Product Group vs Industry Group
Hi everyone,
Is it better for a junior banker to start career in product group or industry group? I used to be an auditor and most of my clients were in technology. I am wondering whether to choose product group or industry group. Thanks a lot for the advice.
industry unless its M&A
product unless industry groups do all the M&A
Haha. Could anyone give out their reasons for their preference? Thanks a lot
Depends on your long-term plans. What kind of exit opportunities are you looking for?
I haven't thought about the exit opportunities. How about if I plan to stay in the banking industry long term?
Then it really depends on your interests. If you want to get exposure across various products (i.e. M&A, equity offerings, debt offerings) then industry groups are the way to go. One thing you'll want to be aware of is that in some banks, industry groups do the pitching and product groups do the deal execution... Some will like to do the pitching (and hours tend to be more generous), but most people like to execute deals. We'd be of more use if you could give us an idea of what interests you, what you want to learn, what you want to do, etc.
from what I heard, it's Sponsors/LevFin/M&A/other industry groups for PE TMT for VC I think general consensus on these board is don't do product group with anything named capital markets
Why? Is there anything wrong with ECM or DCM?
tmt for vc? Can FS get into VC?
dwfrey,
There is absolutely nothing wrong with ECM/DCM, especially if you are in it for the career. However, if you are looking for exit ops (PE, HF, VC), the capital markets are probably not the best group to target. It seems as if you're looking for a career track, so as I mentioned before, it REALLY depends on your preference... ECM/DCM/product group/industry group for career track is all about preference...
NOthing wrong with it, just exit ops are hard for capital markets. jimbrown is correct.
Even HF exit is more likely when you're in an industry group?!
yep, capital markets blows. S&T and IBD go to HF.
dude, you're a junior..why should anybody listen to you
'cause if u weren't lazy u'd go to HF's and see that they are all ex-traders and ex-bankers. not that hard to do some research by urself. capital markets best bet is to try and move or just leave the industry.
ECM / DCM are fiine - iyou have not limited but targetted exits.
ECM analysts will go to PE to help monetize investments / etc or value HFs - especially anyone with syndicate experience
DCM analyst can go to credit HFs or some PE shops if they did lev fin stuff
The stuff you learn is more focused and targetted ... its like going to a trade school vs liberal arts school - your options are more targetted but doesn't mean its any worse.
BTW - Fordham - J. Michael Evans and a ton of other higher ups at GS, MS, JPM were ecm bankers before they became heads of IB, Sales or Capital markets ... so do some of this research you seem to talk about
But if you don't know what you want and want to cast as broad of a net as possible for exit ops then yeah you should do IBD.
BTW - What groups in corporate finance will go to a hedgefund without prior PE experience? unless its some real long only kinda thing.
p.s - Capital Markets is IN IBD - they all report to the heads of investment banking .... I don't get why people always say IBD or Cap Markets
It goes Capital Markets + Corporate Finance --> Report to Investment Banking Head --> Report to Regional Head --> Report to Global Head
You can better start in a client role (i.e. industry or geographical focus) if you do not want to specialize in an early stage and where you have to deal with corporate finance in general. If you do want to specialize you can enter an product group (M&A, ECM, DCM) in which M&A is the best in terms of exit opportunities with respect to PE/HF. Furthermore, M&A is more strategic and less 'processing' compared to ECM and DCM. However, it is also interesting to have a good feeling about how to finance an M&A deal. In some cases, M&A bankers cannot anwer the question whether to use equity or debt after they have done their valuation.
Keep in mind, it is not a choice of life and there are enough examples of ECM/DCM bankers who are working in M&A, client coverage or even PE. Especially when you work for a BB, you have the opportunity to make mulitple transfers in your career (within groups and regions) as long as you perform.
Dagobert have you done M&A work? lol tons of M&A stuff is plenty procedural ... i've done it .... where doy ou work?
I agree with dagobert_duck, that's exactly the advice my MD gave me;
if you want to specialize > product group (preferably M&A in terms of exit opps) if you want to have a broader introduction in IBD before making a choice > industry or regional team
M&A is procedural as well, but compared to ECM/DCM it is more strategic which might be appealing from my point of view. If you have an ECM/DCM mandate (especially for secondary offerings) it is relatively more procedural compared to a M&A transaction in which you have the uncertainty that a transaction might be cancelled for different kind of reasons and where you have to execute multiple (valuation) scenarios.
