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After the MBA: Private Equity

Welcome to another post in our After the MBA series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you.

Job/industry:

Private Equity

What it is:

Private equity firms make investments in the private equity (equity that is not quoted on a public exchange) of operating companies. A private equity firm’s goal is two-pronged: 1) acquire an ownership or large minority stake in a company and 2) maximize the value of that investment.

Private equity firms can utilize a variety of strategies in their quest to obtain a controlling (or significant minority) position in a company, depending on the state of the company and other factors. For example, venture capital, which involves investing in young, not-yet-profitable companies (rarely for majority control), is technically a subset of private equity. Conversationally, the term “private equity” most often refers to investment strategies like:

  • Growth capital (aka expansion capital and growth equity): Growth capital is a type of investment (most often a minority investment) used to fund business expansion without bringing about a change of control in the business. Companies seeking growth capital investments are often mature companies (i.e. profitable), able to fund normal operations, but seeking to undergo some sort of transition or change which they would not be able to achieve without outside funds.
  • Leveraged buyout (LBO): A leveraged buyout occurs when a private equity firm uses a significant amount of borrowed money to acquire an ownership stake in a company. Though any kind of company could technically be the target of an LBO, it is important for private equity firms to ensure that the company will be able to meet its loan payments; thus, LBO candidates typically are stable companies with little debt, significant assets, and opportunities for growth.

Once private equity firms have acquired a stake in their target company, they seek to maximize their return — that is, make as much money as possible on the investment. This can be accomplished through a variety of methods (ex. merger or acquisition, recapitalization, or an initial public offering).

Associates and partners at private equity firms are involved in two main processes surrounding these investments. The first involves deal origination and transaction execution. Deal origination involves (among other responsibilities) identifying potential companies for acquisition and developing and maintaining relationships with mergers and acquisitions intermediaries and investment banks. Transaction execution comes in after the private equity firm decides to pursue a certain target company for acquisition: the firm must assess the company’s history, management, and financial forecasts; analyze the merits of the investment (“valuation analysis”); submit an offer; and if both parties are amenable to the offer, perform due diligence in order to ensure there are not any “deal killers” (i.e undisclosed risks and liabilities).

Once transactions have been executed, they must be managed; this involves supporting the company’s leadership and otherwise increasing the value of the investment. This is the second function of PE firms and is known as portfolio management.

Lifestyle

Private equity jobs can be demanding; the specific hours really depend on the kind of firm. In general, the work schedule is less intense than that of investment bankers — with the exception of when a deal is being carried out, at which point associates might be expected to work around the clock if necessary. At some large private equity firms, however, associates do work very long hours (~90 hours/week); smaller firms generally require 60-70 hours/week, often with a fair amount of travel time required.

Salary Range

The median base salary for Class of 2010 Harvard Business School graduates going into private equity was $135,000, with median guaranteed other compensation of $155,000. At Northwestern’s Kellogg School of Management, the median base salary for Class of 2010 grads going into Private Equity/Leveraged Buyout was $132,000; the median base salary for Private Equity/venture capital was $115,000 (these figures do not include other guaranteed compensation).

How to get a job in private equity

Private equity jobs can be difficult to land. Most firms use headhunters to recruit candidates; networking is another option. If your private equity network is lacking, your best bet is to contact recruiting firms (try places like Oxbridge, SG Partners, and CPI).

An MBA alone won’t necessarily make you an attractive candidate for a private equity firm. Above all, these firms are looking for private equity experience — and, failing that, extensive investment banking experience at a “bulge bracket” firm. It is also possible to move into private equity from a field like consulting — however, headhunters will be less likely to recruit from this industry than from investment banks, so candidates will need to make more of an effort to attract attention and display finance-related skills.

If you’re attending a top business school, it is possible that private equity firms will recruit at your school; take advantage of these opportunities! Some MBA programs also offer courses focused on private equity — if you are interested in PE, these academic experiences can only help you land a job post-graduation.

After the MBA: Cleantech

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Cleantech

What It Is:

Generally speaking, cleantech companies work to reduce energy consumption, cost, waste and/or pollution while improving operational performance or efficiency. Cleantech falls under the larger umbrella of green careers — i.e., jobs which aim in some way to reduce environmental impact, preserve and/or restore the environment. Top sectors for cleantech jobs in the U.S. include solar, biofuels and biomaterials, smart grid and energy efficiency, wind power, and advanced transportation and vehicles.

