,EHMAN"ROTHERS
7ET&EET)NSIDER'UIDE %DITION
4HE7ET&EET2ESEARCH-ETHODOLOGY ...
70 downloads
1036 Views
288KB Size
Report
This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!
Report copyright / DMCA form
,EHMAN "ROTHERS
7ET&EET )NSIDER 'UIDE %DITION
4HE 7ET&EET 2ESEARCH -ETHODOLOGY
4HE 7ET&EET 'UARANTEE
Insider Guide
Lehman Brothers 2004 Edition
Helping you make smarter career decisions.
WetFeet, Inc. 101 Howard Street Suite 300 San Francisco, CA 94105 Phone: (415) 284-7900 or 1-800-926-4JOB Fax: (415) 284-7910 Website: www.wetfeet.com
Lehman Brothers ISBN: 1-58207-319-8 Photocopying Is Prohibited Copyright 2003 WetFeet, Inc. All rights reserved. This publication is protected by the copyright laws of the United States of America. No copying in any form is permitted. It may not be reproduced, distributed, stored in a retrieval system, or transmitted in any form or by any means, in part or in whole, without the express written permission of WetFeet, Inc.
Table of Contents Lehman Brothers at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Industry Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Organization of the Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
On the Job . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Investment Banker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Salesperson. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Trader. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Research Analyst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Lifestyle and Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Workplace Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Vacations and Perks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Career Path. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Insider Scoop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Getting Hired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 The Recruiting Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 The Interviewer’s Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Interviewing Tips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Grilling Your Interviewer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
For Your Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 The Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
At a Glance
Lehman Brothers at a Glance Headquarters
Lehman Brothers 745 Seventh Avenue New York, NY 10019 Phone: 212-526-7000 www.lehman.com Key Differentiating Factors
• Historically, Lehman’s strength has been in fixed income, but the firm has successfully shifted its business toward higher-margin areas such as M&A and underwriting, and the acquisition of Neuberger Berman makes it a player in asset management as well. • The firm employs what it calls a Best Operator Strategy, building high-margin businesses, growing European business, and streamlining back-office and corporate functions. • Management has been together for more than 20 years. Primary Competitors
BofA Securities, Citicorp, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase In the Recruiter’s Words
“We’re looking for people with distinctive problem-solving and analytical abilities. There’s equal weighting on people’s leadership skills. We’re looking for a proven track record of leadership. We’ll look at people’s backgrounds and ask them to give examples of significant leadership roles. Another area is initiative. Another aspect is, absolutely, we’re looking for people who work effectively with others to achieve a goal.” “We want to have an environment where the team comes first. . . . We have one P&L at the firm. If there’s a trade or a business or something to do for a client, as long as overall it’s positive for the firm, we’ll do that.”
1
At a Glance
In the Interview
Show evidence of leadership. Lehman hires individuals who will be future leaders at the firm. Think about your background and how you have demonstrated this ability, and be ready to talk specifically about that. What Insiders Say
“I’ve noticed Lehman goes more for the well-rounded candidate rather than the one with straight A-pluses. It makes the firm more personable. I don’t meet too many people who strike me as bookworm-type people.” “If you can take constructive criticism, Lehman’s willing to take people from zero to 60.” “Lehman’s pretty technology-savvy, which eliminates a lot of the grunt work. That means that analysts here start at a much more advanced level. I’m not sure that’s true at all firms.” The Career Ladder
• Undergraduates enter a two-year analyst program. • MBAs enter as associates. Anticipated Hires, 2003–04
Lehman does not release information about anticipated undergraduate or MBA hires.
Estimated Compensation, 2003–04
Analysts
$50,000–$60,000 plus discretionary bonus
Associates
$80,000–$90,000 plus discretionary bonus Source: WetFeet estimates.
2
The Firm
The Firm • Overview • The Bottom Line • Industry Position • Organization of the Firm
3
Overview The Firm
While Lehman’s roots go way back—the firm started off as a dry goods store in 1850 and founded the New York Cotton Exchange—its modern history begins in 1994 when its stormy marriage to American Express ended in divorce. American Express had bought the bank to create a financial supermarket, combining it with Shearson, a brokerage business run by Sanford Weill (now of Citigroup). The underlying economics looked good, but many Lehman employees couldn’t adjust to Shearson-Lehman and vice versa—and many left the firm. AmEx spun Lehman off to the public in 1994. Those early years as an independent, public company were tough, but so were the management skills of CEO Richard S. Fuld, Jr., who reined in expenses, broadened the firm’s business mix, and ultimately undertook a major restructuring that put the daily operation of the company in the hands of a management committee. Results have been very positive—even during troubling times. After 9/11, Lehman was forced to evacuate its headquarters in the World Financial Center adjacent to the Twin Towers, scattering 6,400 employees among 42 different sites, including a hotel. The year’s results were the second-best ever in terms of revenues. “On the business side, we put up strong numbers out of a hotel,” an insider told us in 2002. “What people feel now is that [our success] is not about our brand-new headquarters. It’s about people.” Lehman has since moved into a 32-story tower in Rockefeller Center. Lehman’s strategy is to focus on strong relationships with select companies. It calls this the Best Operator Strategy, using revenue and costs to drive decision
4
making, targeting high-margin products, applying technology to all areas of its operation, and creating value by broadening the categories in which it competes. Unlike its competitors, however, it isn’t trying to be all things to all people. “Our aspiration is not to be the biggest, but to be the best in those
The Firm
markets in which we choose to compete,” says a senior recruiter. The strategy continued to pay off in 2002. Despite a tough market, Lehman continued its ascent up the rankings in equity research, from 13th a few years ago to second; saw fixed income produce a record $2.6 billion in revenues; and reported its third-best year in terms of revenues, despite unfavorable market conditions. The firm also dramatically expanded its asset management capabilities by acquiring Lincoln Capital Management, forming a partnership with women-owned Milestone Capital Management, and, in August 2003, more than doubling total assets under management with the acquisition of Neuberger Berman, a 1,200-employee firm founded in 1939. The deal is expected to close in the fall. Acquiring Neuberger “sort of completes one of the areas that’s been a high focus area—wealth and asset management,” says an insider. “We think Neuberger brings assets which we can integrate and grow further. [The deal] gets us to the revenue mix that we feel is very diversified across businesses and across borders.” Analysts say that Lehman’s stock and bond research will provide Neuberger a bigger net for customers and that the acquisition will reduce Lehman’s reliance on bond trading. Insiders stress that despite this growth, the culture hasn’t changed. “To be big for the sake of being big doesn’t make sense,” CEO Fuld said in a BusinessWeek Online interview after the acquisition. “Then you’re an elephant. And elephants spend 98 percent of their time eating. We don’t do that. We spend 98 percent of our time running the business.”
5
Insiders say the firm doesn’t need the bureaucracy
“”
other firms require because management has been
The Firm
Titles exist because we need them, but they are meaningless when it comes to our day-to-day interaction.
together for so long (more than 20 years in many cases) and knows the business so well. “From a business point of view, it allows us to get things done very quickly,” one tells us. The management structure is flat: “Titles exist because we need them, but they are meaningless when it comes to our day-to-day
interaction,” says an insider. This should be good news to enterprising recruits, who want to join a bank that gives them room to stretch. “You hear people say they have plenty of rope to run with, but not so much to hang themselves,” says an insider. Lehman looks to campus recruiting to fuel its momentum. The firm’s success in equity research is a case in point. “Those people who got us from fifth [in 2001] to second [in 2002] have been home-grown people,” says an insider. “We’d much rather hire in people and train them ourselves than go out and hire somebody from another firm.” Unlike many of its competitors, Lehman offers its bankers opportunities to move laterally within the organization and considers this cross-fertilization a key to its success in staying focused. The firm has a strong practice in Europe (27 percent of overall revenues) and the United States and is targeting Asia (currently 10 percent of revenues) for growth. Insiders don’t feel that the size of the bank gets in the way of developing relationships. “Even though it’s a pretty large bank, each department feels pretty small,” says an insider. “I don’t feel like I’m at a large place where I don’t get to know people well.” Rotations help people build networks throughout the organization. And when you come to work, expect to work. “We’re very hard working,” says an insider. “People don’t slip out and go to the gym or put their
6
feet up on the desks and tell jokes. While we do have lighthearted moments, we grind it out with a healthy sense of competition.” Employees own more than 30 percent of the bank, providing further incentive to work long, hard, and smart.
