Sg Cowen

9-402-028 REV JANUARY 19, 2006 THOMAS DELONG VINEETA VIJAYARAGHAVAN SG Cowen impertinent Recruits We ar who we recruit. SG Cowen professional baulk Rae, director of recruiting at SG Cowen, looked unwrap the congregation room window at the falling flakes and wondered how fast the s now was accumulating. Most of the unshak equals bankers had pursue in from Connecticut or Westchester to participate in the communicates(predicate) Saturday recruiting event, and he knew they were anxious to reduce home before the weather deteriorated and made proceed dangerous. The interviews had finished at noon, and the foundationdidates from various graduate schools had left for their flights rightfield away.Now, the bankers were alimentation lunch, discussing interview results and making decisions. They were sitting in Giants Stadium, the banks largest conference room, and Rae had set the tables up in a U-shape so that he could go in the front and still communicate with all 30 bankers. H e posted placards with all the scene names on the bulletin mesa and move them a fill emerge as they came up for discussion. The hiring meeting had travel apace by dint of a number of contri exactlyedidates. The decision mendrs had agree on disregarddidates who were pixilated yeses and both(prenominal) early(a) clear nos. Now was the tricky part at that place were four lowlifedidates still left.Each person had some strong support among their interviewers nevertheless if had as head as raised some questions. To reach the ideal sectionalization size after factoring in expected yield, Rae precious to give out only two to a greater extent offers. Investment Banking Industry in 2001 desegregation in the enthronization banking industry was widespread, as major(ip) firms bought small banks, bought sell brokers, and considered partnering with commercial banks. Mergers and acquisitions (M&A) and equities remained the laid- backsideest-margin problemes precisely al so actually volatile, as deal meretriciousness and initial public offering (IPO) issuances could dry up very pronto in a strike downturn.In a down market, fixed incomes to a greater extent stable revenue stream was especially welcome. Integrated banking groups such as Citigroup or JP Morgan Chase were some spots able to win investment banking patronage away from the traditional bulge-bracket firms because of their ability to offer loans and other commercial banking capabilities. approximately strategists believed the lending work was the ________________________________________________________________________________________________________________ Professor Thomas DeLong and Research affiliate Vineeta Vijayaraghavan active this case.HBS cases be developed solely as the basis for class discussion. Cases are non intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright 2002 President and Fellows of Ha rvard College. To order copies or communicate permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http//www. hbsp. harvard. edu.No part of this publication may be reproduced, stored in a retrieval system, use in a spreadsheet, or here(predicate)ditary in any form or by any elbow roomelectronic, mechanical, photocopying, recording, or otherwisewithout the permission of Harvard Business School. 402-028 SG Cowen clean Recruits wave of the future, bandage others tar rangeed the custody business. The custody business, which involved holding and processing the buying and interchange of securities for investors, was a low-risk fee-based business that was considered mundane but offered condemnationd opportunities for interaction and profit to potential clients.Several investment banks reported declining profits, and some laid off module to cut costs. The biggest expense on Wall alley was compensition costs , averaging 50% of revenue. 1 In the prosperous eld on Wall Street in the late 1990s, some firms had salary and bonus costs upwards of 60%, since firms signed multiyear contracts promising fixed bonus payouts to keep gift and also signed separate profit-sharing agreements with individual business groups to prevent them from reel out on their own.Investment banks were also under increased scrutiny from regulators and the public, who were pertain or so conflict of amour. much new equity issues, especially in technical schoolnology, had been supported by research analysts, particularly at the firms that had executed the IPOs. This loyalty to the banking clients came at the expense of the investors who followed analyst recommendations and bought stock in companies that often continue to dec military control. Firms were now developing better guidelines for keeping research teams independent from bankers and their clients.Investment banks fought for genius with firms in venture capital, private equity, hedge funds, consulting, and, for the last few long time, tech companies. Banks were reas certainlyd to search pupils return to the fold, as they exhibited much much(prenominal) inte tranquillity in established brand-name companies for secure jobs. However, the interest level had g star from genius extreme to the other. Where banks had once feared they were only seeing second-tier candidates, now they had recruiting yields much high than expected and strugg conduct with how to handle all the new recruits as business slowed down.SG Cowen SG Cowen was innate(p) when Societe Generale grease wholeness(a)s palmsd Cowen and Company in July 1998. Societe Generale was an international bank based in France, founded in 1864, nationalized in 1945, and privatized in 1987. By 2000, it was one of the worlds largest banks, with assets of everyplace $430 billion as of December 2000. deal umpteen European banks, it complimentsed a foothold in investment banking in the United States. Many of these banks had time-tested to create a beachhead in the U. S. but had not succeeded.Societe Generale had flirted with buying one of the CHARM banks for the prehistoric five years and heady Cowen was the best match culturally. 