Cleantech companies have seen a great deal of growth in recent years, for a variety of reasons. As fossil fuel prices go up and consumers become more aware of climate change and environmental hazards related to fossil fuels, more attention is focused on clean energy. This focus has helped the industry to make notable advances in recent years, improving manufacturing, reliability, and scalability techniques and driving the cost of clean energy down. An influx of capital — from forward-thinking VCs, governments, and corporate and individual investors alike — hasn’t hurt either. According to a Pew Charitable Trust survey, clean energy jobs are growing faster than jobs in other sectors, and increased by 9.1% from 1998 – 2007. According to the Wall Street Journal, top cleantech companies of 2010 include Solyndra Inc., Suniva Inc., eSolar Inc., RecycleBank L.L.C., and Boston-Power Inc.

Salary Range:

Salaries for MBAs in the cleantech industry vary depending on a variety of factors. MBA grads from Stanford GSB’s Class of 2010 reported receiving a median base salary of $102,000, with a median signing bonus of $20,000. Graduates from Berkeley’s Haas School of Business Class of 2009 who went into alternative energy fields reported earning a median base salary of $85,000.

Best B-Schools for Cleantech:

In recent years, plenty of business schools have amped up their dedication to environmental sustainability and “green” practices. If you’re interested in b-schools that emphasize environmental responsibility, check out “Beyond Grey Pinstripes,” a biannual ranking of the top 100 b-schools that provide coursework, research, and activities to prepare MBAs for social, ethical, and environmental stewardship. Some schools even offer so-called “Green MBAs,” which require normal MBA coursework as well as coursework about managing for environmental and social sustainability. While these MBA programs are by no means limited to those interested in cleantech, the coursework would certainly be useful in those fields. Top b-schools also aren’t missing out on the cleantech wave: schools like Michigan Ross, MIT Sloan, Harvard, Stanford, and Berkeley Haas, along with many others, offer a variety of opportunities to students interested in the field.

After the MBA: Government

Welcome to another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Government

What It Is:

Government jobs available for MBAs vary widely. Many government agencies – from the Department of Labor to NASA to the US Postal Service to the Department of the Treasury – have job opportunities for business school graduates. While working for the government post-MBA might seem unconventional to some, the sheer range of jobs available makes it a logical choice for a variety of candidates. According to the Partnership for Public Service, fields currently hiring for positions include Contracting, General Business and Industry, Loan Specialist, and Realty.

Salary Range:

Salaries for government jobs are lower than many of the private-sector jobs available to MBAs; however, there are some advantages to working for the government, perhaps most significantly stability and quality of life (hours are almost always less grueling than those in popular post-MBA jobs like consulting or investment banking).

The median base salary for Class of 2009 Harvard Business School grads entering government jobs was $90,000; the number was the same for graduates from Carnegie Mellon’s Tepper School of Business. According to slightly older data (a survey conducted in April 2006 by the Graduate Management Admission Council), the average base salary for MBA grads in the government/nonprofit sector is $63,565.

Is a Government Job for You?

Because government jobs span such a wide range of fields, it is important to look closely at the individual agency and field in which you are interested in working. If making money is your #1 goal post-MBA, then a government job likely isn’t the best field for you. However, if you are interested in maintaining a work-life balance, and in finding a stable job with excellent benefits that allows you to influence government research and policy, a government job could be a great fit.

Be aware, too, that stereotypes of government work don’t always hold true. As Kerry Willigan, career consultant at the George Mason University School of Management, put it in this article, “I think MBAs have negative perceptions about government jobs, that it’s a type of drone mentality… But it’s more dynamic than that. You get a lot of responsibility and the opportunity to have some sort of impact.”

How to Break In

If you know going into b-school that government work is for you, look for schools that offer certificates or concentrations in Public Management. This way, you’ll have plenty of opportunities to take relevant classwork and network with like-minded peers and mentors.

Government agencies recruit at many business schools; be sure to attend any networking events and info sessions that are offered. There are also fellowship opportunities available for b-school students: check out the Presidential Management Fellows, which “matches outstanding graduate students with exciting Federal opportunities” and the Department of Labor MBA Internship and Fellowship Program, which gives MBA students the opportunity to serve as interns and/or two year fellows in various governmental agencies.

The stimulus plan has provided many government agencies the opportunity to open the doors to new hires–according to a survey by the MBA Career Services Council, recruiting from government industries is up by as much as 35% at many schools.

