MDs IN THEIR 20s

First off why would you want to go back to banking and work for someone else? Why would you want to serve clients when you were already the client?

A decent bank wouldn't hire you back lateral. If a bank did hire you back it would be in the assoc/VP range. To become an MD in banking you have to grow up in it at one place then you can lateral to other MD level positions. The fact of the matter is you normally in most banking groups have to responsible for bringing in roughly $100m in revenue a year to make it to MD. What would suggest to a bank that as a lateral you could put up those kinds of numbers?

The Prince of Wall Street
http://www.princeofwallstreet.com

however, oftentimes (and i'm not sure if we all know this; i worked at a smaller bank, so i do) the $20MM private placement brings in the $200MM M&A a few months down the road. i mean, it's all about relationships at this point; the CEO of quantcast may not matter much to Lazard, but i'm sure Peter Thiel does, you know what i mean (if the relationship here isn't apparent, check out www.foundersfund.com). so my point is, you don't bring in the $200MM deals directly, fine, but you are still a deal sourcing engine, potentially bringing in deals on that scale, but more inadvertantly. i don't know about Lazard, but if i were head of M&A at say, an Evercore, or some other boutique, having this type of engine would only benefit my bank, not be a detriment to it. further, hiring someone as an MD to be involved in this type of deal sourcing process, with MY compensation still mostly tied to the deals that I actually do and execute, seems like a small price to pay for adding this potentially new source of revenue. for such a bank, it seems like a win situation, even if they do hire me as an MD. and if Evercore is too badass for you, then maybe a small bank, like Jordan Edmiston or something.

you are not starting a fund, you are starting kind of an advisory fund (a la zelnickmedia)

is def off; i know MDs at plenty of MM banks that make nowhere close to this in revenue in a year.

i am not talking about BB; would not make sense for a BB to do what I am talking about, might as well just hire a "real" MD

$100MM a year in revenue huh? