Search Results

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview As the most junior member of almost any team – whether in investment banking, private equity and even in non-finance roles – you’ll most likely be responsible for taking notes on a ton of calls. Before you have a strong grasp on the technical details and the analysis, your greatest value add on team calls will be via organization and thoroughness. And it’s important you take good notes because it can be the earliest reflection of your standard of care. A lot of the time you spend as an investment banking analyst will be on calls, so it's important to make sure you're contributing while on them. It might seem like note-taking is obvious and intuitive, but here are a couple of tips that can still help you stand out. These are some easy small things that collectively can help you appear more organized and more professional. We also recommend that you check out our Valuation and Finance Starter Kit if you're looking for a complete technical course. This course will teach you how to build a discounted cash flow, build financial models, and research public companies. 1. Include the date, topic, and relevant attendees Let's start with the super simple. Put the date, topic, and relevant attendees at the very top of the page. Relevant attendees can be helpful because it can highlight the level of involvement of a group. For example, if you’re an investment bank trying to sell a company and the partner from the private equity firm you’re trying to sell to keeps missing calls for that deal, it’s a potential sign they aren’t super interested. Many investment banks running a sell-side process will keep a buyer's log, in which they track the activity of the senior private equity professionals. 2. Remove all marketing language and unnecessary jargon You’ll notice that on a lot of management calls, many people will use a ton of marketing language and unnecessarily flowery descriptors, especially on earnings calls. When you’re taking notes, you should try to write as directly as possible so the eventual reader can absorb information as efficiently as possible. Your goal is to be concise and deliver a clean page of notes, so get rid of adjectives and unnecessary jargon. The below excerpt is from the Starbucks Q1 2020 earnings call transcript: “Q1 was an exceptional quarter for Starbucks. The positive business momentum we've created over the past fiscal year continues with a strong start to fiscal 2020. These results were fueled by a healthy balance of comparable sales growth and new store development, as well as continued expansion of our Global Coffee Alliance with Nestle. I'm especially pleased that we delivered meaningful margin expansion in the quarter, even as we continued to invest in the key areas to support sustainable growth, first and foremost in our partners as well as in beverage innovation and digital customer relationships.” You could cut that down to: Strong Q1 results driven by comp sales growth, new stores, and Nestle partnership (Global Coffee Alliance) Positive margin expansion in Q1 3. Give special attention to any concrete numbers that are mentioned It can be tedious and somewhat pointless to take notes on everything that happens during a call, particularly a long call. But numbers are the one thing that you can’t reverse engineer and take an educated guess at. You should definitely try get down any and all numbers that are mentioned on the call. You don’t have to write down numbers that will be printed on materials (e.g. on a press release). 4. Give special attention every time something is asked You should always take notes when someone asks a question, because more often than not, it’ll reflect what people are actually thinking about. I like to write down the question, answer and whoever asked the question: Q: TMT Partner asked about the planned R&D spending during Q2 2021 A: Exact company forecast still TBD, but all of 2021 expected to be $17mm (+5% YoY) 5. For public company calls, cross-reference your notes with transcripts and filings If you’re dealing with a public company and you aren’t sure about a particular detail, you can always quickly check with the official transcript or filing. Going through the transcript can also help you ensure that you covered all of the main details. In general, doing a quick Google check on numbers that seem peculiar or off can also be a good way to double check what you think you heard. 6. If relevant, group information by topic as opposed to chronologically For long calls that meander back and forth between topics, reading the straight transcript can be confusing for some readers. In private equity, I found myself doing a lot of expert calls, where you speak with an industry expert. The conversations would typically oscillate quite a bit and if I were delivering my notes to a senior partner, I would clean them to group them by topics. It’s a little time consuming, but can make notes much more digestible. I don't think it's necessary to go through the work of categorizing information for shorter calls (like 30 minutes or so). There generally won't be enough bullet points to have to sort through. 7. Format your notes cleanly Formatting is one of the easiest ways to deceive someone into thinking that your work is better than it is. Formatting communicates that you care about a work product and you can get a lot of points if you just develop a couple of your own clean templates. I would recommend the following practices: Title the document / e-mail with the project, main topic and call date Bold and underline headers Use bullet points and sub-bullet points If notes are in a document, attach both Word (if someone wants to amend something) and PDF (if someone wants to read on phone) 8. If it’s an important call or meeting, take the time to scrub your notes Lastly, if it is going to be an important set of notes, take the time to scrub through them and make sure they’re comprehensible by someone who wasn’t on the call. People generally speak between 125-150 words per minute and most people type below 100 words per minute, so you’re bound to make some mistakes or grammar shortcuts when note taking. Scrubbing your notes helps account for any human error made during note taking. Scrubbing your notes can be really time consuming (maybe between 20-30% of however long the call was), so I’d only do this if it was an important assignment. This isn't the sort of thing you do if you're burnt out, but if you want to be a top performer, you should scrub your notes. Here is the full list again: Include the date, topic, and relevant attendees Remove all marketing language and unnecessary jargon Take special attention to any time that concrete numbers are mentioned Take special attention every time something is asked If it’s an earnings call or public company investor call, cross-reference your notes with the transcript to make sure you’ve captured all important details If relevant, group information by topic as opposed to chronologically Format your notes cleanly If it’s an important call or set of notes, take the time to scrub your notes

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview Debating who is and who is not a target school for investment banking is one of the most fun and contentious topics in finance. But having had this discussion countless times, I know that the vast majority of bankers only have a reliable perspective for a single school and a single firm. Without data, it is impossible to approach this question without a huge amount of bias. Many people overestimate the placement of traditionally prestigious schools when they don't know the specifics. For example, it's probably easier to get into investment banking from SMU than it is from MIT. And NYU produces way, way more investment bankers than Dartmouth. All this data is important because quite simply: the school you go to is the #1 factor that influences your ability to get into investment banking and earn a top salary. In this post, we seek to complete a data-driven approach to determine which schools have the best placement into investment banking. If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Methodology Our first goal is to see which school produces the greatest number of investment banking analysts at top firms. To accomplish this, we scraped LinkedIn profile data and filtered the results according to our view of what a "top investment banking" job is. I recognize that this approach favors larger schools, so we have also included a ranking that assigns some weight to the size of the school. Here was our approach to filtering the data: Aggregate all Investment Banking Analyst profiles in the world (~60k people) We collected LinkedIn profile data with the help of HR analytics firm Terrain Analytics. They provided an enormous amount of high-quality data and this would not be possible without their help. We collected the profiles of anyone with “Investment Banking Analyst” or closely related terms as one of their job titles. For this cut, we looked at anyone who graduated between 2008 and 2023 in order to get a highly comprehensive dataset. This resulted in ~60k global profiles around the world. Screen for U.S.-based jobs only (~17k people) We are only assessing U.S.-based jobs for this analysis. Our view is that the most attractive investment banking firms and jobs are based in the U.S. Note that we are looking at schools in and out of the U.S. There are a handful of international schools on this list (e.g., Western University and Queen's University in Canada, National University of Singapore, etc.). Our screen for U.S.-based jobs resulted in ~17k profiles. Screen for top bulge brackets and elite boutiques only (~12k people) Lastly, we only included people who worked at the "top investment banks" (complete list further below). The purpose of this analysis is to determine where the top investment banks recruit. There are of course a ton of small and regional investment banks. But we do not think it is appropriate to equate an offer at one of those firms with one at a leading bank like Goldman Sachs or Lazard. After these filters, we arrived at ~12k U.S. investment banking analysts who graduated between 2008 and 2023 and worked at one of these fine institutions: Allen & Co. Bank of America Barclays Centerview Partners Citi Credit Suisse (now UBS) Evercore Goldman Sachs J.P. Morgan Lazard Moelis & Co. Morgan Stanley Perella Weinberg Partners PJT Partners Qatalyst Partners Rothschild & Co UBS When sanitizing the data, we made sure to include all variations of a school’s name on LinkedIn (e.g., NYU includes New York University, NYU, and Leonard N. Stern School of Business). Also note that each school includes all hires from a school, not just the business program. For example, "University of Pennslyvania" includes all hires from Wharton and Penn. Investment Banking Analyst Placement per School Our first presentation of the data ranks all schools based on total hires. This ranking orders schools based on the total number of U.S. investment banking analyst hires they have had over the past 15 years. On a volume basis, the four best schools for investment banking placement are: University of Pennsylvania New York University University of Michigan The University of Texas at Austin University of Pennsylvania is no surprise and they are very clearly the overall best school for finance placement. UPenn dominates investment banking recruiting and even sends dozens of people directly into great private equity firms and hedge funds every year. NYU, UMich, and UT Austin all have respectable business programs and huge student bodies and thus also do very well on this list. All of these schools consistently place people at the top firms and are well-represented throughout all of finance. The data fields on these tables include: Total Hires: The total amount of U.S. investment banking analysts at top firms that graduated from that school between 2008 and 2023. Data per LinkedIn, provided by Terrain Analytics. # of Undergrads: The total number of undergrads per school, provided by U.S. News and various school websites. U.S. News did not cover international schools, so we had to collect those separately. Undergrads % Total (also referred to as Undergrad % Placement): Calculates Total Hires / # of Undergrads. We include this piece of complementary data to measure how "easy" it is for a student to get into investment banking. This is a highly imperfect measure and frankly, there is no perfect way of accounting for this, which we explore further in the weighted rank below. Elite Firm Hires: The total amount of U.S. investment banking analysts hired into the "Top 5 Firms", including Goldman Sachs, Morgan Stanley, J.P. Morgan, Evercore, and Centerview. This ranking is per the Firsthand. I included this because the difference between an offer at Goldman Sachs and a lower bulge bracket like Citi is very different. Presence: This measures representation across firms, which we define as having at least 2 hires into that firm. I included this because it shows which schools may have great placement primarily due to a couple of strong relationships. Elite Boutique %: The % of total hires that were placed into elite boutiques. This is more of an "interesting to know" data point and it doesn't really impact my perspective on a school's ranking. People are generally most surprised to see Brigham Young in the 13th slot, but they have a very consistent pipeline into investment banking. They have excellent placement into Goldman Sachs, Credit Suisse, and Bank of America and have a stranglehold over Salt Lake City offices. The other relative surprises are schools that have laser-focused business programs with student populations that are dedicated to investment banking. Western University (Ivey and my alma mater), Boston College (Carroll) and SMU (Cox) all have highly dedicated student populations that aggressively prepare for investment banking. Whatever they lack in traditional prestige, they make up for by overloading on investment club experience. Weighted Ranking of Investment Banking Analyst