PE / IBD experience - Ask Me Anything

[DocBlues21]

Shoot.

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[dth8611]

What advice would you give to a medical student who wasn't interested in practicing medicine and wanted to pursue a career in finance, with the eventual goal of working in biotech/healthcare VC/PE? My impression is that the options include: 1) going for a top-tier MBA directly out of med school, 2) trying to get an entry level job in management consulting, IBD or equity research, 3) sticking it out through medical residency and practicing for a few years and/or working in clinical development in biotech/pharma, and then trying to move into a mid-level position at a firm through networking...

 

[DocBlues21]

What advice would you give to a medical student who wasn't interested in practicing medicine and wanted to pursue a career in finance, with the eventual goal of working in biotech/healthcare VC/PE? My impression is that the options include: 1) going for a top-tier MBA directly out of med school, 2) trying to get an entry level job in management consulting, IBD or equity research, 3) sticking it out through medical residency and practicing for a few years and/or working in clinical development in biotech/pharma, and then trying to move into a mid-level position at a firm through networking...

MBA would not be optimal in this case. In addition to putting down another $200,000, you'll be competing with droves of former MBB (McKinsey, Bain, BCG) consultants, bulge bracket investment bankers and pre-MBA private equity peers - a decent portion of which will have had experience in the healthcare sector (in consulting / IBD / PE, typically you'll be split into industry focused groups - and healthcare is one of the hottest at the moment given all the M&A activity in the space). While you'll undoubtedly have more insight into some of the specifics operational aspects of the company (e.g. product pipeline), those with prior consulting / investing experience will be able to attack the problem from a more finance / strategic / investment perspective (e.g. tackle questions like, competitive advantage, cost structure, ability to lever company, synergies, capital structure etc.) as well as the ability to execute deals (e.g. capital raising, M&A, SPA negotiations, working with lawyers / accounts on diligence, etc).

Best bet here (if set on private equity / HF and to a lesser extent, VC) would be to approach from an investment banking analyst position - with your background, you'll definitely be slotted into the healthcare group. If you are at a "target" school, I recommend attending an information session for undergrads / MBA's and then start networking there. Another good approach is to reach out through your alumni network - contrary to what most people say, the majority of analysts / associates at bulge bracket banks are still hired from non-targets (due to the sheer number of non-targets vs. targets). Your first 6-12 months will teach you the significant majority of the "technical" finance you need to know to get the ball rolling. If you are at any of the bulge-brackets, PE recruiting starts about 6 months into the job (to secure a placement 18 months out - i.e. at the end of the 2 year commitment). With your background, you'll also have significant opportunities for healthcare oriented hedge funds.

Being an investment banking analyst is probably one of the most difficult and stressful jobs in the world so it won't be a picnic. But in my opinion, it's well worth it to set yourself up for a long-term career in finance if that is indeed what you want to do (plus unlike school, there's the added bonus that it actually pays you pretty well and that scales very quickly). I personally came from a very liberal arts background (never took a single finance / accounting class) and my experience in IBD taught me all the technical skills I needed to know to handle that part of the job. The other big part of the job - perseverance, personal skills, project management, time-management, intuition - that is developed over time and some people are naturally better at it than others (although there is definitely a correlation between general maturity and those attributes).

 

[dth8611]

MBA would not be optimal in this case. In addition to putting down another $200,000, you'll be competing with droves of former MBB (McKinsey, Bain, BCG) consultants, bulge bracket investment bankers and pre-MBA private equity peers - a decent portion of which will have had experience in the healthcare sector (in consulting / IBD / PE, typically you'll be split into industry focused groups - and healthcare is one of the hottest at the moment given all the M&A activity in the space). While you'll undoubtedly have more insight into some of the specifics operational aspects of the company (e.g. product pipeline), those with prior consulting / investing experience will be able to attack the problem from a more finance / strategic / investment perspective (e.g. tackle questions like, competitive advantage, cost structure, ability to lever company, synergies, capital structure etc.) as well as the ability to execute deals (e.g. capital raising, M&A, SPA negotiations, working with lawyers / accounts on diligence, etc).

Best bet here (if set on private equity / HF and to a lesser extent, VC) would be to approach from an investment banking analyst position - with your background, you'll definitely be slotted into the healthcare group. If you are at a "target" school, I recommend attending an information session for undergrads / MBA's and then start networking there. Another good approach is to reach out through your alumni network - contrary to what most people say, the majority of analysts / associates at bulge bracket banks are still hired from non-targets (due to the sheer number of non-targets vs. targets). Your first 6-12 months will teach you the significant majority of the "technical" finance you need to know to get the ball rolling. If you are at any of the bulge-brackets, PE recruiting starts about 6 months into the job (to secure a placement 18 months out - i.e. at the end of the 2 year commitment). With your background, you'll also have significant opportunities for healthcare oriented hedge funds.

