MBA Career in Finance
This guide is intended to introduce MBA candidates to an overview of finance careers, specific resources for finance job-seekers, and helpful advice to getting into various finance careers. It is not a comprehensive guide, you can download those from www.vault.com and www.wetfeet.com.
Moreover, you will work closely with the finance career coach in the MBA Career Services Center on tailoring your unique experiences and desires into an action plan for your specific career goals.
We several up front cautions, however. First, if you intend to have a career in finance, you should endeavor to do your internship in finance. Students who choose finance and supply chain as a dual major are at a disadvantage to those who choose finance and corporate accounting as their concentrations. Further, while your background before the MBA program does not necessarily niche you into any certain area, doing an internship in supply chain will likely niche you into supply chain in the eyes of corporate recruiters.
Finance is the management of large amounts of money, especially by governments or large companies. Additionally, many roles in finance seem quite glamorous. Investment banking, mergers and acquisitions, and other fields are all highly sought after. We find that frequently candidates changing career do not fully understand what these roles are and the commitment (and excessive hours) they require. Similarly, these positions may not be the road to wealth that many people expect. Make sure you go in with your eyes open to the reality of the positions for which you apply. Finally, while we encourage you to reach for the stars, make sure to keep your feet grounded as to what to realistically expect given your prior experience level in accounting and finance. You may be required to “pay your dues” or start at the bottom and work your way up.
Overview of Industries
Corporations
Corporate Finance
The primary recruiting base for MBAs from Michigan State University is corporations looking for finance staff. A significant number of these employers recruit MBAs into rotational programs aimed at giving the new hire experience in several areas of finance, familiarity with the multiple businesses of the company, and exposure to the executives across the company.
Positions: Financial Analyst, Finance Development (Rotational) Programs
Getting In: Expect technical finance questions and case questions. Full-time recruiting typically is during fall semester. Intern recruiting begins in fall and continues through early spring.
Corporate Treasury
Another common role in corporation is Treasury. This is the staff that manages the corporation’s investments into stocks, bonds, real estate, and other assets.
Positions: Treasury Analyst, Treasury Development/Rotational Program
Getting In: Expect technical finance and case questions. You might also be asked to give a stock pick. Full-time recruiting typically is during fall semester. Intern recruiting begins in fall and continues through early spring.
Mergers and Acquisitions / Venture Groups
Some corporations that grow through acquisitions have a group dedicated to that function. These positions are few and require significant experience in finance.
Positions: M&A Analyst, Corporate Venture Analyst
Getting In: Solid prior finance experience. Recruiting typically happens at various times throughout the year. Except for the largest firms, most hire when they have a need.
Consulting Firms
Many MBAs find opportunities within consulting. Consulting can either be “management consulting” or functional consulting. Finance is one of those functions where consultants can focus. Consulting firms tend to be organized by practices aligned along functions, which determines the office in which a consultant is based. Virtual (and sometimes actual) practices are often aligned along industry expertise. These two dimensions (function and industry) form matrix organizations. Consultants tend to work at specific intersections, known sometimes as “nodes.” Whether your goal is management consulting or financial consulting, you need to first identify the practice in which you want to be based.
Positions: Senior Consultant, Consultant (for lesser experienced MBAs)
Getting In: Many consulting firms rely heavily on case interviews, as well as technical interviews for functional practices. Full-time recruiting typically is during fall semester. Intern recruiting begins in fall and continues through early spring.
Commercial Banks and Insurance Companies
Commercial Banks
Commercial banks present opportunities often overlooked by MBAs changing careers into finance, and thus are great prospects. Banks often have management rotation programs, as well as direct hire positions into commercial credit, or in wholesale banking, which means taking care of all the financing needs of a Fortune 100 client, including investment needs, debt financing, and merger financing. Some banks also hire MBAs into risk assessment roles.
Positions: Management Rotation Programs, Commercial Credit, Wholesale Banking, Risk
Getting In: Typical interview process. Full-time recruiting typically is during fall semester. Intern recruiting begins in fall and continues through early spring.
Insurance Companies
Insurance companies also have management rotation programs leading up to senior management positions.
Positions: Management Rotation Program
Getting In: Typical interview process. Full-time recruiting typically is during fall semester. Intern recruiting begins in fall and continues through early spring.
Investments
Bulge Bracket
Bulge bracket firms are what many people think of when they say investment banking. There are numerous positions within the company. A commonly desired entry point is as an equity or fixed income (debt) analyst or associate looking for investment opportunities in their industry of expertise. Associates pitch their stock picks to the Portfolio Manager, who decides what stocks are in and which are out. When the decision to invest or sell is made, the trade is ordered from the trading desk. On the “distribution” side MBAs work with possible institutional investors who may want to buy into the various portfolios available. Hedge Funds are high risk funds that are widely diversified across equity, debt, currency, real estate, and other assets. Hedge funds are highly desirable, but are managed by the best of the best, and take years to work into. Bulge Bracket Banks also Corporate Finance and other services.