Placement If you take one look at the ranking by total hires, you'll probably make the very obvious critique that it over-indexes to large schools. We can balance this out by factoring in the # of Undergrads per school, but I warn you that it still won't be "perfect". It's still imperfect because focusing on Undergrad % Placement heavily penalizes the larger public schools. Schools like NYU, UMich, UT Austin, and USC have enormous student bodies, most of which aren't interested in investment banking. You might then think to just look at a school's business school (e.g., only including the NYU Stern or the Western Ivey student body). However, I think this approach introduces a ton of bias. We would have to try to apply an apples-to-apples approach by only including the "business" students at a place like Harvard. This becomes nearly impossible when you realize that a ton of people at Ivy League schools major in statistics, engineering, and the liberal arts as opposed to economics. It's not really possible to determine a denominator that is fair to all schools (and yes I have tried). We feel that a reasonable solution is thus to do a weighted ranking: # Total Hires (2/3 Weighting) Undergrad Placement % (1/3 Weighting) In my view, # Total Hires is the more important factor. All else being equal, it's better to go to a larger school because it means you have more alumni, more on-campus resources, and student clubs. Firms are more incentivized to give larger schools attention during recruiting. From an expected value perspective, a firm would rather visit Columbia than Claremont McKenna even if their Undergrad Placement % is similar. Why fight over the two kids that want to do banking at Claremont McKenna when you can get swarmed by an army of Columbia kids foaming at the mouth? I think this ranking is probably a better reflection of which schools are overall "the best" to get into investment banking. Even if you ask the proudest NYU graduate (which I did), they'd probably be reluctant to say that their school is the 2nd best place to get into investment banking from. NYU produces a ton of high-quality candidates, but you'd still rather be at Harvard where it's significantly easier to impress both headhunters and your parents. Weighting toward Undergrad % Placement logically boosts many of the traditionally prestigious schools, with all the Ivy League schools getting a healthy increase. Investment Banking Target Schools Now, there is no clear industry definition for what constitutes a "target school" for investment banking. But because people love tier lists, we can do our best to group the schools based on their placement statistics: Target Schools – the schools with by far the most amount of hires and with good representation at every firm. These schools are actively targeted by most top investment banks and send a considerable number of people to "elite firms". Semi-Targets – schools with a solid amount of hires into investment banking. Semi-targets might lack representation at some firms or not have a great undergrad placement %. We found that many semi-targets dominate a particular region, industry, or bank, but don’t necessarily have the cachet to get interviews across the board. Lower Semi-Targets – schools where it's possible to get into investment banking, but you generally need to be the cream of the crop. Your school might send 2-5 people into investment banking per year, potentially from a specific program (like University of Florida) or a great investment club (like Queen's University). Non-Targets – I would say that if your school isn't on this list at all, you likely attend a non-target. It is not impossible to get into a top investment bank from your position, but having seen the data... it really falls off a lot after these schools. Target Schools (Ranks 1-15) Target schools are schools that the vast majority of top investment banks consistently hire from. Each target school is going to have multiple school alumni across all of the top banks. There are going to be several people for you to reach out to at each firm. Target schools all have strong investment banking/finance extra-curricular activities available. Private equity headhunters may even visit their campuses to give senior year students a preview of buyside recruiting. Based on our assessment, there are 15 target schools nationwide. These schools all have consistent hiring into the top firms and reasonably good Undergrad % Placement. You can find people from all of these schools at the most elite firms. On this list, we mostly have Ivy League schools (e.g., UPenn, Harvard), nationally ranked schools (e.g., University of Chicago), and large schools with great business programs (e.g., NYU, UC Berkeley). The three overall best schools for investment banking placement are: University of Pennsylvania, Georgetown University, and Harvard University. UPenn is clearly the best finance school in the entire world. They send an unparalleled 3.33% of undergrads into investment banking, with over 50% of their hires going to the very best firms. We note that Harvard sends an even higher % (58%) into the very best firms, which appears to be a minor weakness of Georgetown (only 40% to elite firms). Semi-Target Schools (Ranks 16-30) Semi-target schools are schools that consistently send a handful of people into investment banking per year. They typically do not have great coverage across every firm and geography. Oftentimes, semi-targets emerge due to regional or geographical success and slowly creep their way to the rest of Wall Street. Most of the semi-targets are not as traditionally prestigious from an overall school level (aside from places like Dartmouth, Stanford, and Brown), but have made a name for themselves by having strong finance programs. Many semi-targets have carved out a strong alumni base at a single firm and have a disproportionate amount of analysts there (e.g., BYU and Goldman, Emory and Lazard, Ivey and Evercore). As a result of firm concentration, semi-targets tend to have a lower Presence factor and some schools (Vanderbilt and UNC Chapel Hill) have very few hires into elite boutiques. Western University is notable as it is the only Canadian school on this list - Western is at the top of the Canadian target school list. It can be very difficult for a school to improve its investment banking placement. The investment banking lifecycle is very short (1-3 years) because analysts often rush to the buyside, which makes it hard for a school to establish a good reputation. It takes generations of good analysts and an internal mid-level voice to ensure that a school consistently gets looks. Lower Semi-Target Schools (Ranks 31-60) Lower Semi-Target Schools have worse placement than semi-targets but still typically send a few people into the top investment banks every year. This category has a wider range of archetypes. There are the elite liberal arts colleges like Middlebury, Claremont McKenna, Williams, and Amherst that have excellent Undergrad % placement. They are held back by small student bodies and weak Presence scores but are sneakily still great places to recruit from. There are other public schools with huge amounts of people (Penn State, University of Georgia, Texas A&M, University of Florida) that by virtue of sheer volume and willpower place a couple of people into investment banking. Looking at individual school data also shows how reliant some of these schools are on a single firm (e.g., University of Florida sends a disproportionate amount of people to Evercore). Of note, MIT and Queen's University (in Canada) have outstanding Elite Firms score (87% and 86% respectively), which are the highest on the entire target school list. There are also a handful of other international schools on this list (The University of Hong Kong, Singapore Management University, McGill, HKUST). These schools have top-tier placement in their own countries and still manage to send a few people to the U.S. offices. Non-Target Schools Non-targets are schools not on this list. Non-targets typically don't get any on-campus recruiting or specific attention from the top banks. The data does unfortunately really taper off after this point. Non-targets occasionally send people to the best firms, but it often takes an exceptional candidate with the right internal support or recruiting program. If you’re at a non-target, your highest likelihood path is either to transfer schools or to play the long game and slowly lateral between firms. Honestly, lateraling is way easier than most people realize, so long as you start somewhere in investment banking. It might add a year or two to your journey, but signing with a regional middle-market and lateraling to a more prestigious firm is a pretty tried and true path. If you’re at a non-target, the onus is on you to do way more diligence of your alumni and study what the most realistic paths are. The benefit of non-targets is that your alumni will typically bat for you much harder. It’ll also be more obvious who you need to reach out to. Data Caveats Of course, it is fairly easy to criticize the methodology or results of this analysis. There is a limitation to how reasonably precise we can be. Here are some disclaimers that may hinder the accuracy of the analysis: Not all investment banking employees have a LinkedIn profile or keep their investment banking role on their LinkedIn. Some LinkedIn profiles have imperfect "Location" data, e.g., they may have removed all cities from their job titles or moved countries. This makes it harder to filter for only U.S. employees. Finding an accurate denominator for Undergrad Placement % is very difficult. Each definition is going to disadvantage a certain school group. It's tricky to assign weightings to # of Total Hires and Undergrad Placement %. Doing so involves a certain amount of bias. It's impossible to define what the cutoff for a "top investment bank" is. You could make reasonable arguments for firms like LionTree, Guggenheim, etc., and the ranking changes annually. Regardless, I think this is the most robust analysis of investment banking target schools that exists. Conclusion In my view, there is a clear ranking of schools when it comes to investment banking recruiting. Some schools have a very distinct advantage in investment banking and I think it’s unwise to ignore the numbers. If you want to break into investment banking, you need to: Assess whether your school has reasonable placement Begin networking with successful alumni Be technically prepared for the interview

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview One of the best-kept secrets in all of finance is the strength of certain schools in Canada. There are several Canadian universities that have made an impressive name for themselves on Wall Street, with some schools consistently outplacing highly prestigious U.S. schools. Schools such as Western, Queen's, and McGill have cultivated strong finance communities and consistently send graduates to the top investment banks and investment firms in the world. For example, did you know that Western sends more people into investment banking than Dartmouth or Stanford? Did you know that Queen's sends the highest proportion of investment banking hires (across all North American schools) to the very top firms? Just like in the United States, there is a small handful of schools in Canada that tend to dominate investment banking recruiting. Said differently, if you’re a bright, motivated student but you’re not at the right school in Canada, the odds you break into banking are unfortunately greatly diminished. Our goal in this post is to use data to understand which schools are and are not Canadian target schools. We’re going to establish this view by looking at the actual data of where alumni from each school works. The complete table is here and we'll walk through the methodology and data below. If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Methodology Our goal is to see which Canadian school produces the greatest number of investment banking analysts. Here was our approach: Aggregate all Investment Banking Analysts in the world (~60k people) We collected LinkedIn profile data with the help of HR analytics firm Terrain Analytics. They provided an enormous amount of high-quality data and this would not be possible without their help. We collected the profiles of anyone with “Investment Banking Analyst” or closely related terms as one of their job titles. For this cut, we looked at anyone who graduated between 2008 and 2023 in order to get a highly comprehensive dataset. This resulted in ~60k global profiles around the world. Screen for all U.S. and CAD-based jobs only (~41k people) To screen for geography, we are only including people who work in the U.S. and Canada. Many top candidates from Canada work in the U.S. so we think it is important to include both sections. This resulted in ~41k profiles in the U.S. and Canada. Screen for reputable global and Canadian investment banks (~22k people) We tried to only include high-quality global firms and established Canadian firms so that this ranking reflects which schools place into the very best firms Note that we excluded regional boutiques from this screen. Also note that the list of "top firms" we are using here is different from the one we use in the full target school list. We apply a higher standard when evaluating U.S. firms For this screen, we cast a fairly wide net of firms. Note that this list of firms is much larger than the list used for our full investment banking target school list. Bulge Bracket and Elite Boutiques The best Canadian finance schools consistently send a few students to the best firms in the world. Many of these placements are in the U.S., but many of these global firms have satellite offices in Canada. The firms in this category include the usual suspects: Goldman Sachs, Morgan Stanley, J.P. Morgan, Bank of America, Evercore, Lazard, etc. This category accounts for people who go to Goldman New York and those who go to Bank of America Calgary. Mid-Market and Other We included the next "tier" of global investment banks