The Firm
The Bottom Line Lehman has a strong culture that encourages people to take initiative. Lehman insiders like that it’s a down-to-earth environment, focused on building market share in the areas in which it competes, with plenty of opportunity to move around. “They look at the analysts and associates as the people who are going to be leading Lehman in ten years,” says an insider. “The firm puts a lot of faith in your judgment and maturity, and expects a lot in terms of your work capacity and stamina,” says another. Everyone is expected to perform and to take on as much as they can handle, and the firm boasts that its people are the most productive on the Street. The upside is that because “you have more responsibility, people have more reasons to get you up to speed fast,” says an insider. The pace is fast and the expectations are high. If you’re looking to build a long-term career at a bank, don’t mind the added pressure of a smaller balance sheet, and can handle the opportunities offered by a bank with a strong franchise, lean operating environment, and a focus on teamwork, Lehman may be for you.
7
Industry Position The Firm
While Lehman consistently ranks in the top six on the league tables, it’s caught behind the commercial bank franchises, with Citigroup and JPMorgan Chase holding down the one-two spots in many categories. In 2002, Lehman saw its market share surge in global IPO issuance, M&A, and leveraged loans, and also gained market share in secondary trading and global issuance of common stock, high-yield debt, and fixed income. Financial results for the first half of 2003 have been excellent, thanks in part to a strong bond market, but market share has been tougher to gain. For the first half of 2003, market share gains in U.S. asset-backed securities (1.5 percent) and global asset-backed securities (1.8 percent) were offset by market share declines in U.S. high-grade corporate debt (1.2 percent) and global bonds (3 percent). Lehman’s rankings paint a similarly mixed picture. The firm climbed from seventh to third in global assetbacked securities and placed second in long-term debt, for instance, but saw its ranking in U.S. mortgage-backed securities fall from third to sixth. Over the long term, however, Lehman’s trend has been to gain market share even with the economic downturn.
8
Lehman Brothers First Half 2003 Industry Rankings Rank ----------------2003* 2002*
Category
2003* ------------------------------------------Amount ($B) % of Market Top Firm
4
5
146.2
8.4
Citigroup
U.S. long-term straight debt
4
4
62.2
9.7
Citigroup
U.S. long-term debt
2
3
128.9
9.0
Citigroup
U.S. high-yield corporate debt
6
6
5.6
8.4
Citigroup
U.S. high-grade corporate debt
4
3
34.4
9.8
Citigroup
U.S. mortgage-backed securities
6
3
40.3
8.2
UBS
U.S. asset-backed securities
3
6
25.0
9.1
Citigroup
Global bonds
3
2
27.4
10.0
Citigroup
All municipal bond issues
6
3
13.8
6.9
Citigroup
Global debt & equity
6
6
166.9
6.1
Citigroup
Global asset-backed securities
3
7
26.2
8.3
Citigroup
Global high-yield corporate debt
6
6
5.8
8.2
Citigroup
The Firm
U.S. debt and equity
*First six months of the year. Source: Investment Dealers’ Digest, 7/7/03.
9
Other Rankings and Awards 2002 All-America Fixed-Income Research Team
Institutional Investor named Lehman Brothers the top firm for the third year in a
The Firm
row. Lehman ranked first with 35 analysts, including 12 on the first team and ten on the second, with CSFP and JPMorgan Chase tying for second with 31 analysts. Source: Institutional Investor, www.institutionalinvestor.com.
2002 All-America Research Team
Lehman jumped from fifth in 2001 to tied for second (with Merrill Lynch) in 2002 in Institutional Investor’s annual ranking, trailing Citigroup. Lehman took 52 positions; Citigroup took 53. Fourth-place CSFB had 44 positions. Source: Institutional Investor, www.institutionalinvestor.com.
International Financing Review “Bank of the Year,” 2002 Project Finance International “Bond House of the Year,” 2002 WetFeet’s 2003 Student Recruitment Report
In WetFeet’s 2003 Student Recruitment Report, students (MBAs and undergraduates) ranked Lehman the number two on-campus recruiter overall and number one among investment banks.
10
Organization of the Firm The Firm
View from the Top Lehman Brothers is a public firm, with employees holding a little more than a third of its stock. CEO and Chairman Richard S. Fuld, Jr., works closely with Lehman’s executive committee and board of directors. The executive committee, composed of head bankers and traders, manages the firm’s day-to-day operations. The executive committee guides Lehman’s strategic direction. In 2002, Lehman expanded its executive committee from six to nine members. Despite criticism from industry observers, Fuld has steadfastly maintained that Lehman is dedicated to management by committee, reiterating that teamwork is a key ingredient of Lehman’s success—and he’s practiced what he’s preached.
View from the Middle The firm divides its businesses into three areas: • Investment banking, which includes equity underwriting, debt underwriting, M&A, and private equity • Capital markets, which includes equities and fixed income • Wealth and asset management, which provides services to private clients Lehman hires MBAs into the investment banking, fixed-income, equities, and wealth and asset management divisions. Undergraduates join the investment banking or capital markets divisions or come into corporate as members of the information technology, operations, or finance teams. Unlike some other banks, equity research at Lehman is part of capital markets and not a stand-alone
11
division. Lehman stresses its organization’s integrated nature, as all divisions work together to develop and market products to the firm’s clients. Each business division comprises smaller teams that focus on specific industry
The Firm
groups, financial products, or markets.
View from the Bottom At the ground level, Lehman is structured with teamwork in mind. “Lehman is much less hierarchical, much less regimented in terms of what they expect from you,” says an insider. “It’s not all based on titles here. At Lehman, your career path is about responsibility.” Another insider counsels newcomers to meet as many people as possible. “One thing that is asked over and over again is, ‘Find this info.’ You’ve got to find the people in the bank who have what you need. Meeting people across the firm is key.” Groups from each of Lehman’s major divisions overlap to form project teams made up of everyone from analysts to managing directors. For example, a highyield underwriting for a health care company might bring together professionals from the firm’s high-yield (product) and health care (industry) groups in investment banking, plus representatives from debt, capital markets, fixedincome research, high-yield trading, and private-client services. According to insiders, deal teams at Lehman tend to include no more than four or five people, so team members have to pull their own weight. “Lehman’s deal teams are much flatter than at some firms on the Street,” says one insider. “Because the teams are so much flatter, everyone has a lot of responsibility and has to pull together to make a deal happen. You’re not just a cog in the wheel.”
12
On the Job • Investment Banker • Salesperson On the Job
• Trader • Research Analyst
13
Investment Banker The investment banking division is organized around industry coverage groups and product groups. The industry coverage groups maintain Lehman’s client relationships and partner with the appropriate product group to execute each deal. For example, the health care group (industry coverage) will work with equity capital markets (a product group) to execute a biotech company’s IPO and then work with the M&A group to advise the company on a merger. The
On the Job
primary businesses in investment banking are mergers and acquisitions, underwriting of debt and equity, and private equity. In creating deals, investment banking projects combine the number crunching required in accounting and finance with the verbal skills necessary to create cogent, comprehensive marketing documents.
