What's Your Pain Tolerance?

How committed to working in the investment banking division are you?

I've been searching around the internet looking for other investment banking resources to share with you and I came across the email below. The email was written on a Sunday morning, apparently after an all-nighter, by a analyst in the Healthcare group of a bulge bracket in New York.

Warning: Read at your own risk - you might find yourself second guessing your commitment to working in the IBD

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From: REMOVED TO PROTECT PRIVACY
To: REMOVED TO PROTECT PRIVACY
Sent: Sun Sep 16 07:02:32 2007
Subject: Sorry everyone

I'm leaving the bank now.

I'm not made to do this. If I put my mind to something as much as I do
here to mindless text editing, copy and pasting, and getting yelled at
for stuff other people can't/won't/don't do, I would be much better off.
It's 6:43 a.m. on a Sunday, and I have at least 14 more hours of work to
do today that will not be fulfilling, useful, appreciated, recognized,
or paid for.

Sorry this is last minute, but it's just not worth doing more

My blackberry is on my desk

Apparently that failed staffing request was fatal (no, not as in I'm
going to kill myself, hehe, I'm just going to go enjoy life). There is
no happiness here.

I took all my personal stuff. No one needs to contact me for anything
(except for a drink for those of you with my personal number). I will
only be at my New York address a few days longer.

Good luck y'all,

Jonathan
Global Healthcare Group

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As you're aware, investment banking is very demanding. I thought I knew what working 100 hrs/wk would be like but I didn't. No one knows what working 100 hrs/wk feels like until it's experienced first hand. As Jonathan alludes to above, you should be prepared to spend every waking hour sitting in a cubicle. Every week will not be like Jonathan's. There will be times when the workload consumes all of your energy for weeks at a time but there will also be periods when things are slower and you can enjoy a weekend with friends.

Before you spend one more second preparing for interviews, ask yourself if you are committed enough to persevere through the scenario above. If you're not, that's ok - your life will be far more enjoyable if you don't find yourself in a situation like Jonathan's. If you are committed, then keep pushing! You can land your dream job as long as you make the effort.

Interview Question: Why Investment Banking?

This topic has shown up in several places during the last few days so I've decided to take a swing at providing our readers with insight on how to effectively answer this question. One of the most important questions you will be asked in a banking interview will be some form of the question, "Why are you interested in investment banking?" We've discussed this issue before but I'd like to take a deeper dive on the topic.

For obvious reasons, you should never tell the truth when answering this question; "The compensation, you ignoramus!" Or "models and bottles," usually don't fly well with bankers, or anyone else for that matter. There are plenty of wrong ways to answer this question.

On a more serious note, there are numerous ways to answer this question effectively. In fact, creativity is highly valued by bankers so your unique answer to this question may be better than any response found here. The list below is not exhaustive but probably contains a reason that you can relate to and will present during interviews:

- The transactional nature of the business

- Investment banking is the pinnacle of the financial system

- Working with some of the world's smartest people

- Analyst/Associate positions are extremely challenging

- The educational experience and world class training

- Develop fuller, more well-rounded business acumen

- Investment banking is the next logical step in my progression

- My long-term commitment to banking

There you have it! There is our short list of reasons why investment banking. I personally used several of these answers in my interviews that ultimately led to an offer. When answering this question, and all interview questions, it is imperative to speak in concise statements that quickly and intelligently communicate your message. Be prepared to list these reasons quickly and consecutively without thinking about it.

Please leave a comment if you have something to add to this list.

The Sisyphean Challenge

"As a punishment from the gods for his trickery, Sisyphus was compelled to roll a huge rock up a steep hill, but before he could reach the top of the hill, the rock would always roll back down again, forcing him to begin again" (thanks Wikipedia).

As markets continue to decay, you might be feeling the pain from this Sisyphean task of securing a job on Wall St.. You are not alone. You and me, along with everyone else on the Street, are wondering where we will be in a year from now. How is this credit crisis and economic recession going to shake out? Which bank is next on the chopping block?

