If you can stick it out for two to three years as analyst in an investment bank – especially a tier one investment bank, then believe me – it will get better. If your investment banking experience is with a tier one fir, you will be coveted by employers outside banking. All those skills: modeling, building valuation models, analysing cashflows, and doing PowerPoint slides, come in useful in many industries.
Private equity funds want you
In the US where the buy-out scene is huge, it is common for second- or third-year IB analysts to move into private equity, including into big firms like Bain Capital, TPG, KKR and Blackstone. This is particularly relevant for M&A analysts because PE funds require their expertise in valuing companies and doing due diligence work on the buyout.
Funds poach their ideal candidates as early as the end of the second year. Interviews are typically conducted over just two weeks because no PE employer wants to miss out on hiring the best analysts. This period can be pretty intense for analysts, who need to travel and prepare for interviews, yet at the same time, finish work with the bank.
Management consulting firms want you
Other places where junior investment bankers can take their analytical and modeling skills are consulting firms such as McKinsey, Bain and BCG. I’ve seen many people successfully make the move.
Clients want you
Perhaps the more interesting path, but not necessarily the most lucrative one, is to join a client. A friend, who worked as an M&A analyst for two years in the US, found a job in the business development unit of an up-and-coming tech company. Despite being promised a lower salary than buy-side funds were offering, he was given equity in this start-up, which is now about to go public. It’s a risky move, but it’s definitely worth a try. According to his own estimate as a former tech analyst, his new employer is worth US$5bn.
The prospects and earning potential of fortunate former investment banking analysts are great. However, you have to endure inhumane hours and grunt work for at least two years before they will be lavished upon you.