You landed an internship offer, congrats! Getting an internship is not easy nowadays. Investment Banking recruiting is tough. If you accept your first internship offer and still interview with other options, that will put you at risk of reneging on your first internship offer. This means you have to back out of the verbal, written or signed commitment you made to your first offer.
We get it; applying is hard work. Preparing for interviews is hard work. Superdays are grueling. Interviewing requires a bit of luck on top of that. Then you are presented with an exploding offer. You might get tempted just to accept the first offer that comes along and keep it as a fallback option. Then, you keep looking for greener pastures while your base is covered. Once you get that new and better offer, you just renege on your old offer. Sounds easy, right? Keep on reading and we’ll show you how to renege an internship offer and when it makes sense.
How to renege an internship offer
Suppose you get your better offer. The firm’s reputation is better. The job function is more to your liking. The pay is better. So, how do you get out of your first offer?
If it’s a verbal agreement or a simple written email, it’s easy. Just call them and tell them that you have changed your mind because of XYZ. No strings attached. The other side will not be happy, but you just reneged your agreement. Send them an email to schedule a call and tell them the bad news over the phone. This will show them that you have given this decision thought and aren’t doing it lightheartedly. Tell them you have decided to go with a competing offer. For internship offers, don’t expect a counteroffer.
If it’s a signed contract, it’s a little bit more complicated but doable. It’s more complicated because you have a contractual agreement you need to get out of. Worst case, you have to show up for the termination notice period, but that rarely happens. Give them a call and explain why you want to go with another offer. Given that your internship lasts 3-6 months, most companies won’t care and just renege the contract. Nobody wants an employee at a company who does not want to be there.
What happens when you renege an internship offer?
Yes, reneging on an accepted internship offer is easy, especially if you have a better offer on the table. However, before you go ahead and pull the trigger, here are a couple of consequences to keep in mind. You want to make sure that the upsides outweigh the downsides.
While you are not guilty of breaking the law, reneging on an accepted internship offer carries a bad taste. The main point is that you did not commit to your verbal or written agreement. Once you have accepted a job offer, people expect you to follow through with your commitment.
The rejecting side will not be pleased with your decision. Here is what’s going to happen:
The company you applied for
The worst thing that can happen is that people remember your face and you might get blacklisted. The next time you apply, don’t expect to get invited. This is more likely at smaller boutiques, where the Partners and Senior Bankers remain the same over the years. No one will notice if you are changing industries because the people are different. You can mitigate the company-specific consequences by researching other alternative companies within the industry for your next recruiting cycle.
Companies are upset about reneged offers because recruiting takes time and effort. It takes time to collect applications, screen them, interview them and interview them some more just to have your top pick bail on you last minute after agreeing. Understandably, the hiring company will be upset.
HINT: This is why Investment Banks challenge your story and why fit questions are so important. You only want to hand out internship offers to those who want to work in Investment Banking and at that bank specifically. Having someone bail last minute is the worst thing that can happen.
Campus recruiting team
This is where things get complicated. Your school will get upset with you if you renege an offer. The professionals recruiting at your school are most likely alumni. Everyone wants to maintain a good relationship with everyone. The school wants to look good to maintain its target school status. The alumni at that company want to keep recruiting at their alma mater. If you renege an offer with campus recruiting, you will most likely be excluded from campus recruiting activities for your next recruiting cycle. If you go through campus recruiting, you get preferential access to certain companies. On the flip side, you are forced to honor your offer once you have accepted it verbally or in written form. Your campus recruiting team will try to shame you with “ethical” reasons not to renege an offer. It’s understandable because reneging makes them and the recruiting company look bad. Nobody wins and everyone loses. How can you mitigate this point? If you go through campus recruiting and still want to use it going forward, there is nothing you can do. If you landed your internship offer through an open job posting, this point is irrelevant. You sourced the opportunity all by yourself. No campus recruiting team is involved or to get upset about you.
When should you renege an internship offer?
Now, let’s talk about you and your situation. You are the last part of this equation and must live with your choice. Reneging an accepted offer means you will burn bridges with that particular company. Ideally, you have a better alternative offer lined up.
