If you’re young and academically bright, you believe that you can do anything. For a lot of students and junior investment bankers, this means quitting and starting up your own firm.
You see the likes of Evan Spiegel and Mark Zuckerberg and an irrepressible voice tells you that you should be running your own show too. "Now’s the best time to start, you can be your own boss, the opportunity cost is as low as it will ever be, the potential upside is unlimited and there’s no such thing as a bad failure – it’s just a learning experience."
These are actually all very bad reasons to start a business. You are doomed to fail if you start a business just for the sake of it. Don’t start a business unless it’s your business. You need to have huge amounts of faith in it.
Before I started out in banking, I spent 6 months in Hong Kong trying to build my business selling champagne to car-dealers. I had a lot of fun designing the business model and dreaming of success based on an investment-light low-risk/high-return approach. But the reality was closer to painful door-to-door selling. The experience made me appreciate what the financial sector really has to offer. If you have any doubts about starting your own business, my advice is to do banking instead.
You'll get the most intense training in the world, gain confidence in your ability to execute, build some capital, and earn a massive stamp of approval on your resume. If you really want to start your business later down the line, those couple years of banking will be an invaluable asset.
Interns and junior analysts at investment banks like to complain that they are at the very bottom of the food chain. Still, what they do is directly related to the core business, and they never need to worry about making sure that bills are paid on time or about keeping receipts for tax and accounting purposes as you would in a start-up
Beyond that, you'll quickly realise that banking is a great place to be. In M&A, your job is to advise C-level executives on their most strategic issues. This is team-work, so don't expect to deliver the message to the CEO yourself, but you will be key to putting it together and articulating it. The job puts you in the front seat of major transformative transactions and enables you to understand the negotiation dynamics and due diligence process. You'll also gain strong financial modelling and valuation skills and will likely get to know your industry and product inside out.
In the longer term, the career path offered in banking is also appealing. I remember an interview with a senior VP who compared this job to good wine that only gets better as it matures. I have personally liked every sip of it so far, and I can also see how it keeps getting better. I like that the job changes every couple of years as you move up the ladder from analyst to associate to VP to director and MD. Every new step comes with new exciting challenges. At the same time, good firms equip you with the means to take them on.
Finally, another great benefit of the job is the people you get to work with and how much you can learn from them. Basically, if you start your business, you have to be the smartest guy in the room, which may be a stretch when you just graduate. When you sign up for banking, the logic is different: you'll start from a place where you know nothing and will absorb everything progressively through the steep learning curve. It will soon go both ways too: one of the things I love the most in this job is sharing tips and best practices with interns and new analysts to help them work faster and better.
Charles graduated from Essec Business School in Paris and was a visiting student at Fudan University and Berkeley Haas School of Business. He tried to set up a business in HK before realizing that he was more passionate about DCF modeling. He then built his M&A career and worked at Lazard Paris, RBC London, and SocGen London & New York. He advised on a number of transactions including most recently with SocGen NY: TechnipFMC $13bn merger of equals and Suez' $3.4bn acquisition of GE Water in partnership with CDPQ. Currently in the process of renewing his work authorization, he is dedicating his time to sharing tips about the investment banking industry and teaching financial modeling online (more info here) before he can come back to banking.