The Complete Guide to Cold Calling Your Way Into Investment Banking
And you made a valiant effort, securing 10 interviews with everyone from boutiques to bulge bracket banks – but you didn’t land the offer.
And now you only have a few months before your non-existent summer internship begins.
With recruiting finished, your last, best chance of breaking in is to cold call your way into Wall Street.
But will that even work?
Should you bother going all-out and calling hundreds of firms?
And if you do take the leap, how do you cold call your way in successfully without getting slapped with a restraining order for being too aggressive?
Does Cold Calling Really Work?
This is the most common question about cold calling:
“I’ve tried calling 10 different banks and no one is hiring! I sent my resume to all of them, but I haven’t gotten any responses! What is going on, does cold calling even work? Why are you lying to me?!!!!”
The answer is yes, cold calling does work – but it does not work instantly.
Cold calling and cold emailing work better:
- In developed markets like the US and UK.
- If you’re an undergraduate or recent graduate.
- At tiny boutique banks/PE firms/hedge funds.
It’s questionable in regions like Asia, parts of continental Europe, and Australia – I’ve seen mixed results there, whereas there are dozens of success stories from the US/UK.
That’s because recruiting is more traditional in those places and randomly contacting people is not as accepted socially. So give it a shot, but make sure you pursue other options if you’re in a region where it’s not as effective.
It also won’t work as well if you’re at the MBA level or you have full-time experience because you should be leveraging your network to break in instead.
I’m sure some people have cold called their way into bulge bracket banks and mega-funds, but it’s rare and I don’t recommend spending much time on it – those firms never have trouble finding qualified, bright-eyed, and bushy-tailed interns.
And finally, once again: do not expect instant results.
Cold calling is an extended and ego-bruising process where you’ll get bankers yelling at you, writing nasty emails, and acting like Gordon Gekko when he first met Bud Fox.
And unlike Bud, you can’t use insider information to work your way in.
…But Why I’m Still Not a Fan
So cold calling works – but I am still not a huge fan because:
- It can easily turn into a repetitive grind where you spend hours each day calling random banks.
- Networking is much more effective if you do it via referrals and informational interviews.
- Cold approaches are more effective in-person at events like information sessions where you can get the other person to remember you more easily.
- The odds are stacked against you because you have little to offer to banks as a student.
But, you could easily find yourself cold calling anyway if:
- You go to a non-target school where no banks recruit and you have no connections.
- You’ve exhausted all your connections and still haven’t found an internship.
- You can’t make it to in-person events and you live far away from major financial centers.
And remember: all it takes is one.
What Exactly is a “Cold Call”?
What is a “cold call” and how is it different from other types of networking?
The main difference is that you don’t know the other person – unlike contacting alumni for informational interviews, you are randomly calling them and have no previous interactions or connections with them.
You are also much more direct – rather than chit-chatting about their background and asking about what they do for fun outside of work, you ask about internships and recruiting right away.
And if you don’t get a positive response, you persist until you do, you try again later, or you move on to other banks on your list.
On a standard cold call, you might introduce yourself in 1-2 sentences, ask how you can position yourself for an interview at the firm, and then respond to the other person’s “objections” (we’re not hiring anyone, we don’t have the money, etc.) until you get a real answer.
It’s the difference between dating and randomly hitting on people at a bar in search of a one-night stand.
How to Cold Call Like a Champ
It’s a 5-step process:
- Get a list of banks or bankers in your area with their names and contact information.
- Plan your pitch and figure out what you’re going to tell them.
- Place the call and be prepared to respond to their objections.
- Afterward, follow-up at least once a week until they tell you to stop calling.
- Meanwhile, continue to contact and follow-up with other firms on your list.
Timing is extremely important.
You do not want to start cold calling places when it’s still the middle of recruiting season – you should be using other means like weekend trips, informational interviews, and information sessions to contact bankers.
It may seem counter-intuitive to postpone cold calling until the last-minute, but it makes sense for a number of reasons:
- You can focus on your higher probability options first and only spend time cold calling if nothing else works out.
- If you wait until the last-minute, you can find banks that really need interns.
