The First Challenge – Landing the Right Group
At most banks, once you have received your offer, you have the opportunity to state your group preferences. There are two types of groups: industry coverage, and product groups.
Industry coverage groups provide banking services for specific industry sectors, such as TMT (Tech, Media, and Telecom), Healthcare, and FIG (Financial Institutions). In these groups, you tend to specialize within a specific sector and become an expert in understanding the business models, competitive dynamics and unique financial attributes of that specific sector. Moreover, you get to work across all the products on deals ranging from IPOs and convertible offerings, to investment grade and high yield debt financing to M&A transactions.
The Product Groups, on the other hand, provide banking services related to specific products such as mergers & acquisitions (M&A), equity capital markets (ECM), debt capital markets (DCM). These groups typically support a range of industry coverage sector. So the professionals in these groups attain product depth but not the same level of industry depth as their coverage colleagues. Product groups typically work with the industry in pitching for, and in executing a specific deal. So once the team has an M&A mandate – typically an M&A team would also be assigned to run specific aspects of the deal. Similarly, if the deal involves raising debt or equity financing, the respective capital markets colleagues will get intimately involved in the execution of those deals. By definition, professionals specialize in their specific products and therefore don’t typically get much execution experience in other products.
Getting placed in an industry group of your choice can be another recruiting exercise into itself (and you thought you made it when you got the internship!). You are typically sent an email prior to the internship asking for your group preferences. This rarely translates to you being placed in groups of your choice. I was not placed in any of the groups I had on my list. The groups also get to rank the interns they would like in their groups, and this tends to be the deciding factor. To get noticed by the group you wish to be in requires networking. Send emails to the people you interviewed with or the HR resource and express your interest in a specific group. Ask for and set up informational calls with people within the group you want to join. The more people you speak to, the more likely you will get the group you want.
Typically M&A and technology coverage tend to be popular picks by wannabe interns, in part because they sound glamorous. The advantage of networking is also that gives you a chance to explore other groups and see where you are likely to be a fit. Groups can have vastly different culture so it’s ideal to find a place where you enjoy your colleagues and have compatible work styles.
I was placed in FIG although I had no interest in it, nor had I ranked it as one of my choices. This happened because I neglected networking, and because the group handpicked my resume because I had had experience with financial intuitions coverage in the past.
Preparing for the Internship
I’ve written before about how it isn’t necessary to major in finance or accounting to get a job in investment banking or to ace the interview. However, there is merit to being prepared ahead of the internship and here are some tips to make your 10-week stint a whole lot easier.
Being familiar with financial statements, specifically 10-k’s and 10-qs will help you hit the ground running a lot better than knowing how to build a DCF model from scratch. A lot of the analysis I did was searching for numbers of definitions in financial statements even if the info was readily available through aggregation tools like Factset or SNL. Live deals means that every number has to be “scrubbed” and checked against the source statement. My familiarity with financial statements and SEC filings from previous experiences gave me a big leg up, allowed me to accelerate up the learning curve and take on take on more responsibilities early in the internship.
Additionally, build familiarity with Excel and Power Point keyboard shortcuts. These will give you a massive advantage as most other interns learn during training and while working. Unplug your mouse / track pad and get comfortable building a financial model with only the keyboard. Like most interns, I left it to the training to learn these shortcuts. I quickly found that every second I saved using shortcuts was another minute, and potentially another hour, or day I saved in the review process for any and all projects. I would write down every shortcut I encountered and made sure to use it at the next given opportunity which immediately showed my ability to quickly learn and adapt.
Formal training is typically a week-long session at most banks that you spend with the rest of your intern class. During this week you are taught everything from basic finance & accounting, to excel shortcuts (the most important piece!) to basic financial modeling, as well as the policies and procedures of the firm. You will also be pitched the firm as they want you to believe you are at the best bank on the planet. During this week make friends with your intern class and pay a lot of attention to the excel shortcuts, and anything else you don’t know much about.
Once you are on the desk, it’s game on
Make sure to always have a notebook, a pen/pencil, a calculator at all times. Never go anywhere without these three items. And always have your blackberry (and personal cell phone) set on vibrate.
Because you are just starting out, no one really knows what you are capable of. So chances are that you will be given one off projects where you will do simple tasks like build company profiles or perform a simple analysis on an M&A deal.
To be given more responsibility, especially on a deal or an important pitch, you have to show that you can learn quickly and execute well. And you need to show you are a team player who never complains. If you don’t understand something, don’t hesitate to ask, however make sure to truly understand it the first time. Asking questions is a good thing, however asking the same questions over and over is a red-flag (and runs the risk of annoying full time analysts who are your most important allies). Additionally, if you ever see an analyst or associate do something, learn how to do it as well. This will save you and them time in the future. Ask for help. There is no point in trying to figure something out on your own that someone else could show you how to in 10 minutes. You aren’t proving yourself by doing something like that. Chances are that you are just wasting time. You will quickly learn that time is the most valuable asset in banking. The more time you save your colleagues the more of an asset you are.
The hours are long, and the stress levels are always elevated. There are always the complainers. Don’t be that guy or gal. Especially not during a short internship. If you are asked to do something, be grateful that you are getting the chance to prove yourself and not that you have one more thing to do.
