Investment Banking Interview Prep: 2009

Monday, July 6, 2009

Scoopbooks: The Recruiting Guide to Investment Banking

As an objective source of information on investment banking interviews and the associated recruiting process, we endeavor to provide our audience with the information necessary to excel in interviews and land jobs as analysts and associates. After reading Scoopbooks' guide to interviews and the recruiting process, cover-to-cover, I can honestly recommend this guide to every junior-banker hopeful that dreams of working in the investment banking division of any bulge bracket, middle market, or boutique investment bank.

Those of us with siblings, parents, relatives or close friends who have worked in banking naturally have a leg up on the competition because we are privy to the insiders take on the entire recruiting process. The first two parts of the book (The Recruiting Season and Life For A Junior Banker) completely level the playing field because the pages in these sections embody what your brother, dad, friend or relative might tell you. You still need this book even if someone close to you is willing to give you the low-down on the recruiting process; you will be THAT much more prepared.

Part 3 of the book is a nice refresher for the technical aspects of interviews. It breaks things down into the fundamentals and would probably be helpful for non-finance majors (like myself once upon a time). Let me be clear, there are lots of resources that provide this sort of information; Part 1 and Part 2 of the book is the reason for buying it. The book costs $29.95 U.S. and is worth every dime. There might be a few copies available on Amazon for cheaper but buying through Scoopbooks' direct site will probably be more fruitful: http://www.scoopbooks.com/

Next post update:
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Wednesday, June 17, 2009

Investment Banks that are Hiring

I wanted to post this after coming across it this morning. I've taken it from The Deal:

Usually we tell you about the layoffs in the finance industry, but it looks like large and midsize financial services institutions are hiring again. Here are the latest reports and rumors.

In the U.S.:

* Goldman Sachs Group Inc. (NYSE:GS), Barclays plc's (NYSE:BCS) Barclays Capital, Credit Suisse Group (NYSE:CS), Nomura Holdings Inc. (NYSE:NMR), Standard Chartered plc (LON:STAN), HSBC Holdings plc (NYSE:HBC), Lloyds Banking Group plc (NYSE:LYG), Royal Bank of Scotland Group plc (NYSE:RBS) and UBS (NYSE:UBS) are seeking senior staff, according to eFinancial Careers.

* Wells Fargo & Co. (NYSE:WFC), J.P. Morgan Chase & Co. (NYSE:JPM) and TIAA-Cref are hiring private bankers, credit managers, financial advisers and financial analysts on WallStJobs.com, according to The Wall Street Journal.

* Westwood Capital has added co-heads of fixed-income advisory and trading, according to PRNewswire.

* Macquarie Group is hiring new bankers in its industrial and energy practices, according to DealBook.

In Europe:

* Greenhill & Co. (NYSE:GHL) is hiring consumer and retail bankers in London as part of an expansion, according to DealBook.

* Barclays is hiring in its European and Asian share trading operation and will expand its equities trading business by 300 by year's end, according to The Guardian.

In Australia:

* Caliburn Partnership, J.P Morgan, UBS and Credit Suisse are looking to hire. Chris Knoblanche, head of global banking at Citigroup Inc. (NYSE:C) in Australia and New Zealand, told The Guardian, "We are looking to build the team. We have recently hired two new managing directors within global banking."

According to The Economic Times in India:

* Morgan Stanley is hiring "very selectively in highly-specialised fields," including securities.
* Goldman Sachs is hiring eight to 10 senior positions.
* Bank of America Corp. (NYSE:BAC) is hiring in its private client and capital market business.
* RBS is making two senior-level and a few midlevel hires in its corporate investment banking business and in treasury.
* Nomura is looking for people for its capital market division.
* Barclays Wealth wants to increase "headcount by 20% every year for the next five years."

It looks like there's some opportunity out there. Good luck!

Friday, May 29, 2009

Keeping Current: Key to Interview Success

My brother was in New York last week and picked up the most recent edition of the Bark Street Journal for our Dachshund Frankie. As you can see he is getting his fill of all the recent news.