You don’t have to do this – I’m sure some have succeeded by cold calling during recruiting season, but most successful readers started late in the process.
There are a couple ways to do this; the best method is to get Capital IQ access from someone who has it and search for local boutiques in your area.
Failing that, there are over 13,000 firms in the Investment Banking Networking Toolkit and other sources online with names and contact information for firms.
You could also try random Google searches, LinkedIn and even using tools like Google Maps to get names – it really depends on how much time you have left and what your deadline for finding an internship is.
If you live in the middle of nowhere and there are no firms in your area, get your butt out of your chair and hit the road.
Contact firms at the financial center closest to you and make it clear that you’re willing to move there right away.
Refining Your List
One other quick note: no matter how good your source is, do not just blindly call numbers.
Always search online first to verify that the place still exists, that’s it what your list says it is, and spend a few minutes learning something about what they do, recent deals, and so on.
No matter how comprehensive the data, things change every day and unless you’re willing to pay tens of thousands of dollars, it’s impossible to get everything updated in real-time.
Planning Your Pitch
This is the easiest part of the entire process. The main mistakes to avoid:
- Giving your life story rather than a 1-2 sentence introduction.
- Not getting to the point and chit-chatting too much.
So don’t do either of those.
Instead, plan a 1-2 sentence introduction where you say something like, “I know you’re busy so I won’t take too much of your time – I’m a [Major] student at [University Name] and I’ve worked at [Company Names] before. I wanted to see how I could best position myself for an internship at your firm.”
That’s it – this is not rocket science.
Placing the Calls
You do not want to fumble around and say “um” or “ah” too much on the actual calls. You will get better with practice, so I recommend “warming up” with places you don’t care about as much.
Say the same thing to everyone to minimize screw-ups.
Ideally, you will call the bankers directly (higher level is better if you can find them – MDs have more power than VPs, VPs have more power than Associates/Analysts) and speak with someone who has a say in the hiring process.
But more often than not, you will only have their main number – you can still recite the same script, but you need to be prepared for the gatekeeper to respond with their objections and keep you locked out.
Calling vs. Emailing – Cold Emails For the Win?
Right about now, you might be thinking:
“If it’s so hard to successfully get through when cold calling, why not use email instead? Does cold emailing work and is it more effective than cold calling?”
Personally, I am biased against email – but that might just be because I get hundreds of emails each day and can’t even respond personally to 90% of them.
Emails are easy for bankers to ignore or delete, whereas phone calls are harder to dodge. And catching them in-person, of course, is even harder for them to avoid.
But you may still have better luck with cold emailing, especially if you’re not good on the phone.
I’ve seen it go both ways, so you have to experiment and see what works for you. If you do cold email bankers, attach your resume/CV and ask directly in the email how to position yourself for an internship there.
What to Expect on the Calls
Ok, back to calling now – what should you expect when you call and pitch the banker or the gatekeeper?
95% of the time you will get variants of the following response:
“We’re not hiring.” / “We don’t recruit interns.” / “We don’t offer internships.”
Do not give up when they say this or you will never succeed.
Respond by saying, “So you’re in charge of all recruiting for the firm?” or something to that effect – if it’s a gatekeeper they will say no, at which point you then ask to be put in touch with the person who is.
Other strategies for getting past this initial rejection:
- Ask for a banker by name and fib a little by saying you were scheduled to call him/her and ask how you could be put through to talk to him/her (and if you get voicemail, hang up, call back, say you were disconnected, and ask for the number).
- Avoid closed-ended questions (“Do you have any internships?” / “Do you recruit interns?”) with a few exceptions (such as the one about the person being in-charge of all hiring).
Closed-ended questions lead to quick rejections because the person will always respond with “No”; “how” questions are better because you assume that they already offer internships and it’s just a matter of how you will get what they’re offering.
Even when you make it through and speak with a real banker, you’ll run into other objections:
- “We already have someone for the summer.”
- “What value could you add to our firm?”
- “We can’t afford summer interns.”
So you need to be prepared with a response for each of these:
- “Really? So when your deal flow picks up and your hiring needs change for the summer, how could I position myself for an interview so I could help you out?”