in this screen as well. These firms may not be as dominant in investment banking, but many still have a meaningful presence in the U.S. This category includes firms like Harris Williams, HSBC, Deutsche Bank, Rothschild, etc. Canadian Big 6 Of course, in Canada, the majority of investment banking jobs are offered by the big banks. The Big 6 are RBC, BMO, TD, Scotia, CIBC, and I guess National Bank can be here too. Most Canadian semi-target schools (Laurier, Toronto, etc.) send the majority of their placements to the Big 6, whereas the target schools (Western, Queen's) send a greater proportion to bulge brackets and elite boutiques. Broadly speaking, I would say that most Canadian Big 6 firms are less desirable than the bulge brackets and elite boutiques. Note that we have not included regional boutiques in this screen. We end up with ~22k U.S. and Canadian investment banking analysts who graduated between 2013 and 2023 and who worked at one of the firms defined above. The complete list of firms included for this dataset are: Allen & Co., Bank of America/Merrill Lynch, Barclays, BMO Capital Markets, BNP Paribas, Canaccord Genuity, Centerview Partners, CIBC Capital Markets, Citi, Credit Suisse, Deutsche Bank, Evercore, Goldman Sachs, J.P. Morgan, Lazard, Macquarie Group, Mizuho, Moelis & Co., Morgan Stanley, National Bank Financial, Nomura, Oppenheimer & Co., Perella Weinberg Partners, PJT Partners, Qatalyst Partners, Raymond James, RBC Capital Markets, Rothschild & Co., Scotiabank, Societe Generale, TD Securities, UBS, Wells Fargo, and William Blair. Some other firms were included in this screen but had zero placements from Canadian schools. Note: Our data source predicted that this does not represent 100% of the actual Investment Banking Analyst population (some people don’t have LinkedIn, some have restricted public access, or have hidden/different titles). This is a statistically significant sample, but should not be viewed as a complete dataset. Canadian Investment Banking Target Schools After reviewing the data and categorizing it, we sorted the entire list of schools by total number of hires. Then we cut it one final time to only include Canadian schools. After examining the data, we segmented the schools as such: Targets – the Canadian schools with by far the most amount of investment banking hires. These schools send good numbers to the top global firms in the U.S. and they have extremely strong coverage at virtually all Canadian offices. Semi-Targets – these schools send a modest number of graduates into investment banking and the majority of their hires are into the Canadian Big 6 firms. They send very few people to the U.S. but still occasionally break into the global firm satellite offices. Non-Targets – everyone else. These schools generally do not produce as many investment banking graduates. Some of them may have carved out a particular geographical or industry niche (e.g., The University of Calgary still sends people to bulge brackets in Calgary). Generally speaking, you have to be one of the very top students to get into investment banking from these schools, and even then your placement is highly luck-dependent. Target Schools In Canada, it’s quite clear who the best finance schools are: Western (Ivey) and Queen’s. Both schools send impressive numbers to the U.S. and top banks. Western and Queen’s generally both have on-campus recruiting or partially reserved spots at many top firms in the U.S. Both Western and Queen's have outstanding finance recruiting statistics. Western sends >50% of all its hires into bulge brackets and elite boutiques. Queen's sends ~1/3 of all of its hires to the very top firms (Goldman Sachs, Evercore, etc.) In fact, Western and Queen's collectively send more hires into bulge brackets and elite boutiques than every other Canadian school combined. Western and Queen's represent ~70% of all hires into Goldman Sachs. Frankly, if you want to break into investment banking, you're best served at Western or Queen's. But the divergence between these two schools is also stark – Western is by far the best school for investment banking and it’s not that close. Western’s investment banking population is almost twice the size of Queen’s. This list doesn’t show it, but Ivey also has a consistent pipeline of students that go straight to the buyside. Even compared to U.S. school standards, Western ranks as a semi-target, besting many other top U.S. colleges. The third best finance school is McGill. McGill is a distant third, but I would still elevate them among the remaining Canadian schools. McGill still sends a good number of graduates to the most elite firms and has steady placement in the U.S. Unsurprisingly, McGill also dominates the few global firms that have offices in Montreal. Western vs. Queen's Below is firm-specific placement data for Western and Queen's, the definitive top Canadian schools for investment banking placement. Western has almost double the investment banking placements as Queen's (201 vs. 112) and more than double the bulge bracket/elite boutique hires (110 vs. 44). Western also has more hires at virtually every investment bank. However, we should recognize that Queen's has historically had a smaller student body vs. Western and one could argue that Queen's has much more comparable per-capita statistics. It is also worth noting that Queen's has remarkably consistent placement into the very best investment bank, Goldman Sachs. My anecdotal experience working in New York definitely corroborates this. From my view of the data, if you're a top student at Western or Queen's, you'll have a reasonable chance of getting into any investment bank on the street. However, the median student likely has a much higher chance of breaking into investment banking from Western given the sheer volume of placements. Having gone to Western, I can tell you that part of Western's excellence is in part based on its success in a couple of specific offices. Over the course of several years, Western has built rare relationships with offices like Evercore (New York), Credit Suisse (San Francisco) and Moelis (Los Angeles) that generally keep its numbers steady. Semi-Target Schools After the top finance schools, there’s a hodgepodge of overall good schools that are steadily growing their finance community and alumni base. I would categorize the following schools as semi-targets: University of Toronto, University of Waterloo, Wilfrid Laurier University, The University of British Columbia, and York University. All of these semi-target schools have some presence at every Canadian Big 6 firm, but their presence in the U.S. and at global firms is much weaker. On average, these semi-target Canadian schools probably send 5-15 students into investment banking per year. If you're at one of these schools, you'll likely have to be one of the very top students in your program if you want a solid chance at investment banking. You might notice that a school like Laurier sends an overwhelming 75% of its investment banking hires into one of the Big 6 (Laurier has a strong connection to RBC and TD in particular). In fact, many of these semi-targets roughly do as well Western and Queen's when placing into the Big 6. Highlighting Waterloo and UBC I predict that Waterloo, with its extremely successful co-op program, is going to one day become a definitive target school. The ascent of Waterloo as a finance school over the past decade is undeniable. Their co-op program allows them to compete for off-cycle internships and get high-quality work experience at top firms. Anecdotally, I’ve also seen them carve out a real presence at West Coast tech firms in the Bay Area and Los Angeles. It definitely takes several years to build a finance reputation, so it depends on the continued strength of the program and its graduates. The other school I’ll make mention of is UBC – and I really just mean the legendary UBC Sauder PMF program. It would not be a stretch to say that UBC Sauder PMF is the best finance program in all of Canada, even better than Western on a per capita basis. In fact, UBC Sauder PMF sets you up with extremely coveted buyside internships that are so prestigious, that it would make even the top student at Wharton feel insecure. The glaring issue is that it’s only 6 or so students per year and anecdotally it seems like the rest of UBC Sauder is nowhere near as good. This is also an "investment banking" target school list, so UBC doesn't benefit from those buyside placements. Non-Target Schools Outside of this list of schools, breaking into investment banking is going to be significantly harder. You'll have to really rely on networking grit and the off-cycle path. Some of the remaining Canadian schools have carved out a geographical niche in a particular location. For example, HEC Montreal still places well in Montreal. University of Calgary & University of Alberta have steady pipelines to the O&G jobs in Calgary. But these schools often have a tough time placing outside of their niche. Special shout out to the one guy from Carleton who broke into Goldman Sachs, just one of two people to break into investment banking from his school over the past decade. Conclusion If your goal is the U.S., the recommendation is obvious: go to Western (Ivey) or Queen’s. Although investment banking recruiting is pushing into second year, transferring to Ivey for your third year is still a time-tested strategy that has produced some of the most successful Ivey finance alumni that there are. Having gone to Ivey, I can tell you that the transfers were consistently some of the most intelligent and hardworking people in the class. And if your goal is investment banking in Canada, you have a reasonable chance of breaking into investment banking in Canada from any of the targets or semi-targets.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview The hardest career decision I’ve ever had to make has been whether or not to go to business school. After learning about the 2/2/2 path years ago (IB/PE/MBA), I had always assumed that getting my MBA was something worth doing. So getting into a prestigious business school really seemed like the perfect addition to my resume. After completing banking and private equity, I started to become more skeptical about the idea of the MBA. The vast majority of my private equity peers were still interested in going, but I definitely had my share of second thoughts. In this post, I’d like to share with you some of the key factors you should keep in mind as you’re debating the MBA. I no longer think it’s the perfect path for everyone, but it still makes a ton of sense for certain groups of people. Note that my perspective is largely one for a career in finance and even more specifically for the buy-side. Your specific background, situation, and career goals impact the factors in this decision dramatically. Disclaimer: I didn’t end up applying for business school. However, the main advisor for Peak Frameworks, Patrick Fong, has gone to HBS. The Pros of Business School I think the merits of business school are well documented. I view the main pros as such: Career Switch By going to business school, you’ll get some structured time to think about your next career move. You’ll get access to at least one recruiting cycle where employers will actively seek out candidates like you. For some people, an MBA will be the only route that you can take in order to break into a target industry. If you don’t have any business background and you want to switch into say banking or consulting, the MBA is by far the most efficient route. It gives you a chance to do a pretty hard reset and re-brand yourself. As an example, Wharton says that 60% of its MBA graduates switch one of their function, industry, or title. Salary Increase On average, an MBA is going to improve your earning potential pretty significantly. This is because an MBA is going to introduce you to many higher-paying jobs (e.g. banking and consulting). This is also because an MBA is going to help you unlock promotions at your own company. Across all MBAs, I would point out that the average salary coming out of MBAs is ~$140k. So depending on your job prior, this might actually not represent a true increase. If you come from product, software engineering, consulting or finance, this is more likely going to be a lateral salary move. People / Network Perhaps the most important factor of going to business school is the people you’ll meet and the network you’ll become a part of. Your classmates are going to be life-long friends, potential co-founders, and even potential spouses. You are going to be surrounded by extremely motivated, smart, and capable people who will also be conscientious about expanding their networks. If just one of your classmates introduces you to a new boss or if you end up winning a deal down the road because of a school connection, the entire cost of your business school program could be worth it. You also get a tremendous amount of access with an MBA. At a top MBA, you’ll have one of the best calling cards in the world. You’ll be able to reach out to alumni and open new doors. Lifetime Prestige It’s hard to put a price on feeling good about yourself, but there is a significant amount of brand value and traditional prestige associated with business school. There’s only going to be one Harvard Business School in the world, though the most prestigious companies are going to change from year to year. Many of these school legacies have been developed over centuries. Education The education is supposedly pretty great. I’ve heard mixed reviews, particularly that it’s going to be very redundant if you have a business undergrad. However, you’ll still be taught by some of the best professors in the world and have plenty of extremely smart speakers visiting. The pros are well known and I definitely see the merits of business school. There is a lot of value in getting your MBA. If you want to switch careers or if you don’t come from a business background, it is still an incredibly wise move. Buyside Career Switches are Still Rare I want to make a specific note about buyside careers