Georgetown McDonough Alumni Stories-Jeff Hoffmeister

I'm Jeff Hoffmeister, I'm a Georgetown grad myself. I've spent the last 18 years working at Morgan Stanley in the tech banking group. I run our tech banking group in New York, and I was honored to come back and have a chance to talk about investment banking and hopefully help fellow Hoyas get into banking. I was a finance undergrad, I went to the business school, I had a minor in foreign governments, and I actually didn't think I was gonna get into banking originally. That was not my plan. Actually, a fellow Hoya convinced me that it was something I should do, and I've loved it since then.

Investment banking is basically a combination of giving advice to companies, to CEOs, to boards on things like buying another company, selling their company, as well as the second half of it being capital raising. So whether a company wants to raise money to go public, or they're already public like Google and they want to raise additional capital, or they want to raise debt capital, it's that combination of advice around M&A and advice around fundraising, based on what we know about the markets and observe the markets, and give our best input to companies as they go through some pretty important decisions.

I remember when I was a senior here at Georgetown, and it's tough from the outside in to get a good perspective of what's investment banking versus sales and trading versus research and all the different elements. There are elements on the investing side. For those big four examples, big investment banking firms will have an asset management business that is a little bit like a stock picker, where they need to invest in certain companies and see how those companies perform over time. The research job, for those of you that might be considering it, is where you will write about and follow an already public company, like what did Facebook do on their quarterly results, or what did Google or Yahoo or Amazon or whomever. So there's an element of following those companies. Whereas the other elements, with investment banking, and I'm gonna put mergers and acquisitions within investment banking, you really spend your time advising companies themselves, advising management teams and boards on what course of action they should take on things like buying another company or raising capital. Should you raise capital now, should you raise capital later, should you buy this company, and if so, how much should you pay for it? How should you think about negotiations with the other side in terms of what terms of the contract are most important? So it is much more advice-driven than I think people realize. There's absolutely a financial underpinning to all this, but just like you would be a lawyer or someone else advising a person, that's what we're doing: we're advising CEOs.

I think when you start in investment banking, a lot of it is numbers-driven because a lot of the advice we need to give is based on rather complex financial analysis. We need someone to basically fill out that model. I can only give advice to a CEO if we've done a very good job looking at all the elements. If one company's gonna buy another, how should we think about how the company that we're gonna acquire is gonna grow over the next few years? How profitable are they going to be? How well does it fit with our strategy? We need to start with that financial analysis that helps us give that advice. So as an analyst, you really start doing a lot of things like building the Excel models, helping build the presentations, helping us think through the materials we need to give good advice. And generally, the hours are long, as everyone knows, but it's also rewarding that you get to spend a lot of time with CEOs, with boards, at a stage in your career that I think is really hard to replicate in any other industry.

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Generally, investment banking has kind of three to four year blocks of time. So if you're an intern, you're there for the summer. If you were to join a bank full time after you graduate, most people are an analyst for two or three years, and then you would become an associate. As an associate, you're a mix of people that maybe went straight through from undergrad or other people that had an MBA. For the most part, you're an associate for three or four years, then you would be a vice president for three or four years, and you kind of continue with the change. But most people, by the time you get to where the term is partner or managing director, or whatever specific label your firm uses, that's generally about a 12 to 14 year progression.

I think the internship is important for two reasons. Like any internship, you're gonna learn a lot about the business, and especially if you haven't had any exposure to it before, this gives you a chance to understand: do I like it? Do I want to do banking versus research, or maybe you're thinking about financial services versus consulting? It gives you a chance to just learn. A lot of times people go through this and think, 'Well, this is a three-month interview, I'm getting interviewed the whole time, and I got to figure out if I get the job at the end of the summer.' I'd encourage you to interview the firm, interview the industry. Take the time to grab coffee with some of the senior people, take someone out to lunch, have these conversations. You should interview the institution, interview the industry, and see if it's something you want to do. The other thing, which I think is not unique to investment banking but happens more so than in most industries, is to get a job at a firm when you didn't work there the summer between your junior and senior year. It's hard because in any given year, our full-time slots are 80 to 90 percent filled by people that were summer interns with us. So you'll still have super days and other things where you can have a chance even though you didn't work for us for the summer, or maybe you worked at another firm and we saw that you did a good job. But you really have to get yourself in the funnel and the queue, so that's why it's pretty important.

