Investment Banking Interviews: Do you have a chance?

So you didn’t graduate from Harvard, you have no family connections on Wall Street, and you have no relevant work experience whatsoever… but you still want to work in Investment Banking? Do you have an ice sickles chance in hell of landing a job? Surprisingly enough, it turns out you actually still might have a shot.

Recently I spoke with a few guys at a new start up that focuses on providing kids the tools they need to break into Investment Banking.

The website’s called www.iBankingPrep.com and they essentially pick up where most schools leave off when it comes to preparing students for a career on Wall Street.

And for good reason, most schools (aside from a select few) fail to provide students with the knowledge and tools needed to land a job in Investment Banking. Whether it be what questions to expect in an interview or how to run a complex merger model, most schools are out of touch when it comes to getting their kids ready to compete in one of the most competitive and difficult job fields in the world.

The guys that started the website originally came out of state school, had no connections with anyone on Wall Street, and still managed to land jobs at one of the top investment banks on Wall Street. They learned the process and after witnessing first hand, the disconnect between what most colleges teach their students and what is actually needed to make it through the iBanking recruitment process, decided to put together a website that gives students what they need to break into the industry.

If you’re still trying to get into the industry I definitely recommend checking out the website and shooting them an e-mail. They’re nice guys and usually pretty quick to respond.

How much does an Average Investment Banker Earn

If you plan to become a part of investment banking workforce, the most common question to ask is the average earning of a worker in this field. Though there are a lot of negative things about the job such as no time for family and friends or being at the mercy of your client, this is a high paying job. Of course before becoming one, you would need to acquire good education, stellar grades and good internships. On the average, they earn 2% commission from their sales. Example if they convince a person to put in $2,000,000 of investment, they can get $40,000. Of course there are some that sell for billions. They often charge their expenses like food, travel, hotels and transportation to the client.

Investment Bank CEOs: Another one bites the dust

As another investment bank head throws in the towel, another set of investment banking inspired lyrics begin dancing in front of your eyes, sung to the tune of "I Will Survive", but from that vey embattled CEO's point of view.

First I was Chief counsel,
And then the CEO,
I pinned red umbrellas in my suit,
But the shares they moved so slow,
Investment banking was doing well,
ECM made cash to burn,
I was riding the financial markets,
Hoping there’ll be no downturn,

And then the dance,
Began to slow,
All the hedge funds pulled their cash,
nd the institutions began to follow,
And now my share price is in the pits,
Massive writeoffs are what I see,
I don’t want no shareholders,
Can’t they just stop bothering me?!?

They say “go on now go”, “walk out the door”,
“Just turn around now, 'cause you're not welcome anymore”
“ Weren't you the one who tried to stick to the strategy,
That read that if you get advised by us, we’ll throw some debt in there for free”
I should have split the firm apart,
I should have sold it bit by bit,
Like all the analysts told me,
Now it’s all just gone to shit,
At least I’ve got my options when I leave,
Although they don’t amount to much today,
But once I’m gone the price will soar,
And I’ll get my sky high pay day.

Just out of curiosity, how many of you monkeys and monkeyettes out there recognise the CEO and firm in questiosn. Drop the monkey a comment to have your say!

The poetry of investment banking

It's late at night, you're in a cab on your way home and you are paging through you schooldays companion, a book of poetry that reminds you that there are people that have more to say that the overvalued manufacturing arm of the nation's largest conglomerate. As you page through the book, your financial overload of the day metamorphosizes with the words on the page. Before you know it, you are reading Robert Burns' A Red Red Rose and instead of the original verses, a strange collection of the event of the day seems to be lurking between the lines, as if the chief executive of one of the investment banks were himself reading these verses and narrating his view of the world through this beautiful medium.

