This blog post may come off as sour grapes from my two years as an investment banking analyst, but I'm going to go ahead and tell anyone who will listen why working as an investment banker isn't all its cracked up to be - specifically an M&A banker.
~25% of students at top business schools are hoping to enter the investment banking world. I have no idea why that is, but I suspect that it has a lot to do with money. The list below is why I think people want to go into banking:
1) Money: Investment bankers get paid an obscene amount of money by any standard. I know money is why I was interested coming out of undergrad. I actually think that this is a great reason to become a banker and is ideal if you are looking for an easy cash cow. That's right, I said EASY. Despite how many hours you work as a banker, the job is pretty easy and requires little actual thought. Developing a positioning statement is probably the most thinking involved. Building models is fairly mind numbing at the end of the day and usually punted off to an analyst who uses some LBO template that allows you to plug and chug.
2) Prestige: Most applicants to i-banking jobs have no idea what they are getting themselves into. They venture forth into the world because they saw Wall Street or they heard it was the thing to do. Working at Goldman for two years will do wonders for the resume.
3) Learning: I'm going to go ahead and call people out on this. No one coming out of business school is going into banking just to learn. You are probably going because of numbers 1 and 2. I'm not saying that you don't learn, i'm just saying that it is probably not your primary motivation. Personally, I spewed that nonsense in interviews and I learned a ton, but I probably could have learned just as much as a strategy consultant.
So why is the title of this blog post "Investment Bankers are Glorified Real Estate Agents"?
On a day to day basis, M&A bankers are responsible for matching up buyers of companies with sellers of companies. Real estate agents do the exact same thing, except they work with houses. The banking process isn't that much more complicated.
Bankers/RE agents are out trying to get clients by pitching anybody who will give them time. They are on the hunt for the next business/house about to be sold and they want to represent the company/home. They do everything for the business/home owners and cultivate relationships over several years. Once they get your business, they create marketing materials and pimp your Company/House to whoever listens. Their goal is to create an auction or bidding war. They handle all inbound inquiries and run your company/house through a dog and pony show to get people interested and bidding more. They each make money on commission, usually as a % of the total value. If they are representing the buy-side, they are always on the hunt for businesses/houses that fit your needs.
Sooo, what am I suggesting. Probably nothing outside of the fact that M&A bankers are glorified real estate agents. I don't think I am saying anything novel, but people who are doing investment banking are bound to be offended because they spend all this time recruiting and gunning to become the next great banker. You should probably invest your time wisely and do what you would do as a managing director at an investment bank...get a real estate license and become a broker. You can probably do just as well if you dedicate 80-90 hours a week to the job.
If you don't think you would be good as a real estate agent, you should seriously consider whether or not banking is the field for you because that the work real estate agents do is the same as the work managing directors at all the bulge shops do. If your are ok killing yourself to get to that point...more power to you.
~25% of students at top business schools are hoping to enter the investment banking world. I have no idea why that is, but I suspect that it has a lot to do with money. The list below is why I think people want to go into banking:
1) Money: Investment bankers get paid an obscene amount of money by any standard. I know money is why I was interested coming out of undergrad. I actually think that this is a great reason to become a banker and is ideal if you are looking for an easy cash cow. That's right, I said EASY. Despite how many hours you work as a banker, the job is pretty easy and requires little actual thought. Developing a positioning statement is probably the most thinking involved. Building models is fairly mind numbing at the end of the day and usually punted off to an analyst who uses some LBO template that allows you to plug and chug.
2) Prestige: Most applicants to i-banking jobs have no idea what they are getting themselves into. They venture forth into the world because they saw Wall Street or they heard it was the thing to do. Working at Goldman for two years will do wonders for the resume.
3) Learning: I'm going to go ahead and call people out on this. No one coming out of business school is going into banking just to learn. You are probably going because of numbers 1 and 2. I'm not saying that you don't learn, i'm just saying that it is probably not your primary motivation. Personally, I spewed that nonsense in interviews and I learned a ton, but I probably could have learned just as much as a strategy consultant.
So why is the title of this blog post "Investment Bankers are Glorified Real Estate Agents"?
On a day to day basis, M&A bankers are responsible for matching up buyers of companies with sellers of companies. Real estate agents do the exact same thing, except they work with houses. The banking process isn't that much more complicated.
Bankers/RE agents are out trying to get clients by pitching anybody who will give them time. They are on the hunt for the next business/house about to be sold and they want to represent the company/home. They do everything for the business/home owners and cultivate relationships over several years. Once they get your business, they create marketing materials and pimp your Company/House to whoever listens. Their goal is to create an auction or bidding war. They handle all inbound inquiries and run your company/house through a dog and pony show to get people interested and bidding more. They each make money on commission, usually as a % of the total value. If they are representing the buy-side, they are always on the hunt for businesses/houses that fit your needs.
Sooo, what am I suggesting. Probably nothing outside of the fact that M&A bankers are glorified real estate agents. I don't think I am saying anything novel, but people who are doing investment banking are bound to be offended because they spend all this time recruiting and gunning to become the next great banker. You should probably invest your time wisely and do what you would do as a managing director at an investment bank...get a real estate license and become a broker. You can probably do just as well if you dedicate 80-90 hours a week to the job.
If you don't think you would be good as a real estate agent, you should seriously consider whether or not banking is the field for you because that the work real estate agents do is the same as the work managing directors at all the bulge shops do. If your are ok killing yourself to get to that point...more power to you.
