Investment Banking is not an industry for those who are frail. Working in Investment Banking industry also means that you have to devote 100+ hours per week for work, meet deadlines all the time with the sense of urgency as you could lose out important deals anytime.
INVESTMENT BANKING EXIT OPPORTUNITIES
There is a wide range of choices for bankers who would like to have a change in their career path which will be listed below. Some options are quite popular, while some of them are rare, and require you to quickly absorb new skills within a short amount of time.
1 . PRIVATE COMPANY
If you are keen on working on deals, then Private Equity is among the best choices
This is a great opportunity to hone a “generalist skill set”, as the job requires you to do a mixture of tasks: Financial Analysis, Negotiations, Sales, etc.
In order to receive “serious” compensation (8-figure range or beyond), you need to advance to a very senior level or start your own firm.
There are challenges to entering private equity. Furthermore, it is hard to be promoted to the top, as partners at these firms have such cushy positions that hardly anyone leaves voluntarily.
Private Equity (PE) is always among the top choices for Investment Banking Exit Opportunities. However, in order to enter PE, you need to meet some requirements:
Top in performance and in results among your peer group at least for two years
Being the top students of a top university.
Having reasonable experience at a big bank (at least 2-3 years).
Learn more about the differences between Investment Banking and Private Equity here.
2. Hedge Funds & Asset Management
Unlike Private Equity, where you mainly buy and sell entire companies, with hedge fund, your main task is to follow and invest in companies individually.
With such traits, prepare to endure a stressful work as you will constantly monitor the market. The requirements are quite strict since you need to possess a track record, a passion for investing as well as particular ideas. Another thing that you should notice that hedge fund will help you develop very specialized skill sets, nevertheless, it may be a hinder if you want to move to different funds or other industries.
In addition, be careful since hedge fund also contains many risks. You lose once, chances you will be thrown out of the funds!
The consulting services of investment banking include two main areas:
Underwriting – Investments bankers raise capital, usually via the IPO process (selling stocks or bonds to an investor) on behalf of corporations.
Mergers & Acquisitions (M&A) – Advisory roles for both buyers and sellers of businesses, managing the M&A process start to finish.
If you prefer a long-term venture capital career, or working at a tech or bio startup in a finance or business development role has always been on your list, then Venture Capital is a good option for you. This path will provide you with better lifestyle with more flexible working hours, as you can choose your hours – how much you work, which projects you will invest and how much you will invest. Since you invest in early-stage companies, there’s less financial analysis, and you spend most of your time analyzing the market, finding interesting companies, and networking.
However, the compensation may be not as good as that in private equity, and it is a challenge to be promoted since firms make hard distinctions between Partner-track and non-Partner-track positions. Furthermore, the job is quite risky as well, since once you invest into a start-up, you don’t know whether the start-up will yield more money in your pocket or go belly up within a year of time. So play your cards well and go to venture capital market once you have enough money saved up from during your investment banking career.
4. Corporate Finance & Corporate Development
This options slightly differs from other investment banking exit opportunities since it is not a front-office role. To be more specific, you are no longer working with potential investment companies or partners. With corporate finance career path, your main task is to deal with internal finance, regarding company’s budgeting, internal processes, and financing needs. Chief Financial Officer (CFO) is the end goal of corporate finance career path.
Meanwhile, with Corporate Development, your main task is to work on acquisitions and joint ventures at a company. If you work at a well-known company, you will have many options afterwards: You could go to business school, go back into investment banking, or even go into private equity.
In comparison with PR/HF/AM opportunities, your earnings may be less, yet you will get better working hours and more regular lifestyle. Therefore, if your priority is to get work-life balance and not concern about slower progression up the ladder, then corporate finance would be the best choice.
If you have always dreamt of being an entrepreneur, then this is your option. Once you have saved enough capital after certain years of working, you can take risks and follow your dream. This option is especially useful for people in MD ranks who don’t have many options to switch from investment banking to something else. You can start a consulting firm or an advisory firm or whatever you please. Many ex-investment bankers start their own restaurant. If that is what you want to do, you can do that as well.
6. Boutique Banks &CONSULTING
If you are a junior M&A professional and looking for a better opportunity (senior positions), boutiques bank may attract you. Even senior M&A professionals can choose this for better work-life balance. However, if you are a junior M&A professional, you may need to work harder than you did in your previous bank.
If you are a banker who has experience in consulting before banking, you’re good to go in strategy consulting. Many investment bankers join strategy consulting for the sheer love of strategy. But remember once you choose this option, you wouldn’t be called a banker; rather you will be named as “strategist”. And soon enough you will be able to understand how powerful powerpoint presentations and matrix diagrams are.
Two types of people can choose advisory for large corporates. First of all, you need to be among people who are not bothered about earning less and at the same time want easy work-life can join large corporate. And the second type of people is those who are in the senior position in investment banks and they have already made their money; so they don’t get much bothered about less money, all they want is an easy life. These two types of people should get into advisory for large corporates.
Before choosing the corporates there are two things you need to remember. Firstly, you will not get great deals to handle as you did during your M&A banking. Secondly, you will be working in a small team. So choose well and you can have a highly satisfactory career if you are particularly looking for work-life balance.
8. Other Options
If you have specialized knowledge about other industries, then it may be a good option for you to take advantage of your financial knowledge. To be more specific, if you had attended law school, then you may choose to follow your career path as a legal professional. Or if you have a technology background, you are a perfect match for fin-tech opportunities. However, remember that you must be having a strong past in handling different technical kinds of stuff and should have done some serious work in the past.
Get a degree from a top-notch university
Most investment bankers are MBAs from top-notch universities. Bear in mind that you hardly get to the association position until you complete an MBA degree from a top institute. Once finished, you can so some internship (if needed) and then join a top-investment bank as an associate. However, you should also consider about the opportunity cost (which are two years not working and MBA course tuition) for this option.
A writer, why not?
It may sound weird, but to ones who enjoy writing, and wants to share his/her experience with knowledge about book marketing, then you could begin your career as a writer where you illustrate your knowledge about this industry. One typical example is Greg Smith with the popular “Why I left Goldman Sachs”. However, the revenue from books maybe not as good as you expected, therefore consider this choice only when you have enough saved money.
Above are the best investment banking exit opportunities. To understand more about these chances, as well as to help yourself have the best preparation to win such opportunities, check out “What skills do you need to have the best investment banking exit opportunities?” and “The Myth about Investment Banking Exit Opportunities”.
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