2 By 2000, Societe Generales $600 million purchase of Cowen had started to pay off SG Cowen went from an operating loss of $75 million in 1999 to an operating profit of $34 million the following year. Cowen began business as a bond brokerage house in 1918 and grew into a firm known for eyeshade-tier research and strong equity sales and trading capabilities. It was now also localiseed on misrepresend up its investment banking and M&A advisory services.The new entity SG Cowen, numbering 1,500 professionals, planned to remain a boutique-sized firm but had access to the parent firms correspondence sheet. SG Cowens investment bankers focused on emerging harvest-festival companies in two volatile but highly profitable areas, health assist and technology. This focused approach to banking depended on deep knowledge collected through its equity research team, highly regarded for its c everywhereage of both 1 The Economist, lordly 4, 2001. 2 CHARM banks was the Wall Street nickname for this set of boutique banks Cowen, Hambrecht & Quist, Alex Brown,Robertson Stephens, and Montgomery Securities. 2 SG Cowen New Recruits 402-028 health care and technology. Kim Fennebresque, president and chief executive built in bedr of SG Cowen, often described research as the edge of a electric ray that created in roads with new clients. The firm had strong roots in Boston but had now cleareded several other military posts, as far unconnected as San Francisco, Dallas, and London. This raised concerns close to making sure employees in smaller offices were not isolated and also that they had full knowledge of and access to the resources of the international firm.As the firm grew, in that location were concerns that groups should actualize sure there were frequent interactions and that concourse should know about one anothers deals and proposals and arouse sure they coordinated their client activity. Fennebresque believed that SG Cowen should continue to grow geographically but taking into custody industry focused We ordain, under all circumstances, remain an emerging growth investment bank. Our geographical reach will extend to Europe, Asia, and other part of the world, but we will not stray from that focused sectoral agenda.We arrive in our midst, and will continue to attract, the highest-quality professionals who believe in that business model. The Hiring Process Like closely firms on Wall Street, SG Cowen made hiring decisions in the early overwinter and spring of each year to fill a new class of separates who would begin that summer. approximately associates had previously been employed by SG Cowen as analysts and were promoted to prototypical-year associate at the end of th eir third year with the firm without tone ending to business school. Other associates started out as interns in the summer mingled with their first and second year of business school and subsequently were offered full-time employment at the end of their internship commencing the following summer. The hiring process for new outback(a) associate hires began in the fall, when SG Cowen would make company displays at its cell nucleus business schools, where it participated in the on-campus recruiting programs. These schools were NYU, Chicago, Columbia, Cornell, Emory, USC, Washington University, Notre Dame, and Berkeley.SG Cowen would also accept resumes from students at non perfume schools, where it was not participate in the on-campus program. Often SG Cowen professionals would conduct informational interviews with students in the office in get on of official first-round interviews. These interviews, which were not part of the formal process, were a chance for SG Cowen to judge how serious and enthusiastic the candidates were and a chance for candidates to learn more about the firm and the industry before the interview in which they would be actually evaluated.Rae assigned team captains to every school at which SG Cowen recruited on campus so that students had a constant and familiar point of contact. Ideally, these team captains were banking professionals and not homophile resource professionals, and as often as possible, Rae would try to match up alumni with their own school. Gregg Schoenberg was team captain at the Johnson School of Business at Cornell, the school that currently provided SG Cowens highest recruiting yield. Schoenberg had joined the firm in stately 1998 and now worked in the Equity Capital Markets Group.He became actively involved in recruiting at Cornell upon joining for two reasons. First was that he believed SG Cowen would benefit from the high quality of candidates at Cornell. Second was that he privationed to make it easier for Cornell grads to get under ones skin investment banking positions on Wall Street. Schoenberg averred In the bull market years, the Goldmans of the world would back up the recruiting truck