A rights issue for example will be completed most of the times, because there is 100% guarantee from the underwriting banks while a M&A transaction is more complex. That is why I said less 'processing' in my previous post.
I work for a BB.
Hey guys, thank a lot for those insights. They are really helpful.
Well M&A is very procedural..complete diligence on a company write a book, contact buyers, etc. The main difference a lot of the times in the follow up and other analysis prospective buyers will ask for. Working on the buy-side is infinitely more interesting because you get to see how yoru client views the investment, their thought process, etc.
dagobert - rights will not ALWAYS get sold ... the marketing etc is a big part of it .... valuation, setting a range etc and more so for an IPO
I said most of the times, because the underwriting banks will often give 100% guarantee (HBOS right issue for example, there was only ~9% take up and MS has to buy the residual shares because the share price was lower than the rights issue price). However, it is less strategic compared to M&A and therefore relatively easier to execute (except for IPOs).
Can I ask who comes up with the proposed structure of a deal/transaction? Would it be the industry team when they do the pitching/origination or the products team when they perform the execution?
Product groups vs Industry Groups (Originally Posted: 06/01/2006)
Does anyone know if there's a difference between the compensation for people who work in product groups vs industry/coverage groups? And if so, about how much?
I've heard that in banks with M&A groups - the M&A analysts make the most money. Don't know if this is true. I know GS and B of A don't have M&A groups.
Do business schools prefer an experience in eihter a product group or an industry group over the other?
I don't think so. They prefer any experience beyond washing window's at a BB firm. However the any depth of experience/expertise in any particular beit a product or industry group they will probably look upon you more fondly. but stellar GMATs would help as well
Product groups vs industry groups (Originally Posted: 11/17/2010)
What exactly is the difference between a product group like M&A and an industry group like healthcare?
More specifically, how do the analysts' roles differ?
Thanks.
Use the search.
There's actually not that much difference on a single deal if say, an HC and an M&A analyst were double-staffed on a big pharma merger ... work is split, maybe the M&A analyst does more of the modeling, but depending on who's the better analyst, they'll get the more interesting and crucial deliverables.
The main difference comes from variety from deal to deal, and the infrastructure work you have to do in between. M&A's a bit of an outlier because you're usually tapped for your technical and model-building skills, but usually industry analysts do the pitching, the relationship stuff, the comps, and (if there's no M&A analyst) most of the model, whereas if you're in DCM or ECM, you'll be adding in debt/equity market slides, pricing loans, and basically being the market-facing side of the deal team. In DCM/ECM, that's all you'll be doing during your two years, however, and from what I hear, IPOs, PIPEs, and follow-ons are interesting the first few times, but it quickly gets somewhat repetitive. On the plus side, however, you do get to do more deals usually than industry analysts.
Industry group vs. Product group (Originally Posted: 10/03/2006)
What's the benefit of going into industry groups over product groups, or vice versa? Is there a trend in IB that the industry guys end up progressing higher at the bank than the product guys, or vice versa?
It seems like there is a lot of overlap, but still, there must be enough of an important difference for separating industry ppl and product ppl in the first place.
It really depends, but in general the product group bankers have more prestige than industry bankers (but some industry groups have more prestige than product, think GS TMT). M&A bankers also work more hours on average than any other product/industry group.
In general, guys in industry groups tend to progress higher than product group guys because they have built better relationship with clients (a function of them not constantly doing deals).
Also, in a economic downturn, you want to be in an industry group, not a product group.
Could you explain this further? I figured product bankers would be better off in a downturn because atleast some industries might be doing deals requiring the product bankers' expertise..
Thanks for your response. Would you also say that the product group bankers place better when they leave for PE jobs than the industry group bankers do, since the product guys know more about LBO's, dividend recaps, etc.? Or does it not matter, since the industry group guys also have a valuable skillset -- they know a lot about the fundamentals of potential targets?
In a downturn, there are fewer deals getting done so the first ones usually layed off are the product groups (less demand for their services). Banking is all about bringing in revenue, so in the downturn you want to keep the guys who have already built relationships with the clients. An industry banker can learn to do an M&A deal, but an M&A banker can't learn to build a relationship.
