Let’s be honest – nobody who starts their career as an investment banker plans to stay for more than two to three years. Throughout your entire life in college, you have had all the freedom in the world to do what you want whenever you want, and working in investment banking throws all that out the window.
Your life as an investment banker is the complete opposite. You slave away two to three years of your life hoping to jumpstart your career ahead of everyone else and open a lot of opportunities down the road. But the flip side is that out of the 8 best jobs on wall street, investment banking ranks as one of the best. You are guaranteed to be paid the highest out of any other job you can start out of college and open doors to a ton of lucrative exit opportunities.
But like I said, it does not come without a cost and a lot of people really question whether investment banking is worth it. Just imagine going from having all the free time in the world in college to not being able to make plans and having your weekends blown up last minute because of a deal. Banking hours can be a shock to most people.
You need to make sacrifices if you want to be successful and rich
Cliché I know, but it is absolutely true. Unless you were born rich or won the lottery, you can’t have the freedom to do whatever you want or buy whatever you want. It takes hard work and sacrifice.
I’ve spent most of my life growing up being told to aim for work life balance. Working 9 to 5 and making just enough to live your life and support others that depend on – this is what the majority of people do.
If you want to be just like everyone else, then don’t expect to ever be richer or more successful than the average person.
If you want something you’ve never had. You must be willing to do something you’ve never done.
Thomas Jefferson
You must sacrifice parts of your life to be successful at whatever you want to accomplish.
How to land the best investment banking exit opportunities
To position yourself to land the best exit opportunities after investment banking, you must meet have a few things under your belt:
- Good undergraduate school – any of the Ivy League schools or top public undergraduate business schools are good enough.
- > 3.5 GPA – you are still young enough in your careers as an investment banking analyst that recruiters and firms still care about your GPA. They may not care as much as right out of college, but given you have little experience, GPA still plays a decent role when deciding which applicants to interview.
- Work at an elite bulge bracket or boutique – If you work at Goldman Sachs, JP Morgan, Morgan Stanley, Lazard, Evercore, Moelis, Greenhill, Centerview, then you will be contacted by recruiters who work for the big buyside firms.
- Top Bucket Ranked Analyst – Recruiters love analysts who are ranked top bucket by their groups. Now, sometimes it is hard to be ranked top bucket unless you worked on a killer deal and showed that you can do a good job, so it is not the end of the world if you aren’t ranked top bucket, but it will definitely help during your conversations with recruiters. Follow these tips to be successful as analyst.
- Work in a good group – the most relatable groups to a lot of buyside jobs are M&A, financial sponsors, or a non-specialized vertical (i.e. not debt / equity capital markets, real estate, oil & gas, financial institutions).
- Solid interview skills – this is an obvious one. If you can’t sell your skillset and come off as someone who is easy to work with, has a good attitude and is willing to work hard, then you likely won’t get offers at any of these buyside shops.
What if you don’t meet that criteria?
Now if you don’t have one or more of the criteria above, don’t sweat it. It just will be a little more challenging to get jobs at some of the top firms. There is nothing wrong with working at a smaller shop or a middle market firm, but if you want to work for the crème of the crop you must put a lot more effort into networking. You won’t even be on most recruiter’s radars for the top shops, so must have some sort of connection to the firms that you want to work for.
Say you landed into an industry group that is specialized, like Oil & Gas, Financial Institutions or Real Estate. Most people out of college try to avoid these industries because they think they will get siloed into that industry for the rest of their life.
Let me tell you from first-hand experience – just because you are working in a specific group/industry for a couple years absolutely does not mean that is what you have to do longer term. Realize that you and you only are in control of the path you take going forward.
Right out of college I landed a job in one of those specialized industries at one of the elite firms (think GS/MS/JPM/Lazard/Evercore) and after a couple years I switched and landed a job on the buyside specializing in consumer names at a large multi-manager hedge fund.
Point being – don’t ever think that others control your destiny. Whatever you want to do in life, go for it.
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Best Investment Banking Analyst Exit Opportunities
- Private equity
- Hedge Funds
- Venture Capital
- Investment Banking Associate
- Business Development
- Corporate M&A / Strategy
- Startup
Junior bankers fresh out of college always think the “best” exit opportunities are the ones on the buyside – either private equity, hedge funds or venture capital. More pay, meaningful work, less hours, less stress, and a better lifestyle in general. The buyside is the most common career path for those out of investment banking.
1. Private equity
Of the different buyside jobs, private equity ranks at the top of the list for most bankers. Investment bankers are used to following the traditional path:
- Ivy League / target school
- Investment banking
- Private equity
- Business school (worth it?)