Typical Projects I-bankers typically work on four to six deals simultaneously. Both analysts and associates provide research, analytical support, coordination, and some client relationship management for these projects. One insider says, “The difference between an associate’s work and an analyst’s work can be very gray. It depends more on personality than a strict delineation of responsibility.” In general, analysts focus on a deal’s prosaic aspects, such as creating public information booklets (PIBs) and running comparative analysis reports (comps). Associates tackle both analyst- and associate-level projects in their first year, but they have more bottom-line responsibility than analysts do. Also unlike analysts, associates interact extensively with a client company’s financial officers, lawyers, and accountants. Typical tasks include:
14
• Creating PIBs—internal documents that consolidate all the relevant information for “ ” a deal, such as SEC filings, research reports, The trading history, and press mentions. • Running comps, which involves dissecting the 10-Ks and 10-Qs (the annual and quarterly reports that companies file with the SEC) from eight or so companies in an industry, describing trends in the financials, and analyzing how the client’s financial status stacks up to that of the competition.
difference between an associate’s work and an analyst’s work can be very gray. It depends more on personality than a strict delineation of responsibility.
On the Job
• Writing a fairness letter for an acquisition in progress. This letter is a legal document that states the firm’s opinion that a deal is fair to the target company. The document is often lengthy and can require an enormous amount of number crunching by analysts and associates to produce the supporting data. • Building spreadsheet financial models, such as pooling- or purchase-analysis models, for an M&A deal. • Structuring deals for clients and helping companies determine how large a debt or equity offering should be, when to initiate a stock buy-back program, or whether to pay for an acquisition in stock or cash. • Performing due diligence.
15
A Day in the Life of an I-Banking Associate 7:45
Decide four snooze alarms are enough. Out of bed, grab a bagel, and head for work, picking up a copy of The Wall Street Journal on the way.
8:45
Arrive at work and check voice and e-mail messages. Pull up intranet to check stock prices of client firms.
9:00
Dive back into last night’s unfinished project, a sales memo for a new medical device company’s equity offering. Since this memo helps the sales force answer investors’ questions about why they should buy the stock, it’s important to provide lots of good, big picture info and handy numbers. Call the library for stats on the diabetes market.
On the Job
10:00 Study the new materials and integrate statistics into the sales memo. Proof the memo for errors and typos. 11:55 Rush the finished memo to the VP on the deal. Need to get it to him before lunch. 12:00 Grab a sandwich from the cafeteria downstairs and bring it back to the desk to eat. 12:20 Start working on a purchase model for a pharmaceutical merger in the pipeline. Go through the proxies for similar transactions, looking for discrepancies in numbers that will help determine some of the assumptions. 3:00
The VP returns the equity-offering memo with corrections and comments—nothing too extreme. Spend the next few hours incorporating the VP’s comments and finalizing the sales memo.
6:00
Take the sales memo, complete with all of the necessary appendices, down to production. Ask them to prepare 100 copies for the sales team by tomorrow.
6:30
Brisk walk outside. Got to do something to keep that blood flowing to the brain!
8:00
Back at desk, call for a pizza delivery, because it’s going to be another late night. Start working on a discounted-cash-flow (DCF) analysis for another M&A deal, this time for a managed care company.
12:00 Enough is enough. Turn off the computer and head home.
16
Salesperson A Lehman salesperson acts as the relationship manager for a particular client base. As the middleman between the client and the firm, the salesperson is responsible for developing a relationship, marketing the firm’s products, and making sure that the client has access to the firm’s products and services. Institutional salespeople work with institutional clients; private-client services salespeople work with high-net-worth individuals. Both groups cultivate their
On the Job
client bases, using the firm’s research and breadth of product offering to attract new business.
Typical Projects The main business of the sales department is to manage client accounts. A sales-person’s responsibilities include making sure trades are executed, delivering research products to provide timely investment advice to clients, and keeping clients inform-ed about market dynamics. Depending on the product group, typical projects may include providing clients with general economic forecasts, analyzing the perform-ance of individual stocks, or marketing a new stock or debt offering to a client. Salespeople often accompany clients to the industry conferences and road show presentations that Lehman sponsors to sell particular securities. Often, salespeople act as company spokespeople and facilitators, putting the client in touch with trading, research, and investment banking. Typical tasks include the following: • Developing and maintaining relationships with clients. • Apprising clients of market performance and fluctuations. • Reviewing research analysts’ ideas to identify new deal possibilities for clients.
17
• Presenting deal options to clients. • Attending road shows for client companies’ initial public stock offerings. • Responding to client calls during market hours.
On the Job
A Day in the Life of a Salesperson 6:00
Stumble out of bed and hit the road. Burrow into The Wall Street Journal on subway.
6:45
Get to work on the floor amidst hundreds of edgy traders. Pull up Bloomberg screens to check out trading in London and Tokyo markets. So far, so good.
7:15
Attend the morning sales division meeting about the market’s performance. Research news since closing time yesterday. Nothing earth-shattering.
8:15
Return to desk and leave voice mail messages giving clients performance estimates based on this morning’s meeting. Tailor each call to include only those companies relevant to the client’s particular business.
9:30
Opening call.
9:45
Grab some breakfast en route to a morning meeting with a research analyst and a client.
10:45 Call accounts to let them know how their stocks are trading. For once, everyone is happy. 12:00 Attend a road show lunch at a midtown hotel for a biotech firm hoping for an IPO. Don’t think the market’s going to be that receptive. Hope the I-bankers in charge know enough to wait.
18
2:00
Return from meeting. E-mail sales memo on new convert deal to managing director who’s on the road.
2:30
Meet with a Lehman research analyst and a corporate-client team to push some new health care offerings in pipeline. Review stock possibilities with the client and then answer questions. These managers are sharp. All the right questions.
3:15
Practice cradling three phones on my neck and talking into the right one. Still got a way to go on this one. (Never did like headsets.)
4:00
Finally, the market closes. The thrill never seems to wear off when it opens; ditto the relief when it’s over. Attend a meeting with sales team to preview next week’s new deals.
5:20
Day’s done. Time to head home!
Trader On the Job
The trading division is made up of traders, market makers, and sales traders. A trader will buy and sell stocks for a client or, in the case of proprietary trading, for the firm’s own account. A market maker buys and sells securities for the firm’s account in order to ensure a liquid market for a given security. A sales trader in equities or fixed income acts as a liaison between the institutional salesperson and the trader. The sales trader’s task is to help clients buy and sell large quantities of securities.
Typical Projects Unlike in investment banking, there are no strictly defined projects in trading. Titles have less importance, too. Your responsibility is based on your experience, not on your position in the desk’s hierarchy. “It’s what you can handle, not what degree you have,” says one insider. In general, traders execute trades. The projects are much shorter than in banking, and they vary according to a trader’s specific function. A trader may receive an order to sell a large chunk of stock and then work the order over several days, persuading salespeople to shop the order to potential buyers. Market makers are responsible for setting the
19
price of a particular security according to the market. A preoccupied Nike market maker who fails to recognize that the company’s stock has dropped four points, for example, is still obliged to honor his or her obligation to buy shares at the older, higher price. This kind of oversight reduces Lehman’s gains, as well as those of the trader and his or her team (remember, “one firm”). In particular, fixed-income traders must keep abreast of economic data, Treasury bond yields, political trends, and information about companies that might affect the price of a bond.
On the Job
A Day in the Life of a Trader 6:00
Monday, Monday. That’s reason enough to catch a cab instead of taking the subway. Read The Wall Street Journal on the way.
6:45
Gulp down extra-super grande coffee on way to desk. Check out Bloomberg to see what’s happened in Thai corporates overnight. Scan CNNfn for more news.
