My second time writing this...I was 3/4 of the way done when my computer crashed ![[Image: angry.gif]](https://rooshvforum.network/images/smilies/angry.gif)
I've received a ton of emails in regards to how to get a career in investment banking, so I figured i'd create a datasheet. Note - this applies to Canada, but you can apply similar techniques in the U.S, and the UK as well.
I also wrote this pretty quickly, and just based of my experience - so if anything changed, or you experienced it differently, please add it below!
What it takes:
Before you decide that you want a career in IB, make sure it's the career you really want. You'll be trading your time, health, and social life for money. In your first two-years you'll be lucky if work less than 90-100 hours per week.
Starting salaries range from $50,000 - $70,000 CAD, with a signing bonus, and other performance bonuses attached on. It's not unheard of for first-year traders to make mid six-figure salaries.
The trade off is simple - time for money. If that isn't acceptable to you, or you're unsure if you can work the hours required, then maybe think of a different career. The most common route is to work in IB for four-five years, before transitioning to a hedge fund - much less hours, and around the same pay. The most senior trader on my team is 29 - which should tell you that the average career in IB isn't long.
Education:
In the U.S anything less than a top-tier school and you're in for some hard work to get a career in IB. You CAN go for an MBA, however, that's not necessary - they hire straight from undergraduate programs at the top-tier schools. If you didn't go to a top-tier school, go for an MBA - it'll raise your chances drastically.
In Canada, you'll have it easier if you're at a top-tier school (Rotmans, Schulich, Ivey, Degroote, Sauer, Queens etc...) but it's less necessary than in the U.S. We've hired students from lower-tier schools (York, Laurier, Brock, Ryerson). What's more important is what you do with your time in school, the experiences you accumulate, and your networking ability.
If your GPA is less than 3.5, you'd be best off retaking some courses. While GPA isn't the only factor, it's a 'sorting-aid', in that it helps to reduce the applicant pool easier than going through every applicants resume.
Summing up what is required during your four-years at school:
- Get experience (internship)
- Get involved (student groups - finance, investment teams etc..., case competitions, the Bloomberg labs)
- Network (networking is the #1 most important thing to do if you're interested in IB. It's a huge 'boys clubs', so if you don't network, nepotism will reign supreme).
- Good grades
- Create your own portfolio. Showing a solid performance record with your own personal money is massive, and I think it's one of the reason I got my current job. Show that you can manage money, and manage your emotions with real, tangible money.
- Learn the following inside and out : Financial modeling, Derivatives, M&A, Accounting, Valuation
Valuation:
Comparable Company Analysis – Look at publicly traded companies and the multiples they trade at, and then apply those to the company in question.
Precedent Transaction Analysis – Look at what buyers paid for sellers in similar industries and with similar financial profiles and apply the multiples to your own company.
Discounted Cash Flow Analysis (DCF) – Use a company’s projected cash flows, discounting them for the time-value of money and cost of capital, and sum those with the company’s discounted terminal value to find its present value.
Modeling:
Most modeling questions are on merger models – looking at what happens when a company acquires another company – or Leveraged Buyout (LBO) Models – calculating the return to a PE firm when they buy a company.
Interview/Resume:
Most people fail at the resume stage. They list skills, and experiences that have nothing to do with their aspirations in IB. List position-relevant skills:
- Knowledgeable in the field of M&A
- Capable of developing complex financial models
- etc....
If you did have your own portfolio, make sure to list your returns, as well as some (not all) of the positions you owned. When I applied for my job, I printed out a four-year performance chart comparing my returns to market indices. Going the extra mile is worth it.
When it comes time to interview, you'll need to prove a few things:
- Quick on your feet (Here they ask you logical reasoning questions ("how far can an economist run into the forest"), analytical questions ("Walk me through a DCF. How does 40% cash vs. 50% cash affect a merger model? What happens on all 3 statements when COGS goes up by $10?"), and theoretical questions ("thoughts on EBITDA")). This is just a very very general example.
- You want to make a lot of money (Jordan Belfort without the illegal component)
- You're social (They can tell instantly if you're not. Without sounding racist, this is the reason there aren't many Asians in IB - they simple aren't as social as your average Caucasian/Euro guy/girl).