Positions: Equity Analyst/Association, Fixed Income Analyst/Associate, Trading Desk, Distribution, Portfolio Manager (for very experienced MBAs), Hedge Fund Manager (for very senior, experienced MBAs).
Getting In: Be prepared to pitch a stock pick either in writing or in person. Stick to an industry you know well when making these picks. Also, all these positions are very competitive to get into, so make sure you sell your passion. Prior investing on your own may make the difference, although the being in the Student Investment Fund will help. Full-time recruiting typically is August and September. Intern recruiting often follows the same time frame, though some firms recruit interns during January.
Mid-Cap and Boutique Firms
These smaller firms run more limited investment portfolios, but the roles are very similar to those in Bulge Bracket firms. Being smaller, they may be easier to gain entry into if you can develop contacts in them.
Corporate Finance
Although the name can be confusing, banks use Corporate Finance to refer to the structuring of deals centered around Mergers and Acquisitions. If a company were to acquire another, the mixture of debt and equity financing can yield major returns for the company. Only MBAs with significant experience in finance will land these prized positions.
Positions: M&A / Corporate Finance Banker
Getting In: Know how to structure a deal in great detail. Full-time recruiting typically is August and September. Intern recruiting often follows the same time frame, though some firms recruit interns during January.
Private Equity
Private equity firms arrange for investment in companies that are not publicly traded on any stock exchange.
Positions: Associate
Getting In: Look for firms that are raising funds. Sell your prior industry experience heavily since that knowledge is what the firms find attractive. You need to demonstrate excellence in both finance and strategy. Full-time recruiting typically is August and September. Intern recruiting often follows the same time frame, though some firms recruit interns during January.
Venture Capital
Small firms looking for cash to grow their business find financing with venture capital firms, which are a form of private equity. These firms collect private capital from interested investors, then look for prospective businesses to grow. Venture Capitalists not only identify prospects within their area of industry expertise, but also are actively involved in the management of those companies as they grow.
Positions: Associate
Getting In: Look for firms that are raising funds. Sell your prior industry experience heavily since that knowledge is what the firms find attractive. You need to demonstrate excellence in both finance and strategy. Full-time recruiting typically is August and September. Intern recruiting often follows the same time frame, though some firms recruit interns during January.
Skills Desired
Finance careers require the same soft skills as any other career. However, quantitative skills need to be superior. Finance professionals in many roles need to analyze both quantitative (typically financial) and qualitative data, then build models upon which to base decisions. Here are specifics about desired skills.
- Critical, detail-oriented thinking, with strong quantitative skills.
- An understanding of managerial accounting, and operations background can help in project analysis. MIS coursework may help with both internal systems and general analysis tools.
- Knowledge of financial markets, capital structure and other fiscal policies and risk management.
- An understanding of financial statements, an ability to analyze those statements and an ability to translate financial and other information into opinions about credit quality and relative pricing of equity securities.
- Candidates should be able to forecast scenarios, analyze them and recommend a course of action.
- The ability to create and use financial models is essential.
- All employers seek leadership skills and the ability to work in teams.
- Strong oral and written communication skills.
- Personal computer proficiency and information technology skill.
Resume Key Words
? Accounts Payable: Streamlined accounts payable functions, established common vendor files, eliminated duplication and reduced monthly processing time by 20%.
? Accounts Receivable: Introduced improved accounts receivable and collection policies that decreased outstanding receivables by an average of 40% monthly.
? Asset Disposition: Determined proper asset disposition, sale, and leasing options following plant divestiture.
? Asset Management: Established Asset Management Division to control $55 million in capital equipment and technology.
? Asset Purchases: Structured and executed asset purchase of Zylong Corporation in Canada.
? Audit Controls: Implemented a stringent program of audit control to reverse previous findings during Coopers & Lybrand external audit review.
? Audit Management: Directed financial and operational audit management programs of 89 sales, manufacturing, and distribution businesses worldwide.
? Capital Budgets: Formulated, justified, and managed $8 million in capital budgets annually.
? Cash Management: Redesigned cash management processes, renegotiated banking relationships, and created the corporation’s first comprehensive corporate treasury function.
? Commercial paper: Structured and negotiated over $125 million in commercial paper transactions with Chase Manhattan Bank.
? Corporate Development: provided strategic, financial, legal, and negotiations expertise for corporate development initiatives, including mergers, acquisitions, joint ventures, and technology licenses.
? Corporate Tax: Led a team of eight responsible for corporate tax filings in more than 1,000 local, state, and federal jurisdictions.
