What is an exploding offer?
Recruiting for Investment Banking jobs is already tough and competitive. You have to prepare a ton of interview questions and need to know what you are doing. Do your homework and don’t fall for the most common interview mistakes! After multiple interview rounds and maybe even a superday, you get the promised call: “We would like to make you an offer – but we need a decision in one week at the latest.”
Your heart sinks. You finally got that offer. You worked so hard to get it. You like this company and would gladly work there if it’s your only offer. But you have another final round interview lined up at another bank you want more in two weeks. Now what? You feel the pressure mounting. All your recruiting efforts now hinge on this split-second decision.
This is an “exploding offer”. It’s an offer with a short expiration date of one week or less. This offer forces you to decide on the spot and immediately stop your recruiting process. It is a job offer that prevents you from interviewing with other firms. The shorter the expiration window, the worse the exploding offer.
How to navigate an exploding offer?
How do you navigate an exploding offer – especially if it’s your only offer? It’s a tricky situation. You now have an offer – better than not getting any responses at all. But the bank is putting pressure on you. Do you accept the offer or do you continue looking for greener pastures?
Depending on your situation, your best course of action might look different. It all depends on how badly you need the offer, what alternative interviews you have lined up and how high your chances of success are.
Here is how you respond to exploding offers:
Case 1 – You have an exploding offer and nothing else
You have an offer at hand and nothing else. You don’t have any other interviews lined up. You need that offer to fulfill your summer internship requirements or pay your bills. In that case, the decision is easy. If you do not accept that offer, you are back at square one and might end up with nothing else. Here is how you handle this situation:
You can try and reach out to other banks that have not gotten back to you and say that you have an offer that expires next week. You would like to accelerate the interview process if given the opportunity to interview
Wait until the day before your deadline and accept your first offer if you don’t have a better one. This is an easy decision. Don’t force your luck: “A bird in the hand is worth two in the bush”
Bonus tip: It’s a different case if you already have a job. If you are well respected and have established yourself at your firm, you need much more goodwill to switch than your average 10-20% pay increase. You know how your company works. You know who the important people are and how they tick. Think carefully about whether you are ready to give up your established relationships to join a new shop. You should be getting a massive pay increase and a promotion to make you jump ship
Case 2 – You have an exploding offer and other interviews lined-up
You are interviewing with two banks. Bank A has made you an offer and you have one week to decide. You have final round interviews with Bank B in two weeks, which you still want to explore.
Here is how you handle this situation:
Ideally, you can speed up the recruiting process with Bank B. Politely let them know that you have an offer. You politely ask whether it’s possible to accelerate your recruiting process because you are still excited to explore this potential option. Best case, they rush you through the recruitment process within days instead of 3-4 weeks. If you get an offer, you can now evaluate both offers. If you don’t get an offer, you accept your first offer
If that does not work, you can ask Bank A (the first offer) for more time. If you are lucky, you can maybe get another week or so. But don’t expect anything more than that. You can only pull this move once. You cannot repeatedly ask for a couple of days of extension. At some point, the bank will backpedal with “we have other promising candidates in our pipeline” and force you to make a decision
If that does not work and they remain firm on their deadline, you have to accept that offer. Don’t force your luck. Again: “A bird in the hand is worth two in the bush”. The pressure is now off. You can complete the recruiting process with Bank B and see what happens. You can switch if you get a better offer in terms of pay, brand and deal flow. This is not ideal and might burn some bridges. But it makes no sense to reject an offer hoping to land one in the future – especially if you need an offer right now. If you don’t get an offer from Bank B, you still have a job at Bank A
Here is the point we are trying to make: You have to accept your current offer if you need an offer and don’t have any timely alternatives lined up. In other words, you don’t have any choices left. And by choices, we mean actual offers. Not final round interviews. Those can fail as well. You don’t want to be left standing in the rain with no offer.
The situation changes if you already have a job and want to switch to another shop. Here, you are in a much stronger position because you already have a job that pays. You don’t need a job compared to campus recruiting right after college. In this case, you can easily reject an inadequate exploding offer and continue interviewing.
How to prepare for an exploding offer?
Getting an exploding offer is a weird situation. On the one hand, it’s stressful. On the other hand, you finally have an offer. You can prepare ahead of time to make that big decision easier once it’s crunch time. When it’s time to make the call, you’ll have all the information at hand to make a confident educated decision.