- You can work like a dog (I remember from my interview they asked me "We might ask you to stay an hour or two late here and there, are you comfortable with this?" This is a very tricky question, because what they're looking for isn't "yes", they want to hear "I'll work all night, all week, skipping christmas if I have to")
LBO:
The most common question: “Walk me through an LBO model.” You could also get questions on the different drivers and how they affect the return at the end.
More advanced questions cover different types of debt (e.g. bank vs. senior vs. subordinated vs. mezzanine), pro-forma balance sheet adjustments, and debt covenants.
Make sure to sound enthusiastic - smile, use hand gestures. Everything plays a part.
You'll be asked industry-specific questions as well. Most trading teams split traders into whichever industry/sector they're most comfortable with. "What do you think of the energy industry" is fitting for today's economic climate.
They know no one is perfect - so if you make a mistake, admit it. Don't try to be a know-it-all.
Career-Path:
The ideal career path is: Analyst - Associate - leave IB and work at a Hedge Fund. They'll hire you out of an MBA program as either an Analyst, or an Associate, but they usually promote to Associate from their Analyst pool. If you're coming from an Undergrad program, you'll start at the bottom of the food chain - an Analyst.
You don't want to spend forty years working in IB, it's too detrimental to your health.
EDIT: I forgot to mention; if you think bankers doing Cocaine is only in the movies, or in the 90s', it's not. Some of the older more worn-out guys at my office consistently use Cocaine. It's not something I or the younger traders partake in, but it is a big problem, even today. These guys walk down to the main lobby, and buy it from the cooks at a restaurant nearby. The first time I heard about it I couldn't believe it was a real thing haha.
Summation:
I've made it seem like investment banking is all doom and gloom, when in reality it's not. The work hours are long, and hard - but the environment is fairly relaxed, and the 'boys club' mentality makes it entertaining to say the least. I'm in my third-year, and the hours have dropped substantially - in addition to getting holidays off.
If you're comfortable with the work hours, and are hungry for money, there isn't much better than investment banking (aside from being an entrepreneur and starting your own business).
I've received a ton of emails in regards to how to get a career in investment banking, so I figured i'd create a datasheet. Note - this applies to Canada, but you can apply similar techniques in the U.S, and the UK as well.
I also wrote this pretty quickly, and just based of my experience - so if anything changed, or you experienced it differently, please add it below!
What it takes:
Before you decide that you want a career in IB, make sure it's the career you really want. You'll be trading your time, health, and social life for money. In your first two-years you'll be lucky if work less than 90-100 hours per week.
Starting salaries range from $50,000 - $70,000 CAD, with a signing bonus, and other performance bonuses attached on. It's not unheard of for first-year traders to make mid six-figure salaries.
The trade off is simple - time for money. If that isn't acceptable to you, or you're unsure if you can work the hours required, then maybe think of a different career. The most common route is to work in IB for four-five years, before transitioning to a hedge fund - much less hours, and around the same pay. The most senior trader on my team is 29 - which should tell you that the average career in IB isn't long.
Education:
In the U.S anything less than a top-tier school and you're in for some hard work to get a career in IB. You CAN go for an MBA, however, that's not necessary - they hire straight from undergraduate programs at the top-tier schools. If you didn't go to a top-tier school, go for an MBA - it'll raise your chances drastically.
In Canada, you'll have it easier if you're at a top-tier school (Rotmans, Schulich, Ivey, Degroote, Sauer, Queens etc...) but it's less necessary than in the U.S. We've hired students from lower-tier schools (York, Laurier, Brock, Ryerson). What's more important is what you do with your time in school, the experiences you accumulate, and your networking ability.
If your GPA is less than 3.5, you'd be best off retaking some courses. While GPA isn't the only factor, it's a 'sorting-aid', in that it helps to reduce the applicant pool easier than going through every applicants resume.
Summing up what is required during your four-years at school:
- Get experience (internship)
- Get involved (student groups - finance, investment teams etc..., case competitions, the Bloomberg labs)
- Network (networking is the #1 most important thing to do if you're interested in IB. It's a huge 'boys clubs', so if you don't network, nepotism will reign supreme).
