just my two cents..

you can take a look at FIG. in times of boom, deal flow is decent; in times of bust, restructuring is decent. you'll always be doing deals. and if you can model a bank, you can model anything.

GS, BX. Will work for prestige.
 
drexelalum11:
You need to have an MD or PhD to be useful in biotech, so you can forget that.

Is that also the case for pharmaceuticals? or is it a less medical-knowledge intensive sector?

 

It's the lamest response possible but choose something that interests you. You'll spend all of your waking hours reading about and poring over data so if you hate the sector, you'll be miserable. That aside, look for a sector that has robust end markets and will continue to grow. Companies with a global footprint are a plus, companies with 90+% of sales domestically are not. A lot of market cap is great but every co will have 25+ analysts. It's easier to differentiate yourself and gain a following on midcap names covered by 10-20.

 

I selected aviation because I have an interview in a month and I never followed an industry earlier. Within that time, knowledge about the aviation industry can be developed because it's a small industry as compared to FIG or health care. That said, I'm passionate about FIG and healthcare both and will move to them once I get the job. So, probably choose an industry that you like. More chances of you succeeding.

 
ReardenCapital:

Any progress in selecting one?

Haven't made much progress so far. I'm still leaning heavily toward pharmaceuticals/healthcare or energy. Both are project-intensive/deal with tangible assets and both are more stable/always going to be aroudn versus something like Manufacturing that one can argue is dying (or at least is dying within the United States). I was hoping for more responses though to help me out.

 

I think any industry can be interesting but if I had a choice:

Industrials: For the same reason little boys like to play with Tonka trucks

Consumer Retail: Love my brands and what people buy and why always fascinates me

Healthcare: More interested in the hospital/care home end of the spectrum. Never been a big science tech guy so not as interested in med devices. Think it is pretty cool being able to work on something so important (hospitals)

Real Estate: Personally always very interested in RE. It is a tangible thing and has always interested be how value fluctuate and what makes a good property

Hard to describe in words exactly why I like these industry's but that would be my pick.

I hate FIG....find it intensely boring. Like I said never a big science/tech guy so those industries don't hold much interest. I was interested in Natural Resources for a while. It is a really cool industry but when I started doing a bit more research on it it seemed very technical and niche and not quite as interesting as I thought it would be.

 

I would go for whatever I would find most enjoyable.. so O&G, Metals & Mining, Renewable Energy.. I'm a chemical engineer so I genuinely find these areas pretty interesting, whatever I end up doing in the future I hope it's focused in one of these areas!

 

I was in a very similary situation before I started working at a Big 4 firm. I had to pick an industry and sub-group within that industry. Although I did not know where I wanted to end up, I knew that I was interested in the financial sector and so I picked that. While auditing commercial banks, I discoved my deep interest in real estate. From there, I jumped ship. I would recommened a somewhat similar path. Pick a general industry that you are most attacted to and would like to work in after. Then once you start working, you will be able to find where your interest is with that industry. And if you find that nothing in that industry suits you, swich industries the next year. If you are going to work in Big 4, this is relatively easy to do.

 

Not sure if you are going into investment banking or consulting, but my comment pertains to consulting. I personally do not like banking or healthcare as they relate to consulting gigs. When I say healthcare I mostly mean payers, they are some of the worst run companies I've ever experienced. Also, people tend to never leave these cushy gigs so the project sponsors you'll have to work with are horrendous. Now medical device and pharmaceutical manufacturers are much more interesting because, as you mentioned, they have a tangible product. I personally try to get on as many large scale/ industrial manufacturing clients as I can. I think these companies are the most interesting to learn about because they employ technology you've probably never heard of or even thought about before. I also had the chance to work on an O&G client that I loved because, although they don't necessarily manufacture anything, the process to extract resources is interesting to me. I also think tech would be interesting for the same reasons, but that is not big in my geographical area. Honestly, just go with what interests you. Best of luck!

 

I work in what many would consider the most interesting / sexy field...entertainment. But it really isn't all that interesting once you're inside. It's just a product like everything else, but with a bit of that magical dust. However, because of its appeal to the general public, the industry tends to pay you less.

Another con for this industry is slow growth in general and increase in content cost, leading to a huge focus on cost savings.

 

I think a lot of it depends on your location. I'm in SF and the Tech & Internet industries are booming. I've been thinking about going back to Minnesota though where there are a lot of healthcare, food and manufacturing options.

