In the spirit of adding some interactivity to this site, please post your comments and suggestions. Also, feel free to post your questions about investment banking and I will try my best to answer them.
-Andrew
420 thoughts on “Comments / Suggestions / Questions…”
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For the banks to review online application, those people who gotten a 2nd Lower wont even got shortlisted I supposed, since the minimum is a 2nd upper? You said we have to do a job of explaining but I still think there is no chance of getting the interview stage 1, dont u think?
as with other posts, including irrelevant internships may help as you have said but to keep within the 1-pg limit, smtimes we have to curb it by not including it in?
Andrew,
How old are you? Just wondering… (=
— Ariel
ps this is not intended as a pass
Hi Andrew,
I had attended an assessment centre 5 days ago. My friend who also attended the same AC as me received a rejection mail on the next day. But I haven’t heard from the bank yet. How long do you think I should wait before I follow up with them? Thanks!
Freshie,
I’m not familiar with the grading system of which you speak so I really can’t comment on whether you have a shot. What I will say is that plenty of people get jobs in the industry with less than fantastic grades. At least in the U.S., grades are only one factor. Yes, it is more important to keep the resume to 1 page than it include irrelevant internships.
Jimmy,
If you haven’t heard back in about a week’s time, I would politely follow up.
Hi, Andrew
I’ve got a question in connection with current situation on the Wall Street. According to Bloomberg GS and MS are changing their status and are becoming commercial banks. What does that mean? Do they cease to do investment banking and start to take deposits and etc?
Steve,
Let’s first see if they even exist in a month’s time. Assuming they do, they will continue doing investment banking, just like Citi and JPMorgan and BofA do investment banking.
Hi Andrew,
Excellent website. I am currently a law student looking to break into IBD. I have solid summer finance experience, but no prior full-time.Considering the weak hiring environment would I be better off to apply as an analyst rather than the uber-competitive associate position. And, taking an analyst position, would my JD at least accelerate promotion?
Ryan,
Unfortunately, in today’s job market, analyst recruiting is just as difficult as associate recruiting. You can try the analyst route, but most banks tend to tread JDs from top law schools as associate candidates. If you were to join as an analyst, i doubt that the JD would help you accelerate promotion but i suppose it is possible at a boutique bank. Sorry not to have better news for you.
Hi Andrew,
after my initial screening and getting through two telephone interviews, I have been invited to an AC for a winter internship next week. In order to find out about my interviewers, is it ok to send an email to my recruiter who are they gonna be? Also, this is going to be my first AC ever and is going to include a role play. Is there anything to prepare for?
Thank you!
Lucy
Lucy,
I may be missing something very obvious, but what is “AC”? If you have gotten this interview through a recruiter then it is certainly okay to ask the recruiter about with whom you will be interviewing. Without knowing what kind of position this is for, it is hard to give advice on preparation.
Andrew, could you explain please how the financial crisis affected the valuation methods (comparative, dcf, lbo)? What multiples will be the most appropriate to value a company when the assets are undervalued? I guess P/E is not appropriate nowadays.
Hello. I really enjoyed your articles. Could you write an article about breaking into investment banking from engineering?
Regards,
-Ray Murphy
Bratt,
The financial crisis doesn’t really affect the valuation methods per se, though it certainly affects some of the inputs to the valuation methods. Likewise, there really isn’t a change in the types of multiples used, except where, for example, there is negative or very low EBITDA or Earnings (making an EV/EBITDA or P/E multiple meaningless). From an investing (rather than investment banking) standpoint, be weary of forward P/E multiples because analyst estimates of earnings are still way too high.
BTW, what makes you think that assets are undervalued today???
Ray,
I have no specific advice for trying to switch from engineering to banking. Obviously switching from anything into banking right now is virtually impossible given the market. The only shot is trying to network really hard. Or think about getting an MBA. Plenty of engineers go into banking post-MBA (or right out of college with an engineering degree).