After the MBA: Accounting

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Accounting

What It Is:

Accountants oversee the financial strategy of companies, organizations, or institutions to ensure that their financial records are well-kept, that they pay their taxes on time, and that they are fiscally robust. Many – though not all – accounting jobs require candidates to be CPAs (Certified Public Accountants). An MBA is not required to become a CPA – in most cases, only a four-year degree and in some cases, a certain amount of work experience, are needed; however, for senior positions, an MBA or M.Acc. (Masters of Accounting) is often required or strongly encouraged.

There are a variety of possible career paths within the accounting field. Public Auditors review the financials of a client company in order to ensure that there has been no financial misreporting or mismanagement, while internal auditors are hired by large companies to do the same thing on an internal level. Tax accountants and tax consultants work to prepare tax returns and/or advise companies on the tax implications of potential actions. Management accountants work in-house for companies to track the company’s finances in a variety of ways; responsibilities vary. Some management accountants might work as budget analysts or as controllers to plan the allocation of funds in the company.

Salary Range:

Accounting salaries for MBAs vary depending on a variety of factors, including job function, level of seniority, whether the work is in the public or private sector, and the size and location of the firm, among others. USC Marshall reported a median starting salary of $95,000 for 2010 MBA grads working in finance or accounting. This figure does not include bonuses and may be inflated by the salaries of graduates working in other finance-related fields. Kelley (Indiana University-Bloomington) reported a median base salary of $87,200 for 2010 grads working in finance and accounting.

Is Accounting Right For You?

As financial regulations become more stringent, more and more accountants are needed. Accounting requires knowledge of many rules and regulations, so if you’re interested in an accounting career, be sure that you are organized and good at following guidelines! Accounting jobs can be demanding, especially during “busy season” (a.k.a. tax season). In addition, accountants likely will not see much variation in their daily work routine; if you are a highly creative, idea-driven person, accounting might not be the place for you.

If you are interested in going to business school to improve your earning power or standing as an accountant, or want to change careers, getting an MBA in finance or accounting could help you gain a foothold in the industry or get a more senior position at a firm. Often, you will want to sit for the CPA test as well. (It is also possible to go back for a Master’s Degree in Accounting; however, depending on your interests, an MBA could open more doors and will likely ensure a higher salary.)

Accounting firms look for a variety of qualities in prospective hires, including analytical ability, attention to detail, computer literacy and tech skills, ability to work independently and in teams, and ability to multitask. Computer software is increasingly changing the landscape of accounting; many firms look for accountants with superior technology skills who are able to use and manipulate available software to meet their workplace’s needs.

Best Business Schools for Accounting:

According to U.S. News and World Report’s 2010 rankings, the best business schools for accounting include McCombs (University of Texas-Austin), Wharton (University of Pennsylvania), Booth (University of Chicago), University of Illinois–Urbana-Champaign, Ross (University of Michigan–Ann Arbor), Marshall (University of Southern California), Stanford, Stern (New York University), Marriott (Brigham Young University), Kelley (Indiana University-Bloomington), and Kenan-Flager (University of North Carolina-Chapel Hill).

After the MBA: Real Estate

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Real Estate

What It Is:

At the most basic level, the real estate industry has to do with property. Buying property, leasing it, managing it, appraising it, financing it… if it involves property, the real estate industry is undoubtedly involved. MBAs often work in real estate finance; those interested in real estate development are more likely to get a Master’s of Science in Real Estate or another specialized real estate degree.

There are numerous career paths for MBAs interested in real estate finance. Real estate Asset and Portfolio Managers, for example, are responsible for maximizing the performance and value of a company’s portfolio of real estate assets.

Salary Range:

According to one source, average salaries for MBAs from top 20 schools entering real estate start around $70,000. However, this number will be higher if you had significant industry experience prior to completing your MBA. This number might also be higher if you are graduating from a top business school. Columbia Business School, for example, reports a median base salary of $104,907 with median additional compensation of $37,500.

Best Business Schools for Real Estate:

There are a wide variety of business schools that offer real estate concentrations. UNC-Flagler is unique among top-ranked MBA programs in that its real estate program is grounded in the context of real estate development, allowing graduates to understand the “big picture” of real estate in addition to knowing how to structure a project’s financials. Top b-schools that are strong in real estate include Columbia, Haas, and Wharton. Ultimately, success in real estate depends largely on connections and networking; be sure to put these skills to work when looking to gain a foothold in the industry.

Is Real Estate a Good Fit?