In the past we have mentioned the importance of keeping up to date with economic and financial news. The three most salient reasons for this, which relate to investment banking interviews, are 1) it will help continually develop your business knowledge and acumen, 2) you will have a better background from which to ask questions during interviews, and 3) you will be prepared for interview questions such as: "Do you read the Wall Street Journal? What was your favorite article yesterday?" I don't think I have to convince many people that this is a good idea.

The real point of this post is to tell you which newspaper and magazine will be the most helpful for you to read as you pursue a career in finance. The first is the The Wall Street Journal. My university gave out the Financial Times for free while I was a student but I still didn't give up my subscription to the Journal. This is the #1 American finance newspaper. If you don't have a subscription, you should get one today.

The second newspaper I recommend to you is The Economist. This well-written and practical magazine offers solid economic analysis for our evermore complex world-economy. In Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets nearly every top trader interviewed recommends The Economist. Jim Leitner of Falcon Management says, "I read The Economist religiously. If somebody asked me how to get involved in global macro investing, I would say start with a subscription to The Economist, read it every week, and think about what you learned this week that you didn't know the week before" (p. 43). This magazine will help give you a better understanding of the world as well as better investing ideas.

There are other good newspapers and magazines but as students or junior professionals you don't have the time or energy to read them all. By reading The Wall Street Journal and The Economist you will get the most bang for your time and money. If Frankie can keep current on today's markets, so can you.

Wednesday, May 27, 2009

100,000 Hits and Counting

As a blog and organization we have recently passed an important milestone: 100,000 page views. This blog was initially created as a bouncing board for our own thoughts and ideas about finding jobs and successful interviewing skills in investment banking. As students from a non-target recruiting school we endeavored to help uncover this highly esoteric world for ourselves and everyone else that was seeking to breakthrough and start a career on Wall Street. Now, as professionals in the industry, our input and ideas continue to be more and more relevant for you as you begin your journey to land a job in investment banking.

We would like to thank all of our readers for your support and hope that in some way we have helped you achieve your employment goals. Hopefully one day we all will drive bright red Porsches -- isn't that the dream of all investment bankers?

Thursday, May 14, 2009

What IBD Groups Are Hiring?

The biannual Association for Corporate Growth and Thomson Reuters DealMakers Survey Results were published yesterday. The survey was conducted in April and represents the views of 703 dealmakers around the globe. Most interestingly, the survey presents current market sentiments and forecasts deal activity by industry -- an indication of the likely scope and location of job expansion in investment banking.

The three most interesting slides for investment banking job seekers fell consecutively between 9-11.

Slide 9 presents a broad M&A forecast for the next six months. 52% of respondents believe that the number of M&A transactions during the next six months will increase moderately compared with today while another 34% believe that things will remain the same. If deal activity remains unchanged we will likely see more layoffs. Each bank has forecasted employment to meet the demands of the current environment. If deal activity increases beyond forecasts we will start to see hiring across the associated industry and product groups.

Slide 10 illustrates the overarching belief that distressed deals will play a major role in total deal activity during the next six months. I dare say that this trend will last at least for the next year. If you are looking for a job in banking, I recommend you look to groups and shops that have recently advised on distressed deals. There will probably be hiring room in these groups as well as restructuring groups.

Finally, slide 11 illustrates the market's belief that deals in Healthcare/Life sciences, Manufacturing and distribution, Financial services, and Business services will happen. Look to industry coverage groups that cover these sectors for job opportunities. If you start networking today with bankers in these groups, they'll be thinking about bringing you on when they get overloaded in six months.

As a recap: The ACG-Thomson Reuters Dealmakers Survey Results indicate that hiring in groups doing distressed deals and restructing alongside the industries touched on above will be the first the expand. For a list of banks see my last post.

Tuesday, May 12, 2009

List of Investment Banks

In this difficult economic environment, job seekers must be willing to reach out to every potential employer. Below is a comprehensive list of investment banks and links to their home pages. If you're looking for an internship or full time employment, I recommend you contact human resources and recruiting at as many of these banks as possible.

I hope this list is helpful in your efforts to land a job in investment banking.

Saturday, May 9, 2009

Qualities of a Successful Analyst and Associate

Recently I contacted an MD in M&A at a bulge bracket investment bank and asked, "What are the qualities of a successful analyst?" He responded with the following short, concise list.

