Investment banking is known as a high-stress but lucrative career path. Many bankers work incredibly long hours and endure high pressure in hopes of rising through the ranks and earning large bonuses. However, after a few years in banking, many start to reconsider their career options and think about their exit opportunities from investment banks. In this article, we will explore some of the most popular and lucrative exit opportunities that investment bankers pursue after their first few years in banking.
Private equity and venture capital are top exit opportunities from investment banking
Many investment bankers look to move into private equity or venture capital firms after 2-3 years in banking. The skills developed in banking like financial modeling, valuation, and deal execution are directly applicable in PE and VC. The work hours tend to be better than banking, and the carried interest can lead to very high compensation in good years. Top private equity firms like KKR, Blackstone, and Carlyle are popular destinations for exiting banking analysts and associates. On the venture capital side, respected firms like Sequoia, Accel, and Andreessen Horowitz also recruit from banking.
Hedge funds offer strong exit opportunities from investment banking
In addition to private equity and venture capital, hedge funds are another buy-side option that investment bankers transition to. Investment banks have prime brokerage divisions that serve hedge fund clients, so there can be natural networking opportunities. Hedge funds focus on absolute returns and performance incentives like the famous “2 and 20” compensation structure, which can result in world-beating paydays for successful managers. Prominent hedge funds like Citadel, Millennium, and Point72 are known to hire investment bankers.
Exciting startups and growth companies hire ex-bankers
Many investment bankers leverage their financial and analytical skills to join exciting startups and growth companies in operational finance or corporate development roles. Bankers have valuable experience taking companies public and raising capital, so they are assets for earlier stage companies plotting their growth trajectory. Joining the right startup early can lead to career-making equity upside. Landing a role with a unicorn startup primed for an IPO is a dream exit opportunity for many burned-out investment bankers.
Senior bankers can move into corporate CFO or CEO roles
After many years in investment banking, senior bankers may transition into C-suite executive positions like Chief Financial Officer or even Chief Executive Officer. This allows them to move from advising companies to actually running them. Bankers get deep exposure to various industries and companies throughout their career, so they develop business judgment and leadership experience that boards of directors find valuable. The compensation as a public company CFO or CEO can be extremely lucrative, especially with stock options.
Popular exit opportunities from investment banking after a few years include private equity, venture capital, hedge funds, startups, and C-suite executive roles. Investment bankers have transferable skills and experience that make them prime candidates for these coveted roles.