Being an investment banking analyst is probably one of the most difficult and stressful jobs in the world so it won't be a picnic. But in my opinion, it's well worth it to set yourself up for a long-term career in finance if that is indeed what you want to do (plus unlike school, there's the added bonus that it actually pays you pretty well and that scales very quickly). I personally came from a very liberal arts background (never took a single finance / accounting class) and my experience in IBD taught me all the technical skills I needed to know to handle that part of the job. The other big part of the job - perseverance, personal skills, project management, time-management, intuition - that is developed over time and some people are naturally better at it than others (although there is definitely a correlation between general maturity and those attributes).

Thanks for the advice, really appreciate hearing from someone who's worked in the industry! I had a follow-up question: when you mention an investment banking analyst position, do you mean the traditional IBD roles focused on M&A, IPOs, etc.?

A few people I've talked to (admittedly no one with first-hand experience working in any of these finance jobs) have mentioned that physicians or other advanced degree holders may fare poorly in typical ibanking jobs since you're up against 22 year olds who will be way more proficient in Excel and willing to work 100+ hours/week. They advocated shooting for equity research analyst roles where you could better leverage knowledge of a specific sector, like healthcare. Can you comment on going for an investment banking vs. equity research position, and if one has better exit opportunities than the other?

 

[Liquidice07]

Shoot.

 

[DocBlues21]

Thanks for the advice, really appreciate hearing from someone who's worked in the industry! I had a follow-up question: when you mention an investment banking analyst position, do you mean the traditional IBD roles focused on M&A, IPOs, etc.?

A few people I've talked to (admittedly no one with first-hand experience working in any of these finance jobs) have mentioned that physicians or other advanced degree holders may fare poorly in typical ibanking jobs since you're up against 22 year olds who will be way more proficient in Excel and willing to work 100+ hours/week. They advocated shooting for equity research analyst roles where you could better leverage knowledge of a specific sector, like healthcare. Can you comment on going for an investment banking vs. equity research position, and if one has better exit opportunities than the other?

Yes - by "investment banking analyst" I mean M&A, Industry coverage (e.g. TMT, Healthcare, Industrials, Consumer, Real Estate, Natural Resources, etc.), ECM / DCM (equity capital markets / debt capital markets), SLF (syndicated and leveraged finance), etc. These are traditionally thought of as "classic" IBD. Typically people like to think of it as "Coverage groups" (all the industry groups I mentioned) and product groups (M&A / ECM / DCM / SLF).

I don't think it's so much the proficiency in Excel that may put you at a competitive disadvantage - it's more the grinding late nights that will inevitably happen. But contrary to how much people generally complain about this - I actually think the 100+ hour weeks are (generally speaking) the result of being new to the job and not knowing how to do certain things / not knowing where to look. By the end of my banking stint - I could produce the same amount of work a first-year takes 10 hours to do in maybe 3 tops. Also, even as you hit your second year - you'll start having a lot more resources underneath you that will take a lot of the grunt work. One additional point is that the 100+ hour weeks the first year is where you really learn the basics of finance. If that kind of grind didn't exist, there would be no way we could hire English / History / or even STEM majors for this job.

If private equity / HF is your primary goal - definitely go the investment banking position. That's where the pipeline has always been developed and that's where the structured recruiting takes place from. Equity research could set you up for HF down the line, but the best bet is still IBD.

 

[justadream]

MBA would not be optimal in this case. In addition to putting down another $200,000, you'll be competing with droves of former MBB (McKinsey, Bain, BCG) consultants, bulge bracket investment bankers and pre-MBA private equity peers - a decent portion of which will have had experience in the healthcare sector (in consulting / IBD / PE, typically you'll be split into industry focused groups - and healthcare is one of the hottest at the moment given all the M&A activity in the space). While you'll undoubtedly have more insight into some of the specifics operational aspects of the company (e.g. product pipeline), those with prior consulting / investing experience will be able to attack the problem from a more finance / strategic / investment perspective (e.g. tackle questions like, competitive advantage, cost structure, ability to lever company, synergies, capital structure etc.) as well as the ability to execute deals (e.g. capital raising, M&A, SPA negotiations, working with lawyers / accounts on diligence, etc).

