Investment banking is a fast-paced and lucrative career path, but many analysts and associates do not stay in banking long-term. After a few years, many look to exit opportunities outside of banking for better work-life balance, career progression, or to pursue personal interests. Bankers have many options when considering exit opportunities, including private equity, hedge funds, venture capital, corporate finance, startups, and MBA programs. It’s important to consider your skills, interests and long-term goals when evaluating potential exits from investment banking.
Paths to private equity and hedge funds are top exits from investment banking
Many investment bankers look to make the jump to private equity or hedge funds, which are viewed as more prestigious and lucrative. The deal experience, financial modeling skills and client relationships developed in banking are highly valued and transferable. However, the hours don’t necessarily get better in PE and the path is extremely competitive. Only top performers have a real shot at landing PE gigs at top shops after 2-3 years in banking. Smaller, specialized PE firms may be more accessible targets. Hedge funds also recruit heavily from the junior banker pool and offer traders the opportunity to invest and manage money directly. The hedge fund lifestyle can be irregular though, and performance pressure is high.
Corporate finance roles allow work-life balance improvement from investment banking
Some investment bankers transition to corporate finance roles at technology or other high-growth companies. Though compensation packages are likely smaller, the hours are usually better compared to banking and allow more work-life balance. Bankers have the financial modeling skills to value acquisitions and capital projects. Relationship management abilities also translate well to helping manage Wall Street banks and advisors. Corporate development programs at big tech companies like Google, Amazon and Facebook are popular destinations for ex-bankers. Startup financing roles are also potential options, but offer more risk.
Venture capital provides an opportunity to work with startups after investment banking
Venture capital allows ex-bankers to leverage their financial skills to invest in and support startups and small businesses. Junior investors at VC funds are often tasked with evaluating deals, conducting due diligence, modeling financials and assisting portfolio companies. VC provides exposure to cutting edge technologies and entrepreneurship. However, many VC firms value individuals with operating experience and deep sector expertise in addition to financial acumen. Networking is critical to break into smaller, early stage venture funds straight out of banking.
MBA programs allow time for self-reflection and career switches after investment banking
After a few years in banking, many choose to leave the field temporarily to pursue MBA degrees, reassessing their passions and interests. Top MBA programs like Wharton, Harvard and Stanford are great for switching careers, as bankers can reset with a fresh brand and pivot to consulting, private equity, hedge funds, venture capital, corporate finance or other areas. MBA classes also provide hard skills to augment banking expertise. The two years allow self-reflection and the opportunity to recruit for post-MBA roles. However, the high cost of tuition and temporary income loss are considerations.
Investment bankers have a myriad of exit opportunities to consider as analysts and associates, including private equity, hedge funds, startups, venture capital, corporate finance roles, and MBA programs. Each path has tradeoffs to weigh regarding compensation, lifestyle, career development and personal fulfillment.