keninc Wrote: ------------------------------------------------------- > Is it worth it working 15 hours per days or more > with some weekends included (and working mostly > alone after 8pm only because you’re the only > analyst in your team and rest are senior > bankers)… Feel like I don’t get appreciated > after working so hard. > > By the way, I’m in corporate finance in one of the > BB. I think it’s worth it. Not sure what you’re working on but long-term, you will be ahead of the curve.
There are good exit opportunities for bankers
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > Captain Windjammer Wrote: > -------------------------------------------------- > ----- > > I think you are kidding yourself if you think > > money isn’t the biggest motivation for a > majority > > (probably a large majority) of doctors. > > > It’s not. Their work-hours+life-sacrifice vs. > compensation point plots below the aggregate > career SML. no way, gp’s will make 300k a year or more for their entire careers post residency and their work life balance is far better then finance plus they will always find employment.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > I’m in this business for the money. If I could > find a job with the same upside in a different > industry I’d be out of finance in a heartbeat. I > don’t know of any profession facing more misery > than this one right now. you should just go ahead and put a bullet in your dome.
SeanC Wrote: ------------------------------------------------------- > JohnThainsLimoDriver Wrote: > -------------------------------------------------- > ----- > > Captain Windjammer Wrote: > > > -------------------------------------------------- > > > ----- > > > I think you are kidding yourself if you think > > > money isn’t the biggest motivation for a > > majority > > > (probably a large majority) of doctors. > > > > > > It’s not. Their work-hours+life-sacrifice vs. > > compensation point plots below the aggregate > > career SML. > > > no way, gp’s will make 300k a year or more for > their entire careers post residency and their work > life balance is far better then finance plus they > will always find employment. Not true at all.
I have several dozen friends as well as family members/parents that are doctors or that are currently in medical school/residency. The reason or rationale for going into medicine can vary depending on who you speak with. On some level, all of them would probably say that they’re interested in medicine to help humanity or to further their curiosity for the sciences. I think going through medical school would be too tough if you didn’t have a genuine desire to help enhance the livelihood of others or to further the state of scientific research. That being said, money can also be a factor as well. I find that my friends that are in fields that are lower-paying (like pediatrics or internal medicine) or that have difficult work-life balance (like surgery) are more likely to pursue medicine purely for their passion for the field. In other cases, I’m sure my dermatology and radiology friends also love medicine, but they do cite the lucrative nature of those specialties to be a a major draw for them. Of course, they also worked really hard to get into those residencies, so there’s still a big sacrifice that people have to make. As far as how I felt “handicapped” not having done investment banking prior to private equity, I think there have been two stages for it. The first was during the recruiting process – I didn’t think a lot of firms gave me the light of day at first because I didn’t come from an investment banking background. The ones that did give me a chance initially were either drawn to the name of the firm I worked at for equity research, or had alums from my school in senior positions. I eventually got a number of interviews from middle-market and large-cap private equity firms, but I felt like I had to work very hard to get them. It would have been a much more natural career transition for me had I come from investment banking. In terms of how it would help to have done investment banking before private equity, I’d say that the biggest help would be on the financial modeling side. I feel pretty comfortable with my LBO modeling skills, but my M&A modeling skills are pretty rudimentary. I’m sure I’d get better if I had more reason to build M&A models (like for add-on acquisitions for example), but I haven’t worked on any of those yet. Banking analysts spend most of their time working on pitches (not that useful for PE) as well as transactional models (very useful) so I think the other pre-MBA’s that came from banking were more proficient in modeling from the start. It took me a little while to ramp up, and because of that, I felt like I didn’t get offered as many modeling opportunities at the start as I would have had I done banking. Fortunately, I think I’m all caught up to where I would have been had I done banking, but for a time I felt like I was “behind the curve.” That being said, there are other areas where my equity research background has helped tremendously – my industry research and company analysis skills are very polished, and a number of senior transactors at my firm have given me high marks for my analytical abilities. Other pre-MBA’s that came from banking have also told me that I seem to be able to analyze companies from a strategic/operational standpoint more intuitively. According to them, they feel that equity research may have prepared my better because it requires me to always think about the attractiveness of a particular investment, and to be critically assess both the merits and risks of a particular company. From their banking experiences, they felt that they didn’t really spend as much time digging deep into the company or following it over a long period of time (typically, once a deal was finished, they wouldn’t pay attention to that company anymore). Of course, there are areas where banking analysts do have to dig deep, like when they are responsible for identifying files to put in a data room for a deal they’re trying to sell; that being said, in a lot of these cases, they still feel like they don’t have as balanced a perspective on investing, because the banker’s job is to sell a company often with little regard for how crappy it might truly be. One ex-banker at my firm described the process as glossing over the faults of a company and just trying to find different ways to “put lipstick on a pig.” Anyway, at the end of the day, a key reason why I find private equity so enjoyable is because it really requires me to look at a company from many different dimensions – obviously the first and foremost perspective is that of the investor, but being able to analyze a company strategically and operationally are also very important. I look at it as a job where I have to put just about every business or finance skill I’ve developed to good use, and it’s cool that not everyone from our firm is from banking because I find that people from different fields bring different perspectives with them. I’m obviously grateful for my experience in equity research because it taught me a lot of skills that have come in handy, but I also recognize that there were certain skills of mine that would be more polished if I had done banking. That was really all I was trying to get at. Hope that helps shed some additional light on my opinion concerning the merits of investment banking. It is a grueling job but I still think it’s the best way to begin your foray into finance, especially if you’re not sure what area of finance you eventually want to specialize in.