Industry bankers are at a disadvantage when it comes to PE placement since they lack the expertise in deal execution. Industry expertise is a plus, but knowing LBO's like the back of your hand is more of an advantage.
Product vs Industry Groups (Originally Posted: 02/16/2011)
Could anyone shed some light on the differences between these two business lines for banks that are split between coverage and products
Considering Industry/Coverage groups are considered more relationship/sales based jobs, are the hours and pay less than industry groups?
Thanks
Coming into banking, the Vault guide actually did a great job of differentiating the two, definition-wise. I would check that out. I would say that while product groups get all the love on this board, I actually really enjoy working in a coverage group and do get the opportunity to do some more technical work every once in a while. If you find an industry that you love reading about and that you genuinely find interesting, I would think twice before turning it down so you can work in a product group.
If you want to stay in banking long-term, being in an Industry/Coverage group at the VP+ allows you to get in front of more clients and build relationships. Generally, you will be better compensated as a result, as you will have that oh-so important rolodex once you hit MD. Product bankers, at least at the senior level, are more of a commodity, as they focus more on the execution rather than the client. And at the end of the day, it's the guy with the clients that brings in the revenue, not so much the guy double-checking the model.
because people obsess with M&A and LevFin because everyone else slobbers over these groups.
In the long run, always be the relationship banker. Better compensated + you can go wherever you want (assuming of course that since you made MD, you have strong relationships with potential clients)
It seems like most here look to get into M&A/LevFin out of UG to get into PE some day and I understand why one would be more prepared for such in the future.
But to hear that coverage groups get more well compensated seems interesting to me. I always thought that M&A/LevFIn were considered the workhorses and work compensated as such.
However, at an analyst position would you still choose relationship banking even though as an analyst you will probably not be meeting with clients anyways?
product groups vs. industry groups (Originally Posted: 02/16/2008)
What is the difference between product groups (M&A, LevFin, ECM) and industry groups (Energy, Healthcare, TMT, etc.)? Are industry groups a subcategory under product groups (ie. M&A- Energy)? Is that how it works? Help, anyone?
ok within a product group you get to cover a lot of industries and in an industry group you do a lot of products!
Sometimes a product group will have subcategories that are industry groups. It really depends on the product group.
Althouhg it is true that product groups usually do have industry subgroups, i think the orignial poster is slightly confused at the difference. Industry groups and product groups are two separate groups. Although larger product groups can be aligned to an industry.
Industry groups are coverage groups. They build relationships and pitch ideas to clients. They focus on an industry and a specific set of clients. They partner with the product groups that focus on a product. If the company wants to do an IPO, they coverage bankers bring in the ECM bankers to help execute the deal. The ECM bankers bring in their expertise in the equity markets, while the industry bankers bring in their relationship and the knowledge of the industry (especially important for due diligence)
Industry groups generally have a better understanding of the company, and are closer to the numbers initally to decide what product to pitch. However, a common complaint for analyst in coverage (industry) groups that they seem to pitch too much and then pass the deals to the product groups. The complementary downside to the product group is that they may not get as involved in the company and just repeating the same steps over and over.
When chosing a group, take a look at your interests and strengths. Don't pick an industry group when you're not interested in the industry. Similarly don't pick a product group when you don't like the product. Also, make sure you fit into the group. Reach out to current analysts to get a better feel.
capital markets people work way less hours. why would you not do that?
"capital markets people work way less hours. why would you not do that?"
eh from what I hear thats sorta true since they dont work weekends. but i heard that they will definitely stay late if there is a large amount of dealflow
Industry/Product Groups` (Originally Posted: 02/11/2008)
Im curious about some of the specifics of the product/industry coverage groups.
Im curious as to how most ppl choose which industry/product group they will be in. Is it mostly just where you were placed in your first internship or first FT positions? Do Sr. interviewers pick who they want in their group? Is it just random placement? How does it work exactly? If you did choose your group, what did you consider when deciding?
I would also appreciate if anyone could share what group they work in/have worked in, and maybe what makes it different/same as other products/industries. I've talked to some ppl from FIG, Consumer/Healthcare and Retail. Can anyone else share. Thanks in advance.
you rank the groups that you want to be in but they will put you in a group that 1) they need people in; 2) they think you will fit best in; 3) left over slots
consider what you like to do and nothing more when choosing groups. it's too hard to pick a group based on guessing what will become hot in the next 12-24 months. let fate decide that. just concentrate on discovering what you like and let them know about it.
forgot one key question...