- “There are plenty of tasks that you need help with and your time is best spent winning clients – let me handle everything else.”
- “I understand that money can be an issue, so I’m willing to work at below-market rates – and you get a great deal anyway since this is only a trial and I’ll save you more money than I’ll cost you.”
You don’t want to offer up too much at first (e.g. immediately offer to work for free) as that makes you seem desperate; reserve that for when they continue to object.
Persistence vs. Stalking
I’ve gotten a lot of questions on “how far is too far?” and the difference between being persistent vs. turning into a stalker.
You should feel uncomfortable cold calling if you’re doing it correctly.
Unless you have a lot of experience in sales or randomly approaching people, this entire process will be new and uncomfortable to you.
If you think you’re going “too far,” you’re probably not – the only tactics I would consider too extreme are:
- Showing up at the bank’s offices in-person and demanding to be let in (even if you’re not carrying an AK-47 this will result in bad things happening to you).
- Finding out where the bankers live, camping out in their bushes, and then jumping out to pitch them when they arrive at home.
- Calling every day even after they tell you “No” explicitly and warn you to stop calling them.
You know it’s time to move on when they say “No” without even giving a specific reason why – that means they are really not interested and probably can’t be persuaded otherwise.
The first lesson in sales is that an objection is the first sign of a prospect’s interest, and it’s the same idea here: no specific objections, no interest.
I’m sure someone will now leave a comment saying that my advice is crazy and will get you in trouble or result in you getting “blacklisted” (even though nothing like that even exists).
But you are not doing anything unethical as long as you stick to simple calls and emails, so it’s not as if you’re lying about your offer status and forging documents to win interviews/offers.
Expect that some bankers will not like your tactics and will be extremely nasty to you.
On the other hand, some bankers will admire you for having the guts to cold call them and hustle your way into Wall Street.
Even though I satirize bankers here with the “Stuff Investment Bankers Like” series, they do not, in fact, all have the same personality and so their responses will vary.
If you get a negative or sarcastic response, do not take it personally – the banker might just be having a bad day or might be a tool to begin with.
You need a thick skin or you’ll never make it in the cold calling game.
So you’ve cold called several places and gotten lukewarm responses – they already have people for the summer, they don’t have formal internships, or they can’t afford interns.
Rather than giving up, follow-up at least once per week until they tell you, “No” definitively and tell you to stop calling. Many readers have been successful with extremely aggressive follow-up.
You can also email to follow-up and mix up your approach a bit, but I still prefer calls since they’re harder to dodge.
Your follow-up should not be much different – use the same script and just say you’re following up to reiterate your interest and see what has changed since the last time you spoke.
How Long Before You Succeed?
I can’t give you a definitive answer because it’s random – some readers have succeeded in only a few weeks, whereas it has taken others months of networking to land offers.
But you should not expect solid results until you’ve called upwards of 100 firms and followed up with all of them.
That is a lot of cold calling, so you should still pursue “Plan B” options for the summer such as internships at normal companies, private wealth management, and so on.
It took Sylvester Stallone 1500 rejections to star in the first Rocky movie – so please do not complain until you’ve reached at least that number.
This Sounds Really Hard!
At first it is and you will be very intimidated when you cold call MDs at banks. But it gets easier with time and practice, and after a while you barely have to think about it – sort of like interviews and walking through your resume.
I’ve lived in dozens of cities and have “started over” with 0 friends and 0 connections multiple times, so I’m more aggressive than most when it comes to meeting people and showing up uninvited at events – and randomly approaching people is still hard for me.
I still fail and get “rejected” a lot, plenty of what I do leads to failure, and I’d say that less than 10% of my attempts actually result in good stories / good friends afterward.
But it does get easier and less scary with practice – and the good news for you is that the phone tends to be less intimidating than approaching random people in-person.
Next Steps & Further Reading
So, what now?
Get started making your list and placing those calls.
Do not succumb to analysis paralysis and make a flow chart showing every possible response in your planned conversation and what you’ll say next – get a handle on the basics but don’t obsess.