O my firm is like a pot of gold,
With plenty of cash to spare;
A lawsuit here, a settlement there,
The balance sheet has more to spare.
Those multi -million settlements,
Are peanuts for the house of Merill;
Lose one or two, you lose a few,
But eight billion is cause for peril.
Our balance sheet was hit real bad,
Our investor’s confidence was shaken;
But such is the strength of the Merill name,
And my options were still there to be taken.
Farewell my underling, farewell!
For I will certainly do!
I’m off to retire with my $160 mil,
And wish the best of luck to you.

Frank Johnson posts again

You can hardly believe that Frank Johnson posts again. Evidently disillusioned by the departure of his junior to Blunderstone. You never thought you would empathize with Frank Johnson, but on this one, you have no choice. You never thought you'd say this, but... "Frank Johnson, I hear you".

Computer games reinvented for i-bankers

No comment needed. Just walk to the closest HMV or Virgin Megastore and buy your copy. What? Surely you mean, just drop that excel spreadsheet, log onto amazon dot com and order your copy. What a silly thought, going out of the office in broad daylight!

Investment Banking: Competence revisited

Now that you’ve recovered from the shock of Kruelberg Kretin losing the deal of the year, the indignation of losing that job at Blunderstone for that very same reason, you decide to get on with your life, move on, and start crunching a new set of financials for a new dipshit client.

A long term client of the firm, who has grown to be a technology leader in the IT field wants to acquire the industry leader, who is one of the best established firms in the entire sector, a monster of a company, listed on the NYSE with a second listing on the LSE. Oh, and one more thing, this company, call it the target, is ten times larger than the client, call if the acquirer.

Stop.

“WHO THE FUCK CAME UP WITH THIS FUCKING PIPE DREAM?”

You think to yourself quietly as you stare at the blank excel spreadsheet on your screen. The project has just started, so you have been asked to draft a checklist of tasks that will be required to get the work off the ground. According to the staffer, this is part of your development and you are being given the opportunity to “step up”. This translates, of course, into, “as I, the staffer, am meant to be doing this, and really can’t be bothered to, I will ask you to do it by stepping up and doing my work for me”. Reflecting on this deeper meaning for a moment, you come to the conclusion that if you ever had a doubt as to whether the word staffer was synonymous with a piece of shit, there is clearly no doubt any more.

So, you begin to go through what would be necessary to make this project happen. Ok.

You will need comparable companies and precedent transaction analysis for the sector. You will doubtless be required to prepare these. You will then format them nicely. You will then look at what the mean, median, top and bottom quartiles are, until you come up with the number that makes the target’s multiple lower and the acquirer’s higher. You then take this number to your associate and claim success.

You will also need to build DCF (discounted cashflow) models for both the target company and the acquirer. Ok. That’s easy. Both are public companies and have equity research available. You will look at the equity research reports for both companies and find what the consensus valuations that research is predicting are. You will then work back from these valuations and build the models accordingly, from end to beginning, until you have backsolved to the tiniest and most painstaking detail every assumption to magically get to the desired numbers. Once you have done this, you will go to your associate and claim victory once again.

Then, you will use the valuation you have for the target and that for the acquirer to figure out an exchange ratio. This is the number of shares of the acquirer (at the valuation you have “calculated”) that the acquirer will give in exchange for each share in the target (again, at your “valuation”). Simply put, the acquirer will ask the shareholders of the target to now hols its shares instead of the target’s shares they have been holding until now.

Ok. Next step, the shareholders will likely refuse, realizing how much bullshit has gone into the valuation and will ask for hard cash instead of some worthless shares. There will be a crisis moment, and the valuation will “magically” improve. As the shareholders of the target will still only accept cash, rather than throwing in the towel, Rupert will come up with the idea of raising the money needed to buy the target through debt. Why, because that way he gets a percentage of both the full value of the whole deal (hence the inflated valuations) as well as an even bigger percentage of the amount of debt raised. One slight problem. The acquirer will need to raise debt to the tune of ten times its actual size, which is…well…impossible. So, you will spend a few weeks running numbers on how divisions can be sold to raise cash, calling hedge funds to provide money and so on, until Rupert, who will have come back from holiday, will finally focus on the matter at hand, and officially recognise that this is not doable, and thus will tell the client that this idea will never work.

