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Navigating Layoffs in Investment Banking

Blog,Investment Banking

We’ve had dozens of laid off investment banking analysts and associates reach out to us for how to navigate a tough job market. More surprisingly, a handful of private equity associates have also reached out about being laid off or being put on performance plans in a tough market.
From Goldman Sachs to Morgan Stanley to Citi and beyond, it seems like even the biggest banks are being impacted by reduced deal flow, and there’s still room for the dominos to fall. With M&A deals and IPO activity at their lowest levels since the peak in 2021, the old adage is proving true: “in bull markets, banks tend to over hire, and in bear markets, they over fire.”

M&A Deal Volume Fell in Q1 2023

Do not take being laid off as a personal reflection of your ability or worth. Here’s what to do if you’ve been laid off from your investment banking job:

1. Leave on a good note

Wall Street is a small industry. There’s no point in getting mad or holding grudges with your employer. The best thing to say is “thank you for the opportunity” to folks you worked with. It would also be incredibly useful to have 1-2 people at the firm who can advocate for you during reference calls or point you in the right direction with job referrals.

2. Calculate your runway

Living in New York or another big city isn’t easy. Ideally your firm has given you severance to the tune of 2-4 months. Some firms will also continue to pay for health insurance for a couple of months post separation. If you firm hasn’t done this, we recommend tactfully requesting them to do so. Next, calculate your monthly expenses and how much you have saved up to determine your runway (how long you can survive given how much savings you have and how much you spend). Figure out how to cut costs in the short term if needed. Treat recruiting like your full time job and you should be able to convert an offer within 3 months.

3. Update your resume

You probably haven’t worried about updating your resume since starting your banking job. Now is the right time to take a step back and update your resume for all the deals and projects you worked on. If you need help getting started, try the OfficeHours experienced analyst resume template.

4. Identify what your long term career goals are

You made it into investment banking, which wasn’t easy. Maybe you did it for the finance learning or the professional experience, or maybe you did it for the exit opportunities. Now is a good time to re-evaluate what you want from your career in the next 10 years. Do you want to be a career banker? You can then immediately hit the ground running to interview at banks.

Or maybe you feel you have enough experience and want to jump direct into an investing role at a hedge fund, private equity firm, or VC fund. Even still, your investment banking skillsets are transferrable to working in a variety of business roles at a large corporation or even a startup, with possible roles including corporate development, business development, strategic finance, FP&A, or other roles. All of these options have a tradeoff between competitiveness, compensation, lifestyle, and trajectory. It is important to thoughtfully set a target and then shift to recruiting mode. Some may choose to cast a wide net at first, but eventually you will want to narrow down to a specific job function to make your interview prep more efficient.

5. Reach out to headhunters and have a good story for why you are looking for a new role

If you’ve never spoken to headhunters before, now is a good time to get acquainted. If you’re already spoken with headhunters in the past, maybe about PE recruiting or otherwise, now is a good time to have a “reset” conversation to give them an update on your recruiting needs.
It is super important to go into these conversations prepared, especially after having been laid off. You do not want to give the impression you were let go due to subpar performance. Many analysts are getting laid off due to a bad economy, lackluster deal flow, and bloated teams from over hiring during the bull run. Any detail you can add to your situation, such as your entire team being let go or your MD leaving the bank that support the macro factors is helpful, and any micro factors in your control such as positive reviews or references would help your case.

6. Networking

In addition to the headhunter recruiting channel, it is important to dust off your rolodex and have as many networking calls as you can with other investment bankers. You may have a good contact list from prior recruiting cycles, or you may need to start cold emailing. Our view is that sending 200 emails per week with a 10% response rate will get you 20 replies, and if you can convert 20% of the responses into calls then you can set up 4 calls per week.

7. Deal walkthroughs

Once you have all your deal experience on your resume, take a step back to review all the deals you’ve worked on. When working on a live deal, it’s hard to synthesis everything you’re working on to view the bigger picture. You’re often just focused on executing the task at hand by tight deadlines. Deal experience is crucial. While recruiting for internships or on-cycle recruiting relies on aptitude and your potential for growth, experienced hire recruiting relies on what you already bring to the table TODAY.

Finally, once you start having opportunities coming in, make sure you are ready to convert by having mock interviews with friends, peers, or even an OfficeHours coach to make sure you can capitalize on the opportunities presented to you. The job market is incredibly tough right now, so you may not see as many opportunities as candidates did in previous years during a hiring frenzy. It is important to convert the few opportunities you do see.

If you have been laid off and are looking for help with recruiting, feel free to reach out and OfficeHours coaches are happy to have an introductory call to see if we can help. Please fill out a short form here and we will schedule a call subject to capacity.

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