Hi Andrew,
I have one question that you may be able to help me in understanding it:
– Why do we have deferred tax liability (DTL) creation in M&A/purchase price allocation? What is the rationale to create DTLs in this circumstance?
Thanks a lot.
Bart
Hi Andrew,
How much will a shoplifting misdemeanor arrest two years ago hurt my chances of getting an offer? I will have my records expunged in 3 months, but i need work TODAY. Would it be more worth it for me to wait those three months or start the interview process now?
Thanks,
Jim
Hi Andrews
Thank you so much for the great work out here on this site. This is indeed very helpful to get an insight about Investment Banking. I have a question for you…
“How do you see the CFA programme to break into I-Banking..?” You have talked of MBA & other courses but CFA.
Solicit your views.
Thanks …. Ashish
Jim,
I really don’t know how much your arrest will hurt you. But if you need work today, then I wouldn’t wait.
Ashish,
The CFA won’t hurt you but it really doesn’t help you break into ibanking. It is certainly not a replacement for an MBA. For asset mgmt or equity research jobs then the CFA is much more valuable.
Hi Andrew,
Do you have any idea on the question that I previously posted here? (about the DTL creation after a purchase price allocation / M&A deal)
I appreciate your help!
Thanks again.
Bart
Bart,
In a M&A deal with no step-up of tax basis (i.e. stock purchase), if a purchased asset is written up to fair value then a DTL is created. The DTL would equal the amount of write-up times the tax rate. This happens because the write-up is not tax deductible (it affects the book basis but not the tax basis). The DTL would be amortized in future periods.
I am a little confused on the process of getting hiring or recruited by an investment bank. What is the tradtional way to get hired by an investment bank and what are the non traditional ways to get hired by an investment banking if you already completed you MBA?
Andrew, this site was the biggest resource I used throughout my summer analyst recruiting escapades. In the end, I got invited to 15 final rounds and out of the half I actually attended, a majority of those extended offers to me. Proud to say that I’ll be going to a top-notch shop for the summer.
Trust me, this website was significantly better than studying the Vault Guide, etc. It really made a huge difference. Thank you so much for the help!
–S.
Jason,
The traditional way is to get hired out of a top undergraduate or MBA program. It is very difficult to move into investment banking post-MBA (I’d say nearly impossible in this market environment). Occasionally, people might make the switch into banking from related areas of finance (e.g. equity research, corporate banking, finance or corp. dev. within a large company). Small boutique banks are more flexible about hiring senior professionals who are able to bring in deals, regardless of their backgrounds.
Andrew,
First of all, thanks so much for putting together such a useful site. I found it extremely helpful! I have several years of experience in asset management and would like to switch and get my foot in the door into banking. While I haven’t pursued an MBA, I have a CFA designation which involves rigorous financial analysis and modeling. I’m hoping to skip the analyst role and jump in as an associate. My previous roles also included a lot of analytical and grunt work but I am most fascinated by the satisfactions of working on deals. I’ve read somewhere that it’s next to impossible to get in after being a senior in a different industry. Do you think that I even stand a chance to get in? It’s discouraging but I would like to get a sense of how realistic that is!
Thanks so much!
G
Are there any night time or part-time job with investment banks. To investment banks use corporate finance use temp or staffing agencies and if so, what are the names of these companies?
What can I do to learn more about investment banking? are there any books or events that I can join to give me a greater perspective on banking? Inparticular cross borders transactions.
Ryan,
Investment banks do not really have night or temp positions other than for support staff (in other words, not for banking professionals). They do have part-time positions in the summer (for undergrad and MBA students) and some may allows you to do internships part-time during the rest of the year but these also tend to be for students. I don’t think any reputable banks use temp agencies to fill professional positions. I talk about books and internet sites where you can learn more about banking here: https://ibankingfaq.com/category/for-further-learning/. There are some conferences for banking professionals but I don’t think they tend to be open to the general public.
