Guide to Investment Banking: Part 3 of 3

Cream of the Crop: The Top Investment Banks 
Investment banks can technically come in all different sizes and shapes. They don’t have to be units within major financial houses. They can stand on their own as relatively small private entities with about 50 employees. They can include only a handful of people, assuming the founders have the skills, connections and reputation to assist corporations and governments in raising capital and advising on major deals.

Bulge Bracket Banks
The big investment banks on Wall Street, where both young and established bankers often want to leave their mark, include Goldman Sachs, J.P. Morgan, Morgan Stanley, Citibank, Bank of America-Merrill Lynch, Credit Suisse, UBS, Deutsche Bank and others.

Those institutions, which are sometimes referred to as “bulge bracket” banks due to their huge size and multinational reach, will also have offices spread around the U.S. and world, looking for new business opportunities and trying to stay in touch with past, current and potential future clients.

Smaller Banks
Non-bulge bracket investment banks, which are generally smaller and often privately owned, will locate in large cities with dynamic, cutting-edge industries and firms that need to raise capital for public offerings or advice on M&A deals. San Francisco, Chicago, Los Angeles, Boston, Dallas, Houston and other major U.S. cities are popular locations for investments banks, big and small, due to the dynamic and diverse nature of their economies.

The Current State of Investment Banks
Since the financial crisis of 2008-2009, the number of investment bank jobs has actually declined around the globe, as Wall Street and other multinational investment firms retrenched amid market turmoil. The result has been that the already coveted jobs within investment banking are even harder to find and land.

But many of the job cuts, including those on Wall Street, are considered cyclical in nature — and some investment bankers say good times could lie ahead within the industry.

They point to the uptick in IPOs in 2013 — and the prospect of a strong IPO market in 2014.

According to Renaissance Capital LLC in Connecticut, there were about 222 initial public offerings in 2013, valued at about $55 billion. Compare this to 2012, when there were 128 deals valued at $42.4 billion. The 2013 IPO figures were the highest since 2000, when the dot-com frenzy was at its peak. Based on preliminary filings, Renaissance Capital estimates that 2014 has the potential to at least match 2013.

Technology, biotech and pharmaceutical companies have been particularly active in recent years on the IPO front.

But the better news, from the investment banking perspective, is in mergers and acquisitions. M&As have just about fully recovered from the 2008-2009 financial crisis, though the sector has yet to advance beyond pre-recession levels. According to the MergerStat, there were 28,829 M&A deals valued at $2.5 trillion across the globe in 2012, with final 2013 numbers expected to match, or come close to, that approximate level.

As the economy improves and as corporations pile up cash reserves from historically high profits, some investment bankers believe it’s only a matter of time before companies, especially U.S. firms, start to pursue M&A deals more aggressively.

“It’s a fantastic time to be in investment banking,” says one managing director at a Wall Street investment bank. “The M&A market is poised to really improve. Corporations are sitting on a lot of cash that they can put toward acquisitions. There’s a lot of business out there waiting to happen.”

About the Author: Jay Fitzgerald is a business journalist based in Boston. Over the years, his articles have appeared in The Boston Globe, the Boston Business Journal, the Boston Herald and other publications.

 

Guide to Investment Banking: Part 2 of 3

 

Are You an Ideal Candidate?

For junior financial analyst positions, the ideal candidate is someone with a bachelor’s degree in finance, business administration, economics, math, accounting and other majors that show a person can sift through and make sense of reams of complex financial data.

But because investment banks deal with a wide array of companies, those with special secondary majors — particularly in biology, chemistry, computer science, and healthcare — are particularly desired by investment banks, which often represent and interact with software firms, biotech and pharmaceutical companies, healthcare institutions and other corporate entities that might be going public or merging with another company.

The bottom line? Having a secondary major in a specialized non-finance field is often considered a major plus if an analyst, associate or vice president can grasp the lingo and intricacies of a client’s product or services, industry officials say.

A grade point average of 3.5 and higher is considered a must for a position at most investment banks, many of which will recruit heavily, and sometimes exclusively, at top-rated colleges and universities. Smaller investment banks may not be as picky what schools people attended, as long as candidates show they’re razor sharp and ready to handle complex investment-bank duties.

In addition, some industry insiders also say they’re always on the prowl for young candidates who have proven they can commit themselves to projects and can work within team environments. As a result, some investment banks favorably view those who played varsity sports or excelled at some other extracurricular activity.

For those wanting to move up the leadership and compensation ladder within investment banking, getting an MBA degree is generally considered critical after someone has served about three years as a junior and senior financial analyst.

