IB Overview
New to learning and loving this industry I don't quite understand the big picture.
We have coverage groups that focus on a specific industry. These groups actively help raise equity, debt and initiate M&A's for companies they cover. This group pitches but doesn't actually structure deals. Product groups cover specific financing vehicles. These groups become experts from the other side of the field.
I do not understand where M&A groups fall in this scheme. Do Research groups focus on more granular details than coverage groups? Financial Sponsors covers PE firms and is a coverage group?
I understand it varies by firm, but I do appreciate your time and patience in helping me and others better understand (and yes I had trouble finding all of this elsewhere on the site...)
-Thanks
PE
Coverage groups (including
Coverage groups (including Sponsors) and M&A represent your traditional "investment banking division." You're essentially right about the types of transaction services a bank typically offers. Depending on what the coverage group is pitching/executing, they will bring in a product group to provide subject matter expertise to a transaction. M&A is a product group in investment banking; equity capital markets (ECM), debt capital markets (DCM), leveraged finance, etc., are housed in capital markets (which is sort of a subset of investment banking). The extent to which members of the coverage group "structure" a deal varies.
On some M&A assignments the coverage analyst might run the model, on others the M&A analyst will. At a higher level, sometimes the coverage MD is the one with the relationship and the idea, and is the one really driving the process, and the M&A MD and others are brought to meetings to make the client feel important. Sometimes its the other way around. Occasionally you'll find a company that bridges multiple industries, or a deal that crosses industries, and you can have three or four different groups involved. That gets really messy.
Research is a separate part of the bank entirely and is walled off from communicating with investment banking. They write research reports on publicly-traded companies, and are occasionally consulted by coverage groups for their input on how a given transaction might be perceived; however, this is called "wall-crossing" the analyst and needs to be supervised by legal/compliance. Generally, the analyst is restricted for some period on writing research reports about the company.
IB is IB: it's very difficult
IB is IB: it's very difficult to break into. Still with a summer analyst role two years in the future and a lot to do before then, I'm thinking the Sponsors group is the way to go, especially with PE or VC as a planned exit.
Thanks for the thorough response and insights "re-ib-ny." You've painted a very clear and interesting picture here
Generally speaking, the M&A
Generally speaking, the M&A group tends to have the best overall exit placement at most banks. Sponsors usually does well, too. At some firms the lev fin group is perceived to do the heavy lifting on PE financings, at others it's the sponsors group. Most major banks have a few coverage areas where they are particularly strong and whose analysts place really well. If you are interested in VC, you are best off in TMT.