George,
I think you are correct that it is very difficult to switch into banking from another industry or even another area of finance. Having said that, nothing is impossible. It really comes down to networking if you want to give yourself a chance. If you really want to have a good shot at it, getting an MBA is worth thinking about.
Hi Andrew,
I am from Spain, and your website is getting known here. Very useful!
I have a question that I ve been asked in some IB interviews.
When valuing a company with trading companies method, for which sector would you use typical mulitples suxh as EV/ EBITDA, EV/ EBIT, EV/FFCF, P/Book value, EV/ EBITDAR, EV/ Sales…)?
Thanks
Ignacio,
EV/EBITDA is probably the most commonly used valuation metric and is used in many sectors as a primary or secondary metric. It is the primary metric in sectors such as industrials and consumer products. EV/EBIT is used in the same industries as EV/EBITDA but tends to be less important. An exception would be in an industry with high capex. EV/Sales is also used in most industries but also is less important than EV/EBITDA or EV/EBIT. Exception here is for valuing companies with negative, or low EBIT such as early stage tech or biotech companies or distressed industries (e.g. auto manufacturers). P/BV is used for financial institutions. Adjusted EV/EBITDAR (R is for “rent”) is used in industries where real estate is a significant component of the business such as retail and restaurants. I have never used EV/FFCF (Future Free Cash Flow) so I’m not sure about that one.
Hello Andrew,
Fantastic website! Thank you for all your help.
I’m currently a rising sophomore at university of western ontario, and this summer i was fortunate enough to network my way into two “unofficial” internships at two bulge bracket banks. I arranged it so that the first internship will be for the first two months of my summer and the other bank for the last two. Would recruiters find it repelling or negative if i list working for two different banks in one summer? Do you think I should just list both or choose one?
Niether of the two banks know im working for the other one…
thank you so much and i hope to hear from you soon!
Sincerely,
Jack
Jack,
No, I don’t think there is anything negative about having two internships in the same summer. I think it shows an extra level of commitment and work ethic that can only help you. I would list both.
what are altermative ways to gain experience in the banking industry if you can not find a summer internship. How can I prepare for the recovery of the industry
Compliments on your website.
I recently took a financial modeling course in M&A
and realized that we didn’t perform an NPV analysis but
rather looked at whether the acquisition was accretive or
dilutive. The instructor didn’t give a comprehensive
answer as to why we dony usr NPV, he said that it is not practiced in the industry, so I pose the same question to you.
Thank you.
Another question concerning M&A.
Why don’t we view an acquisition as an investment
and calculate the IRR of the deal, get the r in the denominator
and then compare it to other prospective investments and finally choose
the project which yields the highest return. I saw in the class
that we used IRR for LBOs but not for M&A. Why is that so?
Thank you once again.
what is the fee for the course that you teach?
Besides summer associate positions are there internship or opportunities to work with banks during the year?
After applying, should I contact the MD’s of the specific group i like to work for to follow up in my quest for a position?( does this show confidence that I have the gall to follow up or does this demonstrate my inability to follow instructions?)
Generally how comprehensive are the training programs at major investment banks? Do you actually learn from the program that are applicable to carrying out the daily task?
Ryan,
There really isn’t any way to get banking experience without being in banking. If you can’t get an internship in banking, the best you can do is try to find an internship in something similar. I’ve mentioned a few alternatives in one of my earlier comments above. Some smaller banks will let you do internships during the school year. These are typically not advertised so you have to seek them out and they are typically not formally structured like a summer internship.
You can reach out to MD’s but be respectful. It is good to show initiative in this job market as long as you don’t go too far.
The training programs are getting shorter, especially with cost cutting measures. Not that many years ago, training programs at bulge bracket banks might have been 10 weeks. Now perhaps they are only 4-6 weeks (I’m not sure exactly). Boutiques tend to have much shorter training for incoming Analysts and Associates. The goal of the training is to introduce you to the topics but most learning comes “on the job.”