If you want further preparation, check out these case studies, podcasts and other resources:
- How to Break in as an Engineer with No Finance Background – Cold called 120 banks
- From Non-Target and Unpaid Wealth Management Internship to Bulge Bracket Bank – Email better than calling?
- How to Break Into Private Equity Straight Out of Undergraduate – Cold called 50 equity research analysts
- How to Get Into Investment Banking from an Unknown State School – Kept calling, calling, and calling until he got in
- How to Break Into Investment Banking If You Have a 3.0 GPA, Went to an Unknown School, and Only Recently Learned English
- How to Turn Cold Calls Warm – Podcast
And now get to work pounding the pavement until you break in.
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Investment Banking Fairness Opinions: Profitable and Prestigious, or Glamorless Gruntwork?
“Morgan Stanley is acting as financial advisor to the buyer and Credit Suisse is acting as financial advisor to the seller, with the fairness opinion provided by Houlihan Lokey.”
So we’ve been over this “financial advisor to the buyer and seller” stuff before, but what about that fairness opinion bit?
You always see sentences like the one above at the bottom of deal announcement press releases – so what is this mysterious “fairness opinion,” why does it matter, and what should you do when your VP calls you at 2 AM and asks you to help out with one?
What are Fairness Opinions and Why Do Banks “Provide” Them?
A “Fairness Opinion” is just a detailed valuation of a company that’s being sold (if you’re representing the seller) or a valuation of the company that your client is buying.
Right before a deal is announced, the bank that prepares the Opinion presents it to the Board of Directors and concludes whether or not the deal is “fair” based on the purchase price and deal structure.
As you might guess, banks never say a deal is “unfair” – the Opinion is just a rubber stamp to justify the deal to investors.
While they’re not technically required by law, Fairness Opinions almost always get issued for deals that involve the sale of public companies due to lawsuits: no matter how much a company sells for, someone is bound to sue them.
Even if the company is worth $100 million and it gets sold for $1 billion, some random shareholder with too much time on his hands will argue that it should have been sold for $10 billion and will start a class-action lawsuit.
The bank’s Fairness Opinion is filed along with all the other documents related to the transaction (the definitive agreement that includes the terms of the acquisition, for example), and serves as evidence when lawsuits start arriving.
Why Should You Care About This Legal Nonsense?
Bankers have no love for lawyers, but you need to know what Fairness Opinions are and how they work because:
- The deals you work on determine your exit opportunities, your ranking and bonus, and how much you learn.
- You will be asked to work on or help out with Fairness Opinions from time to time, so you need to know whether to say “yes” or to claim you have other urgent deadlines.
- Some banks and groups do more Fairness Opinion work than others – you need to understand this upfront because it affects which bank and group you select.
When Do Companies Request Fairness Opinions?
99% of the time they get issued when there’s a public company being sold – you do not do Fairness Opinions for equity or debt deals, so if you’re in an ECM, DCM, or Leveraged Finance group you won’t deal with them.
If you work with mostly private companies, you also won’t see Fairness Opinions because private companies have far fewer shareholders (well, except for Facebook and its clever skirting around the rules) and are often closely held by the founders or VC/PE investors.
Fairness Opinions might also be issued when:
- There’s a management buyout or take-private (a PE firm acquires the company via a leveraged buyout and turns it private).
- A public company divests one of its divisions.
- There’s a bankruptcy, liquidation, restructuring scenario (less common).
- There’s a hostile takeover – in this case it would be called an “inadequacy opinion” instead and would be used to defend the target by claiming that the offer is not fair.
In short: whenever there’s a high chance of getting sued, companies request these Opinions and use them to defend themselves in lawsuits.
Outside the US, Fairness Opinions are common in some countries (Western Europe) and not common in other places (emerging markets). Whether or not they’re required depends on the legal system in the country, but you almost always see them for public company transactions in developed markets.
How to Issue a Fairness Opinion, Part 1: Before the Deal Comes Together
M&A deals come together in different ways: sometimes the company itself wants to sell, other times investors are getting impatient and force them to sell (Zappos), and sometimes a buyer jumps in with an attractive offer and starts a bidding war (YouTube).
