Ask a former Wall Street investment banker (almost) anything

[LethalGunz34]

do you recommend any books? You said that your major was History back @ Yale, where did you learn all the M&A stuff?

[proconsul]

i want to get into something like this when will it be my turn?

also mirin salaries, past jobs, knowledge and success brah gjdm

When you think about compensation, most people don't consider how "bad" the investment banking trade-off is. I'm totally serious.

Yes, you can make $800,000 a year as a 29-year old VP. I did. But consider the whole decision tree.

You are starting a job (let's assume you're an MBA - analysts do their job as much for the job credentials as the comp) where you make $300K, but you'll work three times the hours of a normal job.

OK, now consider this: in a good market, we try to cull out the bottom 20% of a class in any particular year. A lot of people just aren't cut out for the business. Even assuming 3 years (not 3.5 or 4), that means that you stand a 50% chance of being out of the business before you make VP. (and that's even if you don't self-select out)

Add to that that total comp is a myth. Why? Because you can only count on your base salary. Probably $110-125,000 or so. That means you barely make rent and groceries in New York City all year, until you get your bonus. The firm has the right to fire you at any time, including the day before bonuses (and they do, all the time). Congratulations, you worked 110 hours a week all year for $110K.

If you **** up and make someone angry at you, it could hit you on bonus day. The range between top and bottom bonus for a class can be huge. It might be the difference between getting $75,000 or $200,000 your first full bonus. That's the type of uncertainty you are going to live your career by.

Then it gets worse. When I was an associate, we were all-cash on the bonus. Nowadays, you'll be lucky if it isn't 50% stock. Which means you don't get it. You probably won't get part of it for 3-5 years. If you decide to quit your job or go to another firm? Too bad, you lose it.

Now the biggest killer. What if the market turns down? Well, instead of a $200,000 average bonus, you'll be looking at a class median of $80,000. But that's not the bad part. You'd love to get the $80k. Because when markets get bad, we kill bankers. We kill them in droves. When the dot com crash started in 2000, we had 550 bankers in my firm on the West Coast, between banking and M&A. By the time we were done shooting people in the summer of 2003, there were 65 of us left.

What happens when you lose your job? It's probably at least a year, maybe two, before you find a new gig. Hope you have enough saved for your time "on the beach". This is what I mean when I say you walk into the office not knowing if today's the day you'll get laid off. One of my VPs kept his personal stuff packed in a box under his desk for three years between '08-'11 because he wanted to be ready when they axed him.

Now a $250,000 year corporate job with at least a semblance of job security doesn't look as bad, right?

[fknmisc]

How did you manage your family life with all the long hours of work? wife/kids

[proconsul]

do you recommend any books? You said that your major was History back @ Yale, where did you learn all the M&A stuff?

For banking:
Good deal reads are
Barbarians at the Gate
The Predator's Ball

Funny but bitter:
Liar's Poker
Monkey Business

There are not any really good books on practical valuation.

I learned everything I needed to in the training program (20%), and on the job (80%). By the time I went to business school, I knew everything they were teaching me already, but what b-school gave me was unbelievable context into what I knew how to do. As an analyst, you are kind an a rain man/idiot savant type. You know how to do what you do and you can do it really well. But you don't necessarily understand why.

I joke that I spent my time in b-school working on my surfing and improving my track times (I bought an M3 and a Ferrari 360 in b-school, but I went back after being a bulge-bracket M&A VP so I wasn't really in the same financial category as a typical MBA student), but the truth is b-school made me a much better banker.

[proconsul]

how would you value a 20 person engineering firm. idk how you can say we are worth more than our book value and our refrigerator and shiit. im tryna sell this bitch before the money makers bounce.

You've just hit on the heart of your problem. You're trying to sell the power of the intellectual capital, not the infrastructure.

The rote answer is that you're valued off of your cash flows, but the reality is that it depends upon how confident a buyer can be that they can maintain the business as a going concern. What's the value of an engineering firm (or an investment bank) if everybody starts leaving? Zero.

That's why most investment banking mergers have been extraordinarily destructive to shareholder value. Because people leave, and you are left with desks and computers.

[sudokus]

Prospective junior analyst checking in, thanks in advance.

What's your opinion on internship progression? I'm currently a Sophomore at a moderately well known school (Top 15 Finance program nationwide, multiple alumni MDs and VPs at most of the big firms, but not one of the "target" schools) and I figure my best chance of getting in is landing a couple of solid internships and using those to boost my resume. I know most prospective analysts aim for an internship during/the summer after senior year at a bulge firm, but do you think having one my junior year as well is necessary considering my situation?

[dattrance]

Can you help get me a job?

[proconsul]

What's your opinion on internship progression? I'm currently a Sophomore at a moderately well known school (Top 15 Finance program nationwide, multiple alumni MDs and VPs at most of the big firms, but not one of the "target" schools) and I figure my best chance of getting in is landing a couple of solid internships and using those to boost my resume. I know most prospective analysts aim for an internship during/the summer after senior year at a bulge firm, but do you think having one my junior year as well is necessary considering my situation?

Junior summer is the key time to have an internship. Senior summer is too late. You should already have a job by January of your senior year, or you're probably out of luck. Those that are really fortunate might have an internship sophomore summer, but it's unusual in this market.

The internship is the single most important thing you can do towards getting a full time analyst position. What is the first thing firms do when recruiting gets tight? They stop hiring full time analysts who did not intern with them. Firms love it, because they get to test drive you for a summer before deciding whether to extend you an offer. Candidates love it because it gives them the best chance of getting a job, and enhances their prospects with every other firm for on-campus non-intern recruiting.

