<p>2 questions</p>
<li><p>Can a graduate from a top-mba school get an associate position with no previous banking experience?</p></li>
<li><p>What is the typical salary (and bonus) for a first year associate?</p></li>
</ol>
<ol>
<li><p>Yes.</p></li>
<li><p>Total compensation around ~200-300K. Surely more experienced people will respond.</p></li>
</ol>
<p>wow, is this true? can a graduate from a top 25 b-school, say georgetown, get a job like this?</p>
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can a graduate from a top 25 b-school, say georgetown, get a job like this?
[/quote]
</p>
<p>Well, that depends. As I think you have gathered, the top B-schools take a disproportionate share of the most desirable jobs. Hence, your chances tend to drop dramatically as you talk about lower-ranked schools. Some exceptions exist - the Yale School of Management in particular sends an unusually high percentage of its graduates to Wall Street relative to its ranking- but the general trend is clear. </p>
<p>Of course at the top ranked schools, Ibanking is now seen as something rather passe - the real competition is for jobs in private equity, and to a lesser extent hedge funds and venture capital. Private equity in particular seems to have become quite a strong draw for today's students. For example, at HBS, the general sentiment of the student culture is that Ibanking is seen as something you go to because you, frankly, weren't good enough to get a private equity offer.</p>
<p>that's interesting, considering i-banking is more lucrative than private equity..</p>
<p>at what level? the very best PE investors make more than the best ibanking MDs and executives. of course, both make less than the best institutional trader or hedge fund maven.</p>
<p>and it depends on what you mean by private equity. Venture Capital is a type of private equity. Private equity is a catch-all term for the continuum of corporate investing. At the starting stage of companies, they're looking for angel investors; then you get into Series A / B / C funds which are more traditional VCs. Then you have mezzanine funds who may look at middle-stage companies that are getting more mature but have growth aspirations and potential. At the big end, you have mature companies looking for LBO (Leveraged Buy-Out) firms who will take them private, restructure them for increased profitability, and then sell them to the market at a huge profit.</p>
<p>What many HBS grads are trying to get into is the LBO end of things. Take a look at the chart here:</p>
<p>Any row on that page stand out? That's where the huge bonuses are. If you go to KKR or Blackstone and you're a major participant in the takeover of something like the Tribune Co, and you increase its profitability and sell it in 5 years at 3 times what you paid for it, you're going to get a ginormous bonus.</p>
<p>Investment Bankers are relationship technicians at the most. Like lawyers, they depend on clients and bill themselves out per day. You exist because large corporate clients will pay through the nose, primarily for your connections throughout the business world that can obtain financing for financial moves the clients want to make. You are a professional service, like an accountant or a lawyer or a psychologist. You are just the most highly paid professional-service there is. You are in a different class from an institutional investor (like a VC / LBO fund or a hedge fund or trading entity), and a different class from an entrepreneur.</p>
<p>As for those entrepreneurs, those who are the richest in this world are those who take the risk of starting a company. Their risk profiles are much bigger than an experienced hedge fund trader, but their upside is, they can be doing what they love in an industry they love, and eventually set their own hours, and/or sell their equity and get rich. Starting your own business is still the best get-rich-quick scheme that exists. The trouble is the risk profile... for every Bill Gates there are a thousand who never get past the first few steps.</p>
<p>Wow Denzera,
Your expertise is MUCH appreciated. Can I ask you, how hard is it to get a position in PE/LBO straight out of b-school? Are these normally reserved for the best of the best? I'm realistically looking at a top 20 school (e.g. UVA, Cornell) and am trying to gauge my job prospects.</p>
<p>Thanks.</p>
<p>You can reach the associate level from those banks. It's not top 5 odds - but it's certainly achievable.</p>
<p>I know a guy straight out of Princeton undergrad making 500k/yr his first year as a quant...and he doesn't have to work 100 hrs a week, nor pay for an MBA. The LBO guys have the oppurtunity to make more down the road, though. But that's assuming debt remains cheap, liquidity keeps gushin, and corporate profits remain at record highs. Also, Sarbanes Oxely has been the driving force for a lot of companies being taken private. Regulators might adapt to this trend. Right now, I'd want to be in distressed debt. We saw the sub prime market collapse, wait until the market for corporate debt crashes! I didn't come up with this macro analysis, but a lot of PhD guys smarter than me did. Who knows.</p>
<p>Anyhow, as stated, the richest dudes start businesses. It's risky tho.</p>
<p>The wall street journal said $300k-$425k for associates straight out of MBA. Obviously the figure is inflated.</p>
<p>
[quote]
and it depends on what you mean by private equity. Venture Capital is a type of private equity. Private equity is a catch-all term for the continuum of corporate investing. At the starting stage of companies, they're looking for angel investors; then you get into Series A / B / C funds which are more traditional VCs. Then you have mezzanine funds who may look at middle-stage companies that are getting more mature but have growth aspirations and potential. At the big end, you have mature companies looking for LBO (Leveraged Buy-Out) firms who will take them private, restructure them for increased profitability, and then sell them to the market at a huge profit.</p>
<p>What many HBS grads are trying to get into is the LBO end of things. Take a look at the chart here:</p>
[/quote]
</p>
<p>Uh, LBO work IS private equity. </p>
<p>
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at what level? the very best PE investors make more than the best ibanking MDs and executives. of course, both make less than the best institutional trader or hedge fund maven.