7:45
Turn on squawk box to listen in on the global fixed-income division meeting. Lehman’s chief European and U.S. economists give overviews of fixed-income markets. Once the big stuff is done, they’ll break out into smaller meetings to discuss individual markets like corporates or treasuries.
8:15
Back to the desk. Call up Thai client to update him on market news of the day.
9:30
Market opens—start watching that screen.
10:00 Phone starts ringing with salespeople looking to get more information on specific bonds. Throw a couple of big fish their way. 10:45 Get call from brokers who are selling securities between Lehman and Bear Stearns. Sell position to broker for a cut of the profits when retail buys it. 12:00 A fellow analyst has pulled duty to place the desk’s lunch order. Vote for Chinese. Majority votes for deli. Order a roast beef sandwich.
20
12:30 Answer calls coming in from trading wire while sneaking bites of sandwich. Sit in on meeting for new deals and market indices.
1:30
Call back broker from earlier this morning. Lift an offer on (buy) 100,000 shares of stock at market price for a client in Boston. Take the opportunity to exchange information with a broker on best deals he’s seen.
2:00
Call client to inform him of the completed transaction. Convince him to buy new swap product the desk has. Good work. Hope it gets noticed.
2:45
Hit a bid on (sell) 200,000 shares of stock in computer software firm. Make a juicy profit. Report back to the client.
3:00
Call some clients to look for new deals. Check market prices to see what’s feasible.
3:45
Make several calls to confirm the GTC (good till cancel) orders. Execute smaller buy and sell orders.
5:00
Take a tour of the floor. Chat with some guys at the desk about the day’s business.
6:30
Head out. Everyone in the elevator is making plans to go out. It’s still early, so why not?
On the Job
1:00
21
Research Analyst Providing support for all of Lehman’s other divisions, the research department is divided into fundamental and overview research: 1. The fundamental group is the larger of the two and focuses on specific industries and industry groups. 2. Overview research consists of a handful of strategy and political analysts
On the Job
who study general market trends around the world. Fixed income and equity each have separate research sub-units or product groups. Within fixed income, the groups include high-yield debt (junk bonds), high-grade debt (investment-grade bonds), mortgage-backed securities, government market and Federal Reserve securities, and strategy research, which advises clients on the hottest sectors for investment. Within each product group, researchers analyze specific industries. For example, high-yield researchers study casinos, television, cable, and telecommunications. They also coordinate with the high-yield group in corporate finance and with traders and sales. Equity is broken down into industry groups, each covering its own universe of stocks trading on the New York Stock Exchange and NASDAQ.
Typical Project Specialists in fundamental research focus on long- and short-term opportunities with clients from specific industries. They often juggle information from three or four companies at a time. The overview generalists do not report directly to customers but rather provide a longer perspective—the big picture in global
22
market trends for sales, trading, and investment banking. MBAs are typically hired as associate analysts. (Unlike those in other I-banking divisions, almost all professionals in research are called analysts.) Their primary function is to help senior analysts keep track of market trends, specific industries, or developments within individual companies. Whereas senior analysts divide their time between examining company documents, talking to clients, sharing research with sales and trading, and helping corporate finance bring new issues to market, associate analysts spend a lot of time crunching numbers and gathering documents. Qualified associate analysts usually get promoted to senior positions within a couple of years. Research tasks can include:
On the Job
• Digging through Bloomberg for industry and product developments in the fixed-income market. • Contacting or visiting clients to present estimates on a market’s or stock’s performance and to make buy or sell recommendations. • Tracking performance of client companies. • Writing up summaries of internal meetings, industry trends, and market trends. • Drafting formal research reports for review by senior analysts.
23
A Day in the Life of a Research Analyst 6:45
Rise and shine! Time for a healthy breakfast of powdered donuts and scalding-hot coffee.
7:30
Elevator up. . . . Smile while walking past traders and salespeople into the little world of research.
8:00
Attend the morning meeting of research and sales. The research staff goes over new earnings releases and acquisitions of companies, letting the sales force know how these will affect the price of bonds.
9:00
Write up a one-page summary of meeting and the general consensus regarding bonds. Post it on the intranet so the sales force can read it, and post another copy for electronic delivery to clients.
On the Job
10:45 Take a call from the CFO’s office at a major supermarket chain reporting new information. Interim period results are out! Examine stats to determine the effect on bond prices. 11:15 Write up summary of findings. Hand it over to a senior analyst, who will contact institutional clients who own shares in the supermarket. Her opinions—and the clients’—need to be incorporated into a more formal draft. 11:45 Listen in on a conference call with a senior analyst to discuss client findings with traders and then with sales. 12:30 Lunchtime. Ride down in elevator with senior analyst on her way to a client lunch. Detour at the cafeteria, pick up a chicken enchilada, and shuttle back up in the elevator.
24
1:15
Wipe food stains off a company’s financials and get to work on those numbers.
3:00
Another senior analyst from the consumer group cruises by looking for the new ROE figures for Company X. No one here but us chickens. Hop to and get him the info before he’s turned the corner.
4:30
Sit in on a meeting with banking to discuss whether the timing is right for a big retailing client to do a high-yield deal. Instinct says the market won’t be that receptive now. Suggest waiting till the first quarter.
5:15
Write up a summary of the meeting. In this job, you need to secretly like being a court reporter. There’s a lot of writing. Circulate copies to senior analysts.
6:00
Senior analyst takes off. Pull up your screen and begin some serious number crunching, making spreadsheets for Wednesday morning meeting.
8:30
Call it a day. Head to the gym for an hour, and then go home.
On the Job 25
The Workplace • Lifestyle and Hours • Culture • Workplace Diversity • Compensation • Travel The Workplace
• Vacations and Perks • Training • Career Path • Insider Scoop
27
Lifestyle and Hours Insiders at Lehman tend to downplay the long hours, but they do so only in the context of banking: Expect to average 85 to 90 hours regularly and 100 or more during crunch times. “Your hours depend on the type of work you’re doing, your group, and your team members,” says an insider. For instance, M&A work can be very time intensive because it’s so unpredictable, often requiring last-minute scrambling. Financings, on the other hand, follow a fairly set schedule, which is easier to plan for. For those who work on the trading floor, expect to come in around 7 a.m. and leave between 5 and 6 p.m. During that period, “You have zero privacy,” says a trader. “I have no free time between 7 a.m. and 6 p.m. during the week. I don’t have a lunch break. I eat lunch at my desk. Adjusting to that was a little difficult.” All-nighters and weekend stints are far less common in sales, trading, and research than they are in investment banking. “I think the perception
The Workplace
is that a new hire in banking may necessarily have more of an intense and stressful day than sales and trading. They’re both intense and stressful,” says an insider. “When you’re in front of a bunch of screens, it’s very, very intense. When you’re working on a sales or trade with millions at stake, those moments are extremely intense.” Across the board, bankers are expected to have the client’s interests as their first priority, which often means that sleeping and living are a second, third, or fourth priority. “The schedule will be aggressive and variable,” says a recruiter. One insider asserts that having a life is realistic, but this will certainly depend on what you consider “having a life”: “I have three children and manage to make time for them each month. For the most part though, I’m gone well before they wake up, and they’re asleep when I get home. But I make allowances so that there is a day here and there where we can maintain that connection with home.”
28
Culture Insiders at Lehman say it’s fast paced and intense, with plenty of opportunities to move around and take on projects. Teamwork is essential. “People who have done extremely well here know how to work with other people. It’s an absolute requirement and not something you learn,” says an insider. The firm is leaner than competitors, with a relatively flat structure. As a result, there’s a built-in incentive for those with experience to bring those coming into the bank along quickly. “It’s a small organization that has to compete against bigger ones, so there’s an underdog mentality—every win is a big win. And everyone is hungry. There are great opportunities for growth,” says an insider. Many enjoy the down-to-earth attitude that pervades the office. As one insider describes it, “There’s a lot of mutual respect among all levels, but it’s not a blind faith thing. You are allowed to question someone above you.” Says another, “That question-asking is really rewarded, and so are persistence and adaptability.”