What are some areas which may be opportunistic?
Reason being... half of the ppl I reach out to refer me to X, Y, and Z in A, B, and C group telling me to ask them if there is any room in their group. The other half of the ppl I reach out to, ask me what area is my focus in. Right now, my focus is in the area which has a empty desk. Although Ive been asking anyone and everyone about where they work, whats different about it, etc... Im more or less indifferent between most of what I hear. I am equally interested in FIG, CHR, M&A, and Media/Telecom. Im trying to find something which makes one more interesting than the other, but lets face it, if theres a new sub-group at GS covering Feminine Hygiene Products, Im not going to forgo submitting myself for consideration because it doesnt interest me as much as the Fin Sponsors group.
M&A is usually the elite group at most banks (feel free to correct me if you think otherwise). I like FIG because it's more global and the skills can be applied to all banks/financial insts. TMT is fast moving / high growth related. I also like CHR because it's something that I can use. Mining/O&G/Power would be good as well as they are always growing/in-demand.
It would be great if you get to cover feminine hygiene products - think of all the ops that you will have to work with models and 'test subjects'!
Product vs. Industry (Originally Posted: 06/10/2008)
Hey Everyone,
Wanted to know what you perceive as the advantages and disadvantages to both Product and Industry IBD? I know at my BB, the hours are more in line with Capital Markets than IBD in the product groups over the coverage groups. I have also heard you don't get any/enough modeling experience in product, but get exposed to more sides of the firm, etc.
Thanks!
M&A and Lev Fin. are product groups and you get really good modeling experience and work plenty of hours, especially in M&A
I think the OP got coverage and product reversed.
Thanks so far for the replies. How did I get product/industry reversed?
I've heard Debt Capital Markets is similar to LevFin, just high grade. Any truth to that?
Debt Capital Markets is a pretty big bucket that includes all debt instruments. Although they're the "same type of debt," just different ratings, comparing a high grade deal / high yield deal or a high grade background to a / levfin background, is like comparing dogs and elephants, not even the same animal.
In general, product groups will be more modeling intensive, focus on one product (debt, equity, M&A, LevFin, etc.), but will span all industries needing work w/ that product.
Industry groups will give you a more broad exposure to all the various products, are usually much less modeling intensive, and focus on only one industry (Tech, Industrials, Healthcare, Consumer / Retail, etc.).
This usually holds true, although at GS, for example, the industry groups usually do their own modeling and are thus more highly coveted.
The answer is bank specific, as nystateofmind mentioned. (As an aside, it is also a good answer for why I want to work for XYZ bank.) But I would say that an industry group places you right in the middle in terms of modeling experience.
In general: M&A and Lev Fin are probably the 2 groups that model more than industry. ECM is almost no modeling. DCM, at least at my bank, doesn't include very much modeling.
In re: to industry group modeling, experience will vary substantially by industry, e.g. Covering Biotech companies you won't be looking at debt financing as often
anyone know if any of the Canadian banks follow the same system as Goldman, meaning they have the product groups inside their industry groups?
How product and industry groups work together (Originally Posted: 03/18/2013)
Working at a small firm as a generalist in regards to both industry and product, I haven't had the opportunity to see how product and industry groups work together at the bigger banks. For example, if you were at Goldman in the TMT group -- you would cover a tech company, let's call it skynet. If skynet were to sell, I'm assuming the transaction would be handed over to the M&A group? If it were to issue high yield bonds, I'm assuming the LevFin group would take it...
It seems to me that being in an industry group is more along the lines of corporate banking where you cover a group of 15-30 companies. Is this a fair assessment to make?
For anyone in an industry group, can you let me know what major responsibilities are and how diverse of a role it is?
Thanks in advance
I believe in GS they don't have product groups, so it'd just be the TMT M&A team handling the M&A origination and execution. Can't say for sure though.