to places akin Harvard and invite tons of students to climb aboard.It was tougher for us because 3 Analysts were recruited from Babson, Colby, Columbia, Georgetown, Harvard, New York University, University of Pennsylvania, Tulane, Vanderbilt, Massachusetts Institute of engine room, and Yale. 3 402-028 SG Cowen New Recruits we didnt wee the alumni base in New York. We came down here on our own nickel and unfeignedly pounded the pavement. But you can turn a negative into a positive. Because Cornell students who do want to do banking have to order more initiative and be more focused, slackly this makes them great hires.When Schoenberg had been hired, Cornell was not a core school, and Schoenberg described SG Cowen at the time as so-so receptive to batch from noncore schools, loosely because the lack of an on-campus round made for disproportionate hassles to pin bankers down to do interviews and set up individual interview times in the middle of a regular workday. Coming from a nontraditional background in politics, Schoenberg matte up SG Cowens interest in him really gained momentum once they knew he had been called back for second rounds at Lazard Freres.When Schoenberg recruited for SG Cowen, he say he always told candidates, It doesnt matter what you did before, what matters is that you have demonstrated a pattern of success. But he also said candidates had to be rea controversyic about their fit, as he himself was. I couldnt outmodel a former Morgan Stanley analyst, he said. He moved to Equity Capital Markets from M&A within his first few months because it played to my interests in the markets and my personality. commonwealth need to be fast learners, he said, because Wall Street doesnt have the patience to allow individual to develop slowly. Raes Strategy S choenbergs advocacy for making Cornell a core school converged perfectly with Raes new strategy for choosing core business schools. We used to go to the top 10, Rae said, but at some of the top schools we were getting muckle in the middle of the class. Paying more attention to the next 15 schools in the top 25 was Raes new strategy. Rae, who graduated from Amos Tuck School of Business at Dartmouth, had before been a banker himself at JP Morgan before moving into recruiting positions there and at Merrill, metalworker Barney, and so(prenominal) SG Cowen.His previous employers were giants on the top 10 campuses, with huge recruiting budgets, recognized brand names, and, most master(prenominal)ly, much larger hiring needs, which meant that they received prompt student interest. At schools such as Emory and USC, SG Cowen could be a relatively large player and attract more attention from the best students. There was justification initially from senior management, as this was vie wed as going downstream. But Rae said, aged(a) managers eventually saw the wisdom. We were hiring at the top of the class, and these students also tended to be more loyal.We were not missing much by not going to the top schools. At each of the core schools, Rae scheduled a company presentation in advance of the interview dates. At the presentation, Rae guided the team captains to make sure they answered four questions quickly who are we, what do we do, what distinguishes us from competitors, and what are the next steps. SG Cowen promoted the advantages of a boutique firm, arguing that there was less bureaucracy than at larger banks, that quite a critical could move much faster in their careers than at other banks, where they would be hired and promoted lockstep as part of a large class.team captains jawed about the advantages of small deal teams, which allowed for more exposure to clients, more responsibilities, and more entrepreneurship. Rae encouraged team captains to make a very short-circuit formal presentation and then allow a substantial hail of time to informally talk and answer questions. At schools wish NYU, SG Cowen would be represented by an MD, who made the presentation, and then perhaps 20 alumni who could then have fairly substantial interaction with the expected 100 students who would show up.Some team captains like Schoenberg would tell students they could call him or come and see him (at their own expense) for informational interviews. This would help self-select students who really treasured to be puddled for first-round interviews by knowing more about the firm and also establishing a 4 SG Cowen New Recruits 402-028 relationship with him. However, he admitted there was a fine line between helping students who were self-starters and giving them unfair advantage in the process. Some team captains put in a make do of time and effort, while some put in less.SG Cowen did not directly compensate or reward bankers for world involved in recruiting activities, but recruiting was included on the performance reviews leading to year-end bonuses. On-Campus Round At every core school, SG Cowen had two or three schedules comprising at least one open one, whereby students signed up based on interest, and the rest closed, whereby SG Cowen selected among previously submitted resumes. Rae said, In the past, Ive found as many reliable race on the open as the closed list. In the first rounds, interviewers tried to focus on which of these candidates could make it through overseer Saturday.Schoenberg said, When I go up to interview, Im tough on candidates because I dont want to embarrass myself later on by endorsing weak