Job Interviews and Prep

Never underestimate the importance of job interviews at investment banks, but also don’t psyche yourself out beforehand to the point you act unnatural and come across as uncomfortable, industry officials say.

The entire goal, from the interviewer’s standpoint, is to gauge whether candidates are as sharp as their cover letters, résumés, school records and recommendations may suggest. So, if you’re young, expect lots of questions about your college studies and activities, internships, and prior summer and post-college jobs.

  • If you’ve already worked at an investment bank in a part- or full-time job (or as an intern), expect detailed questions about projects and deals you’ve worked on, as the interviewer will try to gauge the depth of your knowledge about investment banking.
  • Know the names of investment bankers and other executives you have worked with in the past. You may be asked about them.
  • Have mental lists ready about your strengths and weaknesses, and be prepared to talk about them. Questions about careers goals and special fields of interest are also common, as are questions testing skills with spreadsheets and various software programs, including Excel, PowerPoint and other programs specific to various industries.
  • Some investment banks may pose verbal tests to candidates, such as outlining a hypothetical scenario in which a company is trying to buy a similar firm — and then ask how you would approach researching the deal.
  • Have questions ready for the interviewer — about what type of deals you might be involved in as an analyst or associate, or the prospects for promotion within an organization.

By all means, convey a strong desire to work hard and passionately, because that’s exactly what you’re going to be expected to do if hired.

Compensation — What are You Worth?

After all the long hours of research, deadlines, travel and nerve-racking meetings required to piece together major capital and M&A deals, it can be all worth it.

First-year analysts at big Wall Street firms can make salaries of $100,000 to $150,000, with signing and performance bonuses potentially pushing those figures up by 25 percent or more, according to industry insiders and experts.

But the pay goes up almost exponentially in later years as one moves up the corporate ladder. The reason? Commissions off of capital deals can range from 1 to 5 percent for investment bankers — and that means big bucks for mid-level bankers and even bigger fortunes for senior managers.

Every bank has different titles conferred on personnel, and investment banking is no different. But after junior and senior analyst positions usually progress to associates, and then on to vice presidents.

  • Associates generally hold an MBA and have more than three years of experience. Total compensation often ranges from about $250,00 to $500,000.
  • Vice presidents generally have an MBA and a minimum of five years of experience. Compensation hovers between $300,000 and $1 million.

The top-echelon jobs, such as directors, principals, partners, managing directors and department heads — however they might be described — is where the seven-figure salaries start kicking in. The compensation for the very top managers, depending on the size of a bank and its deals, can easily get into the millions or even tens of millions of dollars.

About the Author: Jay Fitzgerald is a business journalist based in Boston. Over the years, his articles have appeared in The Boston Globe, the Boston Business Journal, the Boston Herald and other publications.

 

Guide to Investment Banking: Part 1of 3

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A job in investment banking remains one of the most enduring and sought after positions within the financial sector due to the potentially eye-popping financial rewards for key players.

But, those long-term rewards combined with recent banking industry changes have also made investment banking one of the toughest and most fiercely competitive fields to crack into within the financial services sector.

“They’re definitely unique jobs,” says Richard Deosingh, the regional manager in the New York office of Robert Half, the giant professional staffing agency. “It’s very fast-paced, and it’s not at all your typical 9-to-5 position. It’s long, long hours with big returns, if you can get into it.”

And that “if” is the biggest hurdle for those who have their hearts set on a career in investment banking.

What Is Investment Banking?

Investment banking is non-retail banking that generally serves corporate clients, governments and major institutional investors.

Household checking accounts and handy sidewalk ATMs are not the norm for these financial firms and clients, thank you.

Over the years, due to major regulatory changes and global market forces, the investment banking sector has changed a lot — so much so that someone who started out in investment banking in the 1970s, 1980s and even the 1990s can barely recognize the industry that it’s evolved into today.

Before major regulatory changes in the late 1990s, investment banks were usually smaller partnerships that were more associated with raising capital for IPOs, private placements, bonds, and giant merger and acquisition deals, among other things. As a result of these regulatory changes, today’s investment banking units are often housed inside giant banks that have separate retail banking operations.

In the modern era, investment banks are often huge publicly traded institutions that provide a host of investments services, including corporate finance, trading and research analysis.

However, the “core” of investment banking, strictly speaking, is still associated with raising capital and providing advice on mergers and acquisitions (M&A) — and that’s precisely the field many young investment banker wannabes often want to crack into when they think of careers in this lucrative sector.

A Day in the Life of an Investment Banker

Every job within an investment bank varies, usually depending on the seniority and specialties of individual personnel.

But if they’re all rowing together, the collective goal is to find and raise capital for clients, as well as come up with strategies and solutions to secure capital under the best terms possible for major IPOs, private placements, bond issuances, and M&A deals.

And all those deals are usually, at minimum, measured in the multimillion- and multibillion-dollar ranges. They most definitely don’t fall into the category of routine retail or small-business loans.

The jobs entail long, grueling hours of research into individual companies, industries, markets and even the entire economies of countries and continents, as investment bankers and their small armies of researchers try to measure the potential value and sizes of various transactions.

Investment bankers and their team members will also spend long hours on:

  • Courting potential clients
  • Traveling across the country and globe to research and secure deals

Ultimately, investment bankers are not only savvy about negotiating mergers and acquisitions and raising capital, but they must also be good with clients. In the end, they are salesmen and compete fiercely against each other for very high-stakes corporate business.

One important consideration: Investment bankers are on call 24/7. If a company makes a sudden move over a weekend to buy another firm, all members of an investment banking team had better be ready — on any day, at any time.

“It is a great business for the right person,” says F. Mark D’Annolfo, a former investment banker who’s now managing director of the Stephen D. Cutler Center for Investments and Finance at Babson College. “It is very entrepreneurial, and the work is often highly interesting and intellectually challenging. However, since these jobs often involve a great deal of travel and long hours, they are not for everyone.”

About the AuthorJay Fitzgerald is a business journalist based in Boston. Over the years, his articles have appeared in The Boston Globe, the Boston Business Journal, the Boston Herald and other publications.

Kickstart Your Finance Career in Emerging Markets

 

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You’ve heard and read it over and over. The BRICS this, the BRICS that. The BRICS are booming, the BRICS are unwinding. So what does it mean?

And What the Heck is a BRIC, Anyway?

This four-letter acronym is engrained in the lingo of global financial service professionals who are dealing with or doing business in Brazil, Russia, India and China — superpowers in their own right with massive economic potential. Think young, hungry and eager populations, resources, and a renewed interested in foreign direct investment (FDI). These four countries, along with a handful of others — Turkey, South Korea, Mexico, Thailand and Indonesia just to name a few — offer the risk and rewards that many financial services professionals crave.

Do You Have the Stomach For a Job In Emerging Markets?

You might if:

• You like to travel.

• You are multilingual.

• Political unrest and geopolitics don’t scare you.

• You take the (very) long view.

• You enjoy the thought of higher risks and rewards.

These are just a few traits potential employers will seek out when you walk in their door with hopes of landing a financial services role dealing the world’s emerging markets. These markets are frankly, just that…emerging. Economies are in place, yes, but in many instances, they’re nowhere as developed as that of the U.S. And bureaucracy, geopolitics and stagnation (and the resulting layoffs) are all too real in many of these locales.

I’m Interested, But Sell Me On It

Why now? Emerging market activity has attracted attention from both small and large investment houses. Asset managers looking to diversify have entered the game, and more in-depth research continues to be regularly churned out by some notable financial firms — further proof of the interest in doing business in smaller markets. Political unrest, currency fluctuations and logistics aside, the emerging markets remain on an upward trend.

Why me? Emerging markets truly have something for a number of financial services hopefuls — trading, research and analysis, strategy, mergers & acquisitions (M&A), and overall international deal making are all routes one can travel in this sector. But most importantly, the self-discovery and new business perspectives you’ll acquire may prove to be the most rewarding part of the job.

What You Really Want to Know: Salaries for Financial Analysts

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Salaries and bonuses: According to the Bureau of Labor Statistics, the median income for financial analysts is about $75,000 a year.

But that’s a median, and many big and prestigious financial firms start their analysts near or at $100,000 a year. Sometimes bonuses can double the total compensation for a first-year analyst, though bonuses can range far and wide, depending on the type of type of firm and even its location.

At larger firms, the income of senior analysts with two to three years of experience under their belts can start at around $120,000, not including bonuses.

The financial service industry’s really big bucks — measured in the hundreds of thousands and millions of dollars — don’t start until employees move up the ladder into associate, vice president, senior management and partner positions.

Can I negotiate? There’s not a lot of wiggle room for negotiating higher entry-level and senior analyst salaries at larger firms, primarily because employers hold most of the cards. If an analyst candidate doesn’t like the offered pay, firms can always draw upon the deep applicant pool to find other candidates.

Still, recruiters and industry officials say it’s important for candidates not to get lowballed on offers. Those seeking jobs should research compensation, right down to the salaries at specific firms where candidates are interviewing.

