Can you describe a typical project that you worked on?
I worked in the financial institutions group at my firm. My work was intensive in modeling, and we created very thick presentations with lots of graphs and pictures. Banks are very sophisticated clients. A lot of them have their own M&A and underwriting departments. If you come in with a book that's not very good, they see right through it. Plus, all of them have at least three or four investment banks serving them. There's no loyalty among bank clients. A lot of times we'd meet other investment banks in the lobby who'd have a meeting with the client right after us.
My work was very numbers oriented. A typical project would be an M&A transaction -- huge computer models--pages and pages of models. The industry is very heavily regulated, so that not only do you have to do financial analysis, but you have to pay attention to all the financial regulations. For example, are your equity ratios going to be sufficient after the acquisition to meet required tests? On a typical M&A project I'd go on a due diligence trip to the client, work on models, and develop relationships with a vice president or assistant to the CFO or the CFO himself. He would feed me all the information I needed to build the model. Including assumptions and key criteria they wanted to use to analyze the effect of the transaction. I would keep on punching numbers into a spreadsheet, probably for eighteen hours a day. I'd go to meetings. But I'd seldom present my models. I sometimes spoke when the model was very complicated and no one else could understand and explain it.
Did you find all this work interesting?
Models I found interesting, and it was excellent training, for everything-- learning how to use a computer, understanding accounting and financial analysis. It's very rigorous. Your clients are so smart and sophisticated that if there's a mistake in your model, they'll catch it. There's a high quality bar.
What did you come away with?
I think analysts at any investment bank develop an ability to work hard and spend time efficiently. But more precisely, I came away with excellent knowledge of spreadsheets, running macros, and other computer skills. I developed a good knowledge of accounting and financial analysis, reading financial statements and making up your mind fairly quickly as to what you think is happening at a company, and what its strengths and weaknesses are. And you develop thick skin. At first you're nervous and you don't say anything and then you get more comfortable with senior management of companies. You gain self-confidence.
Were you encouraged to take on responsibility or speak up in meetings?
Not really, no. They're fairly formal in that respect. I would present my models when no one else could. But they weren't expecting me to lead the presentation or make a big contribution to the meetings. If only for the reason that if you stayed up until 4 A.M. finishing the presentation, you're completely brain-dead during the meeting. The only thing you want to do is sit and relax and hope for the best--that there's no mistake and if there is that no one will catch it.
What were your hours like?
I worked 90 to 100 hours per week for one entire year. Then, when I became a corporate finance generalist I worked 60 hours per week.
Does anything surprise you about investment banking?
I was shocked by the way people present their jobs to the outside world versus what's going on. You're basically a slave, and on top of that you're sent out to recruit new people. And you're supposed to give speeches about how good it is. Finally, you convince yourself that this job is the best. The pressure is high to not say anything to the outside world and preserve the glamour and the myths about investment banking. But if you keep your ears open you can find smaller firms where you can make just as much money and lead a better life.
How do you look after yourself in investment banking?
You have to build allies within your group and with the operating people rather than the administrative people. The administrative people can't do anything to protect you.
What's your opinion of the long-term attractiveness of your specific firm and investment banking in general?
I would go back to investment banking, but not to a big firm like where I worked. There's a lot less politics at a smaller firm. You're more visible and your contribution is more visible. Also, I find the sales and trading culture much more pleasant. They're more matter-of-fact, there's no schmoozing, there's no attitude with the Hermes ties and Porsches and all that. They're regular guys, they make a ton of money, but you'd never know it because they rarely bring it up. And if you do something wrong, they tell you right away, and if you do something good, they tell you also. At my firm, it's very much a corporate finance culture--that was the prestigious thing. They schmooze all the time because that's their job. But it's difficult to get real feedback, to know where you stand, how you're doing compared to the other people. The trading culture is more abrupt. I don't especially enjoy the crude language, don't get me wrong. But I'd rather be in a rough but straightforward environment than in a highly political one.