An inside look at how Cornell's investment banking training program readies MBA students on how to do a leveraged buyout analysis before they ever set foot on Wall Street

  • Cornell's SC Johnson College of Business, one of the top schools for investment banks to recruit from, has crafted an immersion program for first-year MBA students heading to Wall Street for the summer.
  • The program, run by former Citi banker Drew Pascarella, takes the theory of the classes and puts it into practice, simulating the work students would be doing as a summer associate at a bank.
  • The goal, Pascarella said, is so students can prove their worth in a short audition period, and land a coveted full-time offer.
  • Visit Business Insider's homepage for more stories.

The competition is fierce to get a spot in one of the top banks' investment banking divisions. 

Firms are littered with recruits boasting Ivy League degrees and sparkling resumes, and every little step up helps when you're fighting for a spot with the cream of the crop. 

Cornell's SC Johnson's College of Business believes it has a program that's been more than just a little boost for its MBA students: An immersion course, taught by former Citi banker Drew Pascarella, the school's current associate dean of MBA programs, that gives first-year students experience doing investment banking before they ever get to Wall Street. 

It is held in the spring semester of the first year of the MBA program, when most students already know where they'll be working for the summer, Pascarella said. Their first semester, students will have taken traditional courses on accounting, modeling, and more, but the "secret sauce" to Cornell interns hitting the ground running is actually working out near-real life investment banking projects. 

How Cornell's MBA students put theories into practice 

The first real-life example that the class starts with is usually a leveraged buyout, where the students have to create a presentation on whether a public company is worth taking private and what kind of returns a client, like a private equity firm, can expect. Pascarella said this year, the project was focused on Cinemark Holdings, a chain of movie theaters, and that students were given two weeks with their group to come up with their client presentations and not much else. 

"They can make mistakes, they can work through it all," said Pascarella, who focused on technology companies when at Citi. "It really leads to where they can wake up in May and have the confidence of having done it before." Students don't go in completely blind — they have an understanding of what a leveraged buyout is, as a theory, from previous classes and lectures, and understand how to use Excel.  

Read more: These 2 charts show the biggest investment banks are recruiting fewer Harvard and Stanford graduates. Here's where they're getting top talent from instead.

The end result of the project is a presentation on the students' would-be advice to the client — and then the class moves on to a different type of deal. Mergers, IPOs, bond offerings — all are dry-run by students before they ever walk through the front doors of a bank. 

Pascarella acts, during the presentations, as the students' would-be boss, and critiques the same way he would if his associates were presenting to him when he was still working on Wall Street. The goal is that his critiques will result in students not making the same mistakes while they are actually working on Wall Street. 

"You could go from really not even being able to spell LBO to being able to be dropped into a deal over the summer and knowing what to do," he said.

Becoming a training ground for top investment banking recruits 

The immersion program itself isn't new at all — in fact, Pascarella took classes in it while he was a student in the school in the early 2000s. But when he joined the school in 2012, he "reinvigorated" it after seeing what associates need to be able to do from his perch at Citi, where he also was a part of the associate hiring committee during his ten years at the bank. 

"How could I draw upon the hard skills being learned in class?" he said. The old program was much more "passive" — often a banker coming in to describe a recent deal they had worked on. 

"Now, it's this ambiguous, two-week assignment that is very active and engaged," he said. "You can't Google the answer to it."

Read more: COMP COMPARE: From Goldman Sachs to JPMorgan, here's what you can make at all the bulge-bracket banks as a first-year IB analyst

All of it comes down to the fulfilling ultimate goal of any business school: Placing students at the top companies. Cornell, according to data from Revelio Labs, is one of the top schools banks pull investment banking talent from, but still trails rivals like Wharton and Columbia.

Other schools offer similar, though not identical, programs. NYU's Stern offers immersion programs across industries, though not one specific to investment banking, for example.

"The intangible we bring is you're putting someone into a fast-moving, ambiguous environment without any prior experience, and you have to prove to the company that you can add value and justify a full-time offer," Pascarella said. 

“UK

Source: Read Full Article