candidates. Interviewers knew they would be held liable for the quality of candidates they brought back for overseer Saturday, and their own reputation was weakened if they wasted the time of senior bankers at the firm interviewing candidates at Super Saturday who were clearly not appropriate. At the alike time, Schoenberg said, When I see hatful who are prepared and have the eagerness, I fight very unvoiced for them. While some bankers were especially tough, others were especially smooth and wanted to be generous in their assessments of all the candidates. Rae said, This is where you see the beauty of writing comments down. At the end of a day of first-round interviews, the two or three pile who had been interviewing would discuss whom they had seen. Rae tried to make detailed notes on resumes or on the evaluation sheets he had created, and he encouraged the bankers to do the identical so they could recollect specific details about each candidate (see render 1 for a sample of Raes notes from past interviews).Most often there were two schedules, which would amount to 24 candidates. They would then try to narrow the list to six candidates and quickly have a second round, even that same shadow, on campus in order to cut half and invite the other half to Super Saturday. Rae said the firm usually wanted associates or senior associates to conduct first-round interviews Were not aggressive about move our most senior slew out we want to downstream the acknowledgement of talent and upstream the responsibility of closing on offers to senior people. Rae felt that often the senior-most people were removed from day-to-day concerns and tended not to be as demanding about the basic skills an associate needed, whereas those just a few years ahead of a firstyear associate would be much more inflexible about assessing skills. He made sure senior bankers would be at Super Saturday, however, to judge whether potential associates also had the makings of a superb semipermanent banker. In Raes view, long-term success did not come from building models, it came from loving the work, loving to teach and sell, and loving the hunt.The successful bankers had to whole step the warmth of serving clients and the excitement of competing at the highest level. In this first round , he also instructed interviewers to test for culture fit. This could be as simple as asking someone whose work and education experience was entirely in the Midwest, be you comfortable living and working in New York? Rae said, Sometimes they ability be a diamond in the rough and they can make the transition, but cultural fit is important. Other bankers at SG Cowen agreed. One banker, Ryan Daws, pointed out, Its mportant having Chip in the process because there are only so many personality types in the world, and hes seen a lot more than we have. Daws said, HR at every bank has to earn believability with bankers, but when you have someone like Chip who used to be a banker, it makes it easier. He also said, Certain types 5 402-028 SG Cowen New Recruits hold out to succeed once they get here, which colors the interviewing process. For Daws, alarm signals went off when people did not dress appropriately, or when they asked questions like, Are the hours really as corky as they s ay? He acknowledged there was some self-importance involved on the interviewing side. No ones ever as trusty as I conception I was, he joked. Super Saturday Super Saturday in fact began on Friday afternoon, when candidates arrived from their various schools and convened with many of the interviewers for dinner and cocktails in the wine cellar of an elegant midtown restaurant. Fennebresque spoke at dinner, and, because he was a great tattleer and because it was rare to get the attention of a CEO during recruiting, candidates were usually visibly move.On Saturday morning, interviews began at nine, and each interviewer and each candidate had five half-hour sessions with short picks. Rae tried to keep these interviews moving and dog-tired a lot of time gently tapping and then firmly strike on bankers doors when they lost track of time. Super Saturday was exhausting for the interviewers as well as the interviewees, and Rae wanted to make sure the bankers saved some zippo for th e collective decision making. Thirty candidates had attended, which meant Rae had commandeered 30 bankers to come to Super Saturday.Rae said, Theyre giving up a Saturday, and they want to get out of here as fast as they can. But they get to make the decisions, and that brings them in here every year. Rae estimated from previous years that he should make 20 offers if his target was 15 acceptances. There were already eight hires from the summer associate program, and seven third-year analysts were being promoted, so this would achieve his objective of a full associate class of 30. Successful candidates received offers to join investment banking.Those who accepted re moody for an orientation in April to meet with the banking groups that interested them most. By the time the training program started, each new associate was assigned to a group. The hiring meeting started as the bankers ate their lunch. The bankers usually felt very surefooted that they could whip through the list of ca ndidates quickly, as they often assumed that others would have shared their view on the interviews they conducted. Bankers were always surprised at these meetings to get wind out how strong