From Boutique Investment Bank to Corporate Development: The Best Exit Opportunity?

Do you believe all the stories on this site?

You should.

Even if I had the time or imagination to make them up, I’d have no motivation to do so.

But you should be aware of the “fine print” attached to many of these accounts.

Yes, it’s possible to get into investment banking from a non-target school even if you’ve already graduated…

…But traditional exit opportunities – private equity and hedge funds – will be challenging if you do that.

When that happens, your best option is often corporate development, as our reader today found out:

Against the Odds: Investment Banking to Corporate Development

Q: Can you take us through your story?

A: Sure. I went to a non-target university in “The South” (deliberately vague), and I did retail banking internships throughout my time there.

As I took more finance courses, I became increasingly interested in finance instead of retail banking, and I started speaking with the capital markets team at my regional bank to see if I could join them.

But my interest came too late, and I had missed the traditional path in – so I signed up for your courses, started reading M&I, and began networking a ton at local events and via cold calls and cold emails.

I won an offer at a local boutique bank and then moved to a well-known middle-market firm.

It was a pure numbers game, especially since I was doing much of this after I had already graduated.

Almost everyone said, “We like you, but we’re not hiring, so we’ll keep you in mind if something opens up in the future.”

Once I joined the middle-market firm, my initial plan was Goldman Sachs or bust.

But after being on the job for a few months, I realized I didn’t want to do the same work and suffer through longer hours just for more “prestige,” so I began thinking of other options.

I looked at both private equity and corporate development roles, but I got almost no traction for PE because the process is nearly 100% prestige-driven: If you don’t have a brand-name school and bank, good luck!

I ended up using a combination of headhunters and my own networking to win a corporate development role at a multi-billion-dollar public company.

Corporate Development Recruiting: Traction 101

Q: Great. So, how did you go about networking for these roles?

A: I started the process roughly one year into my role at the middle-market bank because I wanted enough deal experience to speak to in interviews.

I found companies that had posted jobs on sites like Indeed and then looked up the professionals on LinkedIn and emailed them directly to ask for informational interviews.

Plenty of recruiters contacted me, but they almost always presented roles at other boutique and middle-market banks, which I wasn’t interested in.

Within corporate finance, recruiters mostly had FP&A roles, but less in the way of corporate development.

I ended up going through two full processes (one from a headhunter and one from my networking), made it to the end of both, and won my offer from the second one.

Q: And what was the first process like?

A: It started out similarly to IB interviews: A 30-minute phone interview where they asked me to walk through my resume and asked basic technical questions.

They gave me a simple take-home case study on how to build an M&A model, and then they conducted a few face-to-face interviews once I passed that.

I met with the entire team and the group head, and they mostly asked higher-level questions about my long-term goals and what I liked about the company.

They also gave me a 1-hour on-site case study where I had to look at a few pages of information on a potential deal, put together a few slides, make a Yes/No recommendation on the acquisition, and pose some additional questions.

I then presented my findings to the entire team and answered their questions afterward.

I did not win this offer, mostly because I overcomplicated the case study and didn’t present it effectively.

Q: What happened?

A: I spent too much time creating the model and not enough time on the qualitative arguments.

Also, I approached it the wrong way and built a mini-LBO model for the deal instead of looking at simpler metrics such as IRR and NPV.

They wanted a very simple analysis where I showed that the IRR exceeded the company’s hurdle rate and that the NPV was positive at the proposed price.

Q: OK. And what about the other process?

A: I applied online, after doing some networking, and HR at the company reached out to me for a 30-minute interview.

I spoke with each team member, did in-person interviews, and also presented a case study to the entire team.

In the “take-home” case study, they wanted me to take their company’s financial statements, value the company, and explain how much it might be worth.

I had a ton of practice with that from your courses and my IB role, so I did it quite easily, and the team liked my presentation.

Q: Any tips for standing out?

A: Go the extra mile!

In addition to the valuation, I also built an LBO model for the company and explained why the math would not work, and I researched the market and presented 10 potential acquisitions for them.

Instead of just saying, “Here’s what you’re worth,” I said, “Here’s what you’re worth, and here are some strategies that would make sense and not make sense, given your stock’s implied value.”

Corporate Development Jobs: Facilitators or Creators?

Q: Great, thanks for sharing that.

What has the job been like so far?

A: So far, it’s great and significantly better than IB in terms of both the work and the lifestyle.

It’s typically 40-50 hours per week, though that goes up to 60 when a deal is active.

The best part is that everything has a purpose: It’s not like banking, where MDs give you pointless work that will never come to fruition just to make themselves look productive.

My rough time split is:

• Deal Work: About 50% of my time is spent here; this could be anything from modeling work to internal investment decks to meeting with different divisions to present a deal.

• Administrative Tasks: This is about 25% of my time, and I help with tasks like reporting on pending deals and researching anything in the pipeline.

• Business Development: I spend the last 25% of my time here. “Business development” means meeting with bankers, lenders, and other financiers to discuss companies they find interesting, contacting or meeting directly with companies, and so on.

Q: And how many deals do you execute each year?

A: We look at around 50-100 deals per year, and we close around 2-4 of them.

The “close rate” is low because many of these deals are for companies not represented by bankers, and so the entire process is more drawn out and disorganized.

Also, each different department here has to approve the deal; winning consensus at a multi-billion-dollar company is like herding cats.

The deal-making appetite also depends heavily on management and the company culture: Many of our executives are quite risk-averse and don’t like to do deals even if they make sense strategically and financially, simply because they don’t want to write big checks.

Sometimes deals also slow down when we work on external financing reports and other company-wide initiatives.

Q: Reading between the lines, it seems like “politics” is the worst part of the job.

Is that accurate?

A: Yes, I’d say so. Everyone has different incentives, so you see many cases where a business unit wants to do a deal, but the finance division doesn’t, and so nothing ever happens.

It’s a big contrast to banking, where everyone wants to do deals 100% of the time.

The other downside is that I’m more like a facilitator than a creator.

We act as intermediaries and spend a lot of time trying to win everyone’s approval, but don’t necessarily spend as much time coming up with original ideas.

The Future, If You Choose to Accept It

Q: I see. Then what are your long-term plans?

A: There isn’t a real “set path” here – everyone in our group has different titles, but our roles are similar.

The Manager attends more meetings, but he could easily grind through Excel as well.

To move up, you have to be proactive, make recommendations, and execute successful deals; it also helps when someone senior leaves the group since the company tends to promote people internally when that happens.

At this point, I’m planning to stay here and advance.

If it doesn’t work, or my company stops doing deals, I might go back for an MBA and think about moving to a corporate development role somewhere else.

I’m also considering making another run at PE/VC firms at a more senior level in the future if I can get enough experience here.

Q: Great, thanks for explaining all that.

A: My pleasure!