JohnThainsLimoDriver: There is a lot of upside in the drug running. And eventually you can start your own cartel and work for yourself. There was some buy in the forbes richest list who is a mexican cartel owner. You just have to want it!
I think that was the longest numi post I’ve ever read on af
numi Wrote: ------------------------------------------------------- > I have several dozen friends as well as family > members/parents that are doctors or that are > currently in medical school/residency. The reason > or rationale for going into medicine can vary > depending on who you speak with. On some level, > all of them would probably say that they’re > interested in medicine to help humanity or to > further their curiosity for the sciences. I think > going through medical school would be too tough if > you didn’t have a genuine desire to help enhance > the livelihood of others or to further the state > of scientific research. That being said, money can > also be a factor as well. I find that my friends > that are in fields that are lower-paying (like > pediatrics or internal medicine) or that have > difficult work-life balance (like surgery) are > more likely to pursue medicine purely for their > passion for the field. In other cases, I’m sure my > dermatology and radiology friends also love > medicine, but they do cite the lucrative nature of > those specialties to be a a major draw for them. > Of course, they also worked really hard to get > into those residencies, so there’s still a big > sacrifice that people have to make. > > As far as how I felt “handicapped” not having done > investment banking prior to private equity, I > think there have been two stages for it. The first > was during the recruiting process – I didn’t > think a lot of firms gave me the light of day at > first because I didn’t come from an investment > banking background. The ones that did give me a > chance initially were either drawn to the name of > the firm I worked at for equity research, or had > alums from my school in senior positions. I > eventually got a number of interviews from > middle-market and large-cap private equity firms, > but I felt like I had to work very hard to get > them. It would have been a much more natural > career transition for me had I come from > investment banking. > > In terms of how it would help to have done > investment banking before private equity, I’d say > that the biggest help would be on the financial > modeling side. I feel pretty comfortable with my > LBO modeling skills, but my M&A modeling skills > are pretty rudimentary. I’m sure I’d get better if > I had more reason to build M&A models (like for > add-on acquisitions for example), but I haven’t > worked on any of those yet. Banking analysts spend > most of their time working on pitches (not that > useful for PE) as well as transactional models > (very useful) so I think the other pre-MBA’s that > came from banking were more proficient in modeling > from the start. It took me a little while to ramp > up, and because of that, I felt like I didn’t get > offered as many modeling opportunities at the > start as I would have had I done banking. > Fortunately, I think I’m all caught up to where I > would have been had I done banking, but for a time > I felt like I was “behind the curve.” > > That being said, there are other areas where my > equity research background has helped tremendously > – my industry research and company analysis > skills are very polished, and a number of senior > transactors at my firm have given me high marks > for my analytical abilities. Other pre-MBA’s that > came from banking have also told me that I seem to > be able to analyze companies from a > strategic/operational standpoint more intuitively. > According to them, they feel that equity research > may have prepared my better because it requires me > to always think about the attractiveness of a > particular investment, and to be critically assess > both the merits and risks of a particular company. > From their banking experiences, they felt that > they didn’t really spend as much time digging deep > into the company or following it over a long > period of time (typically, once a deal was > finished, they wouldn’t pay attention to that > company anymore). Of course, there are areas where > banking analysts do have to dig deep, like when > they are responsible for identifying files to put > in a data room for a deal they’re trying to sell; > that being said, in a lot of these cases, they > still feel like they don’t have as balanced a > perspective on investing, because the banker’s job > is to sell a company often with little regard for > how crappy it might truly be. One ex-banker at my > firm described the process as glossing over the > faults of a company and just trying to find > different ways to “put lipstick on a pig.” > > Anyway, at the end of the day, a key reason why I > find private equity so enjoyable is because it > really requires me to look at a company from many > different dimensions – obviously the first and > foremost perspective is that of the investor, but > being able to analyze a company strategically and > operationally are also very important. I look at > it as a job where I have to put just about every > business or finance skill I’ve developed to good > use, and it’s cool that not everyone from our firm > is from banking because I find that people from > different fields bring different perspectives with > them. I’m obviously grateful for my experience in > equity research because it taught me a lot of > skills that have come in handy, but I also > recognize that there were certain skills of mine > that would be more polished if I had done banking. > That was really all I was trying to get at. > > Hope that helps shed some additional light on my > opinion concerning the merits of investment > banking. It is a grueling job but I still think > it’s the best way to begin your foray into > finance, especially if you’re not sure what area > of finance you eventually want to specialize in. Would be very interested to see one of your company/industry research and analysis work. Possible to send me one of your past work to help with the learning?
numi, surprised that you will do much M&A modelling in PE. Would’ve thought more LBO and Ops modelling…
numi, awesome post, this is why I find PE so fascinating
Agreed So in PE, do you stay involved with deals after your modeling is completed? I’d be interested in the work-flow process of the various individuals on the deal team. For example, once you’ve modeled a deal who makes the pitch? Who’s responsible for determining the terms of the deal (purchase price, LOI, definitive agreements) Who determines how the deal should be financed? What’s the negotiation process like? Then after a deal has been signed, who works on the transition piece? (or is there really not much transition work since it’s not like a merger?) kblade Wrote: ------------------------------------------------------- > numi, awesome post, this is why I find PE so > fascinating
Thanks for the post… This gives me encouragement again. Deals have been slowing down since months ago. But I’m still working on pitches and modeling, and so far, there haven’t been good deals won since months ago, even though the company I’m working with is performing very well in the state (I’m in Asia btw).
There have been quite a few follow-up questions on this thread – hopefully I can answer them all… Dermot81 – I didn’t realize how much I wrote until after I posted it. I wrote it pretty late at night after spending the whole day on the road, and just put down whatever came to mind without re-reading it. Hopefully it all made sense… – Picco – I don’t think there’s any one source that I used in terms of how to analyze a company; there are many ways to go about doing it, but it does help to have a framework. When I was in equity research, all the reports I wrote were of a similar format and structure, and that taught me how to think about problems in a systematic and organized fashion. Being able to analyze companies and industries is just something that comes from the experience of looking at and following companies over time – and there are many ways you can get this type of experience (private equity, investment banking, equity research, consulting operations, corporate finance within a non-finance company, etc.). What I learned in equity research helps provide some high-level knowledge; once you get into private equity, you’re exposed to many more levels of detail within a company that wouldn’t ordinarily be available to the public (like data on customers, SKU’s, productivity of individual plants and persons within a firm, inventory details, etc.). It then becomes a matter of applying what you may have learned elsewhere towards thinking like a control investor and analyzing more granular situations. That said, one book that I have to recommend reading is Michael Porter’s “Competitive Strategy: Techniques for Analyzing Industries and Competitors.” It’s probably the most important book that you can read on general business strategy. – Myzegna – You’re definitely right in that it’s predominantly LBO and operations modeling that we do in PE. That said, I’m always trying to identify areas where I don’t know as much as I’d like, and M&A modeling is one such area. One of my key goals at the pre-MBA level is to develop as much technical versatility as I can, which often means learning as much about different transactions as possible. Hopefully this will give me a better idea when I eventually have to find some type of specialty somewhere down the line. – Kblade – thanks – glad to hear you find PE interesting for the same reasons I do. It can be a demanding field, but it’s also quite fascinating, even in an economy downswing. – Artvandalay – I don’t spend that much time working on portfolio companies, though there are other PE firms where pre-MBA’s do tend to follow portfolio companies pretty closely. In my current role, we’re more focused on deal execution, and I guess I’m not as involved with the management and operations of portfolio companies as I’d like to be. Concerning your other questions on the deal process, terms of the deal are determined by our conversations with the bankers and the company. Deal terms obviously take into account the type of credit we can get, so financing is very important. Usually it’s the post-MBA’s that handle most of the conversations with the lenders, with negotiations