Investment Banking Exit Opportunities – Investment banking is not for the faint-hearted. You need to work 100+ hours every week, you will always be on your toes to get things done, and you will always feel the urgency of losing out on important deals.
However, everyone seems to go for investment banking because of the compensation and doesn’t think about the working hours and the mental attitude required to succeed. The idea is to go through 2-3 years of rigorous work and switch careers.
Investment bankers who have a degree from top-notch universities can have a great chance at cracking into other fields. But people who have worked their way up may seem difficult for them to switch when they feel necessary.
In this article, we will look at many different options for exit opportunities for investment bankers. Some of them are pretty common, few of them are rare, and others are the result of learning so many skills within a short amount of time.
Let’s have a look at them one by one.
Table of contents
- Investment Banking Exit Opportunities
- #1 – Private Equity
- #2 – Hedge Funds:
- #3 – Strategy Consulting (Investment Banking Exit Opportunities)
- #4 – Fin-tech: (Investment Banking Exit Opportunities)
- #5 – Advisory for large corporates: (Investment Banking Exit Opportunities)
- #6 – Regulatory consulting:
- #7 – Law: (Investment Banking Exit Opportunities)
- #8 – Venture capitalist:
- #9 – An MBA from a top-notch institute: (Investment Banking Exit Opportunities)
- #10 – Writing tell-all guides about your industry:
- #11- Trading with your own money:
- #12 – Entrepreneurship: (Investment Banking Exit Opportunities)
- #13 – Equity research: (Investment Banking Exit Opportunities)
- #14 – Boutique banks:
- How to take the leap from investment banking to other career options?
- In the final analysis
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Investment Banking Exit Opportunities
#1 – Private Equity
Private equity may be your next big thing if you want to switch from investment banking. But there are a few conditions which you need to fulfill –
- First, you need to top in performance and results among your peer group for at least two years.
- Secondly, you should’ve passed out from a top-notch university, and you need to be one of the top students there.
- Thirdly, you should’ve spent a reasonable time in a big bank for at least 2-3 years.
If you fulfill all these conditions and are ready to work hard almost equal (80-90 hours), but in a completely different role (more of a researcher), then private equity is the right thing for you.
To know more about Private Equity, you may refer to the following articles –
- What is Private Equity?What Is Private Equity?Private equity (PE) refers to a financing approach where companies acquire funds from firms or accredited investors instead of stock markets
- Private Equity AnalystPrivate Equity AnalystA private equity analyst is an analyst who looks for undervalued companies for a private equity investor to buy, take them private and earn profits. The companies are primarily unlisted, and the risk is higher.
- Private Equity BooksPrivate Equity BooksThe best five private equity books to read for gaining comprehensive knowledge in this field are: Investment Banks, Hedge Funds, and Private Equity, The Masters of Private Equity and Venture Capital, Lessons from Private Equity Any Company Can Use, King of Capital, Private Equity Operational Due Diligence, + Website.
- Investment Banking vs Private EquityInvestment Banking Vs Private EquityInvestment banking is the financial mechanism through which a person receives financial advisory services from the investment banker regarding the share capital. In contrast, private equity funds are investment funds that pool funds from different investors with high net worth to acquire stakes in different entities.
#2 – Hedge Funds:
The hedge fund would be a tough nut to crack, and it’s not easy to get into a hedge fund if you don’t have thick skin. However, if you have experience auditing trading and have some experience setting trading strategies, you are all set to go. The only thing that can backfire is if you are losing out even once, chances are you will be thrown out of the funds. So be patient and think twice about your choice of joining hedge funds because the risk is way too much than any other career option.
To know more about Hedge FundsHedge FundsA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques., you may refer to the following articles –
- Jobs of Hedge FundsJobs Of Hedge FundsHedge fund jobs are very popular among people in the finance industry because they can earn lucrative salaries. Some of the jobs available in hedge funds include fund manager, analyst, sales manager, marketing manager, and accountant.
- Hedge Fund StrategiesHedge Fund StrategiesHedge fund strategies are a set of principles or instructions followed by a hedge fund in order to protect themselves against the movements of stocks or securities in the market and to make a profit on a very small working capital without risking the entire budget.