The Workplace
“We have gone to a BlackBerry society,” says an insider, referring to the handheld, wireless e-mail device. “Most bankers have gone from 20 to 30 voice mails a day to one or two.” The dress code is formal. Within the headquarters, “The floors are very light. There are tons of windows. The cubicles are smaller than at a lot of other buildings. A lot of things are very high tech. They’ve got vending machines on every floor,” says another insider. Another says, “We have a great support staff. There’s a lot of stuff that’s taken care of, and it’s done right. I feel I can really trust the people I work with. I feel the people are really generous. People are generally working with people they like. That enhances the supportive environment. People want to be there.” Another says, “I consider the people I work with, 99 percent, friends. We don’t go out often together, but there’s such a mutual respect. I like the people I work with.”
29
Sharing work with others is a familiar theme among insiders. “We always try to make sure other groups are referred to for opportunities. People are pretty selfless,” says an insider. Says another, “On the banking side, for us, it’s about all-the-time, year-round, roping in other teams around the client. It’s not about protecting a client for yourself.”
Workplace Diversity Lehman has a chief global diversity officer and a global manager for diversity recruiting. It formed a Diversity Council in spring 2001, which is chaired by the firm’s COO. The firm has five employee networks—one each for Asian, Latin
The Workplace
American and Hispanic, female, African American, and gay and lesbian employees. These networks conduct mentoring programs, panel discussions on career development, and other programs, and each is developing an interactive website. The firm targets diverse populations, recruits at historically black colleges, and participates in conferences for the National Society of Hispanic MBAs and the National Black MBA Association. The firm offers domestic partner benefits for same-sex couples. “It’s a very difficult industry for women,” says an insider. “I don’t think that has anything to do specifically with Lehman.” That said, the firm has a women’s initiative. Lehman is actively trying to support women who aspire to senior management roles, and it offers a very generous three months of maternity leave.
30
Compensation Compensation at Lehman is competitive with that of other firms on the Street. “We don’t want anyone to join because we’re paying a little more, or because we’re playing a little less,” says a recruiter. “We’ll be very competitive. We’d like to take the compensation piece out of the decision-making process.” An insider adds: “They’re not going to pay you the most, and they’re not going to pay you the least. They’ll pay you the average.” We estimate Lehman will start analysts at $50,000 to $60,000 in 2003 to 2004 and associates at $80,000 to $90,000. Bonus amounts depend on the firm’s success and vary by performance; recruiters indicate that bonuses will be similar to those at other firms on the Street. Associates receive a percentage of their total compensation in stock, depending on seniority. Lehman offers a 401(k) but does not match employee contributions. The company also has a flexible spending
The Workplace
plan that allows employees to use pretax dollars for day care, elder care, transportation, and commuting expenses and for nonreimbursed health care.
31
Travel Travel demands vary widely, depending on division, industry group, and financial product. According to insiders, analysts in investment banking travel 10 to 20 percent of the time, more frequently in the second year of the program than in the first. Road shows, which analysts and associates usually attend a couple of times a year, require visits to numerous clients in several cities on a very tight schedule. During such a trip it would not be unheard of to have an early-morning meeting in Chicago and an afternoon meeting in Los Angeles, followed by a red-eye flight to Europe. In general, the smaller the deal team you’re on, the greater your chance of travel, as there may not be anyone else available to go. The amount of travel for sales analysts and associates is substantial but depends on where their clients are based. In research, senior analysts travel
The Workplace
quite a bit, but travel time is modest for junior analysts, especially at the beginning. Traders rarely travel.
32
Vacations and Perks “Management considers it very important for people to take vacations at all levels,” a recruiter tells us. Lehman offers most of its employees—including analysts and associates but excluding upper management—three weeks of vacation a year. Insiders say they don’t feel managers are counting the vacation they’ve taken or looking over their shoulders when they miss time for being sick. However, few people in the industry make use of all their vacation time, and when they do, they don’t expect to stray too far from a phone. “If something comes up when you’ve planned your vacation, you’re expected to use your judgment, and your judgment better be in favor of the client. That applies across the board—analyst, associate, or managing director,” says one insider. Lehman counts a subsidized fitness plan among its perks. It has partnered with
The Workplace
New York University on a part-time MBA program, fully paid for by Lehman. It does not have a specific tuition reimbursement program, but it pays for jobrelated courses. If you work after a certain time, you’ll get dinner and can take a cab home for free. The Lehman Brothers ID gives employees free or significantly discounted admission to many of New York’s museums and cultural centers, and those working at company headquarters at Rockefeller Center receive a discount at “pretty much every retail establishment” there, says an insider. Maybe the best perks are those that “just pop up,” says one insider. “The managing directors get tickets to a lot of the events going on in the city and will throw you a bone every once in a while. So you can go to Lehman’s box at the U.S. Open or at the Knicks game.”
33
Training Training for analysts and associates is conducted at Lehman headquarters in New York City. Lasting anywhere from three weeks to several months, training introduces analysts and associates to the firm’s management and philosophy and teaches basic financial, analytical, and networking skills. Insiders cite Lehman’s training program as one of the best in the field: Simply completing Lehman’s training program makes you more marketable. In addition to training, Lehman assigns each new hire, including summer interns, a junior and a senior mentor. As you continue with Lehman, your training continues, too. As a sign of the firm’s commitment to leadership development, Lehman implemented a leadership training program in 2001 for managing directors, senior vice presidents, vice presidents, and assistant vice presidents. The firm also offers additional training opportunities outside the formal programs. “Each group I
The Workplace
know does periodic trainings for people all the time,” says an insider.
Training for Undergraduates Analysts joining investment banking, private equity, and public finance start with five weeks of training and are then placed in product or industry groups. Analysts joining the equity and fixed-income divisions enter a two-year program called START (the Sales, Trading, and Research Training Program), which begins with a four-week classroom course that covers accounting, financialstatement analysis, bond math, and computer programs. START analysts then participate in rotation programs that expose them to various product groups within the division. After several weeks, program managers work with the analysts to match them to a specific product group where they remain for two
34
years. Analysts joining the operations, finance, information technology, and credit-risk management groups receive training specific to their functions. Once placed, “it’s up to the groups in how they will train you,” says an insider.
Training for MBAs Associates entering investment banking, sales, trading, research, and privateclient services receive four to five weeks of initial classroom training followed by a series of rotations. After the rotations, associates are placed in groups based on their preferences and the firm’s needs. Insiders tell us that this opportunity to get practical experience in several areas before joining a group permanently is an invaluable part of the training process.
The Workplace
Career Path Opportunities for Undergraduates Analyst programs last two to three years for sales, trading, and research and investment banking. The firm has a special program with New York University that enables exceptional candidates to continue to work at the firm while they get MBAs. Candidates in the START program gain exposure to sales, trading, research, and structured finance within equities and fixed income, and they play a role in choosing where they end up. “The fact that they’re so accommodating of individual interests is a really nice feature of Lehman. You don’t find that
35
everywhere on the Street,” says one third-year analyst. At the same time, you won’t have total control over which job you get—and if you’re one of those who doesn’t get his or her first choice, you may grow frustrated.
Opportunities for MBAs Associates are recruited heavily on campus and join for the long haul—the firm is looking for its future leaders and will groom associates to climb the executive ladder as assistant vice presidents, vice presidents, senior vice presidents, and managing directors. The firm has tracks where associates can specialize and tracks where they can rotate. “We believe in a generalist program,” says a recruiter. The firm does allow for some preplacements in areas looking for specific skill sets, but Lehman thinks a generalist program is more beneficial to candidates overall. Promotions to vice president usually occur after three to four years based on performance.