4 Career Lessons From “The Wolf of Wall Street”

Image Credit: Wolf of Wall Street on Bigstock

Aside from breaking the world-record for most number of f-bombs dropped in a movie (506), “The Wolf of Wall Street” is an award-laden cinema masterpiece with a number of hidden career lessons.

The movie, according to IMDB, follows the “…true story of Jordan Belfort, from his rise to a wealthy stockbroker living the high life to his fall involving crime, corruption and the federal government.” Even if you’re not in sales or investing, this is a wildly entertaining movie sure to capture your attention from start to finish.

Whether you’re in the midst of a job search or looking to rise in your career, these four career tips from “The Wolf of Wall Street” will help you accomplish even the most difficult of goals. (WARNING: Spoiler alert ahead.) And no, unlike the film, we won’t advise you to do anything illegal!

1. If you talk the talk, be able to walk the walk.

So you got big plans, eh? You’re planning on getting a job at the largest company in the industry. You’re planning on getting promoted or moving jobs by five years. Making plans is the easy part — it’s the following-through that really gets people.

In “The Wolf of Wall Street”, Jordan Belfort was determined to live a life of success and achievement. In the beginning, he was humble yet confident in his abilities, and he used his skills and determination to get what he wanted. When his shot at a big break came to an abrupt halt, he didn’t give up there. He used what he learned on Wall Street to restart his career and make it the behemoth he knew it would be.

When you say you’re going to do something, give yourself the full credit you deserve and do whatever it takes to make it happen. When obstacles get in the way of your goals, don’t give up! When you’re determined, other people can see that and gain a new sense of admiration and respect for you.

2. Don’t give up.

From being forced into unemployment in his prime, to having to make the best of transitioning from a great job to a bad one, to juggling multiple women and covering up illegal activity from the FBI – Jordan Belfort had many obstacles to overcome in “The Wolf of Wall Street”.

And you know what? He made it through each obstacle stronger than ever. Even at the end of the movie, when Belfort got convicted, sent to federal prison, and kicked out of the company he started, he still didn’t give up — continuing his legacy of teaching people the tools needed to have it all.

When your job search results in rejection after rejection, keep trying! When your coworker gets the promotion you’ve always wanted, keep trying! Accepting failure only leads to disappointment and regret — if you’re really passionate about achieving your goals, persistence is key.

3. Have your priorities straight.

In the movie (here’s that spoiler!), Belfort divorces his wife, Teresa, in order to “trade up” for a more attractive one named Naomi. He had a vision of what successful people were supposed to have, and Teresa did not fit that model, whether Jordan loved her or not.

Jordan sacrificed love for shallow pleasures and success almost immediately after the film began, showing him with prostitutes and doing drugs. While he had fun with it for a while, it wasn’t until his marriage with Naomi started to fail that he began realizing his life didn’t truly make him happy. Eventually, he realized what truly made him happy was being able to have an influence on people’s lives, and when he was released from prison, he found a legal means of being able to do it.

You may be failing to reach your career goals because you place too little importance on them. Having just a little more determination and passion could be the difference in making those goals a reality.

4. Wolf up.

In a world run by sharks and wolves, Jordan Belfort knew he had to become one to become anything. Like a wolf, Jordan Belfort devoured every opportunity and enemy that came his way. He found the key to Fort Knox in a script he created that persuaded even the filthy rich to invest in garbage, and he turned that into a multi-billion dollar company that made him a fortune. Belfort didn’t just seize opportunities — he created them.

When he met his match in the form of an FBI agent named Patrick Denham, he fought and fought to keep the rewards he wrongfully reaped until he was unable to fight any longer. And even after he was released from prison and still unable to return to his own company, he created more opportunities for himself when he started the lecture series at the end.

When you’re in an interview or promotion meeting, wolf up! Seize the opportunity and take what (in your mind) is rightfully yours through your own skills, knowledge, and intuition. Being humble sometimes only means you’re happy where you are in life and don’t wish to go further, so it’s vital to have that confidence to balance it out and reach your goals.

What other lessons has ‘The Wolf of Wall Street’ taught you about your career?

For this post, Doostang thanks our friends at ComeRecommended.

Best Websites for Finance News and Information

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Most everyone has heard the old saying, “Knowledge is power.”

In the financial world, the adage should read: “Knowledge is power — and money.”

Leaders in the financial sector will almost invariably agree that the vast majority of superstar financiers on Wall Street and elsewhere are usually voracious consumers of the latest business and financial news, industry and company data, analyst reports, business books and relevant websites.

“It is critical for finance people to be well read and stay up with the news,” says Robert C. Pozen, the former president of Fidelity Investments, former chairman of MFS Investment Management and today a senior lecturer at Harvard Business School. “Current events heavily impact markets, and more in-depth reading is needed to understand many companies and issues.”