- Investment Banking vs Hedge Fund ManagerInvestment Banking Vs Hedge Fund ManagerInvestment banking is a subset of banking operations that helps individuals and organizations in raising capital and providing financial consultancy services. A hedge fund, on the other hand, is a private investment fund that pools various complex strategies and invests in complex products such as derivatives.
#3 – Strategy Consulting (Investment Banking Exit Opportunities)
If you are a banker with 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 “strategist.” And soon enough, you will be able to understand how powerful power-point presentations and matrix diagrams are (yes, even more than excel)!
To know more about Consulting, please refer to the following articles –
- Finance vs Consulting; Which Career is Right For You?Finance Vs Consulting; Which Career Is Right For You?Finance is for specialists, for professionals/students who want to play with numbers, think logically, make decisions based on logic, and spend most of their time learning about finance. Consulting, on the other hand, is related to multiple tasks, including business knowledge, administration, marketing, analysis, presentation, and customer service.
- Top 10 Best Consulting BooksTop 10 Best Consulting BooksThe best consulting books are - The secrets of consulting: a guide to giving and getting advice successfully, Flawless consulting: a guide to getting your expertise used, Getting started in consulting, The McKinsey way, The trusted advisor.
#4 – Fin-tech: (Investment Banking Exit Opportunities)
If you have been in investment banks for a long time and are a part of sales, plus if you have a technology background, you are a perfect match for fin-tech opportunities. Not all are cut from the same cloth, and thus, not everyone who is in sales in investment bankingSales In Investment BankingOne of the main functions of an investment bank in the country is sales and trading, in which the investment banking sales team pitches clients for trading ideas and the traders team executes activities related to the purchase and sale of securities and other financial instruments in the market for itself or on behalf of its clients. can be part of fin-tech industries. You must have a strong past in handling different technical kinds of stuff and should have done some serious computer programming and software development work.
#5 – Advisory for large corporates: (Investment Banking Exit Opportunities)
Two types of people can choose advisory for large corporations. First of all, you need to be among people who are not bothered about earning less and at the same time want an easy work-life so they can join large corporations. And the second type of people is those 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. So these two types of people should get into advisory for large corporations. 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 a work-life balance.
#6 – Regulatory consulting:
If you have worked in investment banking as risk and compliance professionals, regulatory consulting may be the best option for you. This is important as companies undergoing MergersMergersMerger refers to a strategic process whereby two or more companies mutually form a new single legal venture. For example, in 2015, ketchup maker H.J. Heinz Co and Kraft Foods Group Inc merged their business to become Kraft Heinz Company, a leading global food and beverage firm., buyouts or going through the process of fundraising will require expert advice on regulatory aspects.
#7 – Law: (Investment Banking Exit Opportunities)
Have you ever considered that? If you have joined investment banking right after your law school or just after working as a legal professional, you can go back to the law again. The only downside is you may need to work harder than ever, and you will not be paid as much as you get paid like an investment banker. So why should you go for a law career? If you love law and are passionate about making your mark in a legal career.
#8 – Venture capitalist:
This is a great option for you if you want to start your own and have a passion for backing up start-ups. The best part of this is you will choose your hours – how much you work, which projects you will invest, and how much you will invest; but the downside is the risk is much more in the beginning. Once you invest in 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. So play your cards well and go to the venture capital market once you have saved enough money during your investment banking careerInvestment Banking CareerAn investment banking personnel is a motivated professional who aims to help their clients reach their financial goals and objectives. The top four investment banking careers are - Analyst, Associate, Vice president, Managing director. .
To know more about Venture capital, do refer to the following articles –
- Angel Investment vs Venture CapitalAngel Investment Vs Venture CapitalAngel investments are made by high-net-worth individuals, who often are informal investors, whereas venture capital investments are made by venture capital firms, which are funded by companies that pool funds from numerous institutional investors or individuals.
- Venture Capital BooksVenture Capital BooksVenture Deals, The Art of Startup Fundraising, Term Sheets, and Valuations are just a few of the books that can help entrepreneurs, venture capitalists, and lawyers gain a better knowledge of the venture capital concept.