Breaking into the real estate industry is, like many post-MBA careers, largely dependent on networking and connections. If you’re not a people person, real estate may not be the place for you. Real estate is also a fast-paced, continuously changing field; you should be willing to be constantly on-the-go and to keep up to date with current trends in the real estate market and changes in laws and regulations that might affect your business. While an MBA is not critical for success in real estate, it can help give you a leg-up in the industry.

After the MBA: Retail/Luxury Goods

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Retail/Luxury Goods

What It Is:

While the retail and luxury industry has typically prioritized creative talent and other skills and talents over business acumen, in recent years an increasing number of MBAs have become interested in jobs in the retail and luxury goods industry. MBAs working in the retail and luxury industry can expect varied job responsibilities and hands-on experience. Some companies at which MBAs interested in the luxury goods industry might look to work include Hermès, Chanel, or LVMH Moët Hennessy Louis Vuitton, among many others.

Salary Range:

In general, MBAs looking to enter the retail and luxury goods industries can expect to make less money than their consulting/investment banking peers. The median base salary for members of the Tuck Class of 2010 working in consumer goods and retail was $108,000, although many estimates run significantly lower.

Is Retail/Luxury Goods a Good Fit?

If you are looking to work in an industry replete with other MBAs, retail and luxury goods is probably not right for you. If you’re looking for a job that is hands-on and requires excellent multi-tasking skills, though, you might be a good fit. If you’ve worked in retail sales (“on the floor”) in the past and enjoyed it — but now want to be involved on a higher level — an executive position in retail or luxury is a great career option.

Great B-Schools for A Career in Retail and Luxury:

Most b-schools will be able to prepare you well for a career in retail and luxury; however, some schools might offer more courses, extracurricular activities, and/or faculty connections that help you get a foothold in the industry. While evaluating prospective schools, look through course catalogs and student group listings to see how many retail-related offerings there are. Some schools even offer MBA specializations in the industry, like NYU Stern’s Luxury Marketing program.

After the MBA: Media and Entertainment

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Entertainment and Media

What It Is:

The Entertainment and Media industries encompass a wide variety of companies, all of which at their core seek to entertain consumers — everything from advertising to television to video games to internet-based media and media technology manufacturers, and much more. For MBAs, a career in Entertainment and Media can take a variety of forms: within the industry, b-school grads might work in marketing, consulting, finance, law, international business, brand management, or business development. As an MBA, you will be much more business person than entertainer (though your responsibilities will of course be intrinsically linked to entertainment). Entertainment and media-related courses in b-school will ideally give you an understanding of the strategy and principles that drive the various sectors of the industry.

Salary Range:

Salaries for MBAs entering the media and entertainment industry vary depending on a variety of factors. Harvard Business School reports that for the Class of 2010, the median base salary (not including bonuses and other extra compensation) was $104,100; the median base salary for Class of 2010 students entering the industry from Georgetown’s McDonough School of Business was $87,500.

How to Break In:

Obtaining a job in media and entertainment depends largely upon networking. There is no recruiting process for media and entertainment jobs like there is for consulting and banking (although if there is a media/entertainment student club at your b-school, they might organize events with prospective employers). If you are interested in entering the media and entertainment industry, make a concerted effort to make connections within the industry during b-school. MBAs looking for work in the media and entertainment industry should be aware that salaries are normally considerably lower than those in careers like investment banking or consulting, and that entertainment companies will not always have fast-track programs to accelerate the career of an MBA hire.

Great B-Schools for a Career in Media and Entertainment:

Going to business school in one of the two main entertainment hubs — New York or Los Angeles — will likely make it easier to make connections in the industry. UCLA-Anderson and NYU-Stern, for example, have top entertainment programs. When looking at prospective b-schools, ask the admissions office if they can put you into contact with students or alumni who have worked in the industry; also look to see if there is an active media/entertainment student group on campus, or if there are any courses offered which relate specifically to the industry.


After the MBA: Venture Capital

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Venture Capital

What It Is:

Venture capital funds provide money to start-ups in exchange for equity in the company. VCs essentially work as middlemen, using funds from “limited partner” investors to finance their chosen companies. VCs are notoriously choosy about the companies in which they invest, and because VCs have a vested interest in the success of the startups they back, they often sit on the board or act as advisers of the companies. Ideally, after a VC-backed company is acquired or goes public, the VCs cash in on their investment, keeping a portion of the money for themselves and distributing the rest to the original investors.