 

I chose Pharmaceuticals right out of college, I think I had economic rational behind that decision but can't fully recall why. Since the FDA has to approve a product for use in America, the industry is partially shielded from the manufacturing movement away from the US. In short, even if physical products are made overseas, a Pharma company will always have signficant US operations and jobs. In addition, Corp Finance in Pharma has an extremely complex component known as Gross- to - net revenue finance/accounting, unique to the US. So as far as job security, that component of the industry will always be housed in the US and with expertise, you will always have a job.

Beyond that, it's a more interesting industry in my mind. Innovation drives the bottom line, from R&D to loss of exclusivity of products, the industry has a very talented employee pool, across divisions. Basically, I wanted to work in an industry of intelligence and innovation. By comparison, (and more specific to finance), a low margin industry with a cost+ business model is just not that interesting to me.

 

Nobody in my bank wants to be in healthcare right now. Tech is probably one of the hottest and hardest-working groups. Industrials seems somewhat less hot but very hardworking, with plenty of steady business and few bad years.

 
Mis Ind:
Nobody in my bank wants to be in healthcare right now. Tech is probably one of the hottest and hardest-working groups. Industrials seems somewhat less hot but very hardworking, with plenty of steady business and few bad years.

Mis Ind, could you expand on why no one from your bank wants to be in Healthcare right now?

Is it specific to your bank, or are you speaking of healthcare groups in general?

 

What would you guys say are the long-term prospects of Industrials banking? It seems that a lot of industrials business is being off-shored, so assuming you're in a US office, you wouldn't get to work on this stuff (although I suppose the Asia-based offices of your bank would). I'm thinking of industrials like autos, manufacturing, etc.

Conversely, I would think Healthcare would be a stable industry at least in terms of off-shoring, since industrials are going overseas whereas healthcare is staying put in the US.

Any comments would be appreciated. Like the original poster, I'm thinking long-term.

 

think Healthcare ibankers sleep or ever leave the office? I mean, apparently it's a very good and interesting sector to be in, and you will be involved in many live deals from start to finish, but you also have to put in an exorbitant amount of time?

I may be wrong, but that's just the impression I got from some of my interviewers who worked in healthcare.

 

The positive thing about it is that it's a very broad industry, so even if one sector is weak (say, large cap pharma), another sector (maybe med-tech or something) will be hot. So, there are very few down-times industry wide, and thus, few layoffs. Also, because of the breadth, the exit ops are awesome.

The trouble, of course, is that the hours suck, and it is very competitive both among banks, and for people to get into that group.

 

What are your thoughts on the value of an MBA in Tech banking? I would assume many Tech groups care less about the MBA (relative to healthcare, financial institutions, industrials, etc) simply because the executives of many tech companies either (a) don't have MBAs or (b) could care a less about their value. Is this a faulty assumption or reality?

 

The thing about Tech is that it's so cyclical. There are times when it's very hot and times when everyone is scared to death of it. So, hiring is less consistent, as is deal flow (and job security a little as well). The upside to Tech is that the companies are very active during good times so there is a lot to work on, and it's usually pretty interesting M&A work (or IPOs). Regarding the MBA in Tech, I doubt it's much different from any other group - the upper management at the company may not have the degree, but he probably has certain expectations about his bankers.

 

Pro:

-Heterogenous coverage universe, as noted above -Secular trends are positive in that healthcare spend as a % of GDP is only going up (increased supply of new technologies and increased demand of aging population) -Interesting companies with a lot to get ahold of conceptually -The ever-changing regulatory environment means continued banking opportunities -Defensive sector, you'll still be doing deals when Tech and TMT lay off a bunch of people

Con: -Brutal hours...largely as a result of the complexities listed above. Street consensus seems to be that HC is generally a sweat shop

 

I had a choice to do healthcare or tech and I went with Healthcare. I think HC is such a dynamic industry with a lot of growth opportunities out there. The aging baby boomer populations, coupled with the advancement of the biotechnology, makes healthcare an extremely interesting area to cover.

There is no such thing as "best industry," per se. Follow your heart and choose an industry that interests you enough that you will be ok coming to work at 8AM on a Saturday morning...

 

I think the rumors about HC being especially bad in hours is slightly exaggerated. I don't think it's any worse than any other group in the bank. In fact, M&A in any bank is the worst when it comes to lifestyle by far.