I left my crystal ball back in my cubicle at the bank I interned with last summer - so my apologies for not answering these questions. Many of us will have to accept the reality that Plan A is not feasible and turn our energies to Plan B and C. Unfortunately, in a game of musical chairs, no participant can control when the music is going to stop.

I can't tell everyone that their hopes will be fulfilled, but I can say that pushing the boulder upwards will make you stronger. Keep pushing but find a way to hedge your efforts. Start exploring Plan B and Plan C. There is plenty of opportunity to come back to Wall St. as an Associate after an MBA.

Training in New York City

When that long-awaited internship finally arrived it was off to New York for a week of training. Looking back now, I should have taken complete advantage of all the free time I had to explore, hang-out and enjoy evenings after training which usually ended at around 5 pm (a "free evening" doesn't exist once you're assigned your cubicle). Make sure you enjoy these few relaxed days, especially if you're headed-off to Chicago, Houston or the West Coast; New York City has a lot to offer. Here is a brief overview of each day:

Day 1:
The first day of training was the typical "Get to know your firm" day and included filling out I-9s, getting your email account set-up, and the hour-long sexual harassment training (that really ought to take 10 minutes). There's a little bit of basic training on how to log onto your network and maybe some accounting but generally this day is laid back. Make plans to grab a drink with friends and enjoy "living the dream".

Day 2 and 3:
During these two days you will feel like you've been time-warped back into Accounting 101. I haven't taken any accounting courses but the workbook I mentioned last week was nearly sufficient to cover all the material we covered during these two days. Even though this section of training was rather boring, I'm glad I was up to speed on the material because it would've been difficult to keep up had I not been. We also learned about the different databases and resources available to analysts. Listen closely and take good notes because you'll be using these resources on a daily basis.

Day 4:
Day 4 of training was the most valuable day of the entire week. We spent much of the day learning how to "Spread Comps" (something that you'll be doing almost everyday the entire summer). Spreading comps is tedious at first but your skills will improve quickly as you get used to the process. There are trading comps and transaction comps, you'll need to learn both. For those of you who're interested, spreading a comp is the process of dissecting a company's financial statement data into a form that can be compared more accurately on a direct and multiple basis. Here is a link to a WallStreetOasis.com forum that discusses the topic.

Day 5:
On the last day we finished spreading comps and just scratched the surface with Excel, Word and PowerPoint (there might have been another hour somewhere earlier in the week with training in these applications but there wasn't much). Previous experience in Excel is important because there isn't much training (DealMaven modeling training will help). As summer analysts at a bulge bracket investment bank you'll be getting Blackberries. We didn't get ours until after training so don't expect one until training is over.

I have one regret about my training week in New York; I wish I would've gotten to know the other summer analysts from different groups and offices better. Considering that it was only 5 days and the majority of our time was spent sitting in training lectures, it would've been hard to make 112 new best friends. However, it would've been insightful to hear about other intern's experiences in different groups and locations throughout the summer. I recommend you reach out and get to know a summer analyst from each of the offices and periodically keep in touch.

Please leave comments, questions and feedback. Stay tuned for the next post as I write about my experiences as a Summer Analyst on the West Coast.

West Coast Summer: Adventures of a Summer Intern

This summer I interned in San Francisco with the technology group of a bulge bracket investment bank. I feel very fortunate to have been selected for the internship and I recognize that I couldn't have secured the position without the help of many. In return for the help I have received, I hope to pass along the favor to all those that frequent this blog.

Regardless of the fact that I come from a non-core recruiting school, in today's hiring market, I believe that it's difficult for anybody (target or non-target) to receive an IBD summer internship offer. This submission, along with those that follow, are aimed to give a glimpse into the life of a IBD summer intern. I'll include information that would've been helpful to know coming into interviews and the internship generally. If there is anything that you're particularly interested in hearing about, please leave a comment. In addition, let your friends and associates know about this blog if you think they might benefit from reading it.

