M&A Investment Banking is notoriously difficult to get into. Investment Banks can pick and choose who works for them. Every year there is a plethora of applicants ready to take on the challenge. If you think top-tier universities, such as Ivy Leagues, have a low acceptance rate, Investment Banks recruit from the top of the class at these target schools.
In reality, most of the selection is done at the resume stage. This is where most of the candidates are rejected. Once you are invited to an interview, it is yours to lose. Yes, there is still a lot of preparation work to be done, but the bank wants to get to know you better.
Here is a little secret: The entire recruiting process is about thinning the herd. It’s a war of attrition. There are a tone of hoops to jump through. That’s how you thin out the herd. There are only a few candidates that are stellar and tick all the boxes. These are the candidates who would immediately receive an offer. The majority of the candidates, however, are average. Sometimes they are good enough and sometimes not – but nothing too impressive. And then there are those who are unprepared. They get rejected right away at the end of the interview.
What does this mean for you? It’s a game of preparation. The more prepared you are, the more “luck” you will have and the more likely you will move into the top bucket. Getting into Investment Banking is about ticking all the boxes bankers want to see. You are more than likely than not competing against yourself than against all the other candidates. Chances are, your competition is trying to take shortcuts. If you outwork your competition and prepare better than they did, you will have an edge. We believe that everyone with the necessary worth ethic can break into Investment Banking.
With that said, what matters for Investment Banking recruiting?
Your GPA matters
Your internships matter
Your interview preparation matters
Your job performance matters
1. Your GPA matters
Being a college student, you are used to stressing about grades. You want to get the best marks possible. You are probably asking yourself what GPA is good enough to be competitive when looking for internships? Do banks have a cut-off GPA? How good do I have to be?
Most banks don’t have an official “cut-off” GPA, but there is a cut-off GPA in practice. At some point, your application is just not competitive enough. Cut-off means that the chances of being invited are rather slim. There are more candidates with higher GPAs than you. So, do whatever it takes to maintain a minimum GPA of 3.5 (US) or a British upper second-class (2:1). In ECTS grades, it would be anything above a B+. In German grades, stay above a 2.2 – preferably a 1.9 and above. You want to be in the top 20% of your class.
Special circumstances are rare. If you have stellar internships at M&A boutiques, your GPA can slip a bit beneath the target range. In other words, you can balance a slightly weaker GPA with relevant internship experience. But the general rule is to keep your GPA in those corridors. That’s how you are the most competitive regarding your GPA.
Why is GPA so important for recruiting? Because GPA is the closest proxy for effort over time – aka long-term discipline and grit. Looking at a first- or second-year student with next to no work experience, GPA is the quickest proxy. The GPA covers the longest period. It’s about the duration. The bigger the sample size, the more likely it reflects your long-term character.
But here is the caveat. Don’t go overboard trying to be an A or A+ student. This will hurt your interview prep because you have to work exponentially harder to squeeze out an A or A+. Better to just stick with a B+ to A- and then pivot to interview prep. Taking super difficult quantitative finance classes where everyone passes with a C will hurt your GPA and overall profile. Recruiters don’t look at your course curriculum. Recruiters look at your GPA and then move on.
Your GPA, albeit important, is only getting you the interview – not the job. Most of your classes in your “Finance” or “Business Administration” degree won’t matter for Investment Banking recruiting. It’s best to take some relevant classes so you can highlight your interest in finance and then move to easier classes, where you have a higher probability of scoring high grades. This will give you more time for interview prep and a better overall GPA.
2. Your internships matter
Summers are for internships. Not Breaks.
So, your first college year is coming to an end and you feel like relaxing. Well, you are out of luck. Summers are opportunities to collect internship experiences to build your profile. You can’t just take a three-month break doing nothing while your competition is interning at various M&A shops. You need to have something lined up for May, July and August when the semester ends.