Venture capital is a notoriously difficult field to enter. Networking is key, as is visibility to people in the industry. At some firms, MBAs will be hired as vice presidents or associates. Job responsibilities include screening business plans for prospective companies, doing research on potential investments, keeping tabs on current investments, and more.

Salary Range:

The average salary range for MBAs working in venture capital varies depending on a variety of factors. According to Kellogg’s statistics for the Class of 2010, the mean base salary for graduates working in venture capital was $115,000. The median salary for 2010 graduates from Tuck working in venture capital was $125,000. Note that these figures do not include bonuses and some other benefits.

How To Get A Job In Venture Capital:

Since venture capital is such a difficult industry to break into, VC hopefuls should expect to exert a great deal of effort to find a job in the industry. Networking and communication skills are key to success. According to one VC, other helpful career moves include going to a top-10 business school, working for a start-up, starting your own company, working for a bank or consulting firm, and “putting yourself out there” by creating an Internet presence for yourself. Potential VCs should have strong financial knowledge, business acumen, and communication skills.

Pros and Cons of Venture Capital:

Pros
High salary
Less burnout than entrepreneurship

Cons

Difficult to break into industry
Don’t get same hands-on experience of running a business
Some believe VCs push businesses to grow too fast
Not all investments will be successful

After the MBA: Consulting

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Consulting

What It Is

Broadly, consultants are hired to help organizations, companies, and government agencies improve their performance. Consultants identify and develop solutions for general or specific problems hindering the organization, and provide insights to help improve their business model. As advisers and problem-solvers, their goals might include increasing revenue, reducing costs, or clarifying the company’s direction. Ideally, consultants provide their clients with extensive industry knowledge and connections, as well as superior communication and problem-solving skills.

There are different types of consulting firms, including management consulting firms, IT-focused consulting firms, and boutique consulting firms. It is also possible to work as an independent consultant.

Salary Range

Salaries for recent MBA graduates entering the consulting field vary based on a variety of factors. According to one source, consultants with MBAs earn an average of $160-200K their first year. This figure includes base salary, signing bonus, relocation/moving expenses, and year-end bonus.

If you are interested in the average consulting salary for graduates from a certain business school, check out the school’s website: often, they will self-report the mean salary of graduates entering certain fields. For example, NYU Stern reported a mean base salary of 116,830 for first-year consultants from the Class of 2010. Harvard graduates’ median base salary was $120,000; Georgetown’s McDonough School of Business reported a median of $90,000, and Washington University in St. Louis’ Olin School of Business reported a median starting salary of $89,000 for consultants. Keep in mind that those figures do not include bonuses and relocation expenses.

Best B-Schools for Consulting

According to an article on Vault.com, the 5 business schools that graduated the most consultants in 2010 were Kellogg (Northwestern), Harvard, Booth (Chicago), Wharton (U. Penn), and Ross (U. Mich). No matter where you want to work after getting your MBA, those schools will provide a strong foothold into the industry. However, attending almost any well-ranked school with a national reputation will greatly improve your chances of getting a job in the consulting industry after receiving your MBA. If you are looking to work in a certain area, be sure to do some research into the top business schools for consulting in your city.

Is Consulting a Good Fit?


While there are many benefits to being a consultant, it is also a very demanding lifestyle. If you are thinking about becoming a consultant, be sure to weigh the pros and cons of the position and carefully evaluate how well your personality aligns with the job requirements.

Consultants must be excellent listeners and communicators, and immediately foster a relationship of trust with their clients. Furthermore, consultants should be creative, knowledgeable, and resourceful; they will be expected to provide quick, innovative solutions for real-world challenges.

If you like working with people and enjoyed written assignments and case studies in b-school, consulting might be a good fit for you.

Getting into the Industry

If you’re at one of the top 50 b-schools, consulting firms will almost certainly recruit at your school. Attend social mixers/presentations/info sessions hosted by firms. Be professional, and try to appear engaged without being over-the-top (make sure others can get a word in edgewise). After these initial meetings, there will typically be a resume submission process: be sure to present a clean, concise resume and cover letter to help yourself stand out. If the firm likes what they see, you’ll go through an interview process, and if you’re lucky, receive an offer.

If the consulting firms you’re interested in don’t recruit at your school, don’t despair! It might be more difficult to get your foot in the door, but it is not impossible. Some firms have online application submission processes; you can also try submitting an application through “contact us” links and email addresses. In addition, don’t be afraid to network and put yourself out there. Contact head-hunters and use b-school contacts, family and friends to find an “in.” If there are other MBA programs or even law schools near you, check out their job fairs to see if you might be able to meet with firm representatives there.