1. Attitude

2. Attention to Detail

3. Team Player

While interviewing for a position as an analyst or associate, it is essential for you to demonstrate a great attitude, exceeding attention to detail, and your commitment to being a team player.

Attitude

As you know, analysts and associates are expected to work hard, long, and late hours. Although it may be very, very difficult at times, having a positive attitude toward superiors, peers, and the work in general is critical to educe the communal morale needed to survive the workload, as well as to indicate your eagerness to be assigned to interesting, challenging projects.

You can show a great attitude in your interviews by being outgoing and excited. Moreover, when asked about past experiences, you need to describe situations that show your ability to be positive and optimistic in the face of adversity.

Attention to Detail

Have you ever wondered why having an error-free resume is so heavily emphasized when applying at an investment bank? Your resume is a demonstration of your ability to pay attention to detail. Attention to detail is vital in investment banking because it is indicative of a bank’s quality and level of professionalism, and thus, evidence of a bank’s good reputation. A lack thereof destroys the institution’s credibility.

While interviewing you can show your ability to pay attention to the slightest detail not only through your “perfect” resume, but also by your ability to answer questions precisely. For example, you should be able to quickly and flawlessly describe the various valuation models mentioned in previous postings.

Team Player

All of the work performed at an investment bank is conducted in teams. Therefore, teams are very important to the success of the organization as a whole. Being a team player is imperative because the distribution of work on a team is not usually equal. Thus, when one of your teammates needs a hand to complete a project, you must be willing to help. (I’m sure you will hope for the same reaction from your team members when you find yourself in a bind.)

You can demonstrate your ability of being a team player in your interviews by discussing past experience on a team, the lessons you learned in those circumstances, and your commitment to occasionally “taking one for the team” in the future.

Tuesday, May 5, 2009

Must Read: Investment Banking: Valuation, LBOs and M&A

I just got my copy of Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions-- For anybody and everybody trying to break into investment banking: this is a must read!!!

Joshua Rosenbaum and Joshua Pearl, two seasoned bankers, have written this new book as the nuts and bolts instruction guide to valuation, deal making, and deal execution. The authors break down comparable companies analysis, precedent transaction analysis, and discounted cash flow analysis into a step by step process. Next, they dissect the leveraged buyout by explaining the key participants in an LBO and their respective roles as well as discussing LBO financing sources and structure. Finally, they reveal the M&A sale process from the first auction to the negotiated sale.

The best part of the book is free access to four completed valuation models. If you haven't gotten your hands dirty with comps models, DCF models, or LBO models, this is your chance. In my own experience, working with models was enormously useful during the interviewing process.

I'm confident, after reading this book, you will ace your technical questions. I'm recommending this volume to everyone who comes to me with banking questions. The book is on special discount at Amazon.comfor $50; I would make the purchase before the discount is gone.

Saturday, May 2, 2009

How Much Do Investment Bankers Make?

During the history of this blog we have never discussed investment banking salaries in detail. We have alluded to the fact that bankers are well compensated but how well?

There is no easy formula for determining banker compensation. At the analyst and associate level, for whom this blog is targeted, compensation is relatively similar across the board. Boutiques and bulge bracket investment banks pay their analysts and associates similarly; variations exist but compensation figures end up in the same ballpark. The largest discrepancies in compensation stem from the difference in bonuses which are derived from the combination of firm performance, group performance, and personal performance.

Banker compensation is down from its heights of a few years ago. Most young bankers understand that banking at the analyst level is not about compensation, rather its about establishing a career trajectory. There are other jobs for maximizing wage per hour.

The table below is a fair representation of banker compensation at different levels of seniority.

Salaries in Investment Banking (with bonus)
Job Level	Salary Range	Typical Comp	Prerequisite
1st Year Analyst	$60K - 150K	$90K	Bachelor's
3rd Year Analyst	$120K - 300K	$150K	Bachelor's
1st Year Associate	$150K - 250K	$170K	MBA
3rd Year Associate	$250K - 450K	$300K	MBA
Vice President	$350K - 1MM	$500K	3-6 years
Director / Principal	$400K - 1.5MM	$700K	5-10 years
Managing Director	$500K - 20MM	$800K	7-10 years
Department head	$800K - 70MM	$2MM	10+ years

Demystifying your MD's compensation is next to impossible but he (or she) rakes in on average a couple million bucks per year. Not a bad salary for a 9-5 job.

