For those new graduates thinking about a career in investment banking, there are different parts of this industry you can focus on: investment banking with a bulge bracket, regional or boutique firm. Or there is the investment banking side of commercial banking. Being on the other side, the buy side, is just as cool, and maybe even more prosperous. Private equity, family offices with PE divisions, companies with a PE group and university endowments all have their appeal.
Each has its own culture. And culture is tremendously important to your success. Culture is hard to describe and, in my view, can only be experienced. I would suggest that you take interest and aptitude tests as a starting point. Then, if you look like a fit, try to interview with all of them. Your personality, drive, and goals must match those of your employer or you’ll both be unhappy.
A boutique firm like this one is very very different than a bulge bracket firm or a regional investment bank. There are vast differences between the commercial banks as well. Within a large firm you can focus on a specialty within corporate finance: debt capital markets, equity, mergers and acquisitions, or restructuring and reorganization. At a smaller firm like PegasusICS, you would do it all, as they are, in our view, closely related.
Be aware that it is not an easy path to walk. It takes innate, upper single-digit percentile ranking in numerical reasoning, people skills, emotional intelligence (if you want to be a rainmaker), immense drive, tenacity, and a belief in yourself.
But there are universal truths. You have to be smart. You have to work hard and love what you do. There must be a part of you that loves the thrill of the chase, and solving problems. You must be able to pick yourself up after suffering a set back and dust yourself off and go right back at it.
You must also have sufficient self confidence that you can admit when you don’t know something. I tell analysts that they should only bring me right answers. I can get wrong answers for free and save paying their salary. If you know the answer, wonderful. If you don’t, say you will get back to me. Know what you don’t know.
I would also add that you must be very, very honest. To me, honesty is our secret sauce. Too many people aren’t. It differentiates us. Money – as it was put to me by a senior banker when I was an analyst – is a very serious matter. Whether someone is borrowing it or lending it, you want to rely on the word of the other party across the table from you when you are dealing with money. A corollary here is that you should never work for people that aren’t honest. That means an employer, boss or client.
Integrity is only part of it. Being forthright is the other part. To be forthright is to offer information that the other party needs to make a decision. You can be honest and still not be forthright. Strive to be both honest and forthright, work hard, and think more about your client than you do for yourself. Be willing to throw yourself on a hand grenade for them. Make them a lot of money. They will like you for it. It’s hard not to like people that make you a lot of money. And that will earn you a clientele.
As I have told my analysts over the years, by the time you are in your forties and fifties, you will have a reputation whether you like it or not. Make sure its a good one. If you do, your life’s work will make your later years easier, and business will flow to you.
Lastly, I strongly recommend that you get a mentor. This should be someone that knows the industry and that you trust. While there are constant innovations being made, much of the skill set has to be acquired by learning from someone that themselves was taught them. This is apprenticeship. Your mentor can also tell you who’s who. This is hard earned knowledge, and is very valuable in a knowledge industry like this one. Be loyal to the people that take care of you. And good luck.
by Charles SmithMr. Smith is the founder of Pegasus Intellectual Capital Solutions, a boutique investment bank specializing in mergers and acquisitions, Capital Raising and restructuring and workouts. The firm is an innovator in the use of Intellectual Capital Audit for pre-closing due diligence and in turnarounds. Charles can be reached at email@example.com