From Valuation Advisory to Investment Banking: How to Make the Lateral Leap
Ask around about lateral hiring at investment banks, and you’ll hear a few comments come up repeatedly:
- “It’s impossible if you haven’t worked in IB before because they only want people with previous experience.”
- “Seriously, who would ever leave their job suddenly in the middle of the year when it’s so hard to get the job in the first place?”
- “Banks are just not hiring.” (Regardless of deal activity, the economy, etc.)
Our reader interviewee today proved all of the points above wrong by moving from valuation advisory (similar to what you do at the Big 4) into investment banking, in the middle of the year and without previous IB experience.
Oh, and he was from a non-target school as well.
And he moved from a regional office to NYC in the process.
Here’s exactly how he did all this and moved into investment banking after graduating:
Whither Commercial Banking?
Q: So, your story. Walk us through the beginning and what you did during and after university.
A: Sure. I attended a small, non-target college in the Southern part of the US. I didn’t have much money to spend on attending a brand-name school, and this one had offered me a full academic scholarship so it was hard to pass up.
I went in thinking I would become a lawyer, but I lost interest in law along the way and switched to business instead.
At my school, almost everyone in the business / finance programs wanted to go into commercial banking afterward. Even my mentor at university was a commercial banker, and he constantly talked about how good it was.
Hardly any firms recruited there for real investment banking positions, so people perceived commercial banking as their “best option.”
Despite that, I wasn’t quite sold on it and I wanted to keep my options open and avoid getting pigeonholed into commercial banking in the future.
So I won an offer for an internship at a boutique valuation advisory firm and worked there in the summer of my junior year.
I liked the work quite a bit and learned a ton about valuation and financial modeling.
But when I got back to school for my final year, I still pursued full-time commercial banking roles for a while because it seemed like the thing to do.
Q: But you didn’t end up working in commercial banking full-time…
A: Nope, because the firm I had interned at gave me an exploding offer and I chose to accept that rather than taking a chance and possibly not ending up with any full-time job offers.
That was probably for the better: it’s much easier to make your case for IB if you’ve done valuation-related work before, but it would be more difficult if you’ve only had commercial banking experience.
Q: And so what was it like working at this firm? It seems like you enjoyed it at first.
A: In some ways it was great, because it really was a crash course on valuation and financial modeling and I got a lot of client exposure from very early on.
But the work was more related to accounting / financial reporting rather than advising on deals and/or affecting the outcome of deals and investments.
So I knew within my first 2 years on the job that I didn’t want to stay there permanently.
Discussion of Strategic Alternatives
Q: So then you started looking for IB roles 2 years into the job?
A: Not exactly. I had very little idea of what investment banking actually was back then.
I really didn’t know which direction I would head in, so I pursued almost anything that seemed related to my work experience – corporate finance, investment banking, private equity, and even joining a valuation / business modeling group at a Big 4 firm.
That turned out to be one of my biggest mistakes – if you interview for so many different roles, it is really hard to keep different versions of your story straight and to sound convincing when you go in to speak with each group.
I did that because I wasn’t 100% sold on banking after doing my own research and networking – so I didn’t want to commit to it and ignore everything else.
But then about 6 months ago, I realized that I wasn’t doing well in interviews because of this exact problem – so I started declining all non-IB interviews, and even stopped pursuing a PE opportunity (the process would have taken too long).
That’s when things started taking off.
I know you’ve recommended keeping all your options open before, but in my experience it was really, really hard to do that and interview for so many different roles when you’re already working full-time.
Q: OK, so you narrowed your focus and then you started doing a lot better.
Can you walk us through how you approached networking once you made that decision?
A: Sure. Overall, I didn’t go quite as crazy with networking as some of your other stories on this site.
I spent around 5 hours per week on it over the course of a year, which was split between looking for people on LinkedIn, asking for introductions, and setting up calls.
Besides the obvious benefits of networking (interviews), I gained 2 other important advantages:
- I learned how to speak like bankers do – this is a subtle point, but just by using different vocabulary and lingo you can instantly make yourself a better candidate.
- I got very direct feedback from bankers – some were brutally honest and said my chances weren’t good, but I always took action based on what they said and fixed holes in my story and work experience based on that.
I relied heavily on a single contact I met during my internship at this valuation advisory firm – he was several years above me and managed to win a boutique IB offer and then a bulge bracket offer several years ago, after completing the same internship I had.
I got to know him well during the internship and stayed in touch afterward, so he was a “mentor” of sorts to me.
Altogether, I probably talked to around 40-50 bankers (most of them were junior, but a few were VPs and above) – I found some of them through LinkedIn, others through alumni, and still others through my mentor and a 2nd person who had worked at my firm and then got into banking.
I had never even met the second guy in-person – I came across his profile on LinkedIn, reached out to him, and said, “Hey, I saw you worked at my current firm and then got into IB, do you have any tips or advice?”
You’ve mentioned before that you should cast your net wide, but I think it’s worth pointing out that a few good, very reliable contacts can be far more helpful than dozens of people you barely know.
In my case, I met 80% of the bankers I networked with through these 2 people.
Q: Yeah, that is a great point. If you already have a really strong connection with someone you need to take full advantage of it.
What about the geographical focus? You were working in the South, but ended up moving to NYC. Did you have to make in-person trips there?
A: Nope, I did almost everything via the phone and email. The first time I even went to NYC in-person was for the interview that eventually led to my job offer.
I focused on a major banking center in the South at first since I knew more people there, but I realized that the turnover rate is much higher in NYC, which is to your advantage when looking for lateral roles – banks often find themselves shorthanded as analysts leave right around bonus season.