But how do you decide between different offers? Here are three factors to consider:
1. Job function and industry
This should be a reason to renege an offer. You only have 2-3 summers to build your CV. Having the right internship makes a lot of difference in full-time recruiting. If you know what you want and are serious about getting into Investment Banking, why shouldn’t you choose the best possible option? Say you have agreed to an internship at a controlling department. However, deep down, you want to break into Investment Banking. Then, a middle market M&A shop makes you an offer. In that case, you should renege your first offer. M&A offers better career perspectives and better pay compared to controlling.
2. Firm’s reputation and prestige
Assuming job function and industry are similar, this one is a little bit fuzzy and not clear-cut. The general rule is that if the difference in reputation is a large step function up, by all means, go with the more prestigious firm. This option will open more doors. Keep in mind, we are talking about large differences, such as a smaller no-name regional boutique vs. bulge bracket and elite boutiques. If the two companies are two comparable middle-market boutiques, it’s not worth the hassle.
3. Pay
This shouldn’t be a deciding factor. In short, it usually does not make a difference. Building your CV and picking the right industry that suits you should be the higher priority. Internships don’t pay very well and should be viewed as a steppingstone. Job function and industry should be the more relevant driver. Do you want to work in this industry? Will you be good in this line of work? Is the work bearable in the long run? Additionally, pay is a function of job function and industry. M&A Investment Banking and top-tier Management Consulting will always pay more than accounting and controlling.
What are your alternatives to reneging?
Ask for an extension on your first offer
Decline the first offer and keep on recruiting
Decline the new offer
1. Ask for an extension on your first offer
The best alternative to reneging on an accepted offer is not to put yourself in a situation where you are forced to renege an offer. Don’t accept your first offer right away. Ask for some time to think about it before making your final decision. You can be honest and tell them that you are also interviewing with other companies and want to make an informed decision on your next career move. If it’s an exploding offer, this is how you handle it.
Ideally, final interviews are scheduled with your runner-up (who you like better). Then you go to the second company and say that you have just received an offer and whether it’s possible to accelerate your application process.
Suppose you get a second offer from that company, great! If you don’t get the second offer or the second company takes too long and you need the internship, you are forced to accept the first offer. Then you can complete the recruiting process at the second company and see what happens.
2. Decline the first offer and keep on recruiting
Declining the first offer and keeping on recruiting is a clean and compliant solution. However, this option makes more sense for a professional who already has a job and does not need an offer.
If you are recruiting for an internship and you need that internship, this might be a risky move depending on how much time you have left. As the saying goes: “A bird in the hand is worth two in the bush”. If it’s already February and you need an internship in May, you probably have to accept that offer. If it’s still October and you are looking for something in May next year, you might get away with rejecting that offer without reneging.
The question here is how confident you are in recruiting yourself an alternative. You don’t want to push your luck so hard that you are left standing without a relevant internship by the time summer rolls around.
3. Decline the new offer
Declining the new offer is also a clean solution. You have already accepted an internship offer, but you have just received another one. You decide that it’s not worth going through the hassle of reneging your first offer. In this case, call the second company. Thank them for their offer and then tell them that you have decided to go with another offer. However, you are still interested in that specific company and would gladly apply for an internship in the next recruiting cycle. Under no circumstance do you tell them that you have already signed the other offer. Just tell them you have decided to go with another offer after a couple of days of consideration. That way, no feelings are hurt and you know that the second company is interested in you. That’s how you keep the door open for the next recruiting cycle.
Where does it leave us?
Reneging from an accepted internship offer is easy. You are usually just a phone call away from stepping down from your verbal or written commitment. Give them a call, tell them you have decided to go with another offer and move on. But beware of the consequences. You are going to burn some bridges. Your campus recruiting team might ban you from participating in campus recruiting during the next application cycle. The company you applied for might blacklist you.
Think long and hard before reneging on an offer. The only reasons we can think of are: (1) a job function and industry that matches your preferences significantly better (e.g., Investment Banking vs. controlling) or (2) a massive difference in prestige and reputation of the firm (bulge bracket vs. no-name regional boutique). In those two cases, the “doors opened” outweigh the “doors closed”.
Your alternatives to reneging on an already accepted offer are (1) asking for an extension on your first offer while not accepting it immediately. This becomes more difficult if you receive an exploding offer. (2) Decline the first offer and keep recruiting. This option makes sense if you have enough time left and are confident in your abilities to recruit a new offer. (3) Decline the new offer. Declining the new offer makes sense if both companies’ reputations are not far apart from each other. You can still apply for your more desired firm in the next recruiting cycle.