Minor correction actually. This wasn’t the client’s idea in the first place, so Rupert will not call the client to pitch the brilliant idea.

Now isn’t i-banking the beautiful game or what.

The lighter side of Rupert

Rob gets a piece of "work" from the new intern and gives him this markup. That night, Rob finds the second markup sitting on his chair - "from Rupert!" Damn. Interns. They don't make them like they used to!

When in Rome…

You’re sitting in Rupert’s office, chewing the fat with this BSD that you almost feel like you can call a colleague! Nothing has been said yet, but you know it and everyone else knows it – you’ve got a job with the firm. You feel like a million fucking dollars (worth of bling handing off your neck) as you sit across the desk from Rupert, who after spending the first half hour of your meeting in his office with his feet outstretched on his desk, has now decided to take off his shoes, and throws them in the left hand corner of his enormous desk. Amazing. You’re so trusted by this BSD of BSDs that he does not feel the need to exhibit even the most basic of courtesies with you any more (which is to refrain from sharing with you the stench that fills the room as his freaking feet come into contact with the crisp air conditioned air). He’s wearing £80 a pop cashmere socks that were sparkling new, clean and not embarrassingly thinning at the heels (to the extent commonly known as a hole) at some date. You can’t make out if the colour is really grey or whether they have absorbed bits and pieces of the surroundings and metamorphosized into that form at some point. You just can’t get it. No matter how important they are. No matter how much of a BSD they are. No matter how much money the make and how much more they have, i-bankers of the Ruppert McMuppet breed are the stingiest fuckers in town when it comes to personal hygiene and items of clothing that they think nobody notices.

“Give me a fucking break Rupert” you think to yourself. As you sit there awestruck by the conflicting thoughts of admiration and disgust, the telephone rings on Rupert’s desk begins to ring. He gives the number on the little screen a glance and grumbles.

“It’s those fuckers from Goldmen. Let’s make them feel welcome – I want to get a piece of that underwriting they’re doing for FuckedCo next week”

Rupert looks you directly in the eyes as he says this and captures your glance, holding you hooked to every movement of his body as he picks up the receiver. He winks as his mouth opens, almost telling you “this is how its done”.

“Shalom!” he hollers as he gives you another wink.

Now that’s how it's done - and incidentally, you are now sure beyond a doubt that Rupert has no shame.

Reich Bank Equity Research

Click on image to enlarge.

The Kruelberg Kretin Saga XV - Frank

The nerve of the guy. He's set up his own blog!!!

http://frankjohnson.blogspot.com/

The Kruelberg Kretin Saga XIV – Blunderstone calls back

Your mobile phone rings. Withheld number. You cautiously pick it up.

“Hello”

There is a brief silence, before you hear the unmistakeable voice of Pete Anderson from Blunderstone.

“Hi, it’s Pete from Blunderstone. Can you talk?”

Wow! Blunderstone. Not calling through a headhunter. Calling you direct. This is it. They want to give you an offer. They’re gonna do it on the spot. You know it. You can feel it. There’s a good reason Frank fucking Johnson lost that deal. It was so that Blunderstone can get it and on that high note, hire you to look after the company for them. What a day! Pete Anderson!

“Sure”

You fire back with the enthusiasm of a five year old who’s about to unwrap its birthday present.

“I’m afraid I don’t have any positive news for you. I wanted to call you in person because you really made a good impression, but we’ve decided to fill in the position with someone with more experience in private equity. We’ve hired a guy from Kruelberg Kretin, who worked on the transaction we announced today. He was so disgruntled working for some prick called Frank Johnson who led the deal at Kruelberg, that he was willing to accept much less favourable employment terms than you. You’re a good guy, and I like you, but this poor guy was willing to do anything to get out of Kruelberg.”

Frank fucking Johnson. You’ve done it again you #@%!*$$£~#.