Saturday, April 18, 2009

US News 2010 MBA Rankings Leaked

Saw some interesting news which I thought our readership would enjoy. These rankings won't be coming out officially for awhile but here are the 2010 US News top 28 MBA programs.

Current rank [Previous rank] School Name (Rating) [Previous Rating]
1 [1] Harvard (100) [100]
2 [1] Stanford (99) [100]
3 [4] Northwestern (93) [93]
3 [3] Penn (93) [95]
5 [4] MIT (92) [93]
6 [4] Chicago (91) [93]
7 [7] Berkeley (88) [89]
8 [7] Dartmouth (87) [89]
9 [9] Columbia (86) [88]
10 [13] Yale (85) [80]
11 [10] NYU (83) [84]
12 [14] Duke (82) [79]
13 [12] Michigan (81) [82]
14 [11] UCLA (80) [83]
15 [17] Carnegie Mellon (79) [77]
15 [14] UVA (79) [79]
17 [14] Cornell (76) [79]
18 [18] Texas-Austin (74) [74]
19 [22] Georgetown (73) [69]
20 [19] UNC (70) [72]
20 [21] USC (70) [70]
22 [24] Emory (69) [68]
23 [29] GaTech (68) [64]
23 [20] Indiana (68) [71]
23 [25] WUSTL (68) [66]
26 [27] Ohio State (67) [65]
26 [34] Washington (67) [61]
26 [29] Wisconsin (67) [64]

It looks like the finance-heavy schools took a couple points hit on the ratings. Wharton, Chicago Booth, and Columbia all dropped 2 points -- my theory is that employment stats took a hit at these schools. Yale and Duke jumped up a couple spots, as did Carnegie Mellon. UCLA and Cornell took a hit in the rankings this year.

Link to US News source
See 0:55 on the video.

Monday, March 16, 2009

Business Week Blog: First Jobs - For Young Professionals

I'm always on the look out for new resources and want to pass along this new blog I found on Business Week called First Jobs. It is a blog dedicated to young entry-level professionals. It has a few interesting posts, of which I have listed below. To learn more check out their site.

Layoff Coaching 101
College Grads Facing Worst Hiring Climate Since 2002
Dressing to Impress: More Important Than Ever?
Relevant Work Experience A Must, Say Employers to Recent Grads

So you might be asking yourself 'How does this relate to me and how to get a job in banking?". The answer: IDEAS. If you haven't caught on yet, finding a job in investment banking this year, especially if you are from a 'non-target' school, is next to - if not - impossible. (If you are from a 'non-target' school and did get a job in banking please respond to this post listing the name of the school, bank or type of bank, and how you landed a job in banking) As the title of the second blog post above clearly states, "College Grads Facing Worst Hiring Climate Since 2002"!!!! This means, as I have mentioned so many times before, to start thinking outside of the box.

I have listed a few ideas in the March 6, 2009 blog post and want to reiterate a few key principles and ideas.

KEY PRINCIPLE 1:

If you can't get a job in banking.......HOW CLOSE CAN YOU GET TO A JOB IN BANKING?

First, try to get a job in banking. Network and try to get interviews with all the main bulge bracket and middle market banks. Also try to network your way into boutique banks. Next, offer to work for pennies or for FREE (ie. an unpaid internship) at an investment bank. If you get in and do a good job it will lead to bigger and better things, such as a full-time job or a job with another firm. So maybe you have to get a second job because you do not make any money, so what! MAKE IT HAPPEN! You have to trust and realize that working for free is the solution to the great dilemma, 'How do I land a job where you have to have experience to be hired, when I do not have any experience?'. Also, notice (if you haven't already) that the fourth blog post specificially states 'Relevant Work Experience A Must, Say Employers to Recent Grads'.