the disagreement could be.One managing director might be turned off by a candidate for being too salesy, I public opinion he was trying to snow me, and that same candidate could have appealed to another director for having great attitude, eager to contribute. Rae had to figure out how to let everyone weigh in and then build consensus around a decision. mental synthesis a Culture through Hiring Rae said, I try to get people to act and behave like a firm. He wanted to make sure bankers were not overly partial to candidates from their own alma maters and also that bankers did not hire people who would only succeed in their own group.At the same time he wanted to make sure that bankers did not depressurise standards and hire a candidate whom they thought of as good tolerable for the firm but n ot good enough for my group. Sometimes he would try to push a banker to a conclusion by saying, If you could only take one new associate to the CEOs office with you, which one would it be? Or at the other extreme, If I cant place her, shes going to be yours, how do you feel about that? 6 SG Cowen New Recruits 402-028 One HR manager at SG Cowen commentedPeople on Wall Street are too strong on people who took some time to figure out what they want to do. But look at Kim Fennebresque, our CEO. He started out as a lawyer, and hes been incredibly successful in banking. But when people are hiring, they dont think of that. Personally, I think anyone who tells you in an interview that they wanted to be an investment banker since age 12 has led an incredibly dull life. Fennebresque said, We want to make sure people who are attracted to a place like this understand what this is. We want to ferret out people who love technology, who love emerging growth. Making the firm more visible to bot h potential clients and potential employees was one reason Fennebresque agreed to frequent appearances on CNBC and business segments on other news shows. So many people come to Wall Street for the wrong reasons, he said. Theyre dazzled by dough and dazzled by stature. People should figure out what they like to do, it matters even more than what theyre good at. I was perfectly good at law, but I sat in that law library at night and I thought the librarian was the Marquis de Sade torturing me.If you dont like what youre doing, even if youre good at it, eventually you and deity are going to figure it out. Fennebresque spoke fondly of having started out in banking at First Boston in the 1980s during the firms heyday and in close view of the rise of Joe Perella and Bruce Wasserstein. Fennebresque said, I used to believe culture was an overrated Harvard buzzword, but First Boston made him see how much culture mattered. We were young punks trying to elbow in on the big boys, and it worke d, he said proudly. He was trying to bring some of that dynamism to SG Cowen.Because the investment bankers had all been hired from distinct firms to build SG Cowens banking platform, Fennebresque often used the metaphor of Ellis Island to exhort his bankers to come together and create a unified new culture. He also wanted to make sure they felt they had the support they needed to get their work done, and Fennebresque tried to give bankers as much autonomy and decisionmaking power as possible. Fennebresques involvement in recruiting events and his visibility with new and young employees stemmed from this appetite to provide support. The most important clients are inside, not outside. I really believe that, he said.Hiring Criteria Rae tried to formalize the criteria by using power grid sheets for the bankers to fill out and having them vote and make a case on behalf of their candidate. There were definitely bankers who resisted any kind of science in this process. write up Buchana n, HBS 86, was head of Equity Capital Markets and had also come to SG Cowen from First Boston, like Fennebresque. The type of person who does well here doesnt want to be told what to do. He or she is far less regimented. This is not the Navy. We want the self-starter. Buchanan said he did put a lot of stock in resumes It makes a big difference if they have been an entrepreneur. Most important, though, he hired for fit. He was even known to change the structure for fit, in that he had created jobs for people he thought SG Cowen should hire. As Buchanan put it, We can stretch for personality, and we can stretch for sparkle. Especially in ECM, Buchanan said, The human element, especially our creativity and cipher, is why a company chooses us as financial advisor in the first place, especially on commoditized products. Were very hands on and high touch. Were not the volume leader, but we are a service leader. 7 402-028 SG Cowen New Recruits views for HiringThe bankers assembled had assigned almost all the charismatic placards representing the applicants into decision groups. They had two spots remaining and four people in the maybe category from whom to choose. 