If it’s the last case, where a buyer swoops in with an offer to buy the company, no one thinks about the Fairness Opinion until that point.
But if it’s one of the other scenarios, then the seller may hire an investment bank to find a buyer. If they do this, in the initial contract they might also give the bank the right to issue a Fairness Opinion in addition to advising on the deal process.
You see that sometimes, but many times the “financial advisor” bank and the “Fairness Opinion” bank are different.
The same bank advising a company on its sale and also saying whether or not the deal they get is “fair” is hardly objective – so executives and regulators believe that having a different bank issue the Opinion is more “impartial.”
If a different bank is providing the Fairness Opinion, they are not notified until the deal is about to be announced – doing so any sooner than that would create unnecessary work because M&A deals often fall apart in the early stages.
How to Issue a Fairness Opinion, Part 2: Just Before the Deal is Announced
Now comes the fun part. A couple factors make the actual construction of the Fairness Opinion especially painful:
- You are under extreme time pressure – you get a few days, and sometimes up to a week or a bit longer. This happens because the process is last-minute and occurs only when everyone is 99% sure the deal is going through.
- You must be excruciatingly precise – this is where bankers’ reputation for “attention to detail” comes from. This valuation could be used as evidence in lawsuits, so if you’ve added back the incorrect amortization amount when calculating EBITDA, you might be thrown into a snake pit.
Normally when you value a company you don’t have to be super-precise: bankers ask for quick valuations all the time, and if you spent hours going through a company’s SEC filings (or equivalent government organization abroad) you would never get anything done.
So you pull a lot of information automatically using tools like Capital IQ and Factset and rely on their numbers.
But when you’re working on a Fairness Opinion you can’t do that – rather than just pulling the LTM (Last Twelve Months) EBITDA from Capital IQ, for example, you have to look at a company’s income statements and cash flow statements (for the correct non-cash charge numbers) to calculate it.
And then you would have to look through the Notes to the Financial Statements and the MD&A to find all the non-recurring charges and other accounting shenanigans that you need to remove.
Another analyst will also check your numbers, your associate will check them, and even the VP may get involved depending on the deal.
To make things even more fun, this entire process will be a last-minute effort that requires all-nighters over the few days you get to complete it.
Oh yeah, and then the deal announcement itself is often delayed – so you need to monitor the seller and all the other companies you’ve used in your analysis and update the numbers when someone announces earnings, issues debt or equity, or does anything else that affects its numbers.
When you finish the Opinion and everyone has checked it over 52 times, you then present it to the Fairness Opinion Committee at your bank and explain all the numbers to them – if they see something they don’t like, you get to re-do that part.
And then when you finally get their approval, the senior bankers working on the deal will present it to the Board of Directors of the company and sign off on the decision.
Sometimes they actually present it to the company’s Special Committee – if one was formed for the deal – but usually it’s to the Board.
Internationally the entire process may be a little less painful, but it depends on your group and the country you’re in – in London, for example, there’s no difference and you will still spend hours poring over filings and adjusting for capitalized leases, pensions, and other trickery.
Why Do Banks Provide This Service?
Simple: it’s easy money and easy prestige for banks, especially for the senior bankers that don’t have to suffer through ultra-precision.
Fees paid to banks in a sell-side M&A deal are a percentage of the sale price (the equity value of the deal, not the enterprise value), and that percentage scales down as the size of the deal increases.
For a $500 million deal, the bank might negotiate a 1% fee and therefore earn $5 million if the deal closes. For a $5 billion deal, it might be 0.2% or 0.3%, for $10-$15 million. For deals in the $50 billion range – very rare – the fee might be around $50 million (0.1%).
With a Fairness Opinion a bank earns a much lower fee – it might be in the hundreds of thousands for smaller deals up to the low millions for larger deals – but it earns that fee with far less time and effort.
Let’s say that a bank is advising a company on a $50 billion deal – something that large would take years to put together (unless we’re in the late 90’s and it’s happening all the time), and they might earn a $50 million fee on the actual advisory work if the deal closes.