Moreover the idea of face-time, where people show that they are putting in long hours even if they aren’t busy, only goes so far. If you don’t have tasks, and are not staffed on any deals, it’s ideal to make sure to wait until your seniors have left the office or have told you to leave. It’s also appreciated if you check in with full-time analysts or associates who are working late, and offer to help. However, if there is a deal team working on something until 1 am and you aren’t on the deal, it’s ok to go home (after you offered to help). Don’t just stick around for the sake of being around.
Navigating Live Deals and Interactions with the Team
The staffer is the person in a group that is responsible for placing analysts and associates on deal teams. MD’s and Directors typically have a VP that works specifically with them on most projects and so VPs are not typically staffed. A deal team is typically made up of a MD or Director, who sourced the deal and is an expert in the industry (even within a coverage group there are even more specific verticals), their chosen VP, an associate, and an analyst. You as the intern act as a resource below the analyst doing whatever is needed. In equity transactions there will also be a deal team from the equity capital markets (ECM) group to assist, however capital markets teams aren’t typically as big and are often missing a VP or an Associate, so most of the leg work on the deal is handled by the industry group. In an M&A transaction, depending on the group, you will likely have a full M&A deal team also working alongside the coverage team on the financial model and doing diligence.
The Managing Director (MD) or Director determines the nature of the deliverables (which are almost always financial analyses in the form of a Power Point presentation backed by a financial excel model). The VP is then responsible for managing the process and assigning specific tasks to the associate and analyst to build out the end product. The analyst is often the person actually building the financial model and Power Point, while the associate is responsible for ensuring the math and materials are thoroughly checked before it reaches the vice president (VP). I worked in a group that tended to over-index in equity transactions. As a result, I got to see the IPO process very closely from inception to pricing and trading on the exchange.
As an intern I was initially assigned to full time analysts and received most of the guidance on work from the analyst or associate, with limited interaction with the VP and MD. As my work got better and I received more responsibility, I was eventually staffed on a deal without a full-time analyst as oversight and acted as the primary analyst on the team. This allowed me to interact with the VP more closely as well as to receive direct guidance from the MD. This responsibility was also stressful because now I was accountable for a higher level of work output and had one less safety net. It also meant receiving emails from the MD at 4 or 5 am (they typically have kids and wake up early) regarding things they wanted to see as soon as they were in the office. In the most internship projects, the summer analyst would rarely interact with anyone above the VP position, and instead be well buffered by the full-time analyst, with the associate and VP as two layers of buffer that made sure work was perfect and error free.
I had one extremely stressful situation when the associate on the deal that I was working on was out of the office, and I was the only staffed analyst on the deal. We had just had a conference call with the client on how they felt about the pitch deck we were preparing for them. They had multiple slides they wanted either thrown out or re-created. Half the deck was to be torn apart or created in a 30-slide deck. We were also told to get it back to them by our call again at 7 pm that night, which was in 5 hours. As soon as the call ended, I feverishly began editing the slides that needed to be changed, but was soon called into the room with the MD and VP on how to go about it. This review took about an hour and after which there were still three slides for which I was given general guidance with limited specifics on how to do things. This meant it was up to me to use judgment as to what I thought would work. Now the ability to get creative and put your thought into work is very limited at the analyst position, especially during an internship. It’s the MD’s and VP’s job to do that. This was a very big responsibility because now if the client didn’t like the slides, the blame may trickle down to me. The last hour leading up to the call was spent with the VP and MD standing over me on either side of me watching me type and try to furiously complete the task at hand. When I finally finished, it felt very rewarding that the client liked what I had done. It was the most stressful 4 hours I had to go through at the office.
When the client was finally pitching investors a week later, there were a final few changes they wanted done the night before the deck was to be presented, that came in late around 3 am, once the decks had already been completely reviewed by the MD and printed. When I got in the office the next morning I was told to make the changes, and get the final copy to the printing team in the San Francisco office as soon as possible. The SF office was waiting for the formal green light from my MD, and so they were really surprised to get the go-ahead from an analyst intern as the last authority on the deck. This spoke highly of the amount of trust the MD had in me as well, and to me was an indicator of how rewarding the job can be.
How to gauge how you are doing
The more responsibility you are the given over the course of summer, the better you are doing. Social fit is important but not enough to land you an offer. The most important attribute is your work ethic and ability to deliver. At the same time, try not to be the person that keeps their head down the whole time and makes no friends. It’s critical for the team, especially the analysts and associates to get an impression that you would be an enjoyable addition to the bull-pen. The hours are long and so camaraderie, while not sufficient on it’s own, is important.
I was able to gauge how I was doing based on the feedback of the associate or VP I would work with on deals. I was once given a task of fixing charts on 5 slides that had the data sorted wrongly and was linked back to a master comps (public valuation multiples for comparable companies) file that was used by everyone in the group and was never to be touched. I had learnt a shortcut on how to quickly fix this issue earlier that day and so I completed the task in less than 10 minutes, and without any mistakes. The day earlier, it had taken me nearly 40 minutes. The associate when given the revised slides initially scoffed expecting errors, and then after checking the work he found it to be perfect to his surprise. He called me “dangerously fast” and remarked that the full-time analysts in the group should watch their jobs. This was high praise and an encouraging marker that I was doing well at the internship.
Another indication that I was doing well was my getting staffed on deals and projects without a full-time analyst as was the standard protocol.
The internship can often be an intimidating experience and so I found that periodically checking in with team members allowed me to get feedback on my performance and areas of improvement to ensure I was on track to receiving the full time offer at the end of summer. When I got it, I was delighted at the successful completion of a grueling, but rewarding ten week internship.