Saturday, June 23, 2007

So I know why you want to be a banker, but why here specifically?

So I know why you want to be a banker, but why here specifically? I
mean, if we at ABC Bank give you an offer, are you going to accept it
over your other offers?
This may be the toughest question out there. It’s tough for a number of reasons. First of all,
it’s fundamentally unfair. It’s a catch-22: We’ll give you an offer, but only if you promise to
accept it. Second, you probably don’t know enough about what makes one firm different from
another to make an accurate assessment. And even if you actually know that you desperately
want to work for ABC Bank and have a great reason for making them your favorite, you
can’t tell that to the other six firms you interview.
But it’s also an understandable question. Let’s say ABC Bank is in the bottom half of all
the recent league tables and has never in its history successfully hired an analyst who also got
an offer from Goldman Sachs or Morgan Stanley. ABC Bank still needs to hire three or
four analysts from your school, and they can’t just give dozens of offers in hopes that a few
souls will fall through the cracks. And by the way, ABC Bank knows that they can offer
analysts a great working experience, and that former ABC analysts are now CEOs, hedge
fund managers, and multimillionaire managing directors at ABC with houses in the
Hamptons. They have every right to know what analyst candidates actually want to work
there and are therefore likely to accept an offer if one is extended.
You need two strategies to get through this question unscathed. First, try to do the research to
come up with an answer that’s actually believable for every firm. Do your homework, read
articles about league tables, and talk to current analysts at different banks. Remember, as a
wise person once said, “The key is sincerity—if you can fake that, the rest is easy.” Second,
if you actually don’t want to work for ABC Bank, but you don’t yet have an offer from your
first-, second-, or third-choice banks, then try to create a believable diversion. Create points of
differentiation. Let’s look at these answers to show you what we mean—we’ve actually
included several examples of plausible good responses to this question.
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Bad Answer
Candidate 1: Well, honestly, I know I want to be an investment banker, for all
the reasons we just finished discussing in your last question. And at this point
in my job search, I haven’t gotten any other banking offers yet. So obviously I
would consider yours very strongly. I mean, after all, you’re a great firm, and my
friend Chip who you hired last year is having a great experience.
This is another of those candid, honest, sincere answers that won’t get you anywhere. Would
you want to give someone an offer if every other bank has passed her over? Of course not—
you’re just as smart and selective as every other bank! If they saw something they didn’t like
about this candidate, obviously I’m too smart to take the bait. Next, this answer doesn’t do
anything for the interviewer’s ego. The interviewer may work at ABC Bank, but he still
considers himself a real stud, because after all, he works on Wall Street on multimilliondollar
deals and he has a really great bachelor pad on the Upper East Side.
Candidate 2: Yes, I’ll definitely accept an offer with ABC. I have offers with
Lehman and Merrill, but honestly I didn’t like the people as much as the ABC
people I’ve met. The ABC people just seem really friendly and down-to-earth,
whereas some of the people I met at other firms—I honestly can’t imagine
working with for 100-hour weeks! Also, my offers at Lehman and Merrill are
both in industry groups, and I don’t want to work only on one industry; I’d
much rather work in a product group, so that I could gain experience across a
number of different industry sectors.
There are two problems with this answer, which could very well represent an honest assessment
of where this candidate stands vis-à-vis ABC Bank. First, although every bank invariably
thinks that its people collectively represent a superior brand of banking professional, you
should never highlight that there are some people you’ve met whom you didn’t like! Every
banker knows colleagues at their firm who are tough on junior people, and don’t want signs
that an analyst candidate has already met bankers with whom they would clash when the
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going gets tough. Although every firm cites “The People” as the number-one thing that
attracted them to their particular bank, it’s not a good enough answer to this question.
Second, although we give some points to this candidate for trying to pick a relevant point of
differentiation between ABC Bank and his opportunity to join Lehman or Merrill, the fact
is that these days, most of the available job offers are in industry groups. It may be that this
interviewer works in an industry group himself and thinks it’s the only way to go. If you
honestly want to work in a product group, you can probably put a more positive spin on it
than “I don’t want to work on only one industry,” which suggests you might bore easily.
Good Answers
For an Investment Banking Job at a Large Commercial Bank
Candidate: Well, I would obviously be honored to get an offer from ABC
Bank, and I would be very inclined to accept it. For one thing, I know that
ABC Bank benefits from the full product offering it offers as one of the largest
commercial banks. The analysts I’ve talked to at ABC Bank have told me that
more and more, clients are awarding investment banking business based on
their ability to bundle commercial banking services that have historically been
unattractive to pure-play investment banks, who can’t lend money from their
own balance sheet as aggressively as ABC Bank can. The ability to be a onestop
shop in this regard will probably enable ABC Bank to gain market share in