The bank that issues the Fairness Opinion might earn a few million – let’s call it $5 million – but it earns that fee with 1/100th the amount of time and effort that the financial advisor put in.
The other, really important point is that the bank earns that fee even if the deal gets announced but does not close – it’s not like M&A advisory fees where they only get paid out when the deal closes.
So a bank could make tens of millions of dollars by issuing Fairness Opinions for deals that never close.
The thinking here is that paying banks upon completion of the Opinion rather than when the deal closes makes them “less biased,” but it had the unintended consequence of making FOs extremely lucrative for risk-averse bankers as well.
In addition, the bank receives league table credit for issuing a Fairness Opinion – so a bank that issues 50 Fairness Opinions but doesn’t advise on any deals would look as good as a bank that has advised on 50 real deals, at least according to a table that ranks banks by # of deals.
If you look at a table that ranks banks by fees earned instead, the Fairness Opinion-centric bank won’t look as good – but you can bet they won’t be showing that version of the table in their pitch books.
Often Fairness Opinions are given to banks as “favors” for work done in the past.
A company might go with a bulge bracket bank for the M&A advisory work for political reasons, but the CEO might know a senior banker at a boutique and might have worked with them in the past – in this scenario the company might give the Fairness Opinion assignment to that boutique as a favor for their past relationship.
The boutique will still feel as if its toes have been stepped on, but the pain won’t be quite as acute if they can make at least some money off the deal anyway.
What Banks and Groups are Known for Fairness Opinions?
No, I’m still never going to rank the banks, so please go away right now if you’re expecting that.
But some banks and groups – for better or worse – are known for Fairness Opinions.
Houlihan Lokey is consistently ranked #1 in Fairness Opinion market share, beating even the bulge bracket banks and elite boutiques.
At HLHZ, the Financial Advisory Services (FAS) group does all the Fairness Opinion work and the other groups don’t touch them. And yes, the FAS group provides other services like solvency opinions, purchase price allocations, and more technical accounting-esque work as well.
Other banks – from bulge bracket to elite boutique (Perella Weinberg is also well-known for FOs) to middle-market – also do Fairness Opinions but no one else dominates the space as HLHZ does.
Groups such as ECM, DCM, and Leveraged Finance do not work on Fairness Opinions because they’re not required for debt or equity deals – so you only have to worry about them if you’re in an M&A, Restructuring, or industry group.
Of those, industry groups are the most likely to work on Fairness Opinions, although you may get asked to help out even if you’re in another group.
Outside of investment banks, some Big 4 firms also do Fairness Opinion work and dedicated valuation boutiques also issue Opinions from time to time.
Take Me to the Examples
Finding actual Fairness Opinions is not the easiest thing in the world, so here are links to good examples. Some of these are quite old, but corporate valuation barely changes over time so they are equally valid today:
- Credit Suisse – Fairness Opinion for LBO of SunGard Data Systems
- JP Morgan – Fairness Opinion for Merck / Schering-Plough Merger (Note the P/E, EBIT, and EBITDA multiples – see, nothing special for healthcare…)
- Perella Weinberg – Fairness Opinion for TPG’s $3B Buyout of J.Crew
You’ll see the usual valuation analyses there: public company comparables, precedent transactions, premiums, DCF, future share price, and so on.
Even if you have no interest in Fairness Opinions, I strongly recommend looking at those examples because they show you exactly how banks value companies in the real world, common multiples, and other questions you’ll get in interviews.
Sometimes Fairness Opinions also include mergers models and LBO models – merger models are more common on deals where it’s more of a merger as opposed to a behemoth acquiring a much smaller company, while LBO models are more common for LBO deals.
You do not include a detailed 3-statement model for the seller, nor do you show all the supporting work that went into the numbers – only the output matters.
If you want to find more examples yourself, you can search for S-4 or DEF 14A (proxy) forms on the SEC EDGAR site; for countries outside the US you will have to go to the company’s website directly and hope they have it there, or go through whatever online database has securities filings in your country.
So, Should You Work On Fairness Opinions?