over deal valuation often being carried out by the VP’s or more senior folks. It’s hard to describe the actual day-to-day of the negotiation process – it varies so much depending on deal, and in a lot of cases, from the time we provide an indication of interest to the signing of an LOI to the close of a deal, it can take several weeks (and occasionally several months). That being said, I can provide you with a broad summary of how we arrive at valuation and how deals get done. First, the bankers send us an offering memorandum, and if we like the company that’s being pitched, we submit a range for a bid. If we’re in the pre-determined range that the bankers or company management like, we’re invited to meet with the management team, check out the data room, and issue a letter of intent (LOI). If our LOI bid is strong enough, we get exclusivity for a period of time (like 30-60 days) in order to conduct further diligence, negotiate with the bankers and management team, figure out how we’re going to fund the deal, and so forth – and hopefully consummate the transaction within that time. Through this whole process, we’ll continue to analyze the files in the company’s data room, speak with outside consultants, discuss internally what we’ve heard and read about the industry trends and growth opportunities, and keep a beat on the credit markets so that we know what the lenders are willing to let us borrow and how much they’re going to charge for us – and we do this all while maintaining a dialogue with the bankers and the company. And let’s not forget about the lawyers, accountants, and tax advisers – these folks are also part of the working group, as it obviously takes many parties to work through all the kinks and nuances when you’re trying to buy a company for hundreds of millions of dollars. Once we close the deal and take control of the company, some of the more senior folks on our deal team join the board of that company and start coming up with ways to grow the business, either through increased sales, making operations leaner, identifying new business opportunities, and potentially acquiring other companies as roll-up acquisitions. – Hope this helps – as you might imagine, there’s a lot of “check the box” and other type of bureaucratic work that is involved in getting a deal done, but really getting to learn about the in’s and out’s of a company is pretty cool. My experience in PE has taught me how to be a smarter and more attentive investor, even if it’s meant a lot of long hours and hard work (occasionally on stuff that nobody else really would want to do).
^and the award for lamest vacation goes to…
Thanks, though I’m actually not on vacation anymore and called it an early evening (sick). Wasn’t prepared for the cold when I got back to the northeast. Figured I’d find something useful to do with my time instead of just laying idly in bed. I’m sure others will benefit from my writings, even if you don’t.
so if I didn’t get into IB directly after undergrad should i just kiss my IB dreams goodbye or is there still hope? If there is hope what can i do experience/education wise to head that way? JTLD what do you do?
With the economy being what it is, it’ll be tough to get into investment banking outside of school recruiting (either undergrad or MBA). When times were good, you’d occasionally see laterals from consulting, corporate finance at a non-finance company, or other fields of finance. If you’re serious about getting into IB right now and don’t have prior finance background, the best way to get into it would be by attending business school and going through recruiting there.
makes sense numi thanks. ive been open to the bschool idea but i need to accrue experience (the right kind) prior to applying as I finished my undergrad 2 yrs ago. Till then not sure what to do. I work for a small telecom company in its finance division. Hardly utilize any CFA knowledge other than cash flow analysis for various business development projects that I look into. I live in Vancouver so its a small market without many opportunities (everyone is in wealth management here; hence my short stint in retail banking last year). Was considering moving but it’s dreary everywhere. Deal making really enthralls me as it has best of both worlds (analytical side and the sales side). Would love to here peoples’ candid opinion on what my best course of action should be to get to where I want to be in the future. ps OP sorry for the thread hijack
At the risk of sounding cliche, the best way to do it is through good ol’ networking. As you’ve correctly noted, the job market is dreary pretty much everywhere, so if you’re not able to get good leads off the bat, please don’t be discouraged. It may be a while before you find any leads, but get started now by reaching out to alumni and continue to learn more about the field. You can often impress people with a positive attitude and your knowledge of their profession – people always want to make sure you know what you’re getting yourself into, and the more you can demonstrate that, the more compelling you’ll be as a candidate. As for the reasons why you find the deal world exciting, I too share those same sentiments so I definitely hear where you are coming from.