Asked if he ever met a financial industry star who didn’t read a lot, Pozen’s blunt response is: “No.”

With that mind, here are some key websites that Pozen and leading venture capitalists, investment advisors and other top players recommend as essential places visit regularly for news and information. Some of these are familiar names, some aren’t.

 Keep in mind: There are numerous finance sectors and subsectors — and with so many niche trade publications and sites trying to serve their very specific needs — it’s almost impossible to list the literally thousands of websites, blogs and other online places where financiers individually go to get their information.

But if you don’t bookmark and regularly visit some of the following sites, you’ll have virtually no chance of reaching the big-time.

Don’t Dismiss the Freebies

There are loads of sometimes very expensive subscription services — ranging from hundreds of dollars to tens of thousands of dollars per year — for those who want to bore down into detailed information and analytics. More on this in a moment.

But don’t dismiss the freebie sites. Why pay for basic information when it’s free at your fingertips, literally?

Some of the free finance information sites that industry leaders say they regularly visit include Google Finance, Yahoo Finance, CNBC, CNN Money and The Street, among others.

Depending on the site, they can be great resources for stock quotes, quarterly and annual financial data, breaking news, company press releases, SEC filings, analyst rankings and even some analytic tools to help break down data and information.

The popular Seeking Alpha, founded by former Wall Street analyst David Jackson, is a stock market analysis website that derives its content from independent contributors.

Another free site is Real Clear Markets, which provides morning and afternoon round-ups of the top business- and finance-related op-eds, analysis pieces, research reports, blog posts and other materials from around the web.

Most of the content at the National Bureau of Economic Research, a private, nonprofit economic research outfit in Cambridge, is available only to qualified subscribers. But summaries and digests of its academic research reports are available free online. NBER focuses on a wide variety of areas, including general economics, corporate finance, international finance and macroeconomics, and monetary economics.

Bloomberg and Reuters (a unit of Thomson Reuters), two powerhouse business-information entities, also provide a surprisingly large amount of free business news stories and other services online, even though they make most of their money via paid subscriptions.

https://www.google.com/finance

http://finance.yahoo.com/

http://www.marketwatch.com/

http://www.cnbc.com/

http://money.cnn.com/

http://www.thestreet.com

http://seekingalpha.com/ 

http://www.realclearmarkets.com/

http://www.nber.org/

http://www.bloomberg.com/

http://www.reuters.com/

Best Sites for Private Equity, Venture Capital and Investment Banking

Ok, now we’re getting into the paid stuff, which, as previously mentioned, can easily run into the hundreds and thousands of dollars a year for subscriptions.

If you’re already in the private equity, venture capital or investment banking sector, there’s a good chance your employer already subscribes to some of these sites — or might consider subscribing to them if pressed.

One is Mattermark, which touts itself as a site for venture capitalists and other investors for “prospecting, tracking and benchmarking more than 200,000 startups around the world.” Some of its content is free, but most of it is subscription only. Mattermark has quickly become a must within some venture capital and private-equity circles.

CB Insights is a popular database website aimed at venture capitalists, private equity firms, investment bankers, angels and other investors who want to track high-value private companies.

Other popular paid sites include Private Equity News, which covers Europe’s private equity market, and The Deal, which tracks transaction information for investment bank, private equity, hedge fund and other investors through its Deal Pipeline products.

Fred Wilson, a venture capitalist and principal at Union Square Ventures, hosts a popular blog about the VC industry, one of many venture capitalists with their own blogs.

 www.mattermark.com

www.cbinsights.com

http://www.penews.com

http://www.thedeal.com

http://www.avc.com/ (Fred Wilson)

Mainstream Media (Sort Of)

They may have been around for a while, but older mainstream media outlets and their websites are also must-reads for most successful financiers, according to industry leaders.

Though they charge subscriptions for full access to their sites, these mainstream players include the Wall Street Journal (and its related other Dow Jones services), the New York Times (it’s been expanding its business coverage in recent years), the Financial Times (very respected for its international finance coverage), and The Economist (the venerable weekly magazine that just keeps on ticking).

Though it offers some free content, Bloomberg, which just about every Wall Street hot shot subscribes to — usually paid for by their employers — charges tens of thousands of dollars a year to get all of its rich array of data, analytic tools and content. But most financiers say it’s worth every penny to have one those now-famous desktop Bloomberg terminals.

Public Service Announcement: Just Read!

The bottom line for those aspiring to be finance rock stars: Just read. Find sites you like, ask others what they read, bookmark the sites, and get moving in your career.