#1 Preparation and Training

The preparation to-do list for investment banking interviews is endless; there's no such thing as being "too prepared". This blog (together with many other resources) offer suggestions on the most fundamental items you should be focusing on. I recommend you read up on those items as you start preparing. Once you have interviews lined-up, the trick to converting the interviews into a summer offer is in the little things that separate you from your competition. A truism that you will hear after you screw-up your first pitchbook or trading comp is: "The devil's in the details". Every bit of additional understanding, market knowledge, and Excel experience will improve your chances of landing that internship offer and the full-time offer that follows.

Modeling and Accounting

Unfortunately, most summer IBD interns don't get a ton of modeling experience. Your primary work as a summer intern will be PIB (Public Information Book) creation, spreading comps, presentation formatting and printing, and infrastructure projects. Anyone with common sense can create a PIB and format a presentation (it goes without saying that some people are faster and better at it). Spreading comps takes a bit of time as you familiarize yourself with the specific adjustments your associate wants (but this isn't "rocket science", either). In later posts I'll explain these tasks in detail so you can speak intelligently about your role as a summer intern in interview situations (definitely something that would have been helpful for me).

Even though you won't be "modeling" per se, you will however be using Microsoft Office Excel, Word and PowerPoint night and day. On day one when you start spreading your very first comp it will be that much easier for you to distinguish yourself if you're already "fluent" with these programs (it should also be said that not knowing how to use these programs will set you apart as being slow or incompetent). Something prior to the internship that helped prepare me was the DealMaven financial model training online course. In addition to teaching me how to navigate Excel effecitively, the DealMaven training forced me to understand the actual item flows between the three financial statements. In retrospect, having completed the DealMaven course prior to interviews would have prepared me that much better.

In addition to DealMaven, I suggest you purchase and complete Adkins Matchett & Toy's accounting workbook: Adkins Matchett & Toy's Accounting Workbook
Although it may be a review for you, this workbook breaks accounting down into the most simple principles. Our recruiters suggested this as extra study material prior to the internship and I'm really glad I completed it. If you're a non-business major this workbook is a must (I'm a Economics BA and really benefited from it).

Setting yourself apart from your competition in today's market is more important than ever. By working through a DealMaven modeling course and completeing the accounting workbook your chance at landing your dream job is that much closer.

Stay tuned for the next post as I talk about my experiences as a summer intern on the West Coast.

Prepare Today For Where You Want To Be Tomorrow

With today's fall of Lehman Brothers, the acquisition of Merrill Lynch by Bank of America, and the recent bailout of Fannie Mae, Freddie Mac and Bear Stearns by the Fed, and with AIG looming on the edge of demise...now is not a great time to be getting a job in banking! The markets are taking a bloody beating and the job forecast for upcoming college graduates is dark and dreary.

I have been affected in my own way by this market turmoil. I previously had a job offer to work at Bear Stearns in New York in their investment banking division before their fall. Regardless of this I was able to find a great job in finance (outside of investment banking), with a company where I help deploy capital, and working on deals, all while partnering with investment banks, private equity funds, and institutional investors.

As you know look to your future and prepare to exit college, I would like to give some advice.

1) Just because the markets are bloody, doesn't mean there aren't great jobs in finance. Consider working on the corporate side of a business in accounting or finance. This is a great way to build your accounting and finance skills in a specific industry.

2) Look for companies who could benefit from the demise of the investment banks. Remember, where there is a loser there is a winner and vice versa. In this case our loser is Lehman Brothers, their shareholders, et al. The immediate winner(s) might include short sellers, hedge funds, and others. There will also be long term beneficiaries because assets of Lehman's will be sold for a discount. For example, Lehman Brothers has a massive commercial real estate portfolio that will most likely be put on the block for sale. Thus, working for a solid real estate investment group with a proven track record would be a great strategy.

3) Be open to working in different industries and cities than you had previously considered. Right now Texas is one of the strongest economies in the nation (although hurricane Ike just ravashed its coast line), it is still a great place to look for a new job.

4) Plan on working in an industry and in a job that will help you get into business school. Markets go up and they go down. Right now the market is down....really down, but it will eventually be back up. In the crash of 1987 the markets were also in a dire situation and the job outlook in the financial sector also was ravished by the effects of the crash. But the market eventually turned around. Prepare yourself now for a market turn around.

