms.

If you don’t get a positive response, move on and try the next team – eventually you’re bound to find a group where someone quit suddenly and a replacement is needed ASAP.

Don’t even bother with headhunters because they’re less likely to be helpful at large banks.

Once you’ve made the initial outreach, you need to practice politely persistent follow-up:

  • If you don’t hear back from someone after 1 week, send a 2-sentence follow-up email.
  • If you still don’t hear back after another week, send another follow-up email.
  • If there’s no response after that, move the team lower on your priority list and focus on more responsive leads.
  • If you do hear back, ask about openings on the team; if they say there are none, ask about other teams at the bank that might be hiring.
  • If you get referred to someone else / another group along the way, you have to be very proactive with follow-up. Apply the same rule as above and if you don’t hear back after 2-3 tries over several weeks, put the team at a lower priority.

Step 3: Interview Like a Pro and Handle Objections

So you’ve been emailing dozens of bankers, and now you have a few interviews set up.

What’s next?

You need to be prepared for all the standard interview questions and you need to know your deal experience very well, but we’ve covered all that before.

Interviewers will still spend a lot of time digging into why you really want to make this move, which is why your “story” in step 1 was critical.

A few years ago, one M&I contributor and guest author had trouble answering this objection in interviews, so I gave her some of the tips above.

But I also recommended another response:

“If you doubt that I’m serious about the role, think about it like this: with my experience, it would be much EASIER to stay in PE/HF/VC and win another role there… but I’m not even interviewing for any of those.

So I’m committed to making this move, even though it’s actually harder than staying in my current industry.”

You wouldn’t lead with a statement like this, but it’s a powerful response if they seem skeptical no matter what you say.

You should expect case studies and modeling tests, especially if you have full-time experience or you’re in a region such as Europe that uses assessment centers.

Bankers know that a lot of “buy-side” roles are glorified cold-calling and research jobs, so they will not assume that your technical skills are sound just because of your resume.

And if you’re moving in from something that’s notoriously non-technical, such as venture capital, you should definitely expect these types of case studies since they’ll be even more skeptical.

There are literally dozens of hours of videos and tutorials on case studies and modeling tests spread across both sites and YouTube, so I don’t have much to add.

Three-statement modeling tests and valuations tend to be the most common for IB roles, but M&A and merger model cases can also come up.

What’s Next?

Easy: win the offer, leave your firm, and move forward toward your bright new future…

…and then be prepared to quit in 6-12 months anyway once a better buy-side opportunity presents itself, and you realize you were silly to move back into IB in the first place.

Funny how that works, isn’t it?

For Further Reading

Yes, even more articles related to this topic:

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hi Brian,

    Thanks for the great article. I’m in a similar situation right now. I’ve been at a MM boutique for 2 years and have a PE offer. I’m not sure if it’s something I want to do and am wondering if a move back to IBD at Associate level later on would be possible? Or do banks frown upon PE analysts?

    1. It might be possible if you switch over early enough, but you’re not going to move back to IB after, say, 5 years on the job in PE.

  2. Thanks Brian. This is really helpful. I work in a local mid-market buyout PE firm in Asia. And I have a chance to interview at one of mega funds (KKR, Carlyle, Blackstone, TPG).

    What kind of stories that I could bring up to the table to justify my lateral move?

    Deal flow of mega funds in Asia is not that great. I think they do a deal every a year or two. So, I can’t say I like to have more solid deal experience. Honestly, I need a brand. But, I know I have to beautify it.

    1. Thanks! I would point to a deal one of those mega-funds has done, and find something about it that you haven’t done at your current fund (different industry type, different deal structure, different maturity stage) and talk about something like that – also point out how those funds are global and so you’ll have the opportunity to learn more about what’s going on in other regions and how it relates to Asia.

      1. Brian, you advice is great. Thank you again!

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