- Good grades
- Create your own portfolio. Showing a solid performance record with your own personal money is massive, and I think it's one of the reason I got my current job. Show that you can manage money, and manage your emotions with real, tangible money.
- Learn the following inside and out : Financial modeling, Derivatives, M&A, Accounting, Valuation
Valuation:
Comparable Company Analysis – Look at publicly traded companies and the multiples they trade at, and then apply those to the company in question.
Precedent Transaction Analysis – Look at what buyers paid for sellers in similar industries and with similar financial profiles and apply the multiples to your own company.
Discounted Cash Flow Analysis (DCF) – Use a company’s projected cash flows, discounting them for the time-value of money and cost of capital, and sum those with the company’s discounted terminal value to find its present value.
Modeling:
Most modeling questions are on merger models – looking at what happens when a company acquires another company – or Leveraged Buyout (LBO) Models – calculating the return to a PE firm when they buy a company.
Interview/Resume:
Most people fail at the resume stage. They list skills, and experiences that have nothing to do with their aspirations in IB. List position-relevant skills:
- Knowledgeable in the field of M&A
- Capable of developing complex financial models
- etc....
If you did have your own portfolio, make sure to list your returns, as well as some (not all) of the positions you owned. When I applied for my job, I printed out a four-year performance chart comparing my returns to market indices. Going the extra mile is worth it.
When it comes time to interview, you'll need to prove a few things:
- Quick on your feet (Here they ask you logical reasoning questions ("how far can an economist run into the forest"), analytical questions ("Walk me through a DCF. How does 40% cash vs. 50% cash affect a merger model? What happens on all 3 statements when COGS goes up by $10?"), and theoretical questions ("thoughts on EBITDA")). This is just a very very general example.
- You want to make a lot of money (Jordan Belfort without the illegal component)
- You're social (They can tell instantly if you're not. Without sounding racist, this is the reason there aren't many Asians in IB - they simple aren't as social as your average Caucasian/Euro guy/girl).
- You can work like a dog (I remember from my interview they asked me "We might ask you to stay an hour or two late here and there, are you comfortable with this?" This is a very tricky question, because what they're looking for isn't "yes", they want to hear "I'll work all night, all week, skipping christmas if I have to")
LBO:
The most common question: “Walk me through an LBO model.” You could also get questions on the different drivers and how they affect the return at the end.
More advanced questions cover different types of debt (e.g. bank vs. senior vs. subordinated vs. mezzanine), pro-forma balance sheet adjustments, and debt covenants.
Make sure to sound enthusiastic - smile, use hand gestures. Everything plays a part.
You'll be asked industry-specific questions as well. Most trading teams split traders into whichever industry/sector they're most comfortable with. "What do you think of the energy industry" is fitting for today's economic climate.
They know no one is perfect - so if you make a mistake, admit it. Don't try to be a know-it-all.
Career-Path:
The ideal career path is: Analyst - Associate - leave IB and work at a Hedge Fund. They'll hire you out of an MBA program as either an Analyst, or an Associate, but they usually promote to Associate from their Analyst pool. If you're coming from an Undergrad program, you'll start at the bottom of the food chain - an Analyst.
You don't want to spend forty years working in IB, it's too detrimental to your health.
EDIT: I forgot to mention; if you think bankers doing Cocaine is only in the movies, or in the 90s', it's not. Some of the older more worn-out guys at my office consistently use Cocaine. It's not something I or the younger traders partake in, but it is a big problem, even today. These guys walk down to the main lobby, and buy it from the cooks at a restaurant nearby. The first time I heard about it I couldn't believe it was a real thing haha.
Summation:
I've made it seem like investment banking is all doom and gloom, when in reality it's not. The work hours are long, and hard - but the environment is fairly relaxed, and the 'boys club' mentality makes it entertaining to say the least. I'm in my third-year, and the hours have dropped substantially - in addition to getting holidays off.
If you're comfortable with the work hours, and are hungry for money, there isn't much better than investment banking (aside from being an entrepreneur and starting your own business).
![[Image: tongue.gif]](https://rooshvforum.network/images/smilies/tongue.gif)
![[Image: wink.gif]](https://rooshvforum.network/images/smilies/wink.gif)
. Still dreading my return to work Monday.