- Venture Capitalist SalaryVenture Capitalist SalaryVenture capitalists' annual salary ranges somewhere between $ 80,000 to $ 150,000, along with the bonus, according to the data available on the site of Wall Street oasis. These professionals serve as associates with the venture capital firms.
- Private Equity vs Venture CapitalPrivate Equity Vs Venture CapitalIn the case of private equity, investments are typically made in companies which are in their mature stage of working. Venture capital, on the other hand, invests in businesses that are still in the early stages of development.
#9 – An MBA from a top-notch institute: (Investment Banking Exit Opportunities)
Most investment bankers are MBAs from top-notch universities. But what if you have joined investment banking and you know that you will never make it to the associate level until you go to a top-notch MBA institute and complete a hard-core MBA! Then what? You should go for an MBA and once you are done, do some internship (if necessary) and then join a top-most investment bank as an associate. The only downside is the opportunity cost (two years of not working plus the cost of an MBA) that you need to bear.
Related Articles –
- CFA vs MBACFA Vs MBACFA focusses on imparting skills associated with Investment Management including Investment Analysis, Portfolio Strategy, Asset Allocation, and Corporate Finance. MBA focusses on overall Management Skills like Marketing, Operations, Finance, Human Resource Accounting, etc.
- FRM vs MBAFRM Vs MBAIndividuals who desire to specialize in risk management skills and knowledge pursue the FRM (Finance Risk Management) course. Individuals who want to gain expertise in management-related skills choose an MBA (Masters in Business Administration).
- CFP vs MBACFP Vs MBACFP helps you gain a seal of professional certification as a financial planner. This course is conducted by the Certified Planner Board (CFP). In contrast, MBA is Masters in Business Administration chosen by individuals who are willing to gain proficiency in management-related skills.
- CPA vs MBACPA Vs MBAThe CPA is a credential, and MBA is an academic degree. CPA provides global recognition in accountancy, while an MBA degree prepares a candidate for the overall business world.
#10 – Writing tell-all guides about your industry:
This is a very unusual career and of course, it’s not for most people. But if you are someone who loves to share his/her experience and know-how to market the book, you can open up a career in writing tell-all guides about your industry. As an example, we can pick Greg Smith’s book – Why I Left Goldman Sachs. Of course, there are many rumors about the book of Greg, but still, it’s a decent career if you know how to play the game. But the word of caution is your books may not sell that well. And you can only consider this a career if you have had enough money saved up and you’re tired of investment banking.
#11- Trading with your own money:
When working in investment banking, it’s the client’s money that is at stake. But once you get into trading your own money, remember it’s your own money, and if you don’t know how to play it safer, you will lose all your money. So, investment bankers who are not interested in hedge funds usually go for this option.
Related Articles –
- Trading vs InvestingTrading Vs InvestingTrading refers to buying and selling of stock on regular basis to earn profit. Investing refers to buying and holding strategy of investments for long period of time with the mindset of earning dividend and capital appreciation.
- Careers in TradingCareers In TradingForex Trader, Equity Trader, Commodities Trader, Fixed Income Trader, and Derivatives Trader are all possible trading careers.
- Options Trading StrategiesOptions Trading StrategiesOptions trading refers to a contract between the buyer and the seller, where the option holder bets on the future price of an underlying security or index.
#12 – Entrepreneurship: (Investment Banking Exit Opportunities)
If you have always reared up this dream of becoming an entrepreneur, this is your option. After working 10+ years in banking, you can take a bit of risk and go for your dreams once you have enough money saved up. 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, an advisory firm, or whatever you please. Many ex-investment bankers start their restaurants. If that is what you want to do, you can do that as well.
#13 – Equity research: (Investment Banking Exit Opportunities)
If you love finance, data, research, reporting but don’t like running after deals, equity research is a great option for you. And you don’t need to go anywhere else. Just switch the place. You can ask the management of your bank if you want to make a switch in ECM/DCM. The best part of equity research is that you have fewer working hours than investment banking, and the pay is almost similar. If you like continuous analyses of data, stock, reports, and financial statements, this is the perfect option.