The Workplace
Opportunities for Summer Interns Undergraduates will find summer opportunities in all geographies in investment banking, private equity, fixed income, and equities and in corporate functions, including operations, finance, information technology, and credit-risk management. The analyst program lasts ten to 12 weeks and gives interns a head start in landing full-time jobs at Lehman after college. Ditto MBAs, who also find that an internship at Lehman is a good way to get a full-time job after graduation. The firm believes this is the best way for you and the firm to get to know each other. Lehman offers ten- to 12-week programs in the United States, Europe, and Asia in investment banking, private equity, fixed income, equities, public finance, and private-client services. During the summer program, classroom training and social events bring the groups together for fun and
36
learning. Regardless of their division, summer associates are sure to be wined and dined and offered extensive contact with senior management.
Opportunities for Midcareer Candidates Although Lehman Brothers relies heavily on traditional campus recruiting of analysts and associates, it’s certainly possible to be hired in the midst of your career. Those with particular industry or product expertise are becoming more and more valued on the
“”
People who have done extremely well here know how to work with other people. It’s an absolute requirement and not something you learn.
Street. “We’re hiring everywhere,” a recruiter tells us. Insiders say that job opportunities in global markets are also increasing as investment banking becomes more international.
International Opportunities Lehman offers opportunities in Europe and Asia. “Asia will be a very important
The Workplace
part of World Capital markets soon. China getting into the WTO will be an important first step. We’re not in a rush. We see more opportunity in Asia than in Latin America. We’ve had that view for awhile.” The firm also continues to build in Europe, where it has a robust practice. The firm has a centralized system for letting people know about opportunities elsewhere. “No one should be afraid to put their hand up and say they’d like to do something else,” says a recruiter. Lehman’s philosophy is that “success in one place leads to success in another place.”
37
Insider Scoop What Employees Really Like Carve your niche. Lehman is a scrappy competitor—note its Best Operator
Strategy—and offers an entrepreneurial environment, which sets it apart from the more established, entrenched firms on the Street. Insiders tell us that if you’re enterprising and enthusiastic, you can make a meaningful impact. “At Lehman,” says one insider, “you can develop your own niche or expertise in an industry and be the go-to person.” Another, referring to the responsibility given to young bankers on project teams, says, “As a junior banker at Lehman, you’re shepherding the process.” Opportunity. Insiders feel that climbing the corporate ladder at Lehman doesn’t
mean climbing a regimented organizational chart. “You get to step up earlier in
The Workplace
your career. You’re not a cog,” says an insider. “If you work hard and perform well, you will be compensated for it,” says another insider. “I don’t feel like I’m hitting my head on any ceiling,” says another, adding, “If you can step up so that you’re talking to clients and doing the advanced modeling work, you can have a significant impact. You don’t have to be a gofer.” Mobility. Unlike some of its competitors, Lehman wants its employees to move
around and considers the resulting cross-fertilization a competitive asset. “I’ve never heard of a firm where you are moved around so much if you want to be,” says an insider. And when you move, you’ll have opportunities to make a difference. As one insider who transferred to the London office says, “I knew I’d be part of generating ideas from the very beginning.”
38
Experience. Insiders say learning the basics of finance is one of the best aspects
of working at Lehman. “Lehman’s well known for having one of the best training programs on the Street,” says an insider. Insiders also report that working at Lehman opens doors. “There’s no way I’d have the job I have now without having been at Lehman,” says one former insider. Employees also say investment banking is great preparation for anything from trading on your own account to starting your own business. “In this industry, you’re privy to so much information,” says an insider. “It’s a real education.”
Watch Out! Lean and mean. Though its compensation is competitive, Lehman’s strategy
means you might not get some of the perks its competitors might offer. “The firm is pretty careful with costs in comparison with … other banks. Some people would rather work at a bank that pays for your lunch every day,” says an insider. “The way that translates to your life as an analyst is you’ve got a lot more responsibility from an early stage,” says another insider—meaning more opportunities to learn, but also more opportunities to work harder than your
The Workplace
peers elsewhere. Formalwear. In February 2002, Lehman returned to a formal dress policy.
“Nobody likes it,” says an insider. “I almost cried when I heard we were going business formal, but I’ve adjusted. What really annoys me about it is that Dick Fuld, at the quarterly earnings announcement, was wearing his shirt and tie, but wasn’t wearing his jacket.” Lehman first. Lehman stresses its team culture. As one insider puts it, “There’s
a saying at Lehman: one team, one dream. And it’s true. They really mean it when they say, ‘Be a team player.’” Candidates interested in their reputations rather than the good of the firm or client won’t find a big stage at Lehman. This isn’t a star system like that at Morgan Stanley. “We’re a strong company
39
that does not let the personal interests of the individual supersede that of the firm; that’s not acceptable,” says an insider. Political influence. According to a report by the Center for Responsive Politics,
which tracks campaign contributions, Lehman Brothers was President Bush’s second-biggest contributor among investment banks (after Merrill Lynch) as of July 2003 with $152,500 in individual and PAC contributions. If you’re a Republican, you may not be bothered by these contributions, but Democrats
The Workplace
might be.
40
Getting Hired • The Recruiting Process • The Interviewer’s Checklist • Interviewing Tips • Grilling Your Interviewer
Getting Hired 41
The Recruiting Process When reviewing résumés and interviewing, Lehman recruiters look for clear evidence of problem solving, leadership, initiative, personal presence, and the ability to work on a team. In making hiring decisions, “We think about people’s intrinsic smarts, intrinsic leadership abilities, and their presence,” says a recruiter. At the undergraduate level, Lehman looks for “distinctive” candidates. The firm recruits on campus at core schools (e.g., the Ivy League), but it actively looks for candidates from noncore schools as well. The firm’s goal is to find the best candidates in North America, period. Lehman claims that it has an infrastructure for recruiting at many undergraduate schools that its competitors don’t have. At the graduate level, Lehman recruits at the top business and law schools and PhD programs. Qualified candidates submit their résumés and, if chosen, move on to a half-hour, first-round general interview on campus. A secondround interview takes place either at Lehman’s offices or on campus. “We have different structures depending on the division,” says a recruiter. “There are many times we make the [hiring] decision on campus. Sometimes it makes sense to do interviews on-campus. Other times it makes sense to fly people back to the office.” Expect to talk to one person at a time during the
Getting Hired
interviews. Although the vast majority of analysts and associates in the United States end up in New York, a limited number of positions are available in Chicago, Los Angeles, and San Francisco. These offices can be desirable because they permit a lifestyle slightly more relaxed than the New York grind. Lehman also hires a lot of people into its offices in Europe and Asia.
42
On-campus interviews consist of a half-hour meeting. If a trip to New York is deemed appropriate, you’ll go through a day’s worth of meetings with employees who range from associates to senior vice presidents. (By the end of a full day, candidates have often been interviewed by as many as ten or 12 professionals). Offers are usually made within the week. Those seeking positions abroad will interview for a specific office, but if hired may spend an initial period of time in New York. You can find recruiting contacts for specific schools at www.lehman.com/careers/americas/contacts/school.shtml. If Lehman Brothers does not recruit at your school, your best bet is to send your résumé to the recruiting department. The firm has a list of names on its website (see “Recruiting Contacts,” in the next chapter).
Special Information for Undergraduates Lehman recruiters say that the firm “looks at candidates holistically.” The analyst program is a two- to three-year, up-or-out program depending on division. In 2003, one insider estimates that on the banking side, half of this year’s class are happy, 25 percent are okay with their jobs, and 25 percent are disappointed. “I think that’s something you take a chance on when you’re hired into the generalist program. You know you’re going to have a job. You just don’t know if you’re going to have a job you like. You’re taking a chance. Maybe 30 percent of people don’t get their number one choice.”