and how I don’t think MBAs actually help you career switch into buyside roles very easily. Unless you have some investing experience or have already done a feeder job like investment banking or consulting, I don’t think your chances of breaking into the buyside after the MBA are very good. For example at HBS, 16% of the class comes from PE or VC. However, only 18% of the class goes back into PE or VC after HBS. Net-net, I don’t think there are that many new investing jobs being offered to graduates. Frankly, I think this is because the competition for these roles is already so high. You’re competing with tons of people who opted to continue working in related roles as opposed to getting their MBA. From my anecdotal evidence seeing friends in MBA programs and having worked in private equity, I think that very few people break into the buyside with just an MBA. There’s some shuffling of seats and you might end up at a slightly better firm if you had already worked in investing, but for the most part, there are not that many new high-quality investing jobs. Even at HBS and Stanford, recruiting for the buyside can be pretty brutal. If you're focused on breaking into private equity, you should check out our Private Equity Recruiting Course, which will teach you how to build an LBO model, do case studies, and deal with headhunters. The Considerations of Business School In my opinion, here are the main considerations you should have when you are thinking through business school: Financial Cost If you go to a top American business school, you can expect to pay $200-$250k. I think this is a lot of money. You can certainly pay off the debt if you end up in a high-paying job like banking or consulting, but at the end of the day, it’s still a huge financial commitment. Many people go into debt in order to finance their MBA. It is estimated that nearly half of the MBA students borrow at least $100k to finance their MBA. The biggest concern for me here is the timing of the debt. Taking on additional debt when you are in your late 20’s and early 30’s – a time when you may be considering to start a family or buy property – can significantly restrict your options. I think that taking on that amount of debt really pushes you to optimize to take the short-term highest-paying jobs. In my mind, it really dis-incentivizes going into entrepreneurship and riskier career options. Opportunity Cost Most top MBA programs are 2 years. This time can help you re-orient your career and give you the flexibility to plan things. However, it also represents 2 years you could otherwise be working and earning. Preparation Time & Effort Getting into a good MBA is no easy feat. It requires a lot of dedication and mental focus while you’re probably working a full-time job. There’s studying for tests, writing essays, and doing extra-curriculars. It can be worth it, but there’s definitely a lot of sacrifice involved, often at the expense of your social life. Dilution of Degrees I think the value of the MBA is only going to continue declining over time, as schools grow class sizes and offer different masters programs. Many schools are incentivized to keep growing their MBA program, which I think reduces the value of a single degree. Groupthink Temptation Another dangerous factor of attending an MBA program is the tendency to adopt a groupthink mindset. When you’re in an environment with extremely competitive and successful people, it can be hard to think fully independently. From my experience in an undergraduate business program, I can attest that many people end up competing for whichever spots are traditionally prestigious. I think that can be a relatively dangerous mindset that doesn’t help you optimize for what you might really want. In general, I think the most difficult factor to wrestle with is how the financial burden of an MBA can prevent you from taking true career risk. I think the MBA is more likely to lead you to short-term high-paying jobs that are conventionally prestigious. The Validity of Prestige Even after I assessed all of the costs of going to business school, I still had an innate desire to go and get a prestigious MBA. When I laid out all of the pros and cons, I felt that it wasn’t a perfect fit for me, but deep down I still wanted to be part of a prestigious institution. And to be honest, I think that’s a valid reason to want to go. The top MBAs have such valuable brands and if one of your career goals is to have traditional prestige, I think that’s perfectly fine. Some people optimize for money or for control and I think that wanting prestige is a completely reasonable goal as well. I think you should be honest with yourself if that’s the reason you want to go, so that you can honestly reflect on your decision. But if you feel uncomfortable about that, you should realize that wanting prestige is nothing to be ashamed of. Summary In summary, I think that you should go get your MBA under the following circumstances: You have a clear career move in mind You know you want to stay in corporate for most of your career Brand and prestige are important values to you

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview For most people, breaking into investment banking is a multi-year long quest. It takes years of cultivating a strong resume, working the right internships, and getting involved with the right extra-curriculars to land a high-quality offer. The roles are so competitive and the jobs are so high paying, that it’s becoming increasingly harder to break into investment banking without prior work experience. In this post, we’re going to break down a couple of key things you should be doing to maximize your candidacy. There is a huge range of things you can spend your time on, but a lot of them won’t materially impact your chances. However, if you start early enough and consistently work towards deepening your knowledge of finance, then you’ll be in a good position to land interviews and secure offers. We also recommend that you check out our Valuation and Finance Starter Kit if you're looking for a complete technical course. This course will teach you how to build a discounted cash flow, build financial models, and research public companies. 1. Learn the Lingo Objective: Read 5-10 minutes of financial news per day. Observe trends and systematically take notes on things you don’t know. Time per Week: 1 hour The easiest thing you can do is start reading financial news and literature. Everyone from beginners to seasoned veterans need to spend time reading some news to understand what’s happening in the markets and with businesses. Reading well-written newsletters every day will give you a sense for what people care about and how people talk about business and finance. Reading the news will help you understand trends and naturally develop an opinion on potential stock pitches and investment ideas. There is a ton of information out there, but for newsletters, I’d recommend two free ones that take less than 5 minutes to skim through: Fortune’s Term Sheet This is a daily newsletter that covers the most important deals and often has focused pieces on interesting transactions. It goes in depth on financial transactions and is used by a lot of people in the industry. It also includes a list of transactions, financings, and new hires, which helps you easily keep tabs on the economy. Robinhood Snacks Robinhood Snacks gives you easily digestible information on big stock movements and also updates you on key indexes. This one is more focused on public stocks and will cover a lot of the more boring economic data too. I would also recommend trying to sign up for a traditional financial news provider (WSJ, Bloomberg, Financial Times, etc.) You may be able to get a free account from your school. I personally find that the marginal utility of reading the news is at about 15-20 minutes per day. There’s no need to go crazy on reading the news because you generally aren’t learning tangible skills, but it’s a great place to start. When reading the news, I took diligent notes and kept a big word document where I would keep track of things that I didn’t know. 2. Meet the Right Finance People Objective: Speak with one new finance person per week. As a freshman, your first priority is meeting with juniors and seniors at your school to see if you can cultivate any mentorship relationships. Then you should shift your focus to alumni who work at places that might hire freshmen. It can be helpful to speak with professionals in different geographies and different offices, so you start diversifying your network. Time per Week: 0.5 hours This step becomes more and more important the less of a target school you attend. As a freshman, the most important people for your career are going to be junior and senior college students with banking internships. Banking recruiting is heavily driven by first-year and second-year analysts, so making connections with them while they’re still in school is going to pay long-term dividends. If you’re at a non-target, the path is going to be a lot more sporadic and the people with investment banking experience are the ones who know the elusive keys to that path. Keep in mind that you want to reach out and talk with people without being overbearing or too intense. Take people out for coffee, ask thoughtful questions, and keep them updated on your progress as you win internships or have career questions. Your goal is to be likable enough that they don’t mind helping you. 3. Get Involved with Good Extra-Curriculars Objective: Obtain leadership positions on one or more finance clubs with a strong track record of recruiting success. Time per Week: 1-2 hours One of the most common resume traits of people in my investment banking class was to hold a finance executive club position. I think at least a third of my investment banking class at Evercore was the president or a key executive of an investment club at their respective school. These clubs are the best way to help communicate your interest in finance to future employers and to introduce you to helpful alumni. It’s much more convincing to tell an employer you’re interested in finance when you have multiple data points to reference. More importantly, being part of high-quality finance clubs exposes you to a community of people with the same goal. This will give you a sense for the competition at your school and the level of intensity you need to have in order to succeed. If your school doesn’t have a finance club, then you need to seek out an intercollegiate investment club (like Global Platinum Securities or ACIIC in Canada) or a non-school activity. You could be the campus representative for a financial institution like Bloomberg. You could start your own investment club at your school, even if you’re just trading paper money. You could submit articles to Seeking Alpha. You just need to do something that shows initiative and that is finance-y. The best way to tell if a club or extra-curricular is worth your time or not is to check where the past club executives and members have gone to work. 4. Build Relevant Technical Skills Objective: Learn the technical information required to succeed in interviews by spending 30 minutes or so per week reading technical material. Time per Week: 0.5 hours The prior steps are all more important because they have longer lead times, but at a certain point, when you’re about to enter recruiting, you’ll need to start ramping up your technical skills. This means you need to review actual stock pitches, read equity research, and learn valuation. You need to spend time sharpening up your resume and cover letter, doing basic modeling, and practicing with Q&A guides. I would recommend spending 30 minutes or so per week to go through this information so you don’t overwhelm yourself. When the time is right, you should shift gears to mock interview with friends and mentors. We have a Private Equity Recruiting Course available, where you can dig through 5 LBO models and learn everything you need to know for recruiting. We also have several videos on YouTube explaining the fundamental information you must know. 5. Cold E-mail to Get Your First Internship Objective: When you are looking for your internship, you should be reaching out to 1-2 people per day to schedule calls and inquire about internships. Time per Week: 1 hour (during recruiting) The most important thing you can do for yourself is land a solid finance-related internship in your freshman year. That is going to be the ultimate signal to future employers that you have been committed and are serious about a career in investment banking or private equity. It doesn’t even matter what specifically, you just want to do your best to be working for any finance company. Any bank, any boutique, any investment firm of any size will do the trick. In order to get a job in your freshman year, you’ll likely have to do a lot of reaching out. Maybe you’ll be lucky enough to have a strong job board or school system, but most likely you’ll have to reach out to tons of people to get something good. Companies don’t invest a lot of time into hiring freshmen because freshmen are generally useless and the companies have a very low chance of retaining you as a full-time employee. So you’re going to need to put in a lot of diligent effort to reach out to people. I reached out to over 300+ people to get my first paid internship in my sophomore year. It’s not easy, but it is necessary so that you don’t fall behind the competition. Summary In summary, here are the five things you should be doing every single week. Collectively, this should probably take you a total of 3-5 hours per week: Read 5-10 minutes of financial news per day (subscribe to Fortune’s Term Sheet) Speak with 1 new potential mentor or recent alumni per week Get involved with one or more finance club that has a track record of success Spend 30 minutes or so per week reading technical material and guides Start reaching out to 1-2 people per day to schedule calls and inquire about internships If this feels like too much work, then either don’t go into banking or make sure you can get into a target school where you can afford to hustle less. The good thing about investment banking recruiting is that it is insanely accelerated. So after you secure your junior year internship, you’ll have plenty of time to chill.