I am not a huge fan of Fairness Opinions because they represent the worst parts of banking – last-minute all-nighters and combing through filings to make small tweaks to numbers that don’t make a difference in the final analysis.
It’s good to get exposed to a Fairness Opinion at least once, but similar to climbing Mt. Fuji or going ice swimming, you don’t want to get exposed repeatedly – especially at the expense of real deals.
Yes, it’s good to learn how to find all the hidden charges and shady tactics a company is using but 99% of the time they don’t make a difference in your final analysis – and on the buy-side you rarely go into such detail unless you’re about to close an investment and you’re in the final stages of due diligence.
So if your VP or staffer waltzes in and asks if you have any “bandwidth” to help out with a Fairness Opinion, cite an urgent deadline and say that you might be able to check some of it, but can’t do it all yourself because of [Important Client-Related Item] that’s due in 2 days.
And if you’re out of excuses, suck it up and do it – but make sure that you hand it off to the 1st years or interns next time around.
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The Investment Banking Cover Letter Template You’ve Been Waiting For
A long time ago I said that we would never post a cover letter template here:
“I was tempted to post a Word template, but I don’t want 5,000 daily visitors to copy it and to start using the same exact cover letter.”
Plus, “investment banking cover letter” is one of the top 10 search terms visitors use to find this site – so you must be looking for a template.
The Template & Tutorial
Let’s jump right in:
And here’s the video that explains everything:
(For more free training and financial modeling videos, subscribe to our YouTube channel.)
And if you’d rather read, here’s the text version:
Do Cover Letters Actually Matter?
At bulge bracket banks, people barely read cover letters.
Cover letters matter 10x less than resumes and 100x less than networking.
But there are a few special cases where they’re more important:
- Boutiques and Local Banks – Sometimes they actually read cover letters.
- Unusual Backgrounds – If you’re NOT in university or business school at the moment, you may need to explain yourself in more detail.
- Outside the US – In Europe, for example, some banks pay more attention to cover letters, online applications, and so on.
Similar to grades and test scores, a great cover letter won’t set you apart but a poor one will hurt you – so let’s find out how to avoid that.
Keep your cover letter compact and avoid 0.1″ margins and size 8 font.
With resumes you can get away with shrinking the font sizes and margins if you really need to fit in extra information, but this is questionable with cover letters.
Go for 0.75″ or 1″ margins and at least size 10 font.
With resumes there were a couple different templates depending on your level – but with cover letters that’s not necessary and you can use the same template no matter your background.
1 Page Only
Ok, maybe they do things differently in Australia (just like with resumes) but aside from that there is no reason to write a multi-page cover letter.
If you actually have enough experience to warrant multiple pages, do it on your resume instead and keep the cover letter brief.
List your own information – name, address, phone number, and email address – right-aligned up at the top.
Then, below that you list the date and the name and contact information for the person you’re writing to, left-aligned on the page.
If you don’t have this information you can just list the company name and address and use a “Dear Sir or Madam” greeting.
That’s not ideal – especially if you’re applying to smaller firms where cover letters actually get read – but it’s all you can do if you can’t find a person’s name.
If you’re sending the cover letter via email as the body of the email, you can omit all this information and just include the greeting at the top.
Paragraph 1: Introduction
This is where you explain who you are, where you’re currently working or studying, and how you found the bank that you’re applying to.
Name-drop as much as possible:
- Impressive-sounding university or business school? Mention it. Even if it’s not well-known, you still need to mention it here.
- Your company name, especially if it’s recognizable, and the group you’re working in, especially if it’s something relevant to finance like business development.
- How you found them – specific peoples’ names, specific presentations or information sessions where you met them, and so on.
- The position you’re applying for (Analyst? Associate?) – especially for smaller places that are not well-organized.
This first paragraph is all about grabbing their attention.
Example 1st Paragraph:
“My name is John Smith and I am currently a 3rd year economics major at UCLA. I recently met Fred Jackson from the M&A group at Goldman Stanley during a presentation at our school last week, and was impressed with what I learned of your culture and recent deal flow. I am interested in pursuing an investment banking summer analyst position at your firm, and have enclosed my resume and background information below.”