? Cost Accounting: Implemented automated cost accounting systems to analyze all labor, material, technology, process, quality, testing, and manufacturing costs for each product line.
? Cost Avoidance: Introduced proactive management techniques to strengthen focus on cost avoidance and elimination within each manufacturing process.
? Cost Reduction: Delivered over $2.8 million in first year labor, inventory, and delivery cost reductions.
? Cost/Benefit Analysis: Conducted large-scale cost/benefit analysis studies to capitalize upon long-term growth and profit improvement opportunities.
? Credit & Collections: Reduced DSO by 28% through improved credit and collection processes.
? Debt Financing: Negotiated $2.5 million in debt financing with a major banking institution and a regionally based venture capital firm.
? Divestiture: Planned and executed profitable divestiture of the $ I.5 million emerging electronic commerce product line.
? Due Diligence: Orchestrated complex due diligence reviews in cooperation with outside financial advisors, accountants, and legal counsel.
? E-Commerce: Launched the company’s entrance into e-commerce to capitalize upon Internet marketing and partnership alliance opportunities.
? E-Trade: Designed and implemented client-server based e-trading system to allow the instantaneous processing of stock and bond transactions.
? Employee Stock Ownership Plan (ESOP): Led Weinhold Winers through successful LBO and ESOP transactions, creating a corporation that is now ranked #1 in nationwide market share.
? Equity Financing: Structured a three-way partnership between 3M, Telecom, and IBM for $160 million in equity financing for new technology venture.
? Feasibility Analysis: Led 22-person finance team managing complex feasibility analysis and developing projections for TLC’s global market expansion.
? Financial. Analysis: Created team-based financial analysis models integrating financial data for all 52 operating locations worldwide.
? Financial Audits: Planned and managed more than 50 financial audits throughout all Xerox sales and service operations.
? Financial Controls: Designed and implemented a comprehensive program of financial controls and accountability to reverse previous years‘ losses.
? Financial Models: Developed financial models for cost/benefit analysis, joint venture analysis, staffing analysis, and compensation design.
? Financial Planning: Directed financial planning functions for both U.S. and European operations, and presented final results to the Board of Directors.
? Financial Reporting: Eliminated unnecessary financial reporting and created a comprehensive PC-based program to integrate financial data from all operating divisions.
? Foreign Exchange (FX): Implemented foreign exchange and currency hedging programs to protect IBM‘s Asian assets.
? Initial Public Offering (IPO): Raised $54 million in public and private investment to fund IPO.
? Internal Controls: Designed and implemented a comprehensive program of internal controls governing finance, accounting, capital assets, and technology acquisitions.
? International Finance: Resigned core domestic financial systems and processes to create a new international finance function to support business expansion and product line diversification.
? Investment Management: Assigned concurrent executive responsibility for administration of $50 million in investment management.
? Investor Accounting: Personally managed investor accounting, reporting, and presentations.
? Investor Relations: Created a sophisticated investor relations, program, restoring credibility throughout the financial community.
? Job Costing: Restructured job costing standards to eliminate excess expenses and strengthen bottom-line profitability of all key projects.
? Letters of Credit: Issued $10 million in letters of credit to fund the acquisition of gold, silver, and other precious commodities.
? Leveraged Buy-Out (LBO): Led management team in successful LBO of ABC Transportation, formed new executive team, and re-launched national sales programs.
? Liability Management: Created a formal liability management program to control major losses resulting from downward trend in the aerospace industry.
? Make/Buy Analysis: Designed PC-based templates to support make/buy analysis for the Construction and Real Estate Investment divisions.
? Margin Improvement: Restructured corporate pricing on all major product lines and delivered a 12% margin improvement.
? Merger: Identified opportunity, negotiated and executed transaction for the 1999 Xerox and IBM merger.
? Operating Budgets: Managed $2 million in annual operating budgets allocated for personnel, facilities, and administrative expenses.
? Operational Audits: Planned and directed operational audits of all Red Cross blood banking facilities to ensure compliance with Red Cross policy and federal regulations.
? Partnership Accounting: Designed multi-tiered partnership accounting systems for 25 limited and general partnership real estate development projects.
? Profit Gains: Accelerated profit gains through an aggressive program of facilities consolidation, staff reduction, and asset divestiture.
? Profit/Loss (P&L) Analysis: Reviewed historical data to prepare complex P&L analysis as part of acquisition due diligence plan.
? Project Accounting: Managed project accounting function for the $3.6 million Bayside Tunnel Development Project in New Orleans.
? Project Financing: Negotiated $2.5 million in World Bank project financing for economic development programs in Ghana.
? Regulatory Compliance Auditing: Established a structured process to expedite regulatory compliance auditing, reporting, and defense.