5) Look for a job that will help you get into business school. Use the most recent events in your future story when you interview for business school. Talk about how when you were graduating Bear Stearns crashed, then Fannie and Freddie were bailed out, the credit markets were terribel, banks were falling, then Lehman Brothers went down, Merrill Lynch was bought by BofA, and AIG was in dire straits, thus with all of these conflicts in the market you started your own company doing ABC. Who knows, but show how in this market you were able to turn lemons and into lemonade and capitalize on the situation.

This might be the perfect opportunity to work for a startup and gain a ton of entrepreneurial experience. Or if you want to go a more corporate route, look for companies that have alumni from the MBA program(s) you want to enroll in.

Take this situation, capitalize on it, turn it into a story, and prepare yourself for the next phase of life: either graduate school, a future job, further career advancement, etc... It doesn't mean you have to take your eye off the prize of being an investment banker, instead prepare today for where you want to be tomorrow.

So you want to be an investment banker....

As you prepare to return to school and start your interviews, continue to think about your interview strategies. Eventually you should become so good at interviewing that you when answer a question you lead interviewers to the next question YOU want. The last thing you want is to be in an interview where someone is asking you all types of questions you have never heard before and haven't already practiced some type of response. The difference between a GREAT interviewee and a GOOD one is how well they "subtly" lead the interview.

For example, the first question you will be asked is typically "Tell me about yourself". In your response you could go on about school, clubs, internships, etc... All of which is fine and dandy, but if you can drop in a line about how in your last finance class or in your last internship you learned how to do a DCF, you have placed a hook out for the interviewer to latch on to for their next question. The next question might go something like, "So you learned about valuation in your Finance Honor Society, tell me how to value a company." Or they might say "You used a DCF model in your internship with Company ABC, Walk me through a DCF." These are the basic questions, which you should know they need/will be asking, and thus you check off the boxes for the interviewer.

Essentially, you should be so good that you know exactly what each interviewer is looking for. In a typical Super Day, a candidate will interview with 6-12 people at the firm. Did you know that each person is typically assigned a specific assignment to interview you on? For example, your first interview is typically a fit/conversational interview. The interviewer is usually a VP and willl come in and kind of shoot the breeze with you. Ask you basic questions about your resume, talk to you about clubs you were in, etc... Super easy, but yet a skill they want to make sure you have.

Then the next people will come in and one will be assigned to test your accounting knowledge, another to test finance, another to test problem solving (Stress Test), etc... Keep track of how the interviews go and then learn to tailor your answers to the interview. Essentially it is an interview within an interview.

My advice is to make sure you know your BIG 5. Refer to my blog post (http://investmentbankinginterviewprep.blogspot.com/2008/02/first-things-first-big-5.html) if you don't know what I mean. Also, go over all the interview questions you can come up with. Break them into the accounting and finance sections. Learn them and know them so you can "drop" hints in your answers to lead the interview to where YOU want it to go. (NOTE: You need to let yourself be interviewed. Don't dominate the interview or start asking questions until you are asked to do so at the end of the interview).

Keep up the good work and keep practicing for your interviews!

New York New York!

As the summer comes to close, internships wrap up, and students begin to prepare for another Fall semester of college, you should be thinking about the upcoming interview season and taking a trip to New York. Hopefully you have been practicing and refining your interview skills and are ready to walk through a DCF forwards and backwards. You should have contacts at all, if not many of the banks by this point, and you should be emailing the recruiters in the near future informing them of your trip to NYC requesting an appointment to interview.

In order to make the NYC trip less expensive I recommend a couple of things: first being to take the jetBlue red eye to JFK. That will save you a few hundred. Next, try and stay at a friends place for all or at least part of your trip. Last, go to Gray's Papaya and chow down on some great, yet cheap, hot dogs and smoothies.

This is going to be an interesting interview season considering the state of the economy and Wall Street in general. If you really want to be a banker.....you better bring your A game. Best of luck!