Paragraph 2: Your Background
You go through your most relevant experience and how the skills you gained will make you a good banker right here.
Do not list all 12 internships or all 5 full-time jobs you’ve had – focus on the most relevant 1-2, once again name-dropping where appropriate (bulge bracket banks / large PE firms / Fortune 500 companies).
Highlight the usual skills that bankers want to see – teamwork, leadership, analytical ability, financial modeling and so on.
If you worked on a high-impact project / deal / client, you can point that out and list the results as well.
This may be your longest paragraph, but you still don’t want to write War and Peace – keep it to 3-4 sentences.
Example 2nd Paragraph:
“I have previously completed internships in accounting at PricewaterhouseCoopers and in wealth management at UBS. Through this experience working directly with clients, analyzing financial statements, and making investment recommendations, I have developed leadership and analytical skills and honed my knowledge of accounting and finance. I also had the opportunity to work with a $20M net-worth client at UBS and completely revamped his portfolio, resulting in a 20% return last year.”
Paragraph 3: Why You’re a Good Fit
Now you turn around and link your experience and skills to the position more directly and explain that leadership + quantitative skills + accounting/finance knowledge = success.
There is not much to this part – just copy the template and fill in the blanks.
Example 3rd Paragraph:
“Given my background in accounting and wealth management and my leadership and analytical skills, I am a particularly good fit for the investment banking summer analyst position at your firm. I am impressed by your track record of clients and transactions at Goldman Stanley and the significant responsibilities given to analysts, and I look forward to joining and contributing to your firm.”
Paragraph 4: Conclusion
This part’s even easier: remind them that your resume is enclosed (or attached if sent via email), thank them for their time, and give your contact information once again so they don’t have to scroll to the top to get it.
Example 4th Paragraph:
“A copy of my resume is enclosed for your reference. I would welcome an opportunity to discuss my qualifications with you and learn more about Goldman Stanley at your earliest convenience. I can be reached at 310-555-1234 or via email at email@example.com. Thank you very much for your time and consideration.”
These examples cover how to apply to a bank if you’re in university, business school, or you’ve been working for several years.
If you have a more unusual background (e.g. you went to med school, graduated, started your residency, but then decided you wanted to be an investment banker), then you might need to add a few sentences to paragraph #2 or #3 explaining yourself.
Resist the urge to write your life story because no one will read it – interviews are a much better venue to prove how committed you are.
Email vs. Attachments
If you’re emailing your cover letter and resume, do you create a separate cover letter attachment?
Or do you make the body of your email the cover letter?
I think it’s redundant to create a separate cover letter and attach it, so don’t bother unless they ask specifically for a separate cover letter.
If you’re making the body of your email the cover letter, make it even shorter (4-5 sentences total) and cut out the address bits at the top.
Optional Cover Letters?
If you’re applying online and it says “Optional Cover Letter” should you still upload one?
You might as well because it takes 2 minutes once you have a good template – it’s not the end of the world if you don’t include one, but you never know what everyone else is doing and it’s not terribly time-consuming.
Cover Letter Mistakes
Remember the role of cover letters: great ones don’t help much, but poor ones get you dinged.
The biggest mistakes with cover letters:
- Making outrageous claims (“I’m a math genius!”) or trying to be “creative” with colors, pictures, fonts, and so on.
- Going on for too long – 10 paragraphs or multiple pages.
- Listing irrelevant information like your favorite ice cream, your favorite quotes from Wall Street or Boiler Room, and so on.
If you think this sounds ridiculous, remember the golden rule: do not overestimate the competition.
For every person reading this site, there are dozens more asking, “What it’s like to be an investment banker?” at information sessions.
Sometimes you hear stories of people who write “impassioned” cover letters, win the attention of a boutique, and get in like that…
…And I’m sure that happens, but you do not want to do that at large banks.
As with resumes, there are hardly any good examples of investment banking cover letters online.
Most of the templates are horribly formatted and are more appropriate for equities in Dallas than real investment banking.
Here’s a slightly different but also good templates you could use:
More questions? Ask away.
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