The next key principle is:

KEY PRINCIPLE 2:
Be Willing To Work For Free*
*Even if it means taking a second job and multiple other sacrifices

This job market is terrible, but let's say you finally pony up and offer to work for free and still cannot find a job in banking, now what?? The next question to ask is 'How close can I come?'. How should we arrive at the answer to this question? If you refer to the blog post First Things First: The Big Five, it lists some key skills to illustrate when interviewing, such as being analytical, quantitative, a team player and a hard worker. If you are working for free and holding down a part-time job, what a great story to illustrate your dedication and hard work in a job interview and an MBA entrance interview.

To illustrate your quantitative, aka financial modeling skills, get a job working for at a bank - regional/merchant bank, for the government at the FDIC, or a private company. As I have mentioned before, take a class from one of the Wall Street training programs or pass your CFA Level I,II, & III. There are many opportunities in today's market place to prepare yourself to get a job in banking. Will it be easy? No, of course not, but with prior proper planning you can prepare and position yourself to be in the right spot to land a job in banking!

Friday, March 13, 2009

Creativity In Times of Crisis!!

This is a funny video, so I hope you like it! Keep working hard to get the job you want and think outside the box. If you have a goal to get a job in banking then create an action plan to help you get there and then stick to it! Do not be afraid to take alternative paths to get there. Make it happen!

Enjoy!

Friday, March 6, 2009

Full-time Jobs & Internships

With U.S. unemployment at its highest in 25 years, it is going to be a difficult and competitive hunt for your next full-time job or internship. Investment banks are under heavey scrutiny and reform and the credit markets are frozen. Businesses in all areas of our economy have been and are being effected. Right now, more than ever, you need to be proactive in your networking and take full advantage of every resource available.

Here are some links to important resources and some pieces of information I hope you already use, but in case you don't or have forgotten, I hope you begin to take full advantage these websites. I am also going to list some alternative ideas that you might want to consider.

Job Websites

Make sure you are signed up and actively using the following websites:

1) Doostang.com - I recommend signing up for their Premium Job service. They typically have a lot of great jobs and internships posted for undergrads or grads just out of college.

2) eFinancialCareers.com

3) CareerBuilder.com

4) Monster.com

Networking

Use the websites LinkedIn and Facebook to your advantage. When you see a job posting you are interested in, type the company name into these websites and find out if you know anyone at these companies or if you know someone who can make an introduction for you. Just sending your resume in will not cut it in today's job market. You need a personal connection or in to really be considered. Plus, Facebook groups typically have a lot of group chatter and posts that might be helpful.

1) LinkedIn

2) Facebook

3) Contact your college career center in order to get in contact with alumni

Investment Banks That Are Hiring

Here is a list of investment banks I have seen postings for recently:

- Iron Capital Partners, San Francisco

- Accordion Partners, New York City

- Kaufman Bros., San Francisco

- Fox-Pitt Kelton Cochran Caronia Waller, New York City

- Sonenshine Partners, New York City

- Energy Merchant Bank, New York City

- Leerink Swann, Boston

- Grisons Peak, London

- Taylor-DeJongh Inc., Washington, DC

- America's Growth Capital, Boston

- ThinkEquity, San Francisco

- Bentley Associates, New York

- Clayton Capital Partners, St. Louis, MO

- Lazard, San Francisco & New York City

- Rothschild, New York City & Washington DC

- Financial Technology Partners, San Francisco

- Arbor Advisors, Palo Alto

- Gemini Partners, Los Angeles

- Callisto Partners, West Palm Beach, FL

- Demeter Group, San Francisco

- Credit Suisse, San Francisco

Alternative Ideas

Here are some alternative ideas for entering the investment banking field.

1) Get into a top MBA program a few years down the road and come in as a full-time associate. There are many ways to get into a top school. You just have to make sure you clear the hurdles of having the GPA requirement, 700 GMAT, write great entrance essays, and an interesting story to tell

2) Work for the US Government and the FDIC or another financial regulatory group, such as the SEC. FDIC is hiring as the Federal Bailout continues to take off . The government needs to hire more people to manage different processes and programs that are going into place to manage their investments.