The informational interviews are important for a couple reasons. One of the things that I see in investment banking, and I'm sure you see it in other industries as well, it's hard from the outside looking in to really understand it. So you really stand out as a candidate if the interviewer gets a sense that you've done your homework, that you understand what you're getting into—the positives about the industry and the negatives about the industry you're thinking about. Informational interviews can really help you do that. I think some people go to informational interviews and feel like, 'Oh, I need to find this person, I really need to impress them, and that's my entree into the firm.' That's an element of it, but I think what's more important is you just need to soak it all in. You should ask the same question of three or four people at one informational interview and three or four people in the next. If you have one or two firms you really want to work at after Georgetown, yes, I would go to those informational interviews. Do you have to go to all of them? No. But the other thing that I think sometimes people underestimate is the importance of the people that graduated a year or two ahead of you. A lot of times they're at the informational interviews, and if there's a prospective candidate, I'll ask the people who just joined within the last year, 'Did you know this person on campus? What do you think of them?' So spend some time with the people that are just a year or two ahead of you. They are important in the process as well.

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Every firm has a unique culture, but culture is hard to describe. It's just like Georgetown feels different than any other school in its own almost indescribable way. From the outside looking in, you kind of have to feel it. That's very true for all the firms, whether you're looking at different firms in consulting, banking, or legal firms. You can ask people to describe the culture, but that's hard. Generally, you just need to meet the people and get a sense for that. That's an important piece of it. You should ask a bunch of questions: 'What do you like about banking? What don't you like about banking? What surprised you? How long do you plan on doing this? If you did something else, why would you do that?' Those types of things to get an understanding of the industry itself. A lot of times people ask, 'What was your favorite deal or project to work on?' That makes sense, but really just try to get a sense for the industry and what people do on a day-to-day basis.

Most people will not ask technical questions. I think sometimes from the outside looking in, people have the sense of, 'Oh, I'm gonna get a bunch of technical questions.' You will get some. You'll get questions like, 'Help me figure out the cost of capital for a business,' or 'Help me figure out how much I should pay for this company,' or 'Help me figure out the calculation for free cash flow, walk me down the income statement.' You should be prepared for those because the last thing you want is to get caught flat-footed on stuff like that. But having said that, you should expect more questions along the lines of what people will purposefully put you on the spot in order to try and differentiate the people that have really done the homework versus those who have only kind of done homework. So I may ask you, and it's a little bit of an unfair question, but I may ask you what you think the worst thing about investment banking is going to be, or describe how you would be described by three or four of your friends at Georgetown if I grabbed them and said, 'What is she or he like?' More personality-type questions. In half an hour or so in an interview, there's only so much you can really glean about a person.

Great question. You certainly, as part of the career services office, can leverage some of the knowledge and expertise that they have. You should spend a lot of time asking fellow Georgetown students that maybe spent a summer there before, or maybe they talked to siblings, talk to family friends, talk to alumni. Really leverage that network. Maybe I wasn't a finance major, you know, I was a Spanish major. In fact, the best analyst I've ever worked with in my career in investment banking was a woman from Georgetown who was literally a Spanish major. She decided she wanted to do banking, she just asked a bunch of questions, she picked it up, and she's phenomenal. You don't have to know everything going in. When you get into investment banking, you may end up in a certain industry group. I'm in the technology group. Probably only a third of people in my group went into it thinking, 'I really want to do technology.' People in the healthcare group necessarily didn't want to be focused on healthcare. But you just find that you ask a bunch of questions, you get to know the industry, you get to know the group, and that makes a big difference.

A super day is basically an opportunity. We call it super day because we have a bunch of people interview candidates from a bunch of different schools that will come to the firm that day. We may have 30 or 40 students at Morgan Stanley on a given day, and they'll meet a bunch of different people. It's just concentrating a lot of interviews into one day, which makes it more efficient for us and more efficient for you.

I don't think there's a standard answer to that one. For the most part, firms try to be efficient with getting back to people, as they know that you as the student want to think about maybe some different alternatives. So we always try very hard to get back to people within a week or two. There's no guarantee that that's the case, but we try.