After all, one of the most important aspects of landing an Investment Banking job is having relevant internships. This is your biggest bargaining chip. Each academic year, start planning for your summer as early as possible. Investment Banking recruiting at larger institutions already kicks off in September. Most slots at larger institutions are allocated by November or December. Recruiting is on a rolling basis and not per deadline. If the bank finds suitable candidates, they will extend offers and fill their slots. This is why it’s so important to be prepared ahead of time. Recruiting cycles move faster than you think.
Most incoming Analysts were Summer Interns
Now, you might ask why are internships so important? Internships are extended job interviews and most banks hire most full-time Analysts from their internship pool. During the summer internship, the bank gets a very good impression of what they are getting with relatively low risks. The bank had about three months to test drive their candidates to see how they perform and fit into the team. If you don’t have internship experience, you are competing against that alumni internship pool. That’s why you need internship experience from other shops in the industry to put yourself on an equal footing. Everyone who eventually gets hired as a full-timer has internship experience.
In other words, if you don’t have any relevant experience, GET relevant experience. If you can’t land an Investment Banking internship right away, build your resume towards finance and transaction-based business. Start with an internship at Big4 accounting or Big4 transaction services and then move into smaller M&A boutiques. Having relevant finance internships under your belt will make your life a lot easier. That’s how you show that you are interested in finance and slowly build your resume around finance – one internship at a time.
3. Your interview prep matters
Investment Banking interviews are about thinning the herd. It’s not about finding the perfect candidate with potential. It’s about weeding out the unprepared candidates who don’t know what they are interviewing for. Would they be able to do the job with enough training? Yes. But other candidates were better prepared and sold themselves better. Keep that in mind.
Interviewers are constantly looking for any indicators for why you might not be a good candidate. This means anytime you answer a question and the interviewer does not like your response, you may get rejected behind closed doors. This means preparation is crucial. You can’t just wing it. You have to know what you are doing before you walk into an interview. Yes, there is an incredible amount of preparation. However, keep in mind that most candidates are just average. You can outwork them.
Overall, there are two different types of questions:
Fit questions: These questions revolve around your story and “behavioral questions”. We want to figure out why you want to do Investment Banking and whether you are a hard-working individual. Fit questions are more about sales rather than clear-cut right or wrong answers. There is no right or wrong with fit questions. However, there are more convincing and less convincing answers. For fit questions, you are looking at: your story, strengths and weaknesses, leadership questions, commitment questions and “Do you have any questions?”
Technical questions: Here, we want to see whether you have a basic understanding of accounting, valuation and Investment Banking. These are hard right or wrong questions. Most people are more comfortable with these questions because there are clear right or wrong answers – similar to college exams. Either you know the answer or you don’t. There is no room to wiggle yourself out. For technical questions, you are looking at accounting, valuation (enterprise value, multiple valuations, DCF) and understanding Investment Banking
This is a high-level overview of what you can expect. Investment Banking interviews follow the same predictable structure over and over again.
Your average Investment Banking recruiting process will consist of some sort of pre-screening routine. This would be your first round and can be anything from a quick office visit or a phone screening. This is a quick screening to see whether this person is normal and knows what they are interviewing for.
In round 2, you usually get invited to an onsite interview. By now, the bank knows who they want and who they don’t want. You will be challenged and grilled much more. You will be asked much more challenging questions. We want to filter out the wannabes from the candidates who would run through a brick wall to get what they want. Once you get invited to an onsite interview, everyone is equal. How you got there does not matter. Your past and your grades don’t matter anymore. You alone can make or break it. It is your job to lose.
If you are looking for an interview cheat sheet, here are the 42 most common interview questions.
4. Your job performance matters
Internship season. The time when you get to suit up and switch campus life with a posh downtown office. It’s just an internship. In three months, you are back on campus. What could possibly go wrong, you ask? Well, internships are extended job interviews. This is serious business. A full-time offer can change your life. During summer internships, the bank gets a very good impression of what they are getting. The bank has about three months to test drive you to see whether you have what it takes and fit into the team. You need to hit the ground running and not fumble with careless errors. Your job performance and especially your first impression matters. You want to establish yourself as a strong performer from day one.