3) Work for a merchant bank. Keep up your finance skills by learning the art of financing. These jobs can require some travel, but are typically a 9-5 type of job which would allow you time to study for your CFA, Series 7, 63, GMAT, GRE, etc.....

4) Apply and begin studying for additional certifications and tests such as the CFA, Series 7, 63, etc..., GMAT, GRE, or any other designation or certification that could help you get a step ahead of your peers.

5) Get international experience by living abroad for a few months and learning a language. Or if you already know a language get an internship working abroad. This always makes for an interesting story and the experience is worth it!

6) Sign up for a class like Training the Street or Investment Banking Institute or another local program to learn advanced financial modeling. You can also sign up to do the Swiss Finance Academy.

There are many options in today's world. Although the world is different today then it was the previous few years, there are still plenty of opportunities and jobs to choose from. Work hard, network, and be prepared for the opportunities when they present themselves.

Feel free to post alternative ideas or feedback to this post.

Wednesday, February 25, 2009

Private Equity Prep - Advanced Financial Modeling Skills For College Students

As our subscriber base has grown to include readers worldwide, this blog post is specifically for all of our local subscribers in Utah. There is finally a training course similar to Training the Street, Deal Maven, Investment Banking Insitiute etc... for students in the Salt Lake Valley. This is a new program now being offered in Salt Lake City and Provo by Private Equity Prep (PEP) (http://privateequityprep.com). PEP is taught by a former Wall Street banker and provides advanced financial modeling to provide real world valuation and modeling experience. An advantage of PEP is that it offers the same training as those other modeling courses for less than half price of what the others charge.

According to their website, "Private Equity Prep was founded in June 2008 by Justin Jory. Before joining a top investment bank in New York City, Justin graduated with a JD/MBA from Brigham Young University and was well taught in respect to corporate finance concepts. Upon arrival in New York City, Justin quickly realized that a firm understanding of finance concepts was not enough. He found he did not have comparable financial modeling skills relative to peers from Ivy League business schools. During training, Justin learned that his Ivy League peers attended advanced financial modeling courses that provided them with a significant competitive advantage." If you are living in the greater Salt Lake Valley and looking to get a job in investment banking, then I strongly recommend you look into pursuing this option. Upon completion of a course such as PEP you will have the knowledge, skills, and experience to push you above and beyond your peers to the next level and land a job in i-banking.

Below I have posted some information about the rigourous course training you will learn during the course of 12 sessions.

**Notice the key buzzwords you will be able to put on your resume and will be able to speak to in your banking and private equity interviews

PEP Course Overview 2.25.09

Publish at Scribd or explore others: Business & Legal training investment banking

Tuesday, January 20, 2009

Methods to Calculate Discount Rates - DCF

Discounted Cash Flow Analysis can be broken down into three sections:

1. Forecast free cash flows for a given period (5 to 10 years generally, and depending on the industry)
2. Discount free cash flows using some discount rate
3. Calculate the Net Present Value

A question you will probably encounter during interviews will be: What discount rate should you use when performing a DCF?

According to Wet Feet, you should know 4 different discounting methods: CAPM Model, WACC, Gorden Model, Hurdle Rate or Rule of Thumb.

1. CAPM Model - Calculating the return on equity (Re)
--- Re = Rf + Beta (Rm - Rf)
--- Beta is a measure of how sensitive the equity price is to the market (also known as market risk)
--- (Rm - Rf) is known as the risk premium (generally 5%-9% depending on your source information)

2. WACC (Weighted Average Cost of Capital)
--- WACC = Re*E / (D + E) + Rd (1 - Tc ) *D / (D + E)
--- Re = return on equity
--- Rd = return on debt
--- E = market value of the equity
--- D = market value of debt (usually assume equal to BV
--- Tc = corporate tax tate

3. Gordon Model
--- Re = D1/P0 + g
--- D1 = next years' expected dividend
--- P0 = today's stock price
--- g = the expected growth rate of dividends
--- this model assumes a constant dividend payout ration and dividend growth into perpetuity

4. Hurdle Rate or Rule of Thumb
--- Determine some rate of return - say 12% - and only accept investment projects or opportunities that exceed that rate

Investment Banking Interview Prep