At my firm, we have a clear separation between industry and product. Industry groups, for instance healthcare, manage the relationship, source ideas, and are the liasion between the bank and clients. We pitch every corporate and investment banking product. When we pull together slides or are on a particularly product-intensive pitch, we invite the product groups to present their capabilities more extensively. However, we decide what to pitch and have the general idea of what our clients want/need. The product groups at my firm are included whenever we need the more product-intensive knowledge on the pitch. Finally, they are the ones who execute the deal and take it through, while we basically just source.
Oh, and if we make money, it's credited equally to both the groups.
TL;DR: Industry - origination, product - execution
This is basically right, but keep in mind that things are rarely so cut and dry. There is just so much variance between firms, across industries, and so forth.
I.e., different firms will organize the various industry and product groups differently (some or all financing groups may be within IB, or there could be a separate Cap Markets group which might be more or less independent from S&T, etc).
As indicated, GS handles M&A within industry groups. Note that at plenty of other firms, FIG will do their own M&A. There could also be an LBO which is "sourced" by Sponsors and handled by Lev Fin, with little to no involvement by the relevant industry group. Some companies do so much financing that they may just work directly with DCM or the relevant financing group (i.e. REITs). At independent shops (e.g. Evercore, Lazard, etc), the boundaries between industry verticals can be less significant and sourcing/execution roles aren't so separately defined. An IPO as a bookrunner is going to entail more industry group involvement than say as a co-manager (or a follow-on), which might just involve ECM bankers. Some Cap Markets bankers are essentially corporate cheerleaders for their product (e.g. investment grade DCM) and in some cases just mediate S&T and the industry group. Other groups (like securitization) do a ton of work on their own, and may only involve an industry group at the beginning of the process. And so forth.
Product Group or Industry Group? (Originally Posted: 06/24/2007)
Can anyone shed some insight of whether you should shoot for a product group (M & A or Leveraged Finance) or an industry group (healthcare, tmt, consumers, etc.)? What are the benefits of each, or does it not really matter?
I think the answer depends on a few things:
If there is an industry group that really interests you and you know you want to become an expert in it, go for it. Some industry groups have tweaked valuation models and it would be beneficial to become familiar with these. The good news is that you are by no means locked into a particular industry (in terms of exit ops), you can still do anything after your two years are up. My personal belief is it would be best to start out as a generalist because you will learn a lot more and at age 22 you probably have no clue what you want to do.
As for product groups, I do M&A and I wouldn't have it any other way (hey, that rhymes). Again what it really boils down to is what interests you.
What matters most in the end is that you do an amazing job regardless of which group you are in and impress your seniors. If you do this, you will have many options available to you.
what about capital markets vs. m&a/advisory?
Ut non qui dicta. Voluptas praesentium dolorem voluptas incidunt ratione est soluta. Dolor dolores velit exercitationem quod dolor minima. Aut est vel occaecati a cum eaque harum eveniet. Et rem qui sed unde.
Modi odit libero dolorem. Quibusdam sit ut tempore magni voluptatum quia pariatur voluptatem. Hic quia praesentium sit et aut qui ducimus. Vero repudiandae voluptatem aut.
Ut placeat quia rerum qui. Officiis quis et fuga ratione neque aut. Cupiditate quae deserunt voluptatem totam error. Quia provident incidunt doloribus nam et ut et quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Autem nemo debitis ut nesciunt voluptas neque qui. Id sequi consequatur minus non.
Sint a et dignissimos. Et est modi fugiat aut est voluptates. Aperiam quaerat velit et quo dicta eum. Iure maxime est itaque ipsa libero delectus expedita. Alias veniam corrupti et.
Incidunt quidem atque molestiae fugiat. Magni ducimus accusantium numquam similique voluptatum.
Officia vel veritatis deserunt numquam aut et mollitia. Est voluptate cupiditate quia accusamus asperiores est. Autem eveniet blanditiis totam et. Voluptas ea voluptas sint alias.
Omnis soluta sapiente nihil error repellat sed omnis rerum. Aut temporibus asperiores dolor.
Ut accusantium qui et numquam aut optio. Dolorum quisquam aut omnis quibusdam animi qui exercitationem. Et ut doloremque eum enim consequatur quia asperiores deserunt.
Repudiandae ut dolor modi quisquam soluta. Molestiae voluptate sit maxime expedita. Voluptates sint quia quod nemo sit harum ipsam.