“The more information you seek out, the more reference points you have to make sound investment decisions,” says Lowell Thomas, who has worked at a number of Wall Street firms and other investment companies and today is a partner at South Shore Capital Advisors in Newport, R.I. “If you ask Warren Buffett what he does all the time, he says he reads. A lot. That tells you something.”

http://online.wsj.com/home-page

http://www.nytimes.com/pages

http://www.ft.com/home/us

http://www.economist.com/

About the Author: Jay Fitzgerald is a business journalist based in Boston. Over the years, his articles have appeared in The Boston Globe, the Boston Business Journal, the Boston Herald and other publications.

 

Day in the Life of a Sell Side Analyst

Get up, Sleepy. It’s 4 a.m. and your alarm goes off. Time to shower, dress and catch a cab to the airport. You’re on your way from New York to Florida to Boca Raton, Fla. for the annual CAGNY (Consumer Analysts Group of New York) conference.

Be ready to listen carefully. There will most definitely be golfing, fun in the sun and fancy dinners, but the bulk of your time during this multi-day event will be spent inside an air-conditioned conference hall, glued to a chair. You’ll be listening — mainly to CEOs, CFOs, and other C-suite executives from Tyson, Campbell, Hershey, Coca-Cola and other major names in the publicly traded food, beverage and tobacco industries — for important news that could affect your firm’s rating on their stocks.

You’re there to back up the lead equities analyst you work for, where you’ll be part of a crowd of sell-side and buy-side analysts, shareholders and other institutional parties. Everyone is on the lookout for changes in guidance on earnings for the coming quarter or year, hints at new product additions, or details on the pursuit of new markets to boost the top line.

And don’t forget your phone. You’re constantly checking your smartphone for messages from your boss, who is busy in a breakout session with management from another company down the hall. You just got a message: She wants you to escape during the break so you can get online and plug monthly sales data released by one of the companies the firm covers into the spreadsheet model that you share.

But wait! You just heard from the latest presenter from a mid-cap company your firm recently began to cover — Foodie BBB — that it’s is planning to allocate more capital toward tack-on acquisitions in the next 12 months. A reporter from Dow Jones Newswire has put out headline, and within a minute, BBB shares have already moved 3 percent higher.

Your analyst is frantic. She wants you to forget the modeling and instead focus on writing a note for investors explaining what kinds of acquisitions would be best suited for BBB. She needs it in 20 minutes so that it can go out as an email blast to clients, along with a reiteration of the firm’s “buy” recommendation and earnings targets.

Welcome to a typical day in your life as a junior sell-side research associate at a leading Wall Street investment bank.

Your judgment about what could affect your firm’s investment ratings is critical in most everything you do. The managing director of research for a sector at one of the leading New York investment banks says he wants to know that his analysts will “pick up the phone and find you (him) when they hear something is a big deal.” And if they aren’t sure, he wants his people to call him anyway.

Whether you are a sell-side expert on food, tech, retail or some other popular sector, your daily activities might include one or more of the following:

  • Attending industry conferences like the one in Boca Raton
  • Participating on the firm’s morning call with the sales team
  • Meeting with institutional clients of the firm
  • Plugging numbers into the spreadsheet models that track whether companies are meeting, beating or missing Wall Street expectations
  • Creating succinct narrative on one or several stocks that may go out as a bulletin under the senior analyst’s name or be included in part of larger research report
  • Listening to and asking questions on a conference call given by a company’s senior management team following the release of earnings or other material news
  • Reading through lengthy 10K annual reports, quarterly earnings and other SEC filings from companies for material information
  • Accompanying the analyst to sit-down meetings with companies’ senior management

Such activities can make for long, but always interesting days. And if you’ve got the energy, commitment and aptitude, you’re sure to find a challenging — and fiscally rewarding — career as you work to gain credibility and exposure within your sector.

“There’s a zillion things to do,” says the managing director. “It’s very important for me to have self-starters.”

How Buy-Side Analysts Use Sell-Side Analysts

1. The sell side remains important to buy-side equity investment decisions. The sell side brings companies to the radar screen and investors to the table.

2. Sell-side research and conferences are the second and third most important ways that stocks come to the attention of global buy-side investors.

3. Buy-side analysts use sell-side analysts to gain access to company management.

4. Buy-side frustrations with the sell side include:

  • A perception that sell-side analysts are too focused on the short-term view
  • Worries over potential conflicts of interest between sell-siders and the investment banking business

Source: “Buy-Side Use of the Sell-Side: A Global IR Best Practices Report, September 2013,” Rivel Research Group.

