Hi all,
Why lots of talented professionals prefer launching a HF or PE firm to IB firm (not saying about 5 men IB boutiques) ? Is the age of medium or big IBs over ?
What's the main reason ? Regulations ? Or HF and PE are better because of possibility to make much more ? HF and PE firms are easier to start ? They are easier to manage ?
Any opinions.
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PE and HF just seem like more fun to me. Less of a sales job and more analytical.
Agreed.
Buy side > sell side
Of course they are, we're both well aware that one can't function without the other. I'm just saying that the buy side is more desirable
Site the source for your claims:
"...what can be asserted without evidence can also be dismissed without evidence" - Christopher Hitchens.
To answer your question, no. Unless companies all collectively decide to no longer go public, issue debt/equity, engage in M&A, etc. investment banks will still be around.
Now if you're talking about outsized gains for individuals entering IBD, there may be a little more truth. Regardless though, unless there's a fundamental shift in industry dynamics, IBD will continue to be a higher paying starting job (and likely end stage job) relative to most white collar fields.
Mergers and Inquisitions has a far more comprehensive write up detailing why hours in IBD are the way they are. This is, in my opinion, a good proxy for why people get paid good wages in IBD (I.e. Logistically, it's easier to work with smaller teams, but then everyone is way more stressed. They are compensated accordingly for that heightened level of stress). So unless they can increase team sizes in a way that reduces work laid per person, don't expect most other fields to pay more than IBD.
Absolutely great and detailed answer. Thanks !
While you're deciding between launching a PE/HF, also among your alternative considerations should be: starting a multi-national metals and mining oligopoly, launching a leading Hollywood film studio and recording a debut album with at least 4 Billboard chart toppers.
This made me laugh out loud. The dude may as well start a new NFL franchise, while he's at it.
Some of the so-called boutique PE/HF shops are no more than PWM operations - you get a few rich individuals to give you money to invest, if you invest in private market, you call it a PE, if you invest in public market, you call it an HF. Any PWM person with a book of certain size can do it. To launch a boutique IB advisory firm, on the other hand, requires extensive business connections and network.
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