[/quote]
</p>
<p>Hedge fund mavens, I agree. But institutional traders? Hardly. At most, they make about $75-100 million a year. T. Boone Pickens, the prototypical private equity maven, reportedly made $1-1.5 billion in 2006. </p>
<p>
[quote]
The wall street journal said $300k-$425k for associates straight out of MBA. Obviously the figure is inflated.
[/quote]
</p>
<p>Actually, if you're talking about private equity (as in LBO work) that is, frankly, probably on the low side.</p>
<p>
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Uh, LBO work IS private equity.
[/quote]
</p>
<p>This is obvious and something that denzera noted. She just happened to expand the term</p>
<p>^I can't drop specifics, but my best friend at McGill happens to be the son of the head of the largest mezzanine fund in Europe. I didn't know this untill several months of being his friend. We were talking about Wall Street, he mentioned his dad's group, and I said "wow, I read about him in the Economist." I just assumed he was too humble to have that sort of family connection. Anyhow, he's richer than God.</p>
<p>
[quote]
Quote:
The wall street journal said $300k-$425k for associates straight out of MBA. Obviously the figure is inflated.
Actually, if you're talking about private equity (as in LBO work) that is, frankly, probably on the low side.
[/quote]
</p>
<p>I'm talking about ibanking.</p>
<p>Wow some inflated numbers here. First of all for the guy who said his friend was making $500k straight out of undergrad as a quant let me tell you this - YOUR FRIEND IS LYING TO YOU! Seriously, this is not even like a "maybe", he is just plain lying. No first or second years make that much out of undergrad, especially not quants. In general quants are actually not paid as well as people think. The big money you hear of to quants is to quant-traders at successful hedge funds (these are guys who have experience, not undergrads). And even those are few and far between. For every well paid quant out there you have 100 who are making fairly mediocre salaries (in Wall St. terms). </p>
<p>A first year associate going into i-banking can expect around $150k-300k close to what the first responder said. I don't know where people get the $425k number but it is wrong, just go ask any 1st year associate. Even at PE you will be making the same in your first one or two years, maybe a little more. The bigger money differences come a few years down the road. Remember during your first and second year firms know that your experience is minimal and you can't add a ton of value. You become marketable after a couple years of working post-MBA and that's when they have to pay you well to keep you (if you're good). </p>
<p>People need to get more realistic about Wall St. salaries. The media really exaggerates numbers and everyone in the industry knows this. The money is good of course but it's not like you come out of school and half a million bucks is showered upon you. I'm in my late 20s and for every guy from HBS and Wharton my age that I know that is making good money (mid to high six-figures) there are a dozen guys with the same HBS or Wharton degree making low to mid six-figures and this is a few years out of those top b-schools. I can't tell you the number of guys I know with great academic credentials and great work experience that can't get jobs at hedge funds or private equity, and like a lot of people they became very sick of ibanking so they do something like go to an advisory shop or traditional fund management. Not to burst anyone's bubble but just to manage expectations, there is a huge attrition rate in this business that a lot of people don't take into account.</p>
<p>You took the top portion of the salary stated by a previous poster, but obviously you forgot the starting salary indicating that it included a range and a variation of 150k.</p>
<p>Yes the range is wide, it's because there are a lot of factors. The answer would have been different if he broke it down by what banks and what desks. For instance if you're at a 2nd tier bank like Bear Stearns in an unglamorous area like DCM or Public Finance you're going to be closer to the bottom of that range. If you start out at a top tier bank in M&A for instance you could be closer to the top of the range. Not all i-banking is created equal, there are factors to consider. </p>
<p>Just to keep people in reality a little also consider your taxes, in NYC you're paying one of the highest state taxes plus the city tax. With all the other things like Social Security, FICA, your 401k contribution, etc thrown in you walk away with around 50% of your salary to take home. So even at $200k-$250k which is what most post-MBAs will be making their first year on Wall Street it means you take home around $100k. If you're still in school that may sound like a lot of money but anyone else will tell you how that basically makes you a middle-class New Yorker ----- and that's what you get for putting in the 100 hour weeks. Be sure it's something you want to do for the long run, otherwise it aint worth it.</p>
<p>"T. Boone Pickens, the prototypical private equity maven, reportedly made $1-1.5 billion in 2006." </p>
<p>But thats from being a trader not a private equity guy. T. Boone Pickens trades energy instruments these days, he hasn't done major LBO stuff in years. Pickens also said himself he's made much more money from oil speculation than he ever did with his LBO activities.</p>
<p>The $425k was from the Wall Street Journal...someone needs to write them and tell them their numbers are too inflated.</p>