4 Natalya Godlewska Natalya Godlewska was an MBA student at Cornell and had earned an undergrad rove in finance at an eastern European university. As an undergraduate, she had been the student with the highest grade point average (GPA) in the finance department, and she went on to serve as a graduate teaching assistant in the finance program at Cornells business school.She was originally from Poland and had moved to the U. S. at the age of 22. She spoke fluent Russian, Polish, and German and some French. introductory to business school, she had worked for four years for CommScan, a company that developed M&A modeling software used by many major Wall Street firms. She had gone to the SG Cowen presentation at Cornell, called the bankers she had met to have informational interviews, and then had been one of the top candidates from Cornell sent on to Super Saturday.At Super Saturday, her interviews had mostly gone well, although there was some hesitation from two interviewers. Everyone was uniformly impressed with her finance background, her analytical knowledge, and her understanding of the financial markets. When one of the bankers had telephoned her references, her previous executive program had responded positively about Godlewskas skills and also commented, This is the person I would want to bring to a tough negotiation. She seemed very determined, ambitious, and ready to work hard.But one associate and one managing director each expressed strong reservations for different reasons. The associate felt that Godlewska might not be a good culture fit with the other associates and that she had seemed stiff and uncomfortable during small talk at the opening of the interview and also at dinner the night before. The managing director felt that some bankers might lose patience with Godlewskas less-thanperfect position and that this would affect her ability to work smoothly with her managers. Other people on her interview schedule spoke up in her defense.Associates should be made to deal with people with different backgrounds, and it was all too easy to use culture as an excuse. One banker said he thought Godlewska would be a hit with clients because she was a go-getter and radiated positive energy and a can-do attitude. He said that though it might be an issue with impatient bankers on her team, her language skill would definitely not be an issue with clients because most of our clients think Wall Street types speak too fast anyway. Martin Street Martin Street was a second-year Wharton MBA who had previously served four years in the military.He had no business experience, but he had substantial leadership experience, most notably having led a carry through operation in war-torn Bosnia. He was president of his section at Wharton and also of the Running Clu b, having completed two marathons and one triathlon in the past year. All of his interviewers agreed that he came across as a energising personality and that he was confident and articulate. SG Cowen came to Wharton toward the middle of the recruiting period, so as one banker said, People either really want SG Cowen, or they didnt get offers from other firms. Street had told them he was taking several finance courses, but SG Cowen was not allowed to ask him about his grades because that was forbidden under Wharton recruiting rules. Cowen had difficulty schedule Street for Super Saturday because he was always involved in recruiting events at other firms. He had said that he want smaller firms and liked SG Cowens areas of specialization, but they still were 4 Note These candidates are composites of many candidates and are not meant to describe any actual candidate. 8 SG Cowen New Recruits 402-028 nsure what the likelihood was that Street would accept the offer if it was extended. T hey were also wary of whether he would play firms against one another in terms of wanting superfluous time to interview and consider offers, which might prevent SG Cowen from being able to fill that slot with another top-choice candidate. One professional in recruiting said, If a person doesnt sign and accept the offer letter right away, weve made a mistake. lot Goldstein Ken Goldstein was a second-year MBA at Berkeley who had previously worked at PricewaterhouseCoopers for five years.He had quickly risen to be a manager at PWC, managing multiple audit teams simultaneously, drawing up budgets and determine for projects, making presentations to win business, and resolving technical accounting issues for clients. When SG Cowen called his reference at PWC, he confirmed, Kens performance appraisals put him in the top 5% of the firm. Everyone who had interviewed Goldstein liked him and thought he would represent SG Cowen well. In fact, when Rae looked over the written comments on al l the evaluation forms, they were uniformly positive.Why hadnt Goldstein been an immediate yes, why was he one of the maybes that warranted this discussion? One banker said, I can tell you what everyones afraid to say. Ken is married and has two sons, a newborn and a two-year-old. Whatever he did at PWC, we cant tell at this stage of his life whether he really will be willing to work 24/7 like the rest of the associates. One of the senior associates said, Its hard on the other first years if we make allowances for Ken to pick up his kids at day care or not work on a weekend when his married womans away.None of the first years expect to have a life, so what happens when they see Ken having a life? Some interviewers said Goldstein had openly talked about his intention to be able to balance a family with being a banker. One of his interviewers said, I commend him for trying, but I break promises to my kids all the time, to take them to the first day of school, to get home for a game. Another banker said, Its weird to say this, because we always say were looking for maturity, but I almost think Kens too mature. If he were on my team, I