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview Investment banking is an extremely lucrative career. The Investment Banking Analyst position, which is the most junior position at the firm, is perhaps the most consistently high-paying job that a business student can get out of school. Investment banks make money from advising on extremely large financial transactions. Analysts support this goal by working on financial models, preparing marketing materials, and helping organize the deal process. You will do a lot of Excel- and Powerpoint-based tasks. In addition to the sheer salary, the Investment Banking Analyst position is also extremely coveted because it tends to be a streamlined path to the best paid buyside jobs in the world. Many headhunters, recruiting on behalf of buyside firms, spend the majority of their energy on hiring analysts from the top investment banks. Not everyone likes the investment banking job itself because of the brutal hours worked, but it’s hard to ignore the huge benefits you get from it. You have the potential to eclipse 2x the median household income at age 22. If you want to learn the technical and interview skills needed to get a top banking offer, you can start preparing today with our Investment Banking Course. Methodology Below, we’ve benchmarked the salary range for the world’s top investment banks. To complete this exercise, we are only using the list of top investment banks from Wall Street Journal’s 2021 league table. Keep in mind that the largest banks are going to pay more than mid-market firms and regional boutiques. We’re going to start by taking base salary data from the H1B Database. The H1B is one of the most popular US visas for skilled employees. If you are successfully granted an H1B visa in the US, then your salary is going to be in this database. We then cross-referenced this hard data with the survey data collected by Litquidity in their excellent compensation report. Litquidity completed a survey that was published in August 2022 that is a great source for analyst, associate, and VP compensation. We went through each of the top investment banks and benchmarked the low and high salary analyst positions from both the H1B Database and the Litquidity report. We only used Analyst titles and only used positions in New York from the H1B Database to standardize things. We had to make some judgement calls on what to exclude (e.g. roles listed at like $60k are almost definitely not referring to Investment Banking Analyst roles, but are more likely to be back-office analysts). In summary, the typical salary range for Investment Banking Analysts at the top U.S. firms is $155k to $220k. This includes the low range from analysts in their first year to the high of analysts in their second year. We also note that these salaries reflect a particularly strong year of M&A from 2021 and the early part of 2022. It is unclear whether these salaries will remain high. Observations Base Salary: Most investment banks will make a base salary between $105k to $115k. This is what goes into your bi-weekly paycheck. Bonus: Bonuses refer to the cash lump sum you’ll get paid at the end of the year. Bonuses are a lot less standardized but based on my own experience and surveying my peers, it is appropriate to use a 50-75% multiplier of base salary. Using this methodology, we get a median salary range of $155k to $220k. This % multiplier is going to depend on a number of factors such as the overall economy, your group performance, and firm performance. Buckets: It really depends on the firm, but some banks will further tier their bonuses into “buckets”. They will incentivize performance by paying better-performing analysts more. At bulge brackets, we’ve seen that top bucket analysts will generally make ~10-30% more than bottom bucket analysts. However, some firms have very small bonus ranges (e.g. as low as $5k). It really does vary quite a bit. Elite Boutiques: I want to specifically point out that elite boutiques (e.g. Evercore, Centerview, and Lazard) typically pay more money. These elite boutiques are where you want to be if you want to just get paid. This is because elite boutiques are a little bit leaner organizationally, having fewer overall employees and less administrative overhead. Elite boutiques are generally also founded on the principle that the deal team should receive a greater proportion of the money. Elite boutique deal teams get a larger portion of deal commission. Centerview: Centerview definitely deserves its own comment. These guys consistently pay the top of street, often rivaling the pay of private equity and hedge fund people. If you’re a top 3rd year analyst at Centerview, you can pretty easily make >$300k. Stock: Most of the top investment banks are public companies (except Centerview). But unlike working for Big Tech, you’re not going to get any company stock as an Analyst. You may start to receive stock at the Associate level, which is the position after Analyst. One last important thing to recognize is that investment banking pay is going to fluctuate with the overall deal volume of the industry. If the economy is slow, then there are fewer deals to do, and fewer commissions to be made. But all things considered, it’s definitely lucrative to be in investment banking.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview Private equity is a very lucrative career. As an asset class, private equity has enjoyed tremendous success over the past decade. Investors around the globe continue to pile their money into private equity firms. Dry powder (i.e., available cash that private equity firms can invest) hit a record high of $2.5 trillion in 2019. There is a lot of money to go around. Private equity firms buy companies. Then, they operate and try to improve those companies. Finally, they try to sell these companies at a profit. Private equity employees are compensated for making good investment decisions. The larger and more successful the investment, the more money there is to go around. Mega funds offer large salaries in part because they manage large quantities of money. If you’d like to learn more about how to break into private equity, feel free to check out our Private Equity Recruiting Course. The Private Equity Associate The Private Equity Associate is typically the lowest-ranking employee at a private equity firm. The Associate is typically a mid to late 20’s person with a prior background in investment banking, consulting, or other deal-related financial services. In this post, we’ll do a benchmarking exercise of Associate pay at mega funds. It’s the easiest to try and standardize Associate pay because: There is the greatest volume of Associates (they are at the bottom of the pyramid), so we have a lot more data to work with. Associates generally don’t receive carry (i.e. a portion of profits in the fund), so we can just calculate cash and bonus salary to get to a decent answer. People get dodgier about their salary as they get older, so there’s less transparency. In short, if you’re at a top mega fund, then you can expect to get paid between $350-$400k per year. These numbers reflect total compensation paid to private equity associates in 2022. Private equity pay increased in 2022, largely driven by competition from other professions such as investment banking and big tech paying large salaries in 2021. We note that similarly-aged hedge fund analysts on average make a similar amount to private equity associates, but there is a much wider variance across hedge fund salaries. Variance in salary is one of the key differences between private equity firms and hedge funds. Methodology We're going to start by ranking all of the private equity firms in the world based on their latest flagship fund size. The flagship fund typically refers to the main fund that a private equity firm is going to invest out of. Flagship fund size tends to be correlated with what private equity firms pay their employees, as employee salaries are partially paid by the management fees on funds. Note that this ends up being a list of the largest private equity funds and asset managers in the world. They manage the most amount of money and generally hire between 6-12 Associates globally every single year. Next, we’re going to consult our reliable friend, the H1B Database, which compiles the base salaries of all U.S. employees under the common H1B visa. We lay out the lowest and highest figure we can find for the Associate position at each firm, exercising some judgment to ignore outliers. We then apply a bonus range of 150-200%, which is the approximate range paid to associates in 2022. This bonus range was derived from industry sources and cross-referencing other compensation studies. We recommend examining the Heidrick & Struggles report if you are interested in looking at more data regarding private equity compensation. Observations Base Salary: Most top Private Equity Associates are going to make between $125k and $145k for their base salary. This is what goes into your bi-weekly paycheck. Bonus: The bonus is a lot harder to standardize, but from my personal experience and that of my peers, the bonus range is typically around 150-200% of the base salary. This depends a lot on the fund performance, group performance, and your own performance. The bonus is a lump sum cash payment that is paid annually. All-In Comp: When you combine the base salary and the bonus, you get your all-in compensation. I think this bonus % is a little bit on the conservative side and I would say an appropriate range is $350k to $400k all-in compensation as an Associate. A Apollo Global Management: Apollo Global Management is frequently reputed to be the highest-paying firm on the street in terms of all-in compensation, paying their Associates upwards of $450k per year. They have an enormous fund and have an incredible track record of success. They also have a reputation of being pretty intense, but hey, this is private equity we’re talking about. Annual Raise: The Private Equity Associate program typically lasts 2-3 years. This is more anecdotal, but each year, you can expect between a $25k to $50k raise. This amount will balloon when you get promoted. Below is a summary chart from the Heidrick & Struggles report that looks at private equity compensation by role. We note that this data looks at 2021 compensation and is self-reported. There are two other factors in private equity that can materially drive how much money you make: carry and co-invest. Carry Private equity firms are paid based on how much profit they can generate from their investments. They are given a portion of this profit, which is known as “carry”. The thing is, most associates don’t get carry. At mega funds, it’s essentially unheard of, and even at sub $1B funds, fewer than 1/5 of people get carry. I think this is partially because the Associate position is relatively high attrition, and it’s annoying to give Associates carry when they might leave in the next year or so. Private equity fund duration can be up to 10 years and carry payments aren’t going to be received evenly over the course of a couple of years, so it’s tough to divvy up. Private equity firms also have no incentive to give their precious carry to the Associate. It’s not the market standard and Associates already get paid a very high amount for their age. Co-Invest Co-investing occurs when you can invest alongside the private equity firm into a deal or fund. This means that when the firm buys a company, you can throw in some money and get some equity in the business. If your fund does what a private equity firm is supposed to and returns 15-20%+ annually, then you might be able to grow your money quickly and safely by co-investing. The ability to co-invest is theoretically pretty cool because a lot of mid-20s people aren’t going to have access to attractive alternative investments. Note that less than half of all funds even allow co-invest. One important consideration is that co-investing will have the illiquidity issues that private equity as an asset class has. If you have a large payment coming up (e.g., business school, buying a house, etc.), it might be hard to have a lot of money tied up in a private market investment that you can’t sell out of. Conclusion All things considered, you’re going to make $350k to $400k at a top private equity fund as an Associate.