[LethalGunz34]

For banking:
Good deal reads are
Barbarians at the Gate
The Predator's Ball

Funny but bitter:
Liar's Poker
Monkey Business

There are not any really good books on practical valuation.

I learned everything I needed to in the training program (20%), and on the job (80%). By the time I went to business school, I knew everything they were teaching me already, but what b-school gave me was unbelievable context into what I knew how to do. As an analyst, you are kind an a rain man/idiot savant type. You know how to do what you do and you can do it really well. But you don't necessarily understand why.

I joke that I spent my time in b-school working on my surfing and improving my track times (I bought an M3 and a Ferrari 360 in b-school, but I went back after being a bulge-bracket M&A VP so I wasn't really in the same financial category as a typical MBA student), but the truth is b-school made me a much better banker.

Thanks man, I'll definitely check those books out.

You definitely know your sh*t on the subject. Props for sharing the knowledge with the Misc.

[proconsul]

Can you help get me a job?

I wish, but I'm not on Wall Street anymore which means I can't pick up a phone to an HR girl and say "I like this kid. Can you throw him into the interview pile please?"

I'm already shepherding through a few guys (mostly from the firearms crew) and a couple of my own interns with my friends who are still on the Street. I'm pretty much out of favors from my buddies for junior recruits at this point. Otherwise I would have been happy to have a coffee with you to hear your story, if I was still in NYC.

Now, if you happen to be a third year analyst or second year associate, I know lots of guys who are looking.

[mcbizkit02]

Have you ever killed a man?

[The Chillosopher]

OP do you regret some of the sacrifices you had to make to get where you are today?

What's the worst "meltdown/breakdown" story you've heard of (or witnessed) of a guy who worked on Wall Street?

[thorherc67]

nice thread procon, always wondered more about your career but didn't want to pry. sounds like you had a great career but reading about this makes me cringe. all of my finance class projects memories are coming back to me, all we did was value companies and similar projects.

[anon1576783490]

[myrongunz]

cliffs on life story? so u went military after hs or college?

[SaviorSix]

wow that sounds like a horrible life the way you explained it.

Guess you really do have to love that sort of thing

[bubba289]

How long do I have until the beginning of the collapse? Or are we seeing the first signs of it right now?

[krogtaar]

wait you served in the military as infantry before getting an MBA into IB? how does that happen?

[Rufflez]

subbed for later

[Bft12890]

Is Jason Genova gonna make it??

[proconsul]

Have you ever killed a man?

Lol, McB. I've done my best to, a couple of times.

[YesMad101]

Please respond to my pm. The best I can offer you are my measlies if you help me out. Cheers

[Odin21]

how long were u a grunt for? when did u finally "make it"?

[aPolak]

How did you become involved with wall street/receiving the job?

What college degree did you have to receive in order to obtain that position?


Sorry if this has been asked in the previous comments.

[TehHoneyBadger]

If you could go back to your undergraduate self, what's the most important thing you would tell yourself? I'm a freshman at what I guess would be considered a target school and I honestly don't really know what to expect yet.

I really appreciate your making this thread, it's been immensely helpful.

[slowteg]

what is a better co-witnesses, absolute or lower 1/3?

[deerdiary]

Damn OP, that sounds harsh.

What really bothers me is these people who protest Wall Street, angry that they make the $$$ while everyone else is "poor." These people have NO idea how much work goes into making the big $$$. They have no idea what it takes to make it to the top.

We have people like OP who sacrifice their life, relationships, family, health and everything in between to make it to the top. To make the big bucks. Then these morons have the nerve to protest and complain how the 1% has most wealth.

The 1% work bloody hard.

Anyway, props to you, OP. Sounds like terrible hours and a lot of bloody hard work/long hours. Not sure if I could ever be an investment banker.

[proconsul]

OP do you regret some of the sacrifices you had to make to get where you are today?

What's the worst "meltdown/breakdown" story you've heard of (or witnessed) of a guy who worked on Wall Street?

Hehe, I'm going to reveal a bit about myself by saying this (yes, I worked at JP Morgan M&A) but we had a guy we called "Yusuf the Abusif" who had was particularly bad. He put a couple of my friends in the hospital with his demands.

He basically got run out of the firm (I think he went to Deutsche Bank) after the last associate, a particularly well-regarded young banker, quit and went to Morgan Stanley. He told our group head, Jimmy Elliott (who was as feared a figure as any in banking) when he left that he was leaving because he couldn't take working for Yusuf anymore - "that ****er put me in the emergency room."

Listening to Jimmy scream at Yusuf from the other side of the floor (basically I was a block away and could still hear it) was one of my happiest moments that year. I hated that son of a bitch.

But banking is full of that kind of thing. I once watched a banker scream at the twelve of us in a conference room because one number on p119 of the book was wrong (there were probably 20,000 numbers in that book). He then tore every page out of the book, and ripped each of them to shreds.

It took him 10 minutes to do it, and we all just had to sit there until he was done. Then he looked at me (I was the VP) and said: "2008 deferred taxes is ****ing wrong. That means this book is ****ing wrong, you sloppy ****. Fix it!"

Then he threw all the ripped up pieces on the floor and stormed out.

He was actually a relatively nice guy.

[Y2JERICHO]

how would you rate tufts in terms of opportunities to become and i-banker?

[GaDoomZ]

Ok you majored in history, and used your campus recruiting program a few years later to land an interview for the analyst position? Was this by sheer luck or did you learn Finance related materials during this time?