This is the most common career path for the first six years out of college for people after banking. The good thing about those who are successful is finance is they know how to focus on a specific path. The bad thing is that most don’t ever take a step back and ask if this is really what they want to do for the rest of their lives. They rather take the most proven structured path and push off the decision on figuring out what they really want to do post business school.
That is not a bad thing – as a private equity associate you make a lot of money and get a good skillset under your belt. Out of all the different buyside jobs, private equity offers the most optionality in terms of buyside exit opportunities.
Compensation range: $225,000-$325,000
2. Hedge Funds
Hedge funds are different. Most people who take the hedge fund path right out of banking had some interest in public investing in college. Otherwise it is pretty hard to land a hedge fund job without any prior experience in investing. You need to show that you are actually interested in working at a hedge fund through investing in your personal account or through clubs you joined in college.
Recruiting to land a hedge fund job is also different than recruiting for a private equity job. It is a lot less structured and interviews happen sporadically instead of all at once like in private equity.
Exit opportunities are not as broad in private equity, so you need to make sure that working at a hedge fund is what you really want to do.
Pay is highly variable depending on your fund’s performance. Expect to make a similar amount as in private equity, or even less if your fund has a bad year. Learn more about hedge fund salaries and bonuses.
Compensation range: $125,000-$500,000+
3. Venture Capital
Venture capital is basically private equity for startup / growth companies, but the job is very different. If you think about how you would value a startup company, it is not about analyzing cash flow and determining an IRR.
It is all about finding companies that have huge market growth potential and very good founders that will do anything it takes to make the company successful. You can’t analyze the cash flow of a company that generates little to no revenue. The analysis a lot more qualitative than it is quantitative in the venture capital world.
Make sure to read more about the differences between private equity, hedge funds and venture capital [link] if you are interested in learning more about the various buyside jobs.
Compensation range: $120,000-$250,000
4. Investment Banking Associate
Despite what most people say, staying on as an investment banking associate is actually not a bad route to take. You actually make more money than in many jobs on the buyside, especially at middle market / smaller buyside firms, and you still have some good exit options if you ever want to leave down the road.
Because a lot of investment banking analysts complain all the time about their jobs (ton of group think among young bankers), this is not a popular right that people take. People have always viewed banking as a stepping stone and a two to three-year job max.
Life as an investment banker has gotten a lot better and banks are doing a better job at convincing analysts to stay on. But still, most millennials these days like to try new things and staying on as an investment banking associate is not a path that is that exciting.
Compensation range: $250,000-$300,000
5. Business Development
Business development is all about figuring out how to best create value and growth opportunities for the company. Most of the work is focused on helping figure out ways to grow the business, either through getting more customers, entering into new markets, or developing partnerships with other companies.
It is different than sales in the sense that you work with potential partners rather than trying to win deals with customers and showcase your company’s service / product offering. But to be successful in business development, you still need to have good sales / relationship skills. You’ll work closely with the sales teams to go after leads and help them get to the next level.
Compensation range: $100,000-$150,000
6. Corporate M&A / Strategy
Working in corporate M&A is a great career path for those who want to continue to work on deals, specialize in a specific industry, and have a better work-life balance (but of course at the expense of getting paid less than a banker would). You will focus on acquisitions, divestitures, JVs, and do a lot of the analysis that investment bankers typically do.
The job is to find good M&A targets for the company and present the rationale behind these deals to management / board members. You will work on analyzing the strategy behind the deal, the valuation, synergies and help with the integration post-close.
Hours are better in general, but just like in investment banking, they can vary a lot depending on if you are closing a deal.
Compensation range: $125,000-$175,000
7. Startup
Given the rise of unicorn startups (startups with a $1 Billion+ valuation), there has been a ton of interest in joining a startup. After a few years in finance, a lot of people start to think that instead of sitting at a computer screen all day long, they would rather build something tangible that provides value to others.
It is tough to go from being on the path where you can make close to seven figures by the time you are in your mid 30s to joining a startup where you will get paid way less and the path is less certain. But once you save $300K-$500K after working in finance for 5-7 years, you start to question what is it that you really want to do longer-term.
Pay will vary significantly depending on which funding round the startup is in. Don’t expect to get much equity if the startup has already raised a Series A. The little equity you do get will dilute significantly over time. You need the startup to make it to a nine-figure valuation before your equity is worth anything meaningful. Point being – don’t count on getting rich by joining a startup.
If you join a startup before the Series A round, then there can be a lot more upside in the equity (but of course more downside since the startup doesn’t have much funding to begin with).