The Kruelberg Kretin Saga XIII – Frank Johnson, you suck!

2:00 pm - Bid deadline (9:00 am NY time)

Bid letter:
Done, drafted and sent to Kruelberg Kretin to put in the final number (Frank doesn’t trust his bankers with shit like this), which he has done, and it has been faxed to the seller.

Bank letters:
Done. All done, credit approved and ready to go.

Frank’s dummy proof database:
Done. Even Frank can’t be caught off guard with this one.

Sleep:
None. It’s for fucking wimps when the biggest private equity deal is in question. Running 36 hours and ready to run some more for that sweet fucking tombstone.

3:00 pm (10:00 am NY time) – no news from Frank

4:00 pm (11:00 am NY time) – no news from Frank

5:00 pm (12:00 am NY time) – no news from Frank

6:00 pm (13:00 pm NY time) – no news from Frank

6:23 pm (13:23 pm NY time) – no news from Frank – Reuters newsfeed hits the wire:

“Blunderstone does largest private equity deal – NY: Blunderstone, the leading private equity house, advised by Shitty Corporate and investment Bungling and Reich Bank has announced that it has been selected as the winner in the highly contested tender that has been making headlines for weeks. Reportedly, Kruelberg Kretin, the favourite contender in the process, reportedly presented an offer that fell well short of the seller’s expectations”

Frank fucking Johnson you’ve fucking done it fucking again! You’ve fucked it up and stolen the sweet, sweet tombstone. You suck!

The Kruelberg Kretin Saga XII – It's All Worth It

There are many things that bug you as an i-banker. The fact that HR leaves at five and you have to crunch useless numbers for Frank fucking Johnson in the wee. The fact that your client is a moronic self important moron who got a lucky break despite the fact that he can’t tell his arse from his elbow. The fact that he wants you to run countless iterations on countless financial models, using structures that have been proven not to work countless times before, despite being told all this countless time. The fact that your boss is so spineless and focussed on the big picture, that he doesn’t care if you do one more useless all nighter as in the grand scheme of things, what’s just one more night of useless modelling in the span of an analyst’s career? It’s all for the greater good, he says. Just think of that shiny tombstone you’ll get when this deal closes, he says. Just think of the money the firm will make, he says.

You ponder on the glory of the tombstone sitting on your desk, which would magnificently state that the firm advised Kruelberg Kretin on the acquisition, paying billions for the company and setting a landmark in being the largest private equity deal ever in the sector. And this will be on your desk. You will be the superhero analyst who worked on the deal. The deal? You must mean THE deal.

You breathe in the fresh air (it’s so much better after 2 AM) and as you close your eyes, you can see the envy in the faces of your class as they pass your desk. They will see the tombstone and stare at it, wanting to have that tombstone. Wanting to share the glory. Wanting to have been part of this groundbreaking deal. Well, wanting to be in your shoes, right here, right now, freezing your ass off in front of the entrance, chainsmoking three Marlboro reds before you head back to the office. Wanting to be the ones doing that useless bit of work for Frank tonight.

You pause for a moment and think again. Really? Wow! These guys are envying me as we speak. You are filled with energy as you feel their envy all around you. You wave to one of your buddies who is heading home for the night, feeling sorry for the poor loser, going home only at 2AM, whereas you will still have the pleasure of spending a few more hours at least, making this landmark deal happen!

You take a final drag out of cigarette number three, stub it out, rub your hands and put your war face on, ready to finish the job for frank. Tomorrow’s bid day and all the work is done. Frank has, however, asked the firm to provide him an easily accessible database for all the deal docs, models and analyses in excel - in case he gets a call with questions about Kruelberg’s bid tomorrow, he wants to be able to punch in the keyword like in a google search engine, and the spreadsheet to pop open the right analysis. Now most of those unlucky colleagues would just call him an asshole, but you know better than that, given that he will be your path to glory. He will be your stairway to fame, with a tombstone for the biggest private equity deal in this sector, ever, on your desk!