Special Information for MBAs Getting Hired
Lehman actively recruits at the top business schools. An insider advises MBAs to enroll in one of these schools, attend a Lehman one-firm presentation and on-campus workshop, talk to second-year summer associates, and seek out recent alumni for informational interviews. For MBAs who are new to
43
I-banking, the best way to get experience is through Lehman’s summer associate program. At the end of the program, Lehman extends full-time offers to all summer interns who are deemed exceptional performers.
Special Information for Midcareer Candidates According to insiders, the best way for midcareer professionals to get into Lehman Brothers is by focusing on the important industry and product groups at the firm. A high-tech or telecom specialist who speaks fluent Cantonese has a much better shot than a finance generalist does. But any previous experience at a bulge-bracket firm, private equity shop, or other markets-based business is generally a strong selling point. Top talent is always in high demand across
Getting Hired
divisions.
44
The Interviewer’s Checklist Insiders say they are looking at five specific areas in hiring: 1. Problem-solving and analytical abilities, such as intelligence, common sense, business sense, and good judgment 2. Leadership, as in the ability to motivate others, head a team, and promote an idea 3. Initiative, such as energy, work ethic, and a drive to excel 4. Teamwork (“It’s critical to understand you’re part of a team”) 5. Personal presence, or “self-confidence, assertiveness, humility” and “the ability to understand one’s own strengths and weaknesses” A recruiter says, “We’re looking to bring in the future leaders of the firm. We’re trying to take a much longer view.” Several hires tell us they joined Lehman because of the firm’s open-minded approach to candidates with varied backgrounds and interests. As one insider puts it, “They were very accepting of my liberal arts background; I didn’t feel like I had to hide it.” At the same time, insiders say that Lehman does value candidates who know how to network and play the political game. According to
Getting Hired
insiders, recruiters recognize those who “talk the right way” and who can “shake hands with the right people” naturally, without having too much attitude. One insider has this advice for new recruits: “You should focus on making yourself and your name very evident in the bankers’ lives. Don’t make a nuisance of yourself, but don’t make the bank make all the effort.” Says another
45
insider: “I think it’s important to relax [in your interview]. The interviews are personality searches. . . . If you get your interviewers to like you as a person, if you show you’re curious, eager, interested, inquisitive, you’ll do well—I think that’s what got me in the door.”
Interviewing Tips 1. Insiders insist that you must know why you’re going into investment banking before you walk into your interview. Once on the job, there is no time for soul searching. “When you’ve slept two hours a night for the last two nights, you do start thinking, ‘Why am I here?’” says one insider. 2. Know Lehman’s history. Understanding where the firm came from, such as its relationship with American Express, and what it’s faced in the last few years, such as moving out of the World Financial Center, indicates an interest in the firm that interviewers want to see. 3. Prepare clear answers to basic questions about your academic and work experience that demonstrate your problem-solving ability, team
Getting Hired
orientation, leadership, initiative, and analytical ability. 4. Understand why you want to work at Lehman, and come prepared with questions that are genuine and demonstrate a desire to learn more about the firm.
46
5. Take some time to look through Lehman’s website. The site was redesigned in 2002 and has a lot of good information, including day-inthe-life profiles of bankers, anatomy of a deal, and testimonials. There’s even a financial glossary (a good way to make sure you can talk the talk) at www.lehman.com/careers/americas/glossary.shtml.
Grilling Your Interviewer Recruiters expect good questions from top candidates. While you’ll want to create your own, here are some sample questions that will put you a step ahead. • Why did you choose Lehman Brothers over the other firms on the Street? • Describe the type of mentorship new analysts and associates receive. • What are the key differences between the training programs in sales, trading, and research; corporate finance; and public finance? • What are currently the hottest product areas at Lehman? • How open is the firm to letting junior employees implement new ideas or products? • How has Lehman had to reposition itself when competing for business with mega-firms like Citigroup and BankAmerica?
Getting Hired
• How concerned are you about SEC inquiries into the potential spinning of IPOs?
47
For Your Reference
For Your Reference • Recommended Reading • The Numbers • Et Cetera
49
For Your Reference
Recommended Reading “Review of the Year 2002”
This report by International Financial Review (IFR) is excellent for anybody interested in banking as it explains market conditions in 2002 and singles out award winners. Those applying to Lehman should read the section on “Bank of the Year” (“Playing by its own rules”), which covers Lehman’s strategy, the strength of its culture, its recent success, and, briefly, its history to explain why IFR named it Bank of the Year. We highly recommend that aspiring bankers read other sections of the report as well, which discuss issues many banks are struggling with, such as the ethical crises in investment research and increasing regulation. Source: www.ifrmagazine.com/ifr/roy2002two.html.
“Lehman’s Fuld on Why He Made a Deal”
In an interview, CEO Richard S. Fuld, Jr., describes why the firm bought asset manager Neuberger Berman for $2.63 billion after years of going it alone. “We have embraced a philosophy of growing organically,” says Fuld. “That’s why this acquisition is momentous in itself.” Source: BusinessWeek Online, 7/23/03.
“Lehman to Buy Neuberger in Deal Worth $2.6 Billion”
Analyzes and explains the Neuberger deal, including how the acquisition will help Lehman diversify its revenue stream (by increasing its fee-based business revenue) and reduce costs (by merging back-office operations). Source: Landon Thomas, Jr., The New York Times, 7/23/03.
50
For Your Reference
“Trio to Thrive on Market Rally; Goldman, Morgan, Merrill Stand to Gain, while Bond Houses Could Falter”
This article provides great background on the dynamics of Wall Street, arguing that Lehman’s success during the bear market could turn if the bull market of 2003 continues, thanks to the domination of Goldman, Morgan, and Merrill in the IPO and M&A business. Source: Aaron Elstein, Crain’s New York Business, 6/30/03.
“The Street’s No. 1 Obsession”
A strong article about how the League Tables are manipulated; Lehman’s mentioned because it got League Table credit on the sale of PwC, a deal for which it didn’t offer any real advice. Source: Andy Serwer, Fortune, 5/26/03.
“Why Lehman Needs a Strategy for Asia”
Though a little old, this article’s focus on Lehman’s strategy in Asia provides a great overview of the firm, with sidebars that cover its history in Asia and the United States. Source: Fiona Haddock, Asiamoney, 4/02.
“After the ‘Darkest Year,’ a Changed Wall St.”
Though Lehman gets barely a mention, this review of how events in 2001 and 2002, from 9/11 to accounting scandals, transformed Wall Street provides a useful background on Wall Street today. Source: Patrick McGeehan, New York Times, 9/8/02.
51
For Your Reference
The Numbers
Lehman Brothers Financial Highlights 1st Half 2003 ($M)
1st Half 2002 ($M)
Change (%)
Net revenues
4,000
3,269
22
Non-interest expenses
2,937
2,393
23
738
594
24
$2.96
$2.23
33
Net income Earnings per share (basic)
Source: Lehman Brothers quarterly report; WetFeet research and analysis.
Revenue by Business Category Net Revenues ---------------------------------------------------2003* ($M) % of Total Change (%)
Investment banking Capital markets Client services
792
20
913
2,803
70
1,945
407
10
411
*First half of 2003. Source: Lehman Brothers quarterly report; WetFeet research and analysis.
Personnel
Total number of employees, 2003: 13,247 Source: Lehman Brothers quarterly earnings report. Number as of 5/31/03.