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview Aside from which school you go to, the most important factor determining if you can graduate with a great finance job is your prior work experience. With recruiting timelines being pushed up earlier and earlier, firms have less and less information to evaluate you with. Grades have become a flimsier metric to rely on because you’ll only have results for introduction level classes. The most important factor to get an investment banking internship is work experience, particularly one's freshman and sophomore internship. This has been amplified in recent years as accelerated recruiting for investment banking now happens in sophomore year. So you need to focus a great deal of your energy in your freshman year cold e-mailing, reaching out to people, and ensuring you have something finance-related to do during your freshman summer. But it can be incredibly hard to find a relevant paid job. Most financial institutions use the internship program as an extended interview process, with the goal of eventually converting interns into full-time hires. A freshman intern has such a low likelihood of converting into a full-time employee that many investment banking firms don’t even bother hiring freshmen. In the unfortunate event you can’t find any relevant paid finance job, you shouldn’t be discouraged. You should focus your energies into a productive outlet. If you're really just trying to improve your finance technicals, you should check out our Valuation and Finance Starter Kit. Remember, you need to be doing something with your time. You need to have something to put on your resume. It’d ideally be a paid job, but if it’s not, here are some good alternatives: Offer to Work (for Free) at a Search Fund A search fund is a structure set up to purchase a single company (tends to be small companies purchased for a few million dollars). Incidentally, search funds have become a great haven for ambitious finance students with no existing skills. Almost a third of all my friends who ended up in finance in Canada interned at a search fund at some point. Search funds are often run by early 30’s professionals with prior finance / consulting experience. This makes them a valuable career resource to you and it makes them more receptive to hiring a student. The early stage of a search is very labor intensive, as it requires lots of canvassing, cold calling, and going through databases to find a suitable investment target. If I were a freshman and I couldn’t find a conventional job, I would patrol the Internet for search funds and reach out to every single person offering to work for free and to work remotely. A lot of MBAs from Harvard and Stanford leave finance to start search funds so you should be able to find at least one person willing to take you on. Here are some directories to get you started: Search Fund Partners (fund of funds) Axial Database of Search Funds LinkedIn groups of search fund investors I specifically recommend search funds (vs. all finance boutiques in general) because I think your recruiting success rate is going to be higher with search funds. Search funds in the middle of a search are running short sprints that last for just a year or so, which makes them exactly the kind of company that needs an intern. Start a Blog about Investing If you get shut out from all jobs and even the search funds aren’t returning your e-mails, I think the next thing you should consider is to start a legit-looking blog about investing. To be honest, if you can’t even secure a search fund internship, you should revisit your cold e-mailing approach… But the next thing I’d recommend is to start a finance blog. Creating a blog is going to show initiative, continuity, and highlight your genuine interest. Don’t get hung up on how good the specific content is because no one will keep you accountable for your stock pitches. Just start writing and try to have a handful of posts that make it seem like you take it seriously (like… 5 to 10 long-form articles). If you consistently post coherent stock pitches or market commentary on a website you built yourself, you’ll definitely impress people. Don’t over-complicate things, just write your investment thought process in a clear and straight-forward manner. I know several hedge fund analysts who started blogs in college and the fact that they had an investing blog would constantly come up in interviews. It doesn’t even have to be a blog really, it can just be making a couple of polished stock pitch presentations that you can show to people you are networking with. If you’re worried about your thoughts being embarrassing – don’t be. Honestly, no one cares if a student has bad investing takes. Here are some good investing blogs that you can use for inspiration: Aswath Damodaran Citron Research Alta Fox Capital Write Articles on Seeking Alpha and Value Investors Club If you want to have a higher chance of getting your ideas read, you might benefit from posting your ideas to an active online community like Seeking Alpha or Value Investors Club. I think both of those communities are large enough to be recognized by most people in finance. The built-in voting system can also give you more external goals to strive for and put on your resume. Start a Solo Small Business It might seem overly ambitious to say you should start a business if you can’t find a job. But the beautiful thing about a start up is that people expect you to fail and you really don’t have to make much success out of it. Remember, the ultimate goal here is to have high-quality talking points and to communicate people that you are a hard worker. There are tons of easy small one-person businesses you can start in the matter of a few weekends. You could start an e-commerce / dropshipping business for less than $500. Or you could tutor high school kids. Or you could freelance on Fiverr. Just file for incorporation and you have instant resume padding. Invest Your Own Money If you have the spare capital, you should try to open up a personal account (“PA”). Do your research and take a few positions that you believe in. It’s kind of funny, but once you’re in the real world working for a financial institution, you won’t be able to manage your PA as actively, so the best time to get familiar with trading public stocks is in college. I think it’d be very reasonable to add a line on your resume (under Interests) declaring that you manage your own PA, which stocks are in it, and what the return has been. If you’re bold enough to include a stock name, you’ll very likely get asked about it in some interviews. If you’re strapped for cash, you could open up a paper account (with ThinkorSwim for example). Take Courses or get Certificates I really think that all of the other options are better, but I suppose you could always get an online certificate / accreditation to express your interest in finance. Again, I don’t think there are any great certificates that will materially impact your chances of landing a job, but a certification is still better than nothing. I got two certifications in my freshman year (Canada Securities Course and the Bloomberg Essentials) because I was desperate to show that I liked finance. It was kind of a waste of time, but I guess they did stay on my resume for a handful of years. Here are some certifications that might be interesting: CFA Level 1 Harvard CORe (Credential of Readiness) Bloomberg Market Concepts Canada Securities Course Network Aggressively and Systematically This should be a given, but if you’ve got nothing else going for you, you need to be dialing up the networking intensity. I normally try to speak with 1 person per week when I’m actively recruiting, but if you’ve got no paid finance job, you should be speaking with 2 people per week in the industry. Relatedly, if you couldn’t land a summer internship, you could begin networking for a fall / winter internship that you could do concurrently with school. I know many people who completed online internships throughout the school year in order to further pad their resume. You only have to do this if you didn’t have a summer internship. Conclusion It’s important to not be discouraged if you can’t find a good finance internship in your freshman year. I know a handful of (semi-target) people who worked in retail / food service their freshmen year who were still able to land great bulge bracket offers coming out of school. They made up for it with stellar extra-curriculars, great grades, and diligent networking. Even if you don't have a full time internship, you need to be working as hard as if you did. If you aren’t able to get a good finance internship, you need to make sure the rest of your resume is as flawless as possible. And it’s always better to be doing something.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview I’ll tell you right now, private equity is a pretty hard and busy job. Any deal-oriented job is going to involve intense, short sprints and private equity is no exception. It’s not quite at the level of investment banking hours, but you’ll still be working a lot. And the average intensity of each hour is going to be higher because your job is to put money at risk. Private equity tends to mean less hours for more money. In private equity, you’ll also be responsible for a lot of different tasks. The deal teams are lean and your decisions will have a high degree of permanence, which is why I’d say the stress level is overall higher in private equity than in banking. Very importantly, there’s also no one around to check your work. There’s a much higher burden of getting things wrong in private equity. I would say the average amount of hours worked in private equity as an associate is ~60-65 hours. This is about 10-15 hours better than investment banking, which is a material difference. If you'd like to learn about how to break into private equity, we'll teach you how to build an LBO and answer technical questions in our Private Equity Recruiting Course. Tasks in Private Equity Let’s start by talking about the key categories of work you’re expected to do in private equity: Working on transactions In private equity, your job is to purchase companies, operate them, and sell them for a profit. The key engine at work here is to work on possible transactions and go through deal processes (which will be managed by investment bankers). The vast majority of your time – probably at least 2/3 of your time, assuming normal market conditions – will be spent looking at new investment opportunities, meeting with management teams, and doing diligence on companies. You’ll need to go through the investment committee multiple times before the firm is prepared to deploy any money, so there’s a lot of work to be done. You’ll work with a variety of advisors, build financial models, and prepare materials as part of your diligence. Managing portfolio companies Once you purchase a company, a lot of your work will be around supporting the portfolio company. You need to make sure the company is operating healthily and as an Associate, you’ll help support a lot of the FP&A work in the company. You’ll go to quarterly board meetings, periodically meet with management, and help run any financing processes. If your portfolio company isn’t doing very well, if the company is understaffed, or if you’re going through a sale process, you will probably become more heavily involved with the day-to-day operations. Everything else (valuation, sourcing, conferences, fundraising) Perhaps 5-10% of your time will be spent doing miscellaneous tasks: Valuation: Typically a quarterly process where you set a mark for your portfolio companies. You’ll have to go over the company’s financials and health to assign a private market valuation. I found this to be kind of a headache since it’s not additive to returns and tends to involve a lot of back-solving to get to a specific answer. Sourcing: Anything that involves canvassing or landscaping potential industries. If you’re in growth equity, this is going to be a big part of your job, in which you’ll spend a lot of time cold e-mailing and cold calling management teams. Conferences: Somewhat related to sourcing, but you may be expected to occasionally go to industry conferences to meet with management teams or stay up to date on trends. Fundraising: At smaller firms, you may be expected to fulfill more of a business development role associated with fundraising. Fundraising is a huge part of the Partner job in private equity and they’ll often need help preparing discussion materials company-level data. Hours Distribution in Private Equity So there’s definitely a lot of work to go around in private equity. Again, you’re going to be working on average ~65 hours. And mega funds tend to be slightly grindier. However, I think it’s best to think of the typical hours you work in private equity as a distribution. Normal work: 60 to 70 hours Maybe 50% of the time, you’ll be in this bracket of working 60 to 70 hours per week. You might be in a few live processes and have to work to midnight once per week, but generally you’ll have your late evenings free. You’ll have work to do for multiple concurrent projects. I found that on any given day I generally had deliverables for 2-3 different teams. You’ll probably have some weekend work (perhaps 3-4 hours of updating a deliverable on one of the days). But generally, there’s a much greater respect for people’s weekends in private equity. People in private equity are older, more professional and tend to have young families, so most people care about having good weekends. Deal mode: 80+ hours When you’re in the heat of a live deal, you’ll most likely be working 80+ hours per week. By live deal, I generally mean that you have exclusivity with a specific company. That means there are no other private equity firms doing work and you have the undivided attention of the management team. There is so much work to do on a deal that it’s hard to get around. You’ll have multiple calls per day with advisors like lawyers, accountants, and consultants. You’ll be getting boatloads of new data from a data room every single day. You’ll have new presentations and diligence e-mails to synthesize all the time. And because this is the world of business, all of your deliverables are going to have a handful of iterations to go through. Even if you’re not on a live deal, you might get to this 80+ hour range if you have multiple processes heating up. 80 hours means that you’re working past midnight a couple times a week and you’ll have at least a couple of hours of work each weekend day. Chill time: 40-50 hours The good thing about private equity is that you can conceivably work between 40 and 50 hours. If your portfolio companies are humming along normally and you’re not in a live process, there won’t be an awful lot to do. A lot of your capacity will depend on the capacity of the more senior people. If the partners are all occupied working on other deals or fundraising, they won’t be able to meet with new companies and fill the funnel with new deal opportunities. One additional quirk is that if you’re only an Associate for 2-3 years, it’s possible you’ll have a relatively chill end to your stint. It’ll be difficult for new teams to staff you on live projects because a lot of work requires continuity. I was consistently leaving at 5pm my final few months on the job. Hours Improve Over Time It’s important to realize that your hours definitely get better in private equity over time. You might even have a normal life by the time you’re 40! As the Associate, you’ll be doing a lot of work that takes a requisite amount of time. Building a model and putting together a PowerPoint presentation always takes a discrete amount of time to do properly. But as you rise in the ranks, you’ll spend more of your time leading calls, coordinating diligence, and giving mark-ups vs. actually computing the work. I think that for every promotion, you can probably shave off 5-10 hours of the time spent in the office. Mid-level people, which would be in their 30s, can get by working around 50 hours per week in the office. They’ll also be highly motivated to go home since many of them have young children at home. The role of the Partner is extremely different, in which your main job is to meet new people and create new deal opportunities. They can spend 40 hours in the office (or far less), dedicating the majority of their time to travel and meeting new companies. The amount you travel increases significantly over time. You might only travel once per month as an Associate, but Partners easily travel multiple times a week. Summary The hours in private equity are far better than in investment banking. It’s a significant enough improvement that most people will make that switch. The stress can be high in private equity, but if you can compartmentalize it reasonably well, then it might be the right career for you.