Industry Group vs M&A

This may sound like a really simplistic question, but it's actually rather difficult to get much info on. I'll be doing a summer analyst internship (IBD) in London this summer, and I'm wondering about the difference in role between someone in an Industry Group (such as Energy) compared to someone in the M&A team. What exactly is the difference? Wouldn't members of an Industry Group also be involved in M&A deals as Industry/Regional experts? I understand that M&A guys/girls won't be involved in raising capital, IPOs, etc, in the same way. I'm interested in M&A, but would like to specialise in an industry/region eventually. Are there still more specific teams within M&A that cover industry groups just for M&A purposes?

OK, that was a few questions in one, but I hope someone can shed some light on this.

 
Best Response

many banks are set up right now with industry groups and then an M&A Execution team (this is not every single bank).

Industry groups cover firms in that industry obviously. So you could be exposed to M&A, IPO, DCM, Financial Sponsors, Leveraged Finance, etc., etc. related to those firms you cover. Depending on the group, the type of deals in which you are most often involved will vary. Because of all the possibilities involved and the whole world of clients out there, the industry groups usually are much bigger than the M&A execution group.

I say this because you will have an easier time getting your preferred industry group than the M&A group, since it will be smaller and thus, have fewer positions available.

M&A Execution typically only gets involved once the bank is close to getting a mandate, so they are typically not as involved in the pitching and client relationship management (in most cases). They will focus more on the transactional and strategic execution of the deal. So when it's time for a deal, there will be a deal team made up of people from the Industry Group and the M&A group.

For what's it's worth, many people simply call themselves either M&A or Capital Markets, so even even if you are in an Industry group, you will just say you are in M&A anyway.

Just starting out, I don't think it matters whether you are in one or the other unless you really have a major interest or expertise in a particular area. On average you will learn a lot of the same skills. Although some people regard M&A as "more prestigious," you will be fine either way.

Anybody who works at a bank with a different group structure, feel free to explain that.

 

Thanks for that. That's pretty much along the lines that I'd assumed (common sense prevails for once...). Although the "more prestigious" bit would be great for my mother to tell her friends, I think the slightly broader exposure in the Industry Groups would be great for the summer, and additionally the pitching and client relationship management (if I get through the internship and eventually get to Analyst/Associate level) would be interesting. I'm currently weighing up the Energy Group at BofA in London.

Any other explanations/comments on the Industry Group / Execution Team or Energy @ BofA would be appreciated.

 

You're a banker, you want to do live deals.

Pitching is just arranging league tables so your bank is ranked in the top 3. It's just pulling together company profiles for 15 possible targets for a CEO who is going to reject all of them. It's going through 25+ turns and having your book opened twice during a presentation.

Very little is worse than doing pitchbooks as an analyst. So much work, and often so little in return.

You want to go into a group that has good deal flow. You don't want to be the next Roger Clemens.

 

So, pitching involves 1) making your bank appear to be the best at what it does and 2) gathering tons of company profiles in a pitchbook to be presented to the CEO of a third party and 3) lots of disappointment?

Sounds like fun to me. =)

So, (if I get a choice) Energy Group or M&A at BofA in London?

 

That is a slight exaggeration. Pitching alot of times, especially pitching specific ideas to companies, can oftentimes allow for alot of valuation and modeling work. So yes, all the above are included in the dog and pony show, but sometimes there is some meat and substance to a pitchbook with specific ideas. There is definitely alot of learning involved in pitching, but there's also alot to be learned in execution of deals. The problem remains that your motivation gets sapped after continuous unsuccessful pitches that are never live deals.

 

There are various types of pitching.

Some are just hail marys with 15 possible acquisition targets (this is where the MD is trying to cultivate a relationship, etc) Some are more detailed (modeling work) because a CEO is looking at a specific target. And some groups have legit senior guys that they don't even pitch to get mandates. It all depends.

But if you still love pitching, you can come work for me anytime.

 

you would be surprised at the number of live deals that just come through the door from the client as opposed to pitching an idea contantly and getting traction. Also, a lot of times it will be a one-off bakeoff pitch, you win and execute deal, you lose and move on. A lot of pitching is just to show the client love and that you are thinking about them, so that when they do want to do something (acquisition, sales, financing) they remember all the hard work and love you have shown them in the past

 

From my understanding, they do have a separate M&A team. At least that was implied to be one of the choices for my choice of group for the summer.

This may shed some light on this issue (from the BofA website for EU summer analysts):

GIB is organised into seven industry teams focused on specific sectors: Consumer & Retail, Financial Institutions, Global Industries, Healthcare, Media & Telecom, Natural Resources & Real Estate, Lodging & Gaming. Integrated with our industry teams are two key businesses of our franchise: Financial Sponsors/Leveraged Finance and Mergers & Acquisitions.

How correct that is in practice is another question. The people I met kept talking about the Energy Group, which presumably is a team within Natural Resources. But I'm pretty sure M&A is its own team.

So, is there any reason to choose an Industry Group over M&A?

 

You will learn a lot of the same skills and become stronger in a few different skills (i.e. more pitching in Industry, more modeling in M&A).

It's less relevant for an internship, but I am big proponent of going with the group where you get along with the people the best. It's in these threads 100 times, 100 hours a week, you better like the people.

That being said, if you get an offer after the summer you can usually work it out to change groups when you come back full time.

A lot of banks make you rank your choices, so just rank M&A 1 and Energy 2, since M&A is typically harder to get into. But be happy if you get Energy too.