Best bet here (if set on private equity / HF and to a lesser extent, VC) would be to approach from an investment banking analyst position - with your background, you'll definitely be slotted into the healthcare group. If you are at a "target" school, I recommend attending an information session for undergrads / MBA's and then start networking there. Another good approach is to reach out through your alumni network - contrary to what most people say, the majority of analysts / associates at bulge bracket banks are still hired from non-targets (due to the sheer number of non-targets vs. targets). Your first 6-12 months will teach you the significant majority of the "technical" finance you need to know to get the ball rolling. If you are at any of the bulge-brackets, PE recruiting starts about 6 months into the job (to secure a placement 18 months out - i.e. at the end of the 2 year commitment). With your background, you'll also have significant opportunities for healthcare oriented hedge funds.

Being an investment banking analyst is probably one of the most difficult and stressful jobs in the world so it won't be a picnic. But in my opinion, it's well worth it to set yourself up for a long-term career in finance if that is indeed what you want to do (plus unlike school, there's the added bonus that it actually pays you pretty well and that scales very quickly). I personally came from a very liberal arts background (never took a single finance / accounting class) and my experience in IBD taught me all the technical skills I needed to know to handle that part of the job. The other big part of the job - perseverance, personal skills, project management, time-management, intuition - that is developed over time and some people are naturally better at it than others (although there is definitely a correlation between general maturity and those attributes).

For IBD, if you entered post-med school, would you be at an equivalent level as an Associate (post-MBA)? If so, wouldn't that absolutely kill your exit opps for PE? My understanding was PE recruiting was almost only for those entering at the post-undergrad level.

Also, how much harder is Medical Student ==> MBB ==->PE compared to Medical Student ==> IBD ==> PE?

The above could perhaps be accomplished through a program like McKinsey's MD Fellow program (2 years as a consultant in between M3 and M4).

https://mckinsey.secure.force.com/Generalist/job_details?jid=a0xA000000AeJTZIA3

 

[Osteoth]

For IBD, if you entered post-med school, would you be at an equivalent level as an Associate (post-MBA)? If so, wouldn't that absolutely kill your exit opps for PE? My understanding was PE recruiting was almost only for those entering at the post-undergrad level.

Also, how much harder is Medical Student ==> MBB ==->PE compared to Medical Student ==> IBD ==> PE?

The above could perhaps be accomplished through a program like McKinsey's MD Fellow program (2 years as a consultant in between M3 and M4).

https://mckinsey.secure.force.com/Generalist/job_details?jid=a0xA000000AeJTZIA3

As someone not necessarily interested in PE/finance in general, but maybe leaning toward administration or management consulting, how useful would a program like this one at McKinsey be?

 

[justadream]

As someone not necessarily interested in PE/finance in general, but maybe leaning toward administration or management consulting, how useful would a program like this one at McKinsey be?

Well the program IS management consulting so obviously it would be helpful for that. That's kind of like asking how useful being a software engineer at Google is if one wishes to become a software engineer.

I'm not sure about administration though.

 

[spicysoup55]

Are there certain roles in finance where a medical background is useful for the actual work and would give you a competitive advantage over straight business types? Based off what I've read about venture capital and equity research in general, it seems that a medical background would be an edge but I'm not completely sure.

 

[MDviaMBB]

MBA would not be optimal in this case. In addition to putting down another $200,000, you'll be competing with droves of former MBB (McKinsey, Bain, BCG) consultants, bulge bracket investment bankers and pre-MBA private equity peers - a decent portion of which will have had experience in the healthcare sector (in consulting / IBD / PE, typically you'll be split into industry focused groups - and healthcare is one of the hottest at the moment given all the M&A activity in the space). While you'll undoubtedly have more insight into some of the specifics operational aspects of the company (e.g. product pipeline), those with prior consulting / investing experience will be able to attack the problem from a more finance / strategic / investment perspective (e.g. tackle questions like, competitive advantage, cost structure, ability to lever company, synergies, capital structure etc.) as well as the ability to execute deals (e.g. capital raising, M&A, SPA negotiations, working with lawyers / accounts on diligence, etc)... If you are at a "target" school, I recommend attending an information session for undergrads / MBA's and then start networking there.

Regarding the 1st italicized part, check out Wharton's healthcare-tract MBA student's profiles:
https://hcmg.wharton.upenn.edu/programs/mba/program-information/mba-students-2016/
The 3 students out of 68 in Wharton's class that do have experience at those firms were either based fairly remotely or did not do actual consulting

About the 2nd italicized part, I agree with what it looks like you're alluding to. Banks and investment firms will not or be extremely reluctant to hire a medical school graduate whom does not have advanced training and experience in the field they're trying to provide financial services for.

The last italicized section I definitely agree with. I go to a target school and do what you described frequently. I would add that interacting with people outside of business schools is perhaps more important (e.g. in pharmaceutical development) since business students mostly network with themselves.