To know more about Equity Research, please refer to the following articles –
- Equity Research | A Complete Beginners GuideEquity Research | A Complete Beginners GuideEquity Research refers to the study of a business, i.e., analyzing a company's financials, performing Ratio Analysis, Financial forecasting in Excel (Financial Modeling), & exploring scenarios to make insightful BUY/HOLD/SELL stock investment recommendations. Moreover, the Equity Research Analysts discuss their findings & details in the Equity Research Reports.
- Equity Research BooksEquity Research BooksEquity research books are highly recommended since they may be quite beneficial to investors. Here are a few examples of books: 1.Best Practices for Equity Research Analysts 2.Equity Research for the Technology Investor 3.The Intelligent Investor 4.Security Analysis 5.Equity Research and Valuations.
- Career Beyond Investment BankingCareer Beyond Investment BankingOne can pursue a career in due diligence, procurement and negotiation, costing, business development, project financing, or corporate planning as an alternative to investment banking.
- List of Equity Research FirmsList Of Equity Research FirmsThe list of top 10 equity research firms in the world comprise: JP Morgan Chases and Co, Bank of America Merrill Lynch, Credit Suisse, Barclays Capital, Citigroup, Goldman Sachs, Morgan Stanley, AllianceBernstein L.P.,UBS, and Nomura Holding Inc.
- Top 5 Equity Research SkillsTop 5 Equity Research SkillsEquity research skills are a set of abilities a research analyst should possess to provide an optimum investing solution. It comprises accounting skills, valuation, financial modeling, excel skills and writing skills.
- Equity Research vs Private EquityEquity Research Vs Private EquityEquity Research is all about finding the valuation of the listed companies on stock exchanges while Private equity is researching and analyzing the private companies and interpreting your results.
#14 – Boutique banks:
If you are a junior M&A professional and looking for a better opportunity (senior positions), a boutique 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.
How to take the leap from investment banking to other career options?
So you can see that there are many options you can choose if you no longer want to continue as an investment banker. But how would you leap? How would you know what the right option for you is?
You need to find your “why”.
Before you ever decide to quit investment banking, you need to ask yourself – “why has it become unbearable to me?” and ask yourself “why?” until you get the right reason.
Your reason may be very hectic work hours for which you’re not able to spend time with your near and dear ones.
Or maybe you are not enjoying running after every deal that you can get.
Or just maybe you know that something else (let’s say research) is more important to you than being on the business side.
The reason can be anything, but make sure that the reason is yours to begin with. For example, you may get inspired by your peer group to leave the job (if a few people are leaving investment banking for some reason), but ask yourself – “Is that your reason?” If not, then don’t quit. Instead, ponder. Justify leaving investment banking and doing something else first. And then you can do what seems justified.
Once you know your “why”, it’s time to decide how would take that leap? The best way is to continue as an investment banker and find out a few hours a week to learn about your new career choice.
Let’s say you want to go into equity research because you find you’re the perfect match for the “research” profile. But do you know exactly what’s going on in “research”? The easiest way to find out is to ask someone in the “research” profile which has always worked in your bank.
Ask about the hours, the work, the pressure, the work-life balance and if possible spend some time a few days a week watch how s/he has been doing work.
Once you get an idea, you will know whether that is a better option for you than investment banking or not.
The next thing you must do is see how much the next career move would help you in your career. Would it add value to your profile? Would it be progressive for your career shortly? For example, let’s say you decide to do an MBA from a top-notch institute. Ask the pass-outs about the opportunities after the MBA. Ask them whether the MBA from this institute will add value? If not, find something else or continue doing what you’re doing till you get a better opportunity.
To take the leap you need to make sure that the move is well-thought after and won’t put you in a complete disaster.
In the final analysis
Investment banking has many roles, and many people work in investment banking. Depending on the role you’re currently in and the years of experience you have, you need to decide the right option.
If you are an MD of the investment bank, consider starting your own business or fund because moving into a different industry may be pretty hard. But if you are a mid-level banker, you may join a corporation where you can act as an advisor.
Choose wisely because the Investment Banking exit should always be a new beginning!