https://www.ft.com/content/24305b38-3f0e-11e7-82b6-896b95f30f58

Students should beware the overconfidence that can often squander opportunities

By: Scott Rostan
May 24, 2017

French philosophers are generally not part of the curriculum covering the skills needed for investment banking and financial modelling. However, with the time for summer internships in the banking industry drawing near, I often find myself repeating the same Voltaire quote to MBA students: “Common sense is not so common.”

I have seen prospective banking interns lose a full-time offer because they made avoidable mistakes during internships, committing what might otherwise have been obvious oversights.

Sometimes these squandered opportunities stem from an intern’s overconfidence, which is especially dangerous for MBA students who may feel their previous experience and age have adequately prepared them for the rigours of an investment bank. That is why I remind students heading into a summer internship that a lot of their tasks require uncommon focus, attention to detail and deep levels of analysis.

With that cautionary tale in mind, it is important for prospective interns to take a strategic approach to becoming “desk ready”, so that they can apply their skills learnt in the classroom in a dynamic investment banking workplace.

Think about it this way: just as a corporation needs a well-defined strategy for driving growth and creating value, the intern should have a strategy that will lead to professional growth and the capacity to contribute value to an employer. Here are things to consider:

Technical skills will be important Interns will spend a lot of time combing through company filings and market data, building spreadsheets (and, yes, formatting PowerPoint decks and assembling deal books). So an ability to understand and interpret financial statements is essential. A familiarity with financial modelling, and knowledge of how corporate/asset valuation is determined, are among core requirements for new interns. Excellence in the use of Excel — not simply a basic working knowledge, but real proficiency and speed — will be especially appreciated.

Beyond technical competency, however, it is important to have a positive attitude. Interns are asked to do meaningful work, and lots of it, that will be essential to the successful functioning of their teams. Investment banking is, after all, a client service business. Clients expect perfection, turnround time is short, and situations change without notice. In this atmosphere, a “can-do”, collaborative attitude is highly valued.

Market and industry context As newcomers to investment banking, interns should do everything they can to build a knowledge base that will make them more valuable team members.

To provide a context for your work activities, read extensively and cultivate an understanding of capital markets trends and issues.

In particular, we recommend delving into M&A transactions (not just media coverage, but also SEC filings, investor presentations, research reports — any commentary on the deal) to develop a feeling for the rationale behind deals, approaches to valuation, financing structures, and other key factors.

Required reading includes the financial press (the Wall Street Journal, New York Times DealBook and the Financial Times) and business periodicals (Bloomberg Businessweek, Forbes, Fortune, and the Economist), among other financial news sources.

In addition, it is helpful to build a solid knowledge base of the industry in which your team works — healthcare, say, or telecoms — by following developments involving key industry players and relevant regulations. Similarly, if your team focuses on a particular product or function (equity or debt capital markets, M&A, restructuring), you would do well to be on top of events in that field.

Think about the “big picture” beyond the day-to-day activities It should also make you more confident in your analysis and assessment. But not too confident — knowing what questions to ask, but asking them at the right time and place, is a prudent approach that shows both engagement and a professional demeanour.

Having the right combination of technical skills, financial and market knowledge, a constructive attitude and a solid work ethic will not only help interns get “desk ready” for their placement at a financial institution, but will make that experience even more valuable.

Scott Rostan is an adjunct professor of finance at Kenan-Flagler Business School at UNC (Chapel Hill), and founder and chief executive of Training The Street, a corporate training provider.