HC is very interesting because like said above it's a truly dynamic industry group with lots of sectors that are cylical and countercyclical. There is always work to be done and deals to be closed. And certain sectors tend to favor different products (biotech - equities, M&A, managed care - M&A, hospitals/services - M&A, LBO, etc.) so you always get a good breadth of experience.

 

I would say that 90% of MD's are not from a science background (and by background I mean even having a hard science degree in college). The fact of the matter is that no matter how well versed you are in the industry you will never know as much as the C-level exec or head of Bus Dev across the table. The value you bring to the table is execution capability.

An Industrial MD can learn enough about a client to make a fairly seamless switch to industry exec if he so chose, but I highly doubt an MD for a HC group would ever make a similar transistion.

 

following up on the comment streetluck made, are analysts with a science background given preference to positions in healthcare groups? i need to chose a group once training commences, and healthcare is getting more interesting just because of the difficulty and breadth

 
Monopolisf:
All,

In particular, I'd like to know which industries offer the best prospects long term (ie: growth potential); which ones have the most potential for IB fees ($$$ - particularly debt financing and M&A); which ones are the most cyclical, etc.

Would specifically love to hear opinions on Healthcare, Technology (TMT), and industrials.

Between HC, tech, and ind, I would have to agree with everyone else that HC would in general probably be your brightest option here (this is, of course very firm dependent).

However, if you actually meant TMT, meaning not just tech, but telecoms and media as well, then this group should almost always be your first choice (assuming the firm you're at has such a group), as this group will almost always be the largest M&A fees generator at a bank that has this group.

 
Monopolisf:
All,

Wanted to get your thoughts and opinions on industry sector coverage for those wishing to remain in sell-side investment banking long-term(ie: NOT those that neccesarily offer the best exit opportunities). In particular, I'd like to know which industries offer the best prospects long term (ie: growth potential); which ones have the most potential for IB fees ($$$ - particularly debt financing and M&A); which ones are the most cyclical, etc.

Would specifically love to hear opinions on Healthcare, Technology (TMT), and industrials.

Where is the best place to be today? And five years from now?

Everyone please share your opinion. Let's make this an informative post!

These are my opinions, and nothing more:

Tech: Tech, and TMT, tend to be favored destinations for junior bankers because it has been, and continues to be, viewed as a "sexy" industry group. However, there are a number of issues I'd point out here.

  • Product concentration. In tech, the business has historically skewed to equity and M&A. While this is changing as some sectors of tech mature and become more leverage-friendly, the concentration still remains more pronounced than other industries.

  • Size. To some extent, the companies you deal with are younger, with less experienced management teams and less infranstructure than an equivalent equity value company. Working with most tech companies is not unlike working a middle market coverage group. Even larger companies are sometimes middle market infrastructures with market value premiums for growth.

  • Simplicity. Tech deals are, on average, simpler, and so M&A tends to be less complex. This directly impacts the quality of your experience. I don't mean to cast stones, but my experience has been that the "Tech M&A" crowd tends to be less well trained and capable of doing complex, structured transactions. Most Tech M&A analysts and associates, in my opinion, are not qualified to step back onto a bulge bracket M&A floor and thrive.

  • Career beta. You don't want to know how ugly it got for the Tech banker crowd around 02/03. While other industry groups were cutting 40-50% of their headcounts, tech bankers were seeing their ranks get trimmed on the order of 80% from their peaks.

  • Lifestyle and culture. Tech groups tend to be gentler places than most industry groups, as a rule. The only groups I'd generalize as being more junior banker friendly might be consumer groups.

  • Media/Telecom impact. All bets on the culture question go out the window if Tech sits with the M/T guys. Why? Because at a BB firm, both of those industries are characterized by a small number of large transactions. What results is that you have an overbanked sector with a lot of firms chasing a small number of franchise deals. That means if the senior banker needs to kill ten analysts to win a mandate, so be it. He'll burn five of them at the stake if it increases his chances of winning AT&T/SBC by 2%.

He'll just ask the associate to bring kerosene and some torches. Maybe another associate too to carry extra matches to make sure the job gets done right.

 
  • Culture. Most healthcare groups I've seen have been more ruthless and lifestyle unfriendly than the firms they reside in. I'm not sure why that is, just that it seems to be that way.