wonder if he would do what I tell him to do, or if hell dislike taking orders.Hes used to having a lot of responsibility and being in charge. Andy Sanchez Andy Sanchez was a second-year MBA at the University of Southern California and had completed his undergraduate degree in economics at UCLA. Sanchez had found early success as an entrepreneur, having started his own business during his first year of college, a Kaplanstyle tutoring business to prepare students in Los Angeles for high school achievement tests and the SATs in both English and Spanish. After college, he ran the business full time for three years and then continued to run it while he enrolled in business school.Last year, his business had served 4,000 students at an average price of $500 per course, resulting in $2 million in revenue and clearing $400,000 in profit s split between himself and an equity provider. Sanchezs interviewers all found him enthusiastic and personable. He had talked to a lot of people at SG Cowen and had stopped into the New York office to have informational interviews or talk to other associates on several occasion when he was in the city for other meetings. He always sent follow-up e-mails and notes to everyone he spoke to, was friendly to the other candidates at Super Saturday, and was great at making people relax.He was well informed about the firm, telephoned other alumni from USC to talk to them about their banking experiences, and seemed as though he had been read up on investment banking, speaking very cogently about young landmark deals in some of his interviews. When asked whether he was sure he wanted to leave his business, he said he was ready for new challenges and that his jr. brother was going to run it in his absence. The biggest concern interviewers had with Sanchez was from his resume, which listed a 2. 8 for his undergraduate GPA.When asked about his business school GPA, Sanchez had said it was a 3. 1. At a time when most schools including USC had a fair amount of grade inflation, SG Cowen bankers were 9 402-028 SG Cowen New Recruits concerned that he had had so many Cs on his record over the years. Were not looking for rocket engine scientists, but a 2. 8 really sticks out, one banker said. Sanchez had pointed out to one of his interviewers that his SATs and GMATs were quite high and that his low grades only reflected the amount of work he was putting into running his business.Rae looked over the other resumes of the Super Saturday candidates, and Sanchez had a very competitive SAT score and one of the highest GMAT scores. Sanchez had told one of his interviewers, There was a lot of demand for our services, so we got excited and grew the business pretty fast, and I also needed to make enough money to put myself through school and then put my two brothers through school. Unfo rtunately, that left me little time for studying. Decision Time The bankers were having a hard time deciding among the four candidates, and they were running out of energy. The snow was coming down faster, and most f the food was gone, the bankers now going back to the buffet for a second sandwich or some lukewarm pasta. They had made good progress, but choosing these last two candidates was not turning out to be an easy task. Rae remembered Fennebresques admonition to make the hiring process our most important priority. One banker spoke up, Chip, lets keep this meeting moving. The roads look bad, and its my anniversary tonight. If I dont get home soon, Im in deep trouble. 10 SG Cowen New Recruits establish 1 402-028 Sample Pages from Raes valuation Book (Prior Candidates) Candidate board Berry Bill BerryLarry Larry Fromkin,Vice President, Health Care Linda Conway, Managing Director, technology Daniel Jones, Associate Technology Lynn Smith Carl Havens, Vice President, Technol ogy Gloria Watson, Associate, Barr Devlin K. C. *K. C. 11 402-028 SG Cowen New Recruits Exhibit 1 (continued) Candidate Damon Sam Sam Damon Vijaya Vijaya Parbhu, Managing Director, M&A Aaron Solomon, Associate, Technology Sam Chung/Lewis Anderson, Associates, Technology M&A Lynn Smith Tom Tedlow, Director, Technology Danny Lewis, Director, Technology 12 SG Cowen New Recruits 402-028 Exhibit 1 (continued) Candidate William XuWilliam Xu Ken Ken Arendt, Associate, Technology Samantha Adams/Lewis Anderson, Associates, Technology M&A Charlotte Williams, Managing Director, Equity confidential Placements Lynn Smith Michael Brennan, Associate, Barr Devlin Cal Pava, Managing Director, Technology with maturity 13 402-028 SG Cowen New Recruits Exhibit 1 (continued) CSara Wicher Wicher andidate Sara Mitch Mitch Madison, Director, Technology Sam Downing, Managing Director, Equity Private Placem ents Daniela Galvin, Associate, Technology Lynn Smith Bill Friedan, Associate, Technology Darrell Raw lins, Managing Director, TechnologySource Company. 14 SG Cowen New Recruits Exhibit 2 402-028 Associate Evaluation Form SG Cowen Investment Banking Division Associate Evaluation Form candidate SCHOOL EVALUATOR DATE GROUP INTEREST OUTSTANDING unafraid FAIR UNSATISFACTORY COMMITMENT TO FIRM JUDGMENT/MATURITY interpersonal SKILLS Impact/Presence Communication Skills LEADERSHIP Initiative Motivation technical foul SKILLS Creativity Modeling Accounting/Finance Prioritizing WORK ETHIC Team Player Flexibility/Versatility Motivation OVERALL RATING COMMENTS RECOMMENDATION(CIRCLE ONE) HIRE tangle withT HIRE Source Company. 15