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview If you’re trying to get onto the buyside, one of the first career forks you’ll be presented with is whether to pursue private equity or whether to pursue hedge funds. As buyside firms become increasingly tenacious, you might have to make this decision within the first 3-6 months of graduating from college. Most people (including myself) figured that we would have enough time to research different roles, get relevant work experience, and organically speak with people to learn about private equity and hedge funds. But in truth, the recruiting process begins so quickly that if you’re in banking or consulting, you’ll be forced to make this decision before you know it. There are of course many other lucrative career paths you could go down in finance (venture capital, credit, infrastructure, etc.), but I find that the majority of investment banking analysts choose between private equity and hedge funds. This tends to be even truer on the east coast, where there’s a huge supply of hedge funds and people are more laser focused on finance opportunities. To summarize this entire post, my recommendation is generally as follows: if you want a safe outcome, optionality or to go to business school, do private equity. If you’ve always liked stocks, like talking about finance outside of work, and want the opportunity to make more money, do hedge funds. If you're interested in pursuing private equity, you can check out our Private Equity Recruiting Course to learn how to build an LBO, do a case study, and answer technical questions asked by interviewers. Buyside Career Paths Private equity and hedge funds are perhaps the two most opaque and lucrative careers in the entire business world. If you join one of the best firms (i.e. one of the top-performing funds) and continue to rise in the ranks, it’s not unreasonable to think you’ll be earning in excess of a million dollars by the time you’re in your early 30s. It really pays to be really good at capital management. Working at a mega fund can mean that you'll be earning huge amounts of management fees. On the surface, private equity and hedge funds can seem like very similar professions. In both fields, you’ll: Study businesses and learn how economic systems work Build financial models Meet with management teams Manage investments in order to generate money for your investors There’s a great amount of overlap, which is why candidates often have difficulty deciding between them. However, there are also big differences that will have a profound impact on your career, earning potential, and day-to-day work experience. Let’s go over the key characteristics of each field. Key Characteristics of Private Equity Buy companies and improve them In private equity, you buy private companies in order to improve their financials and operations. You’re typically buying whole companies or large enough stakes where you can have major influence over the direction of the business. Private equity is a lot more about control and taking over an entire business. As such, a private equity firm is going to generally have a fewer number of investments to watch over than a hedge fund. Many private equity firms will have maybe 10-20 companies in their portfolio at a given time. This puts a very, very strong emphasis on granular due diligence because you have a fewer number of bets to get right. Additionally, because you’re purchasing whole companies (as opposed to stock), most transactions are completed in the context of deals. You have to go through processes in order to purchase companies in private equity. Hold investments for years By virtue of purchasing entire companies, you’ll also be stuck with companies for the long haul in private equity. The average hold time of a company in private equity is about 6 years (which is probably longer than the average career of someone who enters private equity). When you purchase companies, it can take years for them to grow and improve their operations. Private equity is also built around the concept of severely burdening a company with debt, and it can take several years to pay down that debt. Private equity tends to be a big game of patience. You look at a high volume of potential opportunities, but you can only invest in a few. Then you hold those investments for a long time. Use debt to target 20%+ returns A big puzzle piece of the private equity business model is a sacrosanct use of debt. When you buy a company, you can control what goes on its balance sheet. So you can effectively load with a ton of debt. This is good for you (most of the time), because you can use that debt to lower how much equity you need to put up initially. This allows private equity firms to purchase larger companies and gain outsized returns on the money they put up. The use of leverage essentially increases your potential returns. Most private equity firms target a 20%+ annual return. Exposure to multiple faculties I think one of the most enticing factors of private equity to junior folks is the optionality of the career paths. In private equity, you get to look at businesses under an investing lens, but the nature of the private equity model also exposes you to functions like legal, corporate development, FP&A and operations. If you end up becoming a private equity associate, you’ll have a straight shot to the top business schools and top hedge funds, while still leaving the door open to VC, corporate development, and start-ups. As with investment banking, you learn a little bit of everything. Key Characteristics of Hedge Funds Look, there are so many different kinds of hedge funds. The term “hedge fund” is a really imprecise label. Here, I’m going to be speaking about fundamental equity hedge funds, because that’s what most investment bankers and consultants end up doing. “Fundamental” implies that you’re analyzing the business, the economy, and the business’ financials (as opposed to quantitative). Some hedge fund types in this category would include long / short equity, long-only, event-driven, and activist funds. We’re excluding things like quant, algorithmic trading, and derivative funds, which tend to be more suited for traditional STEM types. Invest in public stocks Instead of buying whole companies on the private market, these fundamental equity hedge funds buy public stocks. They typically buy shares of common equity in these companies. The key difference here has to do with liquidity – you can very easily trade in and out of stocks. You can make a trade in a matter of seconds at a hedge fund, while private equity processes can take weeks (or months). Public stocks are also marked to market, meaning that their value is transparently available every single day. I think people at hedge funds tend to have a slightly greater psychological burden when it comes to investing because your performance is explicit to you and your boss. This can be very positive if you’re someone who is motivated by clear metrics. Able to short companies to hedge risk The long / short model employs the use of “shorting” in order to hedge their own risk on trades or further amplify returns. There’s no explicit mechanism to short a private company in private equity, but you can easily short a public stock. Hedge funds have the option of going both long and short positions, which can lead to a lot of different investing strategies. Many funds are “net long”, where you invest in companies you believe in and short companies you think will fail, giving you a potentially higher upside. There are also “market neutral” funds, which try to pair long and short trades in order to mitigate market risk. Try to beat a benchmark Most hedge funds are given a benchmark to beat and will at least partially be compensated on their relative performance to the benchmark. A lot of the times this will be the S&P 500 (a composite index of the world’s biggest stocks). There’s less of a standard target return threshold than in private equity because there are many different kinds of investors. “Market neutral” funds try to always yield positive results, even if at the cost of losing out on higher highs. Highly specialized skillset Those who go down the hedge fund path are often sacrificing a little bit of optionality (relative to private equity). The job is laser focused on analyzing public companies. You spend a lot of your time building models, analyzing a company’s financials, and creating a bulletproof investment thesis. You’re investing in common equity, so there’s less legal work. You’re not always going to be taking a controlling stake, so you won’t be as involved with corporate development, FP&A, or other parts of the business. Most people who enter the hedge fund world tend to stay in it or in a highly related sphere. There are fewer people who go to hedge funds that switch to PE, VC, or corporate. I think hedge funds tend to have fewer institutional relationships with big companies and business schools. Many top hedge funds are extremely lean and focused firms, while many top private equity firms try to maximize the amount of assets they manage. Private Equity vs. Hedge Funds Below is a table capturing some of the discrete career factors of the most junior roles in both careers. We are referring to the position you will have as a mid-20s person (i.e. right after being a banking analyst). Pay: Private equity associate positions tend to pay in a relatively narrow band. It’s somewhat standardized across the industry that you’ll be getting between $250k to $400k at a mid-market to mega fund. Hedge fund salary is extremely contingent on how well your fund is doing. If you were down on the year, you might just make your base ($150k), but if you’re at a top performing fund, you could make close to a million dollars as a mid-20s professional. Hours: Private equity requires doing deals so you’ll probably generally be working in private equity more. Doing process-oriented transactions has a requisite amount of work that is extremely high. Hedge fund hours can become busier during earnings season (once per quarter). You also have to go in earlier (like around 7:30 to 8:00 am) so you can match market hours. Stability: The nature of private equity capital is pretty stable. Capital is locked for years because the investing strategy is based on holding companies for the longer term. You have to screw up several funds in private equity in order to have a chance of shut down. This can make a career in private equity relatively more stable. Hedge funds are extremely susceptible to redemptions. By virtue of being marked to market, your investors will know exactly how well you are doing. There tend to be fewer barriers for investors to redeem their money. So if you’re at a newer fund that has a few rough quarters, it’s not inconceivable that your fund could shut down. Again, both careers are extremely coveted and you’d be fortunate to land a job in either. I’ll reiterate the advice I give to people who are trying to decide: Go into private equity if: You want to preserve optionality. You want to go to business school. You are on the risk-averse side. Go into hedge funds if: You’ve always really liked finance (have an active PA, constantly read about stocks and read finance-related books for leisure). You don’t mind some volatility (or you’re super smart so you’ll crush the competition). You want the opportunity to make more money.