Whether consulting firms recruit at your school or not, keep in mind that consulting is a notoriously selective field. If you don’t get an offer right off the bat, don’t be discouraged. Look for jobs in another industry or at a less desirable firm; you can always try again after you’ve gained some more experience.

Pros and Cons of Consulting

Pros:
Relatively high pay
Prestige
Intellectually stimulating
Extensive Travel*

Cons:
Long hours (50-80 hour work weeks are normal)
Difficult work/life balance
Extensive Travel*

*Some enjoy the extensive travel required by many consulting firms, while others (especially those with families) consider it a con.

Prominent players in the field:

Top consulting firms include McKinsey & Company, Booz Allen Hamilton, Boston Consulting Company, Bain and Company, Accenture, Deloitte, and Monitor Group.

After the MBA: Investment Banking

This is another post in our “After the MBA” series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you’re looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.

Job/Industry:

Investment Banking

What It Is:

Investment banking is a demanding, intellectually stimulating career that requires a great deal of dedication, financial savvy, and time. Investment bankers serve a variety of functions, depending on their specific position. They advise clients on financial organization; underwrite, sell, and trade stocks and bonds; and manage assets, among other responsibilities.

If you are working in corporate finance, you will serve as a financial consultant for corporations. Often banks will assign bankers to work in a certain industry (health care, communications, finance, etc.); you’ll be responsible for helping firms execute financial strategies, analyzing their financial needs, determining valuations for new offerings, and underwriting equity and debt offerings, among other responsibilities. Mergers and acquisitions is related to corporate finance and sometimes serves as its own department; if you’re an M&A banker, you’ll give advice to companies that are merging with or being acquired by other companies. M&A requires a detail-oriented, strategic mind to ensure you’re able to work out all the specifics of the merger or acquisition deal.

If you are working in sales and trading, you will buy and sell securities and commodities; traders must keep track of the markets constantly while communicating with buyers and sellers.

Research analysts become experts in their given industry. They use their expertise and do continued research to predict the movement of stocks, usually either in fixed-income or equity. Traders rely on their educated advice. Research analysts do many different types of research on a company’s financials as well as economics trends in general.

Salary Range:

Salaries for investment bankers vary depending on a variety of factors. According to one source, the salary range for associates with MBAs is $80,000 to $150,000, including bonuses. Stanford’s Graduate School of Business, for example, reported a median salary of $100,000 with a median bonus of $40,000 for investment bankers from the class of 2010. Dartmouth’s Tuck School of Business reported a median base salary, not including bonuses, of $95,000. Bonuses are determined at the end of the year and are based on a variety of factors: namely,  the performance of the firm, the market, and the individual. According to some estimates, bonuses are typically anywhere from 10-50% of the yearly salary for first-year bankers, and increase markedly with seniority (often, a significant amount of the bonus will be in the form of equity). At regional or smaller banks, salaries will likely fall below those at major banks in major markets.

How to Get an Investment Banking Job:

If you are attending a top-50 MBA program, it is likely that representatives from banks will recruit at your school. If you are interested in a career in investment banking, be sure to attend these events. You should make a concentrated effort to do a summer internship with a bank after the first year of your MBA program; this will help you get your foot in the door and make contacts in the industry. Be sure to strike a balance in your interactions with recruiters: you want to be appear interested, but you do not want to monopolize the representative’s time and make a bad impression.

If investment banks do not recruit at your MBA program, use your networking skills to find contacts within the industry.

If you are fortunate enough to get an interview for an i-banking job, be sure to prepare answers to frequently asked interview questions, including:

  • Why investment banking/why do you want to work here?
  • Why should we hire you?
  • What are your outside interests?
  • Are you a risk-taker? What are some risks you’ve taken?
  • What are your greatest strengths and weaknesses? How are these reflected in your resume?
  • What questions do you have? (Make sure you have challenging, detailed questions prepared for this one.)

Furthermore, you should have a clear understanding of the industry and be up to date on industry trends, recent mergers, etc. in order to ensure you are competitive for an i-banking job.

Is I-Banking Right For You?

Investment banking is not a career to jump into blindly. It be very rewarding, intellectually and financially; however, it also requires a great deal of dedication and time. Try to evaluate whether your personality is a good fit for the banking lifestyle. You should be a strong communicator, enjoy taking on leadership roles, be an excellent problem solver, and not mind (and ideally enjoy) working under pressure.