M&A and equity underwriting over time, which in turn makes it a pretty
exciting place to grow professionally for a junior banker.
Do your homework and figure out which banks really offer this point of differentiation—you
don’t want to try this one when interviewing with Goldman Sachs or Morgan Stanley! But
since the wave of consolidation that swept through the financial services sector in the mid-
1990s, this is one of the few genuine points of differentiation between the traditional
investment banking powerhouses and their aggressive competitors that are affiliated with the
world’s leading commercial banks. Also, we think the interviewer will give the candidate
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kudos for ambition and for the ego-friendly theme that he would see ABC Bank as a place to
dig in his heels and carve out an entire career beyond the 2-year analyst commitment.
For a Firm that Isn’t Top of the League Tables, but Is Gaining Ground
Candidate: Yes, I would be thrilled to get an offer from ABC Bank, and I
would absolutely accept it. My understanding is that the firm has real momentum
right now, and that you’ve been steadily climbing in the league tables.
Didn’t you jump to like fourth in equity underwriting last year?
Note to candidate—get this right, or don’t try it at all!
Candidate: It’s my understanding that in banking, business tends to be
contagious, and that the more deals a firm does, the more likely they are to win
new business as a result. I think deals like the recent $10 billion acquisition of
SmallCo by BigCo that ABC advised on will generate enthusiasm among other
potential clients in the widget industry, while also signifying what a force ABC
Bank has become in the M&A business. I want to join a firm that’s moving
forward, and gaining share versus its competitors, because that’s the kind of
place that could really offer me opportunity going forward if I get in and prove
myself at the analyst level.
Have you ever wondered how different firms pitch themselves when they know they’re competing
for a big equity or M&A mandate against five or six other firms? While every firm
tries to cut the league tables to show that it actually is the number one firm in this industry for
this specific product, often firms have to get creative. More often than not, firms will use an
argument like this with clients: Instead of acknowledging outright that they aren’t number one
or even number three in the league tables, they’ll say, “Our firm has real momentum right
now, we are climbing in all the relevant league tables, our own stock price is up X percent this
year, and we recently advised on all these important offerings. . . .” The implication? Don’t
choose the firm of yesterday—go with the bank of tomorrow! You need to do your homework
to actually be credible spinning this answer in an interview, but we think this could be a very
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effective approach. Like the first good answer we presented above, this answer also demonstrates
the analyst’s humble but fervent ambition to get in the door, do a good job, and rise up
the ranks.
For Your First-Choice Firm
Candidate: I will absolutely accept this job if I get an offer. I’m obviously
ready to roll up my sleeves and work extremely hard, and I know that I’ll be
working on a fair number of pitchbooks and client service presentations no
matter what bank I choose. But I’d be lying if I didn’t admit I hope to work on
live deals, and ABC Bank’s reputation is unparalleled. My understanding from
my former classmates now at ABC Bank is that the firm’s ability to point to
their leading market share and history of relevant transaction experience is a
huge selling point when pitching for new business. I have friends at other firms
who say they have lost numerous pitches to ABC Bank, always for the same
reasons. From the firm’s initial presentations on campus to all of my interviews,
I’ve been extremely impressed by the people I’ve met from ABC Bank and I
strongly believe that I would fit in there. And I know from my friends at ABC
Bank that the firm gives analysts the opportunity to step up and take on a great
deal of responsibility if the analyst can prove him- or herself as being reliable,
hard-working, and effective in the trenches. I would love to get that shot.
This is pretty self-explanatory, and we probably don’t need to script an answer for you for
your first-choice bank in any case. But just saying “because you’re the best” would have been a
little bit arrogant, implying the candidate thinks he’s too good for anything but the best. This
candidate gives the real reason why being atop the league tables matters: It ultimately helps
generate more business, which is good for analysts seeking live deal experience. Also, this is a
great chance to shamelessly (but indirectly!) praise your interviewers by saying you really like
the people you’ve met at ABC Bank and believe you’d fit in there. They’ll ultimately make
that decision for you, but a little plug doesn’t hurt. And you may be sensing a theme with how
we end this sample answer—once again, sell, sell, sell. I recognize you’re the best, but if you
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hire me I won’t spend time wallowing in my glee over working for ABC Bank—I’m going to
dig in and make you glad you gave me the chance. Be humble and ambitious, no matter who
you’re interviewing with.
You probably note that in every single “Good Answer” above, the candidate utters some
version of the words, “Yes I will absolutely accept this job offer if I get it.” There is clearly a
moral issue here, and we are not advising that you say this if you don’t mean it. But consider
the alternative. Nobody wants to be told, “Well, I mean, I’d consider it, but I don’t know if
I would accept it. . . .” There’s no good way to spin that, considering the egos involved.

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