You're going to be a banker either way, congrats.

 

It might be irrelevant in the case of BofA (have no idea), but I thought this should be mentioned:

Many banks have geographically focused teams as well (e.g. New Markets or Emerging Markets, Nordics, Benelux, etc.) The names speak for themselves - instead of focusing on industries these guys specialize in specific geographies - the beauty of working in London!

This might be of interest to you if you possess certain European language skills other than English.


P.S. I noticed some 'posers' saying 'shait' about BofA on another thread. These are not the only irrelevant posts on this board. I'd say a fare share of all the posts here are worthless and shouldn't be replied to.

 

PraahMonkey, thanks for clearing that up. I did the check on Banc of America Securities on Wikipedia, and there it was, clear as day. I have to say that the MD that called me after my interview managed to confuse me slightly, talking about putting down choices such as Energy or M&A....neither of them really exist. Hehe.

PraahMonkey, are you still at BofA in London? Is it as great as I think it is? =)

On another note that came up in Alexey Kirilov's post..... does it mean anything if the MD that called me to extend the offer of employment said that he'd love for me to come work in his team? I assumed that this was a generic IB recruiting strategy that makes you feel wanted and loved and will encourage you to choose them as the bank to work for. Maybe this isn't so? I did get along best with this specific MD, so maybe he wasn't making all the calls to everyone? Maybe this should suggest a completely different Industry Group as number one choice......choices, choices. I am so incredibly happy to have to make these choices!

Re: kniaz ua's comment about regional groups. I assumed that if BofA has M&A bankers in Industry Groups, they'll also have regional folks in Industry Groups. There definitely wasn't any mention of separate regional groups. But that doesn't mean anything.....PraahMonkey? Any ideas?

Thanks a lot for all the comments!

 
mea04tdt:
On another note that came up in Alexey Kirilov's post..... does it mean anything if the MD that called me to extend the offer of employment said that he'd love for me to come work in his team? I assumed that this was a generic IB recruiting strategy that makes you feel wanted and loved and will encourage you to choose them as the bank to work for. Maybe this isn't so? I did get along best with this specific MD, so maybe he wasn't making all the calls to everyone? Maybe this should suggest a completely different Industry Group as number one choice......choices, choices. I am so incredibly happy to have to make these choices!

To answer your question, usually there are a number of MDs involved in the recruiting process (there's just not enough time for one MD to interview everybody). That being the case, if you interview well with an MD and he gives the thumbs up to hire you, of course he is going to want you in his group. This is only natural. At the same time, most people don't take it personally if you ask for other groups. Also for a summer internship, you can always switch groups if you get to come back full-time.

In my case, one of the MD's I interviewed with called me and made the offer. At the same time, he "semi-recruited" me for his group, talking about how many deals they were doing, etc., etc. But he wasn't pressuring me.

What I did do and would recommend for you, is to ask to meet/talk to people from a couple of groups you are interested in. This gives you a feel for the culture and the people in the group. I eventually chose a group (not the one of the offering MD) because I liked the few people I talked to. I love the group and I still have a relationship with the offering MD.

On a related note, which is important in general, and particularly so for summer internships, one of the most important things you can do is network and have relationships with many different people (particularly MDs) in different groups.

This helps in case you don't like or get along with your group because you have other places you can go. For example during my summer internship, I had two groups other than my own try to sell me on their groups because I got along well with them at one of the networking cocktail events. I liked my main group, but it's nice to have options...

my two cents.

 

Re: Kniaz ua. Finnish, Norwegian and Swedish (less fluently, but confidently) in addition to English. So, any regional specialisation would be quite an obvious choice, I think. =)

 

Alexey, thanks for the comments. That sounds pretty reasonable. He sounded really sincere about wanting me to choose the group I felt I would fit in the best with, but I should just keep his group in mind, cause they'd like to have me. It's a great (but strange) position to be in. I'll take your advice, and, since there's plenty of time before the summer and any decisions, I'll try to get a chance to meet/talk with some people from other groups. That really would make the decision a lot easier.

It's "only" a summer internship, so, like you said, there's always a chance of moving desks if I get lucky enough to be kept on after the summer.

Cheers.

 

Do you mean a mad dash to industry as in "working the petrochemicals industry" or do you mean working in an industry group in an investment bank?

If you mean the former, then the glaringly obvious answer to your question is that people are 'dashing' to industry get a job after being laid off

If you mean the former, then someone else can answer cos I am too tired :P

 

Well, I've done both.. and as far as I can say..

The M&A work is more interesting b/c I feel like the entire process of trying to match two companies together is much more intriguing than taking a company public when a majority of the time you are going to lose money for your clients after a year.

What I've got right now is an industry group job that focuses almost entirely on M&A. The benefits of an industry group is the knowledge you will learn about the players in the industry. No more scrambling around on every deal not knowing the major strategics, major financial buyers, what multiples are reasonable, etc. That part of being a generalist M&A analyst gets old real fast..

Personally if I had a choice I'd say choose an industry that is interesting (Retail, TMT, anything one step away from retail, etc.) and run with it. Worst case is to be put into an industry group you hate.

 

I would pick the M&A gig. The work you'll be doing is more relevant. However, you have to make sure that there's a decent pipeline, even 4 transactions a year would be interesting if you had an important part of the transaction.

--Death, lighter than a feather; duty, heavier than a mountain
 

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