Sean,
I need to update this website a bit because I am not currently teaching the course in New York that I used to. What I am doing is teaching similar 1 – 4 day courses at undergraduate and MBA schools. More information is available at http://www.instituteforfinance.com. If this is something that you are interested (assuming you are a student) please feel free to contact me. I am also working on self study materials that I hope to offer in the coming months.
Marissa,
Your instructor is correct that NPV, while taught in school, is not practiced in banking. The short answer is that as an M&A banker, our job isn’t to tell our client whether a deal is good (e.g. positive NPV or IRR > than WACC) or bad. Our job is to get the deal done. The last thing M&A bankers want to do is tell our client that a particular deal will destroy shareholder value. Bankers don’t earn fees unless the deal is executed. From a theoretical perspective, you are correct that we can view a potential acquisition as a project and calculate the NPV and/or IRR. Perhaps the company making the acquisition will look at this, but the banker will not. As you point out, IRR is used for LBO modeling to understand the return to the financial sponsor of doing an LBO. Accretion/dilution is done for a strategic M&A (strategic) deal to understand the accounting impact of a deal on the publicly traded acquirer. Accretion/dilution doesn’t tell us whether a deal is good or bad (the way NPV does) but we as bankers look at it because our clients care about what happens to EPS. Hope this helps a bit.
Andrew, Thank you for your response. It has put things into perspective for me especially the role that the IBer plays. Great points that I never thought of.
Once again, thanks!
Andrew,
I was thinking about your response a little more. Isn’t there an advisory stage within the relationship between banker and client where banker would advise to go or not go forth with the deal? Couldn’t a potential client go to a banker to ask whether the deal is a winner/loser – seeking advice? I am studying for the series 7 and there is an advisory stage.
Thanks again!
Marissa,
You ask a good question. Yes, the banker is supposed to give “advice” to the client. Yes, in theory, the banker should advise the client if he/she thinks the deal is good or bad for the client. However, in practice, as I mentioned in my previous response, it is extremely rare for a banker to tell a client that a deal is a loser. To a banker, all deals that close are “good deals” because the banker (really the ibank) gets paid on success. Success means a closed deal not a “good” deal. The kind of advice that a banker does give its client are things like whether a deal will be able to be completed, whether it will be able to be financed, the probable market reaction to a deal, how to structure and finance a deal, how to negotiate the deal, how to value the deal, etc.
Is it worth it to have an unpaid internship at a middle market investment bank, Stifel Nicolaus for example?
Its a lot of hours to work to earn no salary. I guess I am wondering if the “experience” they assure me of and the resume boost will be worth it in the end.
Thanks.
Joe,
In the past, I would have said you should consider an unpaid internship very carefully. The reason was that pretty much any reputable firm where you were likely to get a good experience would be willing to pay you. However, I do think things are different in the current difficult market. Firms have less money to pay interns and they know that good students are willing to take internships without pay because there are so few jobs/internships available.
Bottom line is that Stifel Nicolaus is certainly a reputable firm and if you think you will get a good experience that will help your resume then I would certainly consider it, provided that you can do without the salary. I’m assuming that this is a summer or part/time internship.
In order to move up on the heirachy of investment banking, I know an MBA is required. However, is it necessary to obtain a CFA designation? Will this be seen as a plus in the investment banking field (specifically M&A, as that is where I would like to end up)? If so, what other certifications/designations are prefered/suggested in the industry?
Thanks to anyone who knows these answers?
Will a combined MBA/CPA be a good combo for banking. I plan on prepping for CFA after CPA. Would you instead recommend MBA/CFA?
Andrew,
This is truly a great site for helping people who want to get into i-banking. Having been in the field and not enjoyed it, I started a site to help people get out of finance 🙂 …just to be different I guess. It may also help people who are considering finance as a career and not sure if it is for them. Let me know what you think – leavingfinance.com
Best,
-TM