About the Author: Deborah Cohen is an award-winning business reporter and editor with a penchant for entrepreneurial stories and the issues facing small to mid-sized companies. She has covered large public corporations ranging from McDonald’s to Cisco for Reuters, Crain’s Chicago Business and Bloomberg News.  

 

 

Interview Questions for Top Financial Firms

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You’re on your way. You worked relentlessly on your résumé. You edited and tweaked until you got it just right. It didn’t end there. You practiced your pitch a dozen times, probably bugged a few friends for advice, and now you’ve done it. You’ve landed the interview. That’s right, the interview with a top financial firm that will hopefully get you a new position in the world of financial services.

The Phone Screen — Don’t Screw It Up

In most cases, due to the sheer volume of applicants across the sector, your first real interview may be via phone. Often referred to as a phone screen or informational interview, you’ll be asked to schedule a phone meeting to review your résumé and further the discuss the role. Sounds easy enough, right? (Especially given that you’ve read that official job description nearly 40 times, can most likely recite it, and want that job.)

It’s a candidate purge. It is important to bear in mind that the first point of contact will most likely not be the hiring manager. Why? Most large firms have a huge volume of applicants and a lengthy corporate screening process. It’s most efficient for an in-house recruiter to conduct the first round of phone interviews.

It’s about basics. For phone interviews, stay relaxed and speak conversationally without sounding overly familiar. Here’s what you may be asked:

• Why do you know so far about the role?

• Why do you want the role? And why with this particular firm?

• Let’s talk through your résumé. Tell me why you worked at Company X for just 5

months.

Be prepared for these common questions. If you get past this candidate purge, you will probably interview with multiple people on various levels before getting your foot in the door. From your phone screen, it will then be decided whether or not to pass you on the respective manager or hiring manager. And this is just the beginning.

Level Up: An Actual, In-person Interview

Interviews at this level usually include two parts.

Technical skills and aptitude: Once you get to the first in-person interview, technical knowledge will be tested. Be prepared to explain why you enrolled in that Advanced Economics course. Will you be open to a test? Of course you would be — after all, you’re a quantitative type and live for those complex balance sheets.

Top financial firms (and recruiters) are known to include a test as part of the interview process — be it a role for brokers, traders or investment banking desk jobs. Your grades may state one thing, but can you tackle a 12-page Excel file full of client data? Let’s hope so.

The long answers: Your aspirations and goals will, of course, come up during the big interview, and you must have reasonable answers that show thought, research, and ambition. This is when your fit and personality for the respective firm will come to the forefront. You obviously won’t say you want to be CEO in two years, but ambition won’t hurt, either. Remain humble, attentive and thoughtful in your replies. Your fit for the respective firm, how much you know about the culture, your expectations of the role and technical aptitude are what matters most. The same questions may even come up but in different ways by different interviewers.

Here’s a bit of what to expect:

• What makes you think you are a fit for this role?

• Why do you want to work for us?

• What will you bring to the role?

• Can you discuss capital flow?

• Can you walk me through a balance sheet?

• Are you open to relocation?

And expect the unexpected. Sometimes hiring managers ask unconventional questions — such as math problems, brainteasers or would you rather type situations — but it’s because they want to see if you can think on your feet. They also want to get a glimpse inside your thinking process. Stay relaxed and maintain your composure, even if you aren’t sure of your answer.

Send a digital thank you. Be sure to follow up in some fashion. A short, concise email is best. While pen are paper are nice, handwritten notes take time and may not arrive in a timely enough manner. Good luck!

About the Author: Dawn Kissi is an international multimedia journalist reporting on the business, finance and economies of the world’s emerging markets. She reports and writes on sovereign and geopolitical risk, as well as securities trading and the technology moving global exchanges and markets. She began her career in broadcast news at ABC News in New York, eventually movinginto print and digital journalism. She is a graduate of Columbia University’s Graduate School of Journalism.

Boutique Banks 101

If working at a huge multinational investment bank is not your cup of tea, then you might instead set your sights on landing a job at one of many specialized, or boutique, investment banks spread across the country.

How Are They Different?

Unlike large “bulge bracket” banks such as Goldman Sachs, J.P. Morgan and other Wall Street powerhouses, boutique investment banks tend to be much smaller and specialize in certain industry fields, including technology, biotech, healthcare and energy.

They’re also usually private partnerships, not publicly traded firms, and often resemble what investment banks used to look like before major regulatory changes and consolidations transformed the banking industry in the late 1990s and early 2000s.

Why Boutique?

And the top-tier boutique banks are considered excellent and often lucrative places to work for those yearning to break into investment banking.