Compensation range: $60,000-$125,000 + Equity
Real Examples of Investment Banking Exit Opportunities
Private Equity
- TMT analyst to TPG
- TMT analyst to Centerbridge
- TMT analyst to Bain Capital
- M&A analyst to Tinicum
- M&A analyst to Trilantic Capital
- Power & Energy analyst to KKR
- Healthcare analyst boutique to Carlyle
- Generalist analyst to Lindsey Goldberg
- Industrials analyst to HIG Capital
Hedge Fund
- Restructuring analyst to Select Equity / Anchorage
- Restructuring analyst to Sorobon Capital
- Restructuring analyst to Highline Capital
- Real Estate analyst to Millennium
- TMT analyst to Glenview Capital
- Consumer analyst to Citadel
- Consumer analyst to Starboard Value
- Healthcare analyst to family office hedge fund
- Real Estate analyst to Baupost
Venture Capital
- Power & Energy analyst to Tusk Ventures – Yes, it is possible to not get siloed
- Power & Energy analyst to TPG Growth
- TMT analyst to Providence Strategy Growth
- Industrials analyst to Norwest Venture Partners
Corporate Development / Strategy
- Power & Energy Analyst to Disney corporate strategy
- Industrials Analyst to Walmart e-commerce
- Restructuring Analyst to HBO corporate strategy
- Consumer analyst to ABInbev corporate strategy
Investment banking associate exit opportunities
There is a common perception that it is much harder to land a buyside job once you reach the associate level. This is because most investment banking associates are MBA graduates and have not go through the analyst training that a lot of buyside shops like to see.
Analysts work deeply in excel and get in the weeds in company filings and financials. Associates on the other hand usually are the intermediary between the higher ups and the analyst and they check the work, offer ideas, and also help out with the analysis. Even though associates do work in excel and help build models, they are usually not the one driving the analysis. Also, given associates are post MBA graduates, they are likely much older (late 20s / early 30s) and lack the energy that analysts who are much younger have.
Now there are definitely certain groups at banks where you get an amazing experience as an associate and basically do the work of an analyst – this is true especially at the smaller boutique shops where there are not that many bodies to do the work.
Exit opportunities as an associate are very similar to that of an analyst. You can definitely land good jobs in corporate development / strategy / M&A. For buyside roles, you just need to work a little harder as the recruiting path will be less structured.
I know many investment banking associates who landed jobs at middle market private equity firms and good hedge funds. All it takes is a little more networking and proving that you have the same analytical capabilities of an analyst.
The problem with success and landing that dream job
The #1 problem with people who want to be investment bankers and work in finance is that they suffer from their own ambition and the need to have MORE. Every time you land the job of your dreams, the excitement fades and you start to focus on accomplishing even more. This is the problem with most people who are successful: enough is never enough. Regardless of how much money you make or how successful you become, there is ALWAYS someone who is richer, smarter and more successful than you.
In finance this problem exists everywhere. People are always comparing themselves to others. I have worked for people who make millions and they compare themselves to their friends who make tens of millions. Money will not make you happy. I quit a $500K / year job because I wasn’t happy. If you work in a job that is not best suited for your skillset or what you want to in life, you will experience signs of burnout and not be successful at it. Don’t go after a job just because everyone else wants to do it. Figure out what is best for you.
You are already ahead of most people in this world
So once you make it, once you land that investment banking job, realize that you are already ahead of 99% of people in this world. Be grateful that you have that opportunity to begin with. If you don’t get that job on the buyside after investment banking, it is not the end of the world. You have so many other doors open to you because you are an investment banker, so figure out what path is best for you and take the steps needed to go after that job you love.
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Lets say I’m a summer intern at Citi/BAML/Barclays/CS – should I be trying to recruit FT at an elite firm or is it not worth it? At the mid tier bulge I’ll be in a non specialized group like tmt/consumer. I want to eventually be in UMM/MF private equity.
Doesn’t hurt to try to leverage your full time offer to a better shop, there is nothing to lose. That said, you should still be fine for middle market / Upper middle market PE recruiting. Big funds will still recruit at those firms, but it will be a little harder than if you worked at one of the “elite” banks.
thank you for your valuable information.
I want to know pe exit route for senior ibd banker such as vp,md and so on.
is it possible path to pe as a ibd vp,md ??
PE exit as an IBD associate and VP is doable. I know a few IBD VPs who switched to a middle market PE fund. They both had to take a demotion to the Associate level and a pay cut from what they were making in IBD. Not that big of a deal though in the long run.
IBD MD to PE is hard. I am sure if you have valuable relationships in a certain industry and can source deals well then you can, but you don’t see the switch often.