It’s all worth it. It is all so worth it! Forget the fact that all those other guys are getting paid the same as you. Forget the fact that they are all working far less than you. Forget the fact that the work they are doing is far more interesting than the shit you have to do for Frank fucking Johnson. Forget the fact that they don’t give a shit.

It’s simply just worth it!

Tired? Need Sleep? Want a Break?

If you see something rotating – go home, you need a break!

Recent studies suggest that the current economic meltdown is taking a toll on America's best and brightest, producing record numbers of bankers, attorneys, and executives seeking help for depression. So, if haven't been working hard and the circles are still spinning, get some help!








Click on image to enlarge.

Investment Banking Recruitment Clips

Bulge Bracket

What does a Junior Investment Banker do?

In addition to being on the company brochure, you get asked to present in front of a group of prospective interns who are coming to visit the firm tomorrow. You get given the boilerplate firm standard slides, so you decide to make some notes to amke sure you get it right.

Click image to enlarge.

Why Senior Bankers Don’t Retire: The BA Black Card

It’s the second week of the month and Wednesday, which means its time for the European firm wide meeting and conference call at 8:30. The meeting takes place across all the European offices of the firm by audio / video conference and in the main amphitheatre in London. This is the one occasion an analyst has to be seen by senior management, so rain or shine, one wears ones best suit, best shirt, buffed shoes, combined with a clean shave and haircut. These guys don’t care about pulling allnighters. Been there, done that, and got plenty of T-shirts. They are the most important partners in the franchise and they make organization spin.

They passed the point where compensation was important long ago. They all sit on personal fortunes substantial enough to not have to work ever again. They are almost all former analysts and associates of the firm, who rose through the ranks and gained the respect of the organisation in record time. They are, in short, the pride and joy of the firm. Its present, its past and its future. They are the deep bench of talent that will take the firm from great to greater and beyond. They are also barking mad.

For guys that don’t ever need to work again, these guys are pretty damn gung ho about generating revenue for the firm, seeing clients and getting on a plane to fly halfway around the world to attend a one hour meeting and then getting the next plane and flying halfway round the world back. Do they need to be in the meeting? Not really. Are they indispensable? No. Would anything change without their presence? No. Ok. These guys evidently don’t need to be at ten different places at one time for the good of the firm. No.

Ok, maybe its frequent flier miles. They’ve gone from blue to silver to gold BA cards and they need to be in the air 24/7 to finally get an invitation for that coveted BA black card. Yes you got it. Black card. It’s not on BA.com. If you ask the helpline about an upgrade from your gold card, they’ll say that there is no such thing. But believe you me there is. The black card is by invitation only, and was set up in the old days, when bankers and executives used to jet back and fort across the pond on Concorde to New York. It gets you through immigration, security and the works along with the crew. More fast track than the fast track (although with BA nowadays that isn’t to hard to achieve if you fly from terminal 4 at Heathrow). Having said that, you’ll probably still get asked to take out your toothpaste and mouthwash by security even with a black card.

Delving deep into the senior banker’s psyche, you begin to understand. These are hotshots that have risen from height to height, from the humble level of analysts. The images of some shithead associate telling them to check the book for typos and telling them to triple check the net debt on that one comp because it can’t be right are hard to wash off. Not even when they themselves became that associate and handed down shit of greater magnitude to overcompensate, could they wash that off. Not even as EDs and MDs could they wash it off, because no matter how high they climbed, there was always someone higher up to shit on them. Now that they have reached what can in most mortal terms be called the op of the investment banking pyramid, there are always the clients whose asses they have to kiss ahead of them, and even worse, the shareholders! So now you understand, how a little black BA card is the holy grail for these creatures of finance. It is the key into the exclusive world of the uber executive where few clients are able to tread. Where not many a stockholder can reach them. Where, when they get asked to take out their toothpaste, deo and mouthwash at Heathrow airport, it will be with the knowledge that the person asking them to do so knows what a superfluous request this would is - these are the true BSDs. They don’t need deo, a toothbrush and mouthwash. They don’t carry luggage. They jet from city to city, attend meetings and jet right back. They are the true masters of the universe. They are the BSDs that sit on the other side of the line that separates the mortal world of investment banking and the twilight zone.