? Return on Assets (ROA): Increased ROA on real estate investments by 26%.
? Return on Equity (ROE): Invested $10 million in start-up industrial products company and, over six years, achieved an average 22% ROE.
? Return on Investment (ROI): Purchased failing company, revitalized sales and distribution, and delivered a 48% ROI to investor group.
? Revenue Gain: Negotiated distribution contracts throughout the Pacific Rim, delivering a 12% revenue gain in first year.
? Risk Management: Strategize and implemented TouchTone‘s first-ever corporate risk management, insurance, and pension plan administration function.
? Shareholder Relations: Restored corporate credibility through a combined shareholder relations and shareholder communications initiative.
? Stock Purchase: Identified opportunity for market expansion and negotiated transaction for $837 million stock purchase of the Telephone Group, Inc.
? Strategic Planning: Facilitated cross-functional executive team through a complex, multi-year strategic planning process.
? Treasury: Redefined the vision, mission, and objectives of the Corporate Treasury Department to align financial targets with operational goals.
? Trust Accounting: Developed and implemented formal trust accounting and pension plan reporting functions to replace reliance on third-party administrator.
? Work papers: Streamlined accounting processes to reduce work papers and documentation requirements.
? Contact alumni. Working with alumni is key for MBAs trying to get in. Alumni can provide advice, help you learn more about the career path, and perhaps provide contacts for you. Alumni also will help you have in-depth insight into the types of projects done in the company or during internships, so you can make your cover letter, pitch, and other interview answers more relevant. See www.mba.msu.edu/careers/services.cfm for notes on how to log into Alumni Connection.
? Corporate packet – use P&G North American Financial Seminar as an example of on-line only.
? Always apply 0n-line to any company where you want to work. At very least when they meet you in some other venue (career fair, campus presentation, referral from an alumnus) they will be able to find you in their system and begin to process you as an applicant. At times, however, being registered on-line may spark an interview, especially if MSU is one of their target schools or they recruit mainly through their website.
? Check eRecruiting for notes on specific employers. You may see posted there any insights we have collected from past candidates. If companies have a limited window to apply, that may be noted as well.
? Be passionate about finance! Know why you want to work in finance and what you want to do. All to often students focus on their desire for the particular company or qualifications (which are important, too), and fail to sell that they want to work in finance.
? Research, Research, Research! Too many candidates have lost out because they didn’t understand how the company is structured or what the finance career path is.
Technical Interview Questions for Finance
Technical interviews test your knowledge of finance. Below is a list of questions MSU MBA candidates have been asked in recent years. Many of these questions are like a verbal quiz about finance. Others are more like miniature cases based on real situations in finance.
? What do you know about WACC? Where do the cost of capital and cost of debt values in the WACC equation come from?
? What is better for our company, 2/10 or net 30?
? If you are analyzing the credit of a potential customer, what factors would you consider?
? What is good/bad about debt/equity?
? Walk me through the steps of conducting an NPV analysis.
? Is ROA a good measure of success?
? What are the methods of raising capital for a project?
? What could be some reasons why our actual cash flow was less than forecast?
? Does it ever make sense to accept a negative NPV project?
? What are some things you can do to further investigate a negative NPV project?
? How do you calculate WACC?
? What is an accrual?
? How would you go about pricing a product?
? How would you go about analyzing a situation where demand exceeded capacity?
? Which is better for your company, offering a 2% discount if paid in the first ten days, or getting the net due in 30 days?
? If you have two products that are similar, how would you decide which one you want to launch (or both?)?
? How does the increase in interest rates affect our company?
? How would you make a business profitable (discuss P&L for this one!)?
See also the Vault.com guides to finance interviews (listed under readings, below).
Pitching a Stock – Investment Careers
For many roles in investment banking, venture capital, and even corporate treasury, you may be asked to pitch a stock. The company is looking for a highly structured financial and legal analysis. If done verbally, they will want a less than two minute explanation of the stock you think is undervalued and why. Be prepared for many follow up questions, both strategic and getting into the real details of the company’s finances. If in writing, they are looking for a several page brief with charts. The best training for this is presenting the board for the Financial Analysis Lab by taking FI857 Security Analysis. Written samples are available from the MBA Career Services Center.
A common mistake people make in picking a stock is to choose to ‘cover’ an industry in which they have never worked. Remember, you will likely be hired to cover specific industries, and your past industry experience is going to be a major part of the recruiter’s decision. So, stick with something you know. If you have worked for a pharmaceutical firm and want to get out of that industry, your inside knowledge and understanding of the industry is exactly what you need to leverage to do well in this exercise.
Also, recruiters are looking for candidates who have a passion for investing. If you maintain your own investment portfolio, be prepared to talk about it. If not, then involvement in the Student Investment Fund is critical.