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview The financial crisis of 2007 - 2008 permanently changed how the leveraged finance arms of investment banks operate. Regulatory guidelines enacted in response to the financial crisis and decisively limited the banks’ ability to lend to companies in risky sectors or finance risky leveraged buyouts to support their private equity clients. As banks became more selective about the transactions they supported, Private Credit (i.e. Private Debt or Direct Lending) emerged to fill the significant lending gap that the investment banks left behind. Private Credit has grown to become one of the most important segments of the entire debt financing universe. Despite the surge of popularity in private credit among young professionals, there are very few resources explaining how those interested in a career for private credit can navigate its mystifying recruiting process. In this post, we will provide an overview of how recruiting for private credit works, discuss the similarities and intricacies compared to private equity recruiting, and provide a guide on how professionals from different career backgrounds can navigate the process. Overview of Private Credit Similar to private equity, recruiting for private credit is composed of 4 to 5 rounds of interviews, which include a round dedicated to a case study and/or model test. Interviews consist of technical, behavioral and fit questions, with technical questions being geared towards debt- or credit-related topics. The recruiting season typically begins one year later than private equity, starting in late Fall of an analyst’s 2nd year, although many funds, especially smaller ones, will just recruit on a need basis. As such, we would estimate that Private Credit has more off-cycle recruiting opportunities than Private Equity. Paths to Private Credit The most common path to getting an interview at a private credit fund is through headhunters who usually reach out directly to analysts through your professional email. The largest credit funds such as Carlyle, KKR (both Henkel), Oaktree (Amity) and GSO (SG Partners) rely on the headhunters they use for private equity recruiting. Many private equity mega funds have large credit arms. Regional or smaller funds (<$5B AUM) often post directly to job sites or use lesser known recruiters. When speaking with headhunters, make sure to have your story nailed down as to why you are pursuing private credit over private equity. Opportunities are available to anyone working in investment banking, but the most common paths to Private Credit are candidates from: Leveraged Finance or “LevFin” (origination, underwriting, execution) Capital markets Corporate / commercial banking For those not currently in any of these fields, it is highly recommended that you lateral to one first in order to get related work experience and better access to recruiting pipelines. For commercial and corporate banking analysts finding it difficult to get interviews, a common path is to transition into a LevFin group (whether internally or lateral) before recruiting. Contrary to private equity, it is not uncommon to see analysts that were promoted to associates in investment banking also move to private credit. Typical Credit Interview Questions When preparing for Private Credit interviews, you should take special attention to understand your deals very well. You should be able to: Explain in 30 seconds what the company does and how their business model makes money. Know key stats of the transaction (size and interest rate on each debt tranche, leverage metrics) and business (EBITDA, cash flow/margin profile, etc.). Discuss the investment highlights (what makes this company a good business to invest in?) and risk and mitigating factors (what risks could impact the business’ performance and how is an investor and the company’s cash flows protected?). If it was a LevFin deal, know details of the syndication process and what investors were concerned with (if possible, check if the credit fund potentially looked at any of the deals you worked on). If you have directly related experience, you will likely be asked about credit-related technicals, such as: How do you calculate financial covenants (e.g. Fixed Charge Coverage Ratio) How do you calculate all-in yield for term loan or bond? Walk me from EBITDA to levered free cash flow Walk me through a credit agreement What is your view on the leveraged loan market? If you have a corporate or commercial banking background, expect to be grilled more on technicals and what exactly your responsibilities were on deals. Some interviewers assume corporate bankers just manage client relationships and do not handle technical analysis like LevFin juniors, so the technical standard is often higher. The Case Study / Model Test The majority of Private Credit groups will administer a case study as the next portion of the interview process. The case study will either be a take-home assignment or an in-person test. Take-home assignments are much more common during the off-cycle, while in-person tends to be more common during on-cycle due to the time constraints. 1. Take-Home You will be given a CIM or presentation on a company and supplemental information including an industry report or excel files with large data sets that you will need to comb through. You will have 2-3 days to prepare a presentation either in Word or PowerPoint format. It should outline the transaction situation, company and its business model, investment merits, key risks and mitigating factors, historical financial analysis, a projection model with multiple cases and most importantly, your recommendation on if you would do the deal or not (Hint: It’s okay to recommend not doing the deal as long as you can defend why). You will present your memo in front of a group of people who work at the fund. Expect to be grilled on your thesis (Hint: even if it’s a stellar deal, people in the room will try to scrutinize your analysis to see how you handle pressure). You should also be prepared to talk through a downside case. The idea is to simulate a real investment committee where decision-makers will ask very tough questions to make sure your thesis is air-tight before they approve your deal. 2. In-Person This will be similar in structure, except that you will only have 3-4 hours to prepare and present your presentation at the fund’s office. Your write-up will be a slimmed-down summary of the take-home version, so 2-4 pages of analysis plus a short form cash flow projection model (i.e. no full balance sheet). A case study is similar to the work you do during a credit underwriting process (i.e. putting together an 80-page memo and presenting it to the bank’s risk committee). Every bank runs its credit processes differently, so if your group is not involved with credit underwriting, we suggest taking a CIM from a deal you’ve worked on and preparing your own investment memo. Example of a Summary Cash Flow Model Output Some funds may administer a separate model test depending on their investing mandate. Some firms only invest in first-lien term loans, while others invest all throughout the capital structure. Capital structure-focused funds often have higher technical standards and may have a more complex model assignment. This involves building a full three-statement model from scratch within 2-3 hours using provided financial and capital structure assumptions. Expect to calculate credit ratios and run an IRR analysis if the fund invests in mezzanine or equity co-investments. Conclusion While the talent pool for Private Credit and Private Equity recruiting may be similar, the technical standards needed for Private Credit tend to be different. Not only do you have to build three-statement cash flow models, but you also need to be able to compute credit financial ratios, understand debt documents, and analyze individual tranches of debt. The interview fundamentals may be the same, but you may need to spend more time understanding the technical nuances.

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year. Overview The sheer absurdity of the private equity recruiting process is perhaps best illustrated by the recruiting timeline. In recent years, private equity recruiting has kicked off within months of people graduating. Private equity firms commonly interview and hire people that have fewer than 6 months of work experience. And the thing is, private equity firms are hiring people who won’t actually start their jobs for another 2 years. The majority of hires into private equity are analysts from the top investment banks in the world. Many investment bankers move to private equity for the opportunity to earn even more money. Based on my own experience working in investment banking and private equity, we’ve observed that over half of the people in banking typically pursue private equity (making it the most popular career path out of banking). This obsession with private equity tends to be truer on the East coast, where the majority of bankers choose to stay in finance. On the West coast, many bankers also pursue fields such as venture capital and tech. If you’re not at an investment bank or consulting firm, it’s tough, but not impossible to break into private equity. Perhaps you’ll have to go to a smaller boutique first or work your way into banking first before getting contacted by headhunters. You can check out our Private Equity Recruiting Course if you're interested in learning more about the modeling and technical information needed to ace an interview. On-Cycle Recruiting In 2019, on-cycle recruiting kicked off in September. On-cycle refers to the “main recruiting process” in which the vast majority of private equity firms recruit within the same week. On-cycle is not an organized process. Firms are not carefully coordinating with one another to ensure that candidates have a reasonable interview timeline. What typically happens is that one large firm, oftentimes a mega fund, will begin interviewing candidates and then all other firms will begin interviewing as soon as possible. Firms are compelled by game theory, eagerly trying to jump the gun on recruiting in order to snatch top students away from each other. It’s like a cold war. After this week of on-cycle recruiting, the majority of top firms will have filled their entire classes. During on-cycle recruiting in 2019, firms were extending offers to candidates who wouldn’t start working until 2021. This means that firms were extending contractual offers to 22-year olds, who wouldn’t join the firm for another two years. Even more astonishing, most people are only given 24 hours or so to decide on their offer. Some extremely cutthroat firms have policies that if you leave the interview room without accepting, the offer will expire. Even pro athletes only get drafted 6 months to a year before they join their team – and they typically hire agents! Can you get mad at the private equity firms? Well, yes, sure you can, but it’s instructive to realize that the current state of affairs is the byproduct of years and years of competition. There is no governing body that manages the recruiting process. There are no schools or organizations to protect candidates. In fact, many investment banks discourage or ban the idea of recruiting, which just adds another layer of stress. These private equity firms have some of the brightest minds in the world and all firms know how demanding and labor-intensive private equity can be. They understand how critical labor is doing deals. When you layer that with the competitive intensity and moral apathy of the average finance professional, you get a horribly uncomfortable recruiting process that no stakeholder enjoys. The Recruiting Timeline through History Was it always this bad? No. It was always bad, but not like the dystopian sci-fi level of bad that we have now. Below, we have a chart that maps out when on-cycle recruiting kicked off every single year. Over a decade ago, recruiting occurred only 1 year in advance. This gave analysts much more time to do actual deals, technically prepare, and thoughtfully decide if they wanted to recruit for private equity. Every single year, the recruiting timeline inches forward by a month or so. There was a brief stretch for the 2012 – 2016 associate classes where the start time held relatively constant at around 1.5 years in advance. Over the past five years, the recruiting timeline has consistently moved up a month or two at a time. Every single year, many firms get caught off-guard or unprepared because of how accelerated things have become. It’s at the point where it seems like there’s no further it can move forward. The only time over the last 15 years that recruiting has moved backwards in time was during the Great Recession (recruiting during July 2009). And even then, recruiting only moved back by a couple of months. The crazy acceleration of recruiting timelines has reduced some candidate enthusiasm. Candidate participation in on-cycle recruiting has declined from 72% to 59% in recent years per GoBuyside. This means that more and more candidates are waiting an additional year to pursue on-cycle recruiting (which unfortunately means that those candidates are doomed to an additional year in banking). Candidate preparation and participation based on GoBuyside survey of bulge bracket and elite boutique bankers. The Impact of a Recession A popular looming question is: how will COVID-19 impact recruiting timelines? The truth is that no one – including the top headhunters or mega funds – really knows what will happen. However, based on our conversations with several leading headhunters and observations from the previous recession, we can assert the following: Most firms are predicting that recruiting will be pushed back (even if just slightly), as class sizes, fund sizes, and portfolio company performance are all uncertain. During the Great Recession, many private equity firms and mega funds hired reduced class sizes (e.g. 1 associate instead of 2). Hiring numbers were down, but most firms still participated in recruiting to assess the talent pool. However, even if it isn’t ideal, firms will still be prepared to interview and extend offers virtually. Private equity firms are smart and adaptive organizations. Just as with investment banks, these buyside firms will be prepared to recruit and administer case studies over Zoom calls if it comes down to it. We predict that off-cycle recruiting will become more prevalent for this year of candidates. Many firms will likely still participate in on-cycle recruiting to assess the talent pool, but we find that when timelines are too accelerated for a firm, they tend to not fully fill their class. Many firms might hire half their class during on-cycle recruiting, but might leave one spot open to hire during the off-cycle or the following on-cycle. It can be frustrating and tiresome to recruit for private equity in such a competitive and intense atmosphere. But we’ve come to believe that the highly accelerated timeline can provide an opportunity for extremely prepared candidates. The preparation you need to do for interviews is going to be consistent – regardless of whether it kicks off in August or November. If you take the time to prepare well ahead of time (like during your senior year), then you won’t be nervous when the time comes for the modeling test. If you’re interested in learning more about the recruiting process and how to be fully prepared for the modeling tests and case study interviews, you can check out our Private Equity Recruiting Course.