Here are three things you can prepare ahead of time to confidently make a decision under pressure: Talk to as many banks as possible at the same time
To deal with exploding offers, you need alternatives that converge around the same time. You can rush an alternative bank, but you must also be in the final round. It is unlikely that a bank will rush through multiple rounds of interviews within days instead of 3-4 weeks. That said, it’s best to apply to as many banks as possible simultaneously. That way, the recruiting processes are more likely to be on a similar timeline and your final round interviews will happen around the same time
Keep track of your recruiting process. Have an Excel file and track all your submitted applications, first round interviews and final round interviews. That’s how you know how many viable alternatives you have at a point in time
Lastly, prepare interview questions ahead of time. This goes without saying. You will be under immense mental pressure when your recruiting process is in full swing. You will be busy with applying, interviewing and case studies. It’s better to have a strong grip on your story and technical questions beforehand and make minor tweaks as you tag along vs. starting your interview prep with three interviews lined-up next week
While applying and interviewing, take diligent notes and consider whether you would be willing to work there
Determine how badly you need that job offer. As a student, it’s easy. You need that internship and you need that first job. You don’t have much wiggle room if you desperately need a job. If you already have a job, then think of what salary and upgrades to your role would make you change shops. What are your deal breakers to switching jobs?
Take notes during the interview rounds. This is your chance to learn more about the firm and whether you want to work there. Your opinion will likely change as you go through interviews. But collecting data as you go along can be very helpful when it’s time to decide. Prepare your decision ahead of time as best as you can. That way, you can determine your preference when interviewing with multiple banks. Don’t make the mistake of getting too enamored with a potential bank. Until you have an offer, you can still get dinged last minute
Are you willing to renege an offer?
Reneging means you sign the contract with Bank A because you had an exploding offer. Then Bank B makes you a better offer and you terminate the contract with Bank A to sign with Bank B
This is a controversial move. This may not be a good idea for students participating in campus recruiting. You will burn bridges with that company, especially if your school is a target school. Other students might feel it puts them in a bad light because of your ruthless actions. Some schools even outright ban you from participating in campus recruiting if you renege an offer
But as a professional, finance recruiting is ruthless. Everyone focuses on their benefit. You have to jump through too many hoops to get that offer. And if a better offer comes along that offers better career prospects, better pay, better deal flow and better prestige, go for it! You only get so many chances to build your CV. There is nothing the firm can do besides blacklisting you. But if you are getting a way better offer, who cares? Just make sure you don’t get fired within the next couple of years
Why do firms give exploding offers?
Commonly, both smaller boutiques and bulge brackets will set an expiring date on their job offers. They can’t let you “think about it” for months. More conventional offers have an expiration window of two weeks. More generous offers have an expiration window of more than two weeks. In other words, you shouldn’t be surprised if you receive a job offer with one week or less to decide.
There are a couple of good reasons why banks are willing to give exploding offers:
A rejection after an extended offer is very costly. For the bank a rejected offer is a disaster. Recruiting takes very long. Just think of the process. You apply. People screen your CV. You get invited to multiple rounds of interviews. And after months of recruiting, the bank decides who they want to hire. By that time, you don’t want that candidate going anywhere but signing on the dotted line
Banks don’t want their offer abused as a negotiation chip for a competing offer. The bank has spent months recruiting. The last thing you want is candidates using your offer as a negotiating chip at a competing shop. You need offers to get offers and banks know this. You don’t want a student to take your offer as a backup plan while trying to recruit for a hotter shop. A tight exploding offer is designed to prevent exactly that. It’s the bank’s way or the highway
You have no leverage over the bank. If they gave you an offer, you accepted it and then they rescinded the offer because of “corporate policy”, there is nothing you can do. And even if you were working at the bank for multiple years and the bank decided to fire you, there is nothing you can do. You can write an angry review online, but there will be enough fresh graduates willing to work for the bank. The bank needs the new role less than you need money to feed yourself and the position to build your CV
The bank can get away without any consequences. Nobody will punish the bank for its ruthless recruiting tactics. As long as it’s not against the law, there is nothing you can do and the bank gets away with it. Let’s be honest: If you had a bargaining chip, you would use it in the same way the bank uses its stronger position
Where does it leave us?
Exploding offers are designed to ramp up the pressure. You are forced to decide on the spot. These offers are designed to prevent you from shopping around with a sure fallback option. Don’t get caught off guard if you receive one. Banks can get away with it because they can.
You have no alternative if you have an exploding offer and nothing else. If you need the offer, you are forced to accept the only offer you have. This is an easy decision: “A bird in the hand is worth two in the bush”. You can try and contact other banks to see whether they want to interview you. But your best bet is to stick with your current offer. You don’t want to end up with no offer.
If you have an exploding offer and other interviews lined up, you can contact your other banks and ask whether they can accelerate your application process. If you are lucky, they might be able to shorten the process to a couple of days vs. weeks. If that does not work, you can ask the first bank to extend the deadline. If that does not work and you need the offer, you have to accept the offer. Don’t force your luck.
Recruiting is a highly chaotic and messy process. It is incredibly personal and you have limited information on how the hiring decisions are being made. You are better off hedging your bets by talking to as many banks as possible. This is how you can build competitive pressure in your favor. While applying and interviewing, take notes and prepare your decision ahead of time. Evaluate whether you would be comfortable working at that bank. But don’t get too enamored with any particular company until you have an offer. Preparing your decision ahead of time will help you make a more confident decision under pressure. Good luck!
Additional resources
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