Sartorial Tutorial

Waiting for a batch of presentations to print at the print room so you can go home, you scroll BusinessWeek for something worth poking fun at, when you come across an article giving sartorial tips for would be investment banking job candidates.


The article reads that you need to spice up a dark pinstripe and white shirt with a power tie in maroon or red. Being rather taken aback by the fact that a someone is recommending wouldbe investment bankers to look like essex boys with a makeover, you finally get over the fact that the you are most displeased at the mediocrity of the suggestion. You take another look at the picture of what an investment banker is supposed to look like, and you decide you've had enough. You write to BusinessWeek, suggesting they check with The All Nighter's article on How I-banking is like Barbie for the true i-banking look.


You dread seeing an army of intens this summer marching in in black tacky pinstripes, white shirts and maroon ties, so being the constuctive, problem-solving, thinking out of the box, individual that you are, you venture out for more on the investment banking look.

The phone rings, and its a call to let you know the books are ready. You go downstairs, pick them up and grab a cab to deliver them to Rupert for his meeting on Monday. It being a Saturday, you decide to do some proper shopping along the way. You decide to shop for the perfect i-banker candidate outfit, take a picture of the finished product and plead with BusinessWeek to revisit their suggestions before it is too late.

First stop, get a tie. Now you may be thinking that Hermes on Bond Street is pit stop number one. No! An intern should never wear an Hermes tie. This is a privilege for full-time employees of the firm. Also, when the intern performs well, by already owning an Hermes tie, they take the boss's pride away, when they buy them an Hermes tie at the end of the internship. So off to Old Bond Street and to ferragamo you go, getting off on Regents street and instructing the cabbie to wait.


You walk into the Ferragamo shop on the corner and browse through printed silk ties with the unmistakeable Ferragamo pattern. Not large and distinctively in your face enough to be a Hermes, but a tuch more geometrical and smaller motif size. Perfect for the intern. From far, the tie looks unobtrusive and will ward off comments from other jealous interns about the intern in question splashing his money around, whilst obvious enough to the trained analyst eye to signal that said intern has potential to upgrade money spending skills to higher ticket items. You finally pick out a fairly neutral bluish piece and take it to the counter.



Next stop, up the road to Ralph Lauren. Perfect place for an intern to get a shirt. You walk into the multi storey store and head straight to the first floor, where the purple lable stuff sits (if one is to buy a pony and polo player emblem shirt, one might as well go to NEXT or the GAP). You look around until you find the right piece. Creamy white, full cutaway collar, cuffed to appeal to a Brit interviewer and just about perfect. Happy with the selection you make your way to the counter.

Next stop, shoes. Off to the King’s Road and Tim Little for a pair of hand made shoes. Keep them clean, conservative and a perfect fit. Yes, perhaps the £1,350 tag is a tad much for a single pair, but you are soon comforted by the fact that the next pair will cost less. You are also comforted to see that the heels are not fully coater with rubber (only the corner in the back). You sit for a measurement and spend another two hours finalizing the style and walk out with a smile on your face, knowing that in a few weeks your brand new shoes will be ready to wear.

Happy with your day’s purchases, you tell the cabbie to take you home. You get a call from Rupert whilst in the cab, asking why the books are so late. You explain that the cabbie got the address wrong, and came back, so you had to call another one and send them again. Perfectly reasonable and having reassured Rupert, you get out of the cab, confirm the delivery instructions and get home.

Final touch. You call your tailor to confirm an appointment for Monday. He’ll come to the office. 10AM.

You recap on the day’s work. Damn it feels great to be an i-banker.

Tie. Only £70?
Shirt. Below £200 Bargain.
Shoes. Hand made for £1,350.
Looking like an Investment Banker. Priceless.