Q: You bring up an interesting point about timing – do you think it makes more sense to go for lateral roles when it’s close to bonus season and people are leaving?
A: Actually, not really.
There might be a small advantage to doing this, but in my opinion the sooner the better when you’re recruiting for lateral roles – you don’t want to wait an arbitrary amount of time just because you think people will be leaving right after bonuses.
The truth is people are always leaving. Lots of analysts win offers, realize they hate it after a few weeks or few months, and then suddenly quit – even if they haven’t gotten their bonuses yet.
Yes, it’s competitive, you’re up against experienced people, and you need to be prepared – but as you’ve always said, do not overestimate the competition.
People leave all the time for unexpected reasons, and when that happens banks can be very quick to hire new people because they desperately need the help.
Q: OK, so you’ve narrowed your focus, you’ve spoken to a few dozen bankers and indicated your interest in a lateral move, and you’ve gone beyond your own city to consider NYC-based roles.
A: I ended up with 2 interviews, one of which was for a real estate investment banking position and one of which was for more of a generalist role.
Although I liked the RE team, I didn’t want to get pigeonholed in that industry so I didn’t go beyond a phone interview with them.
At the other bank (a top 15 global firm), a lot of analysts were leaving early for PE roles so they needed to hire someone very quickly.
I found out about the opportunity at noon on Thursday one week, went through 2 interviews and a case study, flew in for an in-person interview, and won the offer in 7 days.
Q: Yeah, sounds like they really needed the help. So what were the key objections you faced in interviews?
A: First off, as you’ve pointed out before, most bankers tend to view anything other than banking as inferior.
I had assumed they would assault me with technical questions, but my first 2-3 interviews focused on:
- Who are you and why do you want to do this?
- What does your firm do?
- What work have you done that’s relevant to this role?
- Are you sure you want to move to NYC? Why?
I anticipated a lot of those in advance and had ready-made responses to the usual questions about the hours, my attention to detail, the relevancy of my work experience, etc.
The short version of my story:
“Everyone at my school did commercial banking, but I was more interested in valuation and financial modeling, so I went to the valuation advisory firm to get exposure to that. While I enjoyed the work, I wanted to take a more active role in the deal process instead of simply coming in to render an opinion after all the work had already been done – and I see IB as the best way to get there because it would allow me to combine my existing valuation and financial modeling skill set with advising companies on deals and taking a more active role in the process.”
I made sure to include keywords such as “attention to detail” in my actual story, and also included specific references to the number of hours I had worked during busy periods at my firm.
I could also cite examples of the valuation work I did that was most relevant to IB.
Before I had even finished answering the “Walk me through your resume” question, I wanted to answer at least 2-3 of their objections in advance
That way, the interview would turn into more of a “get to know you” session as opposed to a “grill you on whether you’re qualified and serious” session.
The question about whether or not I really wanted to move to NYC was harder to “prove,” but I answered it by pointing out that I had a 6-month apartment lease, which would be up in 1 month, and that I was going through this process in anticipation of moving.
I also said that moving to NYC would be critical since I was just starting out and had only worked in a regional office before.
Q: That question tends to surprise people, but it will come up if you’re moving to another region like this.
You mentioned they didn’t ask many technical questions, but there was a case study – what was involved and how did you approach it?
A: They told me 2 days in advance that I would receive an LBO model case study where I would build the model from scratch, starting from a blank sheet in Excel.
They sent me excerpts from public filings, research reports, investor presentations, and a 1 page PDF with simple instructions, and gave me around 5 hours to do it (remotely) on Saturday morning and then send it back to them.
It wasn’t that difficult because:
- I had already practiced building LBO models from scratch based on other case studies.
- I practiced under extreme time pressure so I could learn how to skip unnecessary details.
It’s easy to get hung up on small details that don’t make a big difference in these case studies; I’ve seen people dwell on how to show Depreciation on the Income Statement (some companies show it as a separate line item, some embed it in COGS or OpEx, and some do a mix of both).
That is a big mistake because it doesn’t matter how you show it – you just need to ensure that you’ve reflected the full amount somewhere on the IS and then added it back on the CFS.
So I prepared for those issues in advance and taught myself not to over-think them.
Q: Great, any other interview tips?
A: Honestly, the biggest obstacle for me – and for anyone else moving in from another field, I suspect – is the perception that “you have good experience, but it’s still not investment banking experience.”
That mindset will drag you down in interviews and will make it much harder to sound convincing.
So I did the opposite and acted as if I had worked on real M&A deals in interviews – even though I only contributed to the valuation.
You never want to “apologize for” your experience or indirectly admit that it’s inferior.
It sounds simple, but that shift in mindset and going 180 degrees in the opposite direction made a big difference – if you have to choose, it’s much better to be overconfident in interviews.
Q: So we’ve been through most of your story now – any other tips or tricks you want to share that we haven’t already discussed?
I can’t stress how important it is to make everything you’ve done look like a deal even if you haven’t worked on deals.
Bankers scan resumes so quickly that you may not even have a shot unless you use the “project/client”-format you’ve recommended.
And using that format, at the very least, forces them to take a closer look and see what you really did – which will always help your case if the rest of your resume is well-done.
Q: Well, thanks for promoting my resume templates. But back to you: what about your own future plans?
A: I settled on IB mostly because I didn’t think I could get a decent PE job without it.
I’m not 100% sold on PE, actually, so I’d say there’s a 50% chance I’ll eventually go there and a 50% chance I’ll stick around and go for the Associate promotion here.
Even if I do go into PE, I have no interest in the mega-funds – I would only aim for middle-market and lower middle-market funds so that I can be competitive (the slightly better lifestyle also helps).
Q: Awesome. Thanks for your time!
A: My pleasure.
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