  • Experience. You get a lot of different subsectors in healthcare, many of which don't resemble one another. HIT bears almost no resemblance to large cap pharma, or insurance, or hospitals.

  • Downturn protection. No industry group has full insulation from a market downturn, but hc is better than most. Part of it is due to sector diversity, part of it is product diversity.

  • Market share fragmentation. Unlike tech, where you have a small number of market leaders and a bunch of laggers, hc is relatively fragmented. Even smaller firms have robust practices, and you're generally not fighting over the remaining scraps. Obviously, that doesn't hold true for large cap pharma, but most of the rest of the industry is big enough for lots of firms to play in successfully.

  • Sexiness. Doesn't quite have the ring that "tech banker" does, huh?

 

anyone else has more insight on this group? i am considering working in healthcare once i have to chose groups, although i dont have a science background. it just seems interesting to me and i prefer kicking my ass if there is more meritocracy - whatever that means in ibanking..

 

GhengisKahn, that was very helpful. Could you provide your opinion on MT that does not sit with Tech? What is the learning experience like? What kind of deals are the norm in the industry? Anything else you provide would be appreciated.

 

GameTheory, I got you beat. 213 pages: "The Handbook of Corrugated Box Production". It includes such exciting chapters as "Packaging Today!" and "To the Wet End of the Corrugator".

Text sample: "Many corrugated printers believe that bar code quality deteriorates when symbology printing is accomplished with the bars perpendicular to the press direction ("Step Ladder" configuration) or when the bars are printed perpendicular to the corrugated flute direction."

I actually don't work on packaging companies; it was a one-off thing and I've still got the book on my desk. It's hideous, though.

 

Choose whichever you are have the greater interest. If you get into specific banks, then you might get different answers, but as a summer gig, I would go with the space that you would find most stimulating.

 

FIG or Healthcare. Every industry will have strong deal flow during the good times (except RX) - if you're aiming long term, you want to stay in an industry that will also have relatively strong deal flow during the bad times. FIG and Healthcare are the two industries that will always have strong deal flow regardless of the economic condition. Especially in the case of FIG, if you specialize in a niche field (ex. insurance or specialty finance) you will be in very, very high demand because of the lack of people with knowledge and legit experience in that field.

 

To be fair - there is a reason that there are very few specialists in those fields. The more complicated parts of HC (biotech/pharma) generally require some sort of background in the field (or a very long period of picking it up) and FIG also has a tough learning curve and most people find regulated insurance subsidiaries, for example, pretty boring to boot. Also, when FIG does hit a slow stretch (i.e. recently), it is arguably harder to transition your franchise.

 

FIG did hit a slow stretch but the term "slow" is relative here, it's not the same as hitting a "slow" stretch in say like real estate where it REALLY dries up. And you can be guaranteed that there will always be financial institutions and healthcare at least for the next century so it's a safe bet. There's no question FIG and Healthcare are the most "Stable" groups in that regard.

But I do agree with you that FIG is boring as fuck seriously, you cannot be human to genuinely enjoy that shit. Can't speak much for healthcare though haha

 

Troll?

About ten people are about to tell you something like "just do what interests you most" or "pick something you want to do long term."

Also, TMT is just popular because the industry is growing and has a lot more room to grow, so there's great deal flow and long term career opportunities.

"If you can count your money, you don't have a billion dollars." - J. Paul Getty
 

When i apply to IB, i would like to place in Mergers/Acquisitions or IPOs. It seems fascinating to me; the job of being the change agents, reshaping and sculpting some of the largest companies in the world. :D

 
BuffetIsGod:
When i apply to IB, i would like to place in Mergers/Acquisitions or IPOs. It seems fascinating to me; the job of being the change agents, reshaping and sculpting some of the largest companies in the world. :D

that's a product group, not what the OP was asking

 
2226416:
I would imagine the hierarchy would go something like this:

1) TMT 2) Industrials 3) Consumer / Retail 4) Healthcare 5) Everything else

Just a guess though?

I would love to see the rationale for this one, as well as any other blanket statement saying that one industry group is better than another across banks...

 

TMT is generally highly regarded, because it is the industry that is the easiest for you to get into PE, people on this forum are crazy about exit opps (so am I!)....

consumer and retail are also very good at getting you into PE...

from a pure IB perspective and doesnt taken into account of the exit opps, I would say, TMT, FIG, Industrials are generally the three big sectors in any banks.

 

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