Breaking into investment banking as a target and as a non-target are completely different games.
As a target, you can lazily rely on on-campus recruiting. Hundreds of alumni will be willing to chat with you. And you can join one of the many finance clubs at school.
As a non-target, you often have to make your own luck and play a longer, more arduous game in order to break into investment banking. You will likely need to network three or four times as much as your target school peers and your conversion rate on reaching out is going to be much lower. Your ultimate goal should still be to break into a top bulge bracket or elite boutique firm, but it would be extremely wise of you to reach out to a much wider list of firms.
As a non-target, you have to accept the reality that your chances of graduating into a top firm out of school are much lower.
That shouldn’t prevent you from knocking on every door that you can find, but in this post, we’d like to shine the spotlight on other categories of firms that non-targets end up at that are still great places to work.
And if you're at a non-target and thinking about private equity, you should really check out our Private Equity Recruiting Course.
The way we conducted this analysis was to extend our original analysis of investment banking target schools. We first looked at all of the U.S. investment banking analysts who graduated between 2014 and 2019, which gave us 6 years of data. We then sorted the data to identify which schools do consistently place into investment banking. We ranked all of the schools and determined that any school with above 30 investment banking hires at top firms over the past 6 years could reasonably be concluded as semi-target or target schools.
By top firms, we mean the highest paying investment banks that work on the largest deals. Firms like Goldman Sachs, Morgan Stanley, Evercore, etc. This is the same list of firms we used to determine our investment banking target school list.
30 hires at top firms over 6 years is by no means a "good" placement rate, but we’re treating it as the cutoff of what a reasonable finance program can place. The best performing target schools consistently placed 40-50 candidates every single year.
When surveying the data, we saw that there was a sharp cut-off at schools with fewer than 30 investment banking hires over the 6 year time horizon. Schools in this category tended to have very erratic hiring between years.
Just to be abundantly clear, we’re defining a non-target school as a school with <30 investment banking hires into top firms over the last 6 years.
This includes schools like:
University of Florida (which actually still has a great finance program, but it’s very small)
Texas A&M University
The University of Georgia
Claremont McKenna College
These are overall good schools with capable students, but they might not necessarily have a strong finance recruiting system or sufficient alumni in the industry.
Again, it’s not impossible to place into the top firms from these schools (as students from these schools still consistently do so every year), but it is meaningfully harder to do so and might only be accomplished by the very top finance students at each school.
Where do Non-Targets Place?
So what we did was look at all of the placements of students from these non-target schools. We then stripped out the placements to top firms.
Our goal here is to identify which lesser known investment banking firms commonly hire non-targets.
Investment banking is a huge industry. As a newbie or student, it’s understandable to not have a great understanding of the landscape, but there is a very large number of investment banking firms that do small deals. The most recognizable top firms work on the mega deals, but many respectable firms focus on small asset deals and regional deals.
The thing is, many students waste all of their networking effort chasing the big firms. If you're a non-target, you need to reach out to both big firms and these lesser known firms.
What you need to do is play to your expected value and reach out to investment banks who want to hire talented individuals and have less demand from applicants.
Upon surveying the list of firms, you can roughly categorize the firms that hire lots of non-targets into the following buckets:
Middle Market Firms
Alpha Capital Holdings
Regional / Industry Focused Players
SunTrust Robinson Humphrey
Financial Technology Partners
Union Square Advisors
Foreign Banks trying to break into the U.S.
Accounting Firms / Financial Institutions with advisory divisions
Duff & Phelps
Citizens Financial Group
Capstone Partners (formerly part of Arthur Andersen)
Let this be a general framework for you as you’re researching firms.
These are the types of firms that tend to fly under the radar but offer attractive career opportunities.
These are all firms that still do investment banking deals and will give you all the training you need to break into the buyside. They also garner way less attention than the biggest investment banks, making them much easier to reach out to as a non-target.
The data we’ve scraped from LinkedIn supports this notion. And anecdotally, I’ve seen way more non-targets at these firms. Many people will lateral after a year or two at one of these firms, sometimes in a regional office, in order to break into a top firm in a Tier 1 City. The road is a little longer, but it's definitely possible to lateral if you employ the right strategies.
Another great thing about these firms is that they tend to have smaller investment banking organizations, so there are fewer decision makers you have to network with. It’s easier to reach out to someone and know that your efforts are actually making a difference. Trying to network into a large bulge bracket can be extremely annoying because it’s less clear who actually has the authority to make a hiring decision.
What do These Firms Have in Common?
The list above is a great place to start, but you should be reaching out to 50-100 firms as a non-target if you want a solid chance of landing a place.
In general, as a non-target, you should really be looking for firms with the following characteristics:
Actually does investment banking deals
It doesn’t really matter what firm you’re at as long as you’re actually getting deal experience. You can be at a Big 4 firm or abroad at an unknown firm. As long as you’re getting deal experience, you’re moving your career forward and building tangible skills. Make sure that whichever firm or office you’re going to at least does a few deals per year. You can verify this by checking the firm’s website, checking news, or Googling for league tables.
Track record of people lateraling to top firms
If your ultimate goal is to break into a top firm, you should obviously make sure that the firm you’re going to has a track record of lateralling. You can verify this by looking at the last 5 years of LinkedIn data from the firm. Do analysts actually have a decent chance of leaving?
Some firms might be in bad geographies, not have deal flow, or have senior people who actively prevent recruiting, which are all factors that would limit your career.
Hires at least 5 analysts per year
From an expected value standpoint, it’s helpful if the firm hires at least 5 analysts per year across its offices. This is already a really small number, but this number generally means that there’s room to network into. Firms that only have 1 or 2 analysts per year can be really tough to break into because there’s almost always some reserved spots for relationship hires (at every firm in finance).
Don't be afraid to play the long game with your career. Tons of people lateral to the top investment banking firms after a year or two working elsewhere. There’s so much attrition in finance that as long as you’ve landed a finance advisory role out of school, you can eventually climb your way to the top.
As a non-target, it really makes a ton of sense to focus on opportunities and firms that others might not be as focused on. Even if you’re at a target school, you might potentially be late to recruiting in finance, in which case this list of firms would also be a very logical target.