52
For Your Reference
Et Cetera Key People Richard S. Fuld, Jr., Chairman and Chief Executive Officer Jonathan Beyman, Chief of Operations and Technology David Goldfarb, Chief Financial Officer Joseph M. Gregory, Chief Operating Officer Jeremy M. Isaacs, CEO, Europe and Asia Bradley H. Jack, Chief Operating Officer Herbert H. McDade, Head of Global Fixed Income Robert S. Shafir, Co-Head of Global Equities See www.lehman.com/who/bios/index.htm for biographies of senior management.
Recruiting Contacts Recruiting contacts for each of the departments are listed on Lehman’s website: www.lehman.com/careers/americas/contacts www.lehman.com/careers/europe/contacts www.lehman.com/careers/asia/contacts Lehman also lists recruiting contacts for specific schools: www.lehman.com/careers/americas/contacts/school.shtml.
53
For Your Reference
Major Offices New York
World Headquarters 745 Seventh Avenue New York, NY 10019 United States London
European Headquarters One Broadgate London EC2M 7HA United Kingdom Tokyo
Asia Pacific Headquarters Aki Mori Building 12-32 Akasaka 1-chome Minato-ku, Tokyo 107-6036 Japan Locations for all of Lehman’s offices can be found at www.lehman.com/who/offices/index.htm.
54
WETFEET’S INSIDER GUIDE SERIES JOB SEARCH GUIDES
Getting Your Ideal Internship Job Hunting A to Z: Landing the Job You Want Killer Consulting Resumes! Killer Cover Letters & Resumes! Killer Investment Banking Resumes! Negotiating Your Salary & Perks Networking Works! INTERVIEW GUIDES
Ace Your Case: Consulting Interviews Ace Your Case II: 15 More Consulting Cases Ace Your Case III: Practice Makes Perfect Ace Your Case IV: The Latest & Greatest Ace Your Case V: Return to the Case Interview Ace Your Interview! Beat the Street: Investment Banking Interviews Beat the Street II: I-Banking Interview Practice Guide CAREER & INDUSTRY GUIDES
Careers in Accounting Careers in Advertising & Public Relations Careers in Asset Management & Retail Brokerage Careers in Biotech & Pharmaceuticals Careers in Brand Management Careers in Consumer Products Careers in Entertainment & Sports Careers in Human Resources
Careers in Information Technology Careers in Investment Banking Careers in Management Consulting Careers in Manufacturing Careers in Marketing & Market Research Careers in Nonprofits & Government Agencies Careers in Real Estate Careers in Supply Chain Management Careers in Venture Capital Consulting for PhDs, Doctors & Lawyers Industries & Careers for MBAs Industries & Careers for Undergrads COMPANY GUIDES
Accenture Bain & Company Boston Consulting Group Booz Allen Hamilton Citigroup’s Corporate & Investment Bank Credit Suisse First Boston Deloitte Consulting Goldman Sachs Group J.P. Morgan Chase & Company Lehman Brothers McKinsey & Company Merrill Lynch Morgan Stanley 25 Top Consulting Firms Top 20 Biotechnology & Pharmaceuticals Firms Top 25 Financial Services Firms
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·WH[LVW6RZHVWDUWHGZULWLQJ7RGD\:HW)HHWVHUYHV PRUHWKDQDPLOOLRQMREFDQGLGDWHVHDFKPRQWKE\KHOSLQJWKHPQDLOWKHLULQWHUYLHZVDYRLGLOO IDWHGFDUHHUGHFLVLRQVDQGDGGWKRXVDQGVRI GROODUVWRWKHLUFRPSHQVDWLRQSDFNDJHV7KHTXDOLW\ RI RXUZRUNDQGNQRZOHGJHRI WKHMREVHHNLQJZRUOGKDYHDOVRDOORZHGXVWRGHYHORSDQH[WHQVLYH FRUSRUDWHDQGXQLYHUVLW\PHPEHUVKLS ,QDGGLWLRQ:HW)HHW·VVHUYLFHVLQFOXGHWZRDZDUGZLQQLQJZHEVLWHV :HW)HHWFRPDQG ,QWHUQVKLS3URJUDPVFRP :HEEDVHGUHFUXLWLQJWHFKQRORJLHVFRQVXOWLQJVHUYLFHVDQGRXU H[FOXVLYHUHVHDUFKVWXGLHVVXFKDVWKHDQQXDO:HW)HHW6WXGHQW5HFUXLWPHQW6XUYH\2XUWHDP PHPEHUVZKRFRPHIURPGLYHUVHEDFNJURXQGVVKDUHDSDVVLRQDERXWWKHMREVHDUFKSURFHVVDQG DFRPPLWPHQWWRGHOLYHULQJWKHKLJKHVWTXDOLW\SURGXFWVDQGFXVWRPHUVHUYLFH
!BOUT /UR .AME 2QHRI WKHPRVWIUHTXHQWTXHVWLRQVZHUHFHLYHLV´6RZKDW·VWKHVWRU\EHKLQG\RXUQDPH"µ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·VH[DFWO\ZKDWZH·UHGRLQJDW:HW)HHW
#AREERS*OB 3EARCH
/HKPDQKDVFRPHDORQJZD\VLQFHLWVEHJLQQLQJVDVD GU\JRRGVVWRUHLQWKHV7KHILQDQFLDOVHUYLFHVILUPQRZVWDQGVDVDSUHPLHUEXOJH EUDFNHWSOD\HURQWKH6WUHHWDQGFRQWLQXHVWRERRVWLWVUDQNLQJVLQHTXLW\UHVHDUFKIL[HGLQFRPHDVVHW PDQDJHPHQWDQGRWKHUNH\DUHDV/HKPDQVSRUWVDIODWPDQDJHPHQWVWUXFWXUHWKDWDOORZVQHZUHFUXLWV VRPHURRPWRVWUHWFKRXW)RUWKRVHZKRDUHQ·WDIUDLGWRZRUNKDUGDQGDUHORRNLQJIRUDORQJWHUP FDUHHULQILQDQFLDOVHUYLFHV/HKPDQLVDJRRGSODFHWREH
4URN TO THIS 7ET&EET )NSIDER 'UIDE TO EXPLORE +RZ/HKPDQVWDFNVXSDJDLQVWWKHFRPSHWLWLRQ $W\SLFDOGD\LQWKHOLIHRI D/HKPDQLQYHVWPHQWEDQNHUWUDGHUDQGUHVHDUFKDQDO\VW +RZWKHILUPLVRUJDQL]HGIURPWRSWRERWWRP :KDWHPSOR\HHVORYHPRVWDQGOLNHOHDVWDERXWZRUNLQJDW/HKPDQ $YHUDJHVWDUWLQJVDODULHVIRUXQGHUJUDGVDQG0%$VERQXVHVSHUNVDQGWUDYHOH[SHFWDWLRQV /HKPDQ·VRSHQHQGHGFXOWXUH :KDWWKHUHFUXLWLQJSURFHVVHQWDLOVZKDWUHFUXLWHUVDUHORRNLQJIRUDQGWLSVIURP/HKPDQLQVLGHUV IRUDFLQJWKHLQWHUYLHZ
:HW)HHWKDVHDUQHGDVWURQJUHSXWDWLRQDPRQJFROOHJHJUDGX DWHVDQGFDUHHUSURIHVVLRQDOVIRULWVVHULHVRI KLJKO\FUHGLEOH QRKROGVEDUUHG,QVLGHU*XLGHV:HW)HHW·VLQYHVWLJDWLYHZULWHUV JHWEHKLQGWKHDQQXDOUHSRUWVDQGFRUSRUDWH35WRWHOOWKHUHDO VWRU\RI ZKDWLW·VOLNHWRZRUNDWVSHFLÀFFRPSDQLHVDQGLQ GLIIHUHQWLQGXVWULHVWWW7ET&EETCOM