An intern is successful on two fronts. You have to consider it successful because you learned a lot. If you went into the summer saying, 'I want to figure out if investment banking is right for me, I want to figure out if this firm is right for me,' you should actively think about that. Spend time with people in the group you're working with, grab people, maybe Georgetown students in another industry group or other departments, maybe friends of yours that are at a different firm but are also working in New York for the summer. Ask them how they like their firm and their job, and just soak it in. Ask as many questions as you can. Obviously, the other element is you want to get an offer at the end of the summer. Not everybody gets an offer, and I would really encourage you to do a great job so that you do have an offer for the summer, even if you're not sure you want to work at that firm. Because if you worked at a different firm last summer and you're interviewing with me this year, I'm gonna ask, 'Did you get an offer from your firm?' So it's an opportunity, and it's just a smart thing to do.

It varies by firm. The bigger the firm, generally it's a little bit harder to move, but it also depends on how far you want to move. If you think about this in concentric circles, the further out you want to go, the harder it becomes. So if you worked in investment banking and you tell me you want to work in capital markets, I'm like, 'That's not that hard.' If you work in investment banking and you tell me you want to work in research, definitely still doable, just a little bit harder. But I would also encourage you to start thinking about that as early in the summer as you can. If you're halfway or two-thirds of the way through the summer and you say, 'Maybe banking is not for me, maybe I want to work in sales and trading or asset management,' I'd encourage you to seek people out in those divisions and start asking those questions sooner rather than later. Take advantage of the board, maybe at a different firm, while you're there in New York or whichever city you're in. Just ask around before you get to the end of summer and you have an offer from a department that maybe is not right for you.

I really encourage people to focus on the sub-sector of any industry that they want to do. If you say, 'I want to do investment banking,' and you talk to three of the big firms and for whatever reason that doesn't work out, don't give up on investment banking and say, 'Well, I'm gonna go work for research in one of the big three firms or some other department.' If you know it's investment banking you want to do, focus on investment banking. Maybe there's a midsize firm, or maybe there's a boutique, or maybe there's a firm in a different geography where you can get a job there. That's really important. You can always transfer later. Every investment banking firm will always grab good people at another firm. So maybe you've really had your heart set on firm X, it doesn't work out to start with, you go work for another firm, you do a great job, and 18 months after graduation, you're back working at firm X where you really wanted to be.

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What I love about investment banking: I don't know another industry where at a very young age you get to spend very high quality time with CEOs, founders, with the executives that are forming our economy in many ways. It's just not, with all due respect to other industries, I think this is one where you get to have your input heard and your advice taken at an age where you just can't see it anyplace else.

I think a lot of people go into investment banking and say, 'I want to do it for a couple of years, then maybe I go to business school or maybe I try another industry.' We see that a lot. We also have a lot of people that just go straight through. For the people who are in investment banking and love it, they say to themselves, 'I could go to business school or do something else, but really, I like what I'm doing, so why don't I stay here?' I don't have a silver bullet answer for you on that one. I think what you do is you find that you're 6, 12, 18 months in, you get a sense for what you're doing on a daily basis. You look at the more senior people that have been there longer, what they're doing on a daily basis, and you look at them and say, 'Is that what I want to be doing? Does it look like they're enjoying their job? Is that where I want to find myself in 3, 5, 10 years?' I think that's a key indicator.

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Yeah, I think for investment banking, everyone talks about the long hours, and they are long, there's no question. I think the other thing too is the hours, like any customer service job, whether you're in consulting, at a law firm, or in banking, you're providing advice, you're providing a service to someone else. So your hours can change, or your schedule can change quickly because a client needs your help. So in addition to long hours, you do have to be really good at managing changes in schedule and juggling a bunch of things at one time. That combination is one which some people like and other people don't.

I would go back to the point made before: do your homework, ask a bunch of questions, ask the same question of multiple people. Again, classmates, people who graduated a year or two ago, people that graduated 5 or 10 years ago, family friends, siblings. Just ask and ask and ask, because you would be surprised how much you stand out if you have a good understanding of investment banking and you can answer those questions. A lot of people have a cursory understanding of it, and they just don't do nearly as well in the interview process as the people that have really done the homework.

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Well, I think certainly work with the career services office. They're the best starting point for giving you some perspective on that. I think the other thing too is that a lot of times people try and focus all their efforts on just someone who is a Georgetown grad from maybe a year or two or five years ago, and they don't spend as much time with HR. I would encourage you to do a dual-prong approach on that. The HR team is actually the ones who would know better what they're doing on campus, the exact deadlines for resume submissions, and all those things that I'm just not at any one point in time as current on. So you got to do both: stay on top of the process with the HR department and the career services department, and then stay on top of what's going on in the firm via some of the recent alumni. Thank you.