“It’s one of the best training grounds for young investment bankers,” says Alex Hart, a managing director at Signal Hill, considered one of the more prestigious boutique investment banks in the U.S., with offices in Baltimore, Boston, Nashville, New York, Reston, Va., San Francisco and Bangalore, India. “You can gain a lot of experience at a boutique that you can’t find anywhere else.”

What’s Their Niche?

The evolution: Modern boutique investment banking can trace its roots to roughly the early 1980s, when then young tech companies like Microsoft, Apple and other tech firms were first emerging as titans, or potential titans, in places like Silicon Valley and Boston’s Route 128 high-tech corridor.

Back then, boutiques played a key role in helping startups and medium-sized firms by raising capital and providing advisory services for mergers and acquisitions (M&A). But the bottom fell out on many boutiques in the late 1990s, as federal regulatory reforms allowed larger banks to jump into a wider field of financial services, including investment banking. Several boutiques ended up getting snapped up by giant financial firms.

“Many of these (mergers) failed miserably, as the cultures were quite different,” says F. Mark D’Annolfo, who formerly worked in investment banking at Deutsche Bank Securities and Adams, Harkness & Hill, a boutique firm that was purchased last decade by Canaccord Genuity.

The current climate: Over the past 10 years or so, boutiques have reemerged as key players within the investment banking field, often taking on smaller deals that mega-huge firms don’t want to touch. In other words, they’ve found a nice and often very lucrative niche.

What’s their bread and butter today? Some boutiques raise capital for IPOs and other public offerings, while also providing advisory services for M&A deals. But the majority of boutiques focus on the M&A advisory side of the business, effectively acting as middlemen between small-to medium-sized firms of all stripes and potential financiers, such a private equity firms and other fund companies.

Why it works: Boutiques tend to specialize in certain industry fields — such as technology, healthcare, biotech and energy — and often locate in major cities with cutting-edge companies and industries. Their deals are usually smaller than what the bulge bracket banks handle. Boutique deals can range from $20 million to $1 billion.

“After that, you’re starting to compete with the big guys,” M. Benjamin Howe, chief executive and head of investment banking at AGC Partners in Boston, says of the huge Wall Street firms.

The Best of the Best: Top Boutique Banks

There are literally hundreds of investment banks across the U.S., largely because anyone can technically call him or herself an “investment banker” and try to act as a financial advisor on major M&A and other financial deals.

But the most well known, top-tier boutique investment banks include Evercore Partners, Signal Hill, AGC Partners, Pacific Crest, Catalyst Group, GCA Savvian and others who are considered key financial players within certain industry sectors.

D’Annolfo, the former investment banker and now managing director of the Stephen D. Cutler Center for Investments and Finance at Babson College, cautions that those applying for jobs at boutiques need to carefully research firms to make sure they’re the right fit, such as whether a bank’s industry focus matches a candidate’s own expertise and interests.

“You really have to do your homework, as the experience can be very different from firm to firm,” he says.

The Best of the Best: Ideal Candidates

The best boutiques want the same type of job candidates as the big investment banks: potential top-notch financial analysts who are excellent at sifting through and analyzing complex financial data.

They also tend to recruit from top colleges and universities, though some boutiques may be partial to smaller prestigious schools close to their headquarters or satellite offices. Like bulge bracket banks, they look highly upon candidates who have majors in both business and specialized fields, such as computer science, biology and other science-related fields.

Compensation

Compensation at boutique investment banks tends to be lower than what is paid at the mega-
big banks, largely because their deals are smaller, and they don’t have as much capital and global franchises.

But the compensation at boutiques, by any other standard, is still excellent, with some boutique starting first-year analysts off at $80,000 to $100,000, with additional performance bonuses. The pay rises as employees move up the corporate ladder and, if they can crack into senior management positions, compensation can easily surge into the seven-figure range.

The Typical Day — and Why It’s Better Here

For junior employees at boutiques, the average day is not unlike what financial analysts endure at big firms — long hours of research, research and more research.

But there’s a huge difference: Early-career boutique employees can get much more involved in actual deal strategizing, working closely with senior investment bankers and even clients. In other words, their jobs can be more flexible within a collegial environment, allowing them to gain far more experience than they might at bulge bracket banks.

“They’re also on a much faster track to partnerships because firms are smaller,” says AGC Partners’ Howe.

 And another big plus: Many young boutique bank employees can parlay their valuable experience into landing jobs at private equity firms, hedge funds and larger banks.

Some even occasionally take the entrepreneurial plunge by joining young startup firms that they’ve previously worked with on finance deals.

About the Author: Jay Fitzgerald is a business journalist based in Boston. Over the years, his articles have appeared in The Boston Globe, the Boston Business Journal, the Boston Herald and other publications.