Investment Banks hire extremely conservative. It’s better to leave a slot empty than hire a candidate the team is not fully convinced of. A wrong hire is extremely expensive for the bank. You spend money and time hiring, training, firing and re-hiring two people for one position. In hindsight, it is better not to extend that offer to lukewarm candidates.
What does that mean for you? You need to take your internship seriously. This is serious business that could change your life. “Do I trust you?” – This is the big question that determines whether you receive an offer or not. Can I trust this person to deliver this item without a single formatting error and without a single typo on time without asking too many questions? That is that bar. Once you submit your final product, it better be error-free. Do everything you can to prevent any type of careless errors. If the numbers don’t match up, it means that the entire item requires a thorough check for further capital errors, which renders your work almost useless. This is not a college essay. This is serious business. No careless errors allowed.
Now that we’ve set the stage for job performance, here is a quick checklist to impress your higher-ups:
Keep a good attitude, always be happy to help and NEVER complain. Nobody wants to work with a grumpy and entitled junior who thinks he is too good for simple tasks. Respond immediately to emails with “Will Do”. That way, people will know you’ve read the email
Don’t ask dumb questions. Try to figure it out by yourself first. Google for at least 15 minutes before you consider asking someone
When you have questions, write them all down and ask them all in one go. One single email or one knock at the door to clarify all of them at once. The key is not to waste the time of your Senior Bankers
Triple-check your work before submitting it. Take a highlighter and markdown every item that needs to be completed. Never miss any item that is being handed down to you. Next, check whether the numbers and currencies match. This is very important. If your numbers don’t match up, everyone will think that you are careless. You are working at an Investment Bank. It’s their job to get the numbers right. Then you check for typos and formatting. Only copy/paste company names and names of CEOs
Write down your mistakes. You will mess up several times on the job. There is no way around it. We all start at some point. When your seniors point out a mistake, admit your fault. Don’t beat around the bush trying to cover things up. Say sorry and that it won’t happen again. Take note of that mistake and the person who pointed it out. The next time you submit an item to that person, make sure the same mistake does not happen again. This is how you slowly create trust
This was a quick cheat sheet on what to pay attention to when you start interning. Don’t complain, submit error-free work, take diligent notes of your mistakes and you will slowly earn the trust of the bankers. This will get you closer to an offer to get you into Investment Banking.
Where does it leave us?
To get into Investment Banking, you need to get all your ducks lined up. To recap, here are the boxes you must tick:
First, get your GPA in-line. You must be competitive. Aim to be part of the top 20% of your class. However, don’t go overboard and try to be an A+ student. B+ to A- is roughly fine. Go ahead and take easier classes. Everybody looks at your GPA. Nobody looks at your course curriculum. Once your GPA is in-line, switch to targeted interview prep.
Understand that internships matter. You need to strategically build your CV with relevant internships. Don’t just take a break during summers. Most full-time Analysts were former Summer Interns. You need to have something lined up for your summer, so start as early as possible. Either you manage to directly break into Investment Banking right away or you take a detour via Big4 accounting or transaction services.
Prepare for your interviews thoroughly and ahead of time. Investment Banks receive a ton of applications and can pick and choose who works for them. You need to say what they want to hear. Lucky for you, the majority of the candidates are mostly “ok”. So, if you put in the effort and outwork your competition, you will have an edge.
Once you are on-the-job, take your internship seriously. This is serious business. This is an extended job interview. Keep a good attitude. Don’t ask dumb questions (try Google first). Don’t waste people’s time: collect your questions and ask them all at once. Triple-check your work before submitting it. Write down your mistakes and never make the same mistake twice.
This is the most straightforward path to get into Investment Banking from scratch. It’s not rocket science. It’s a set body of knowledge you need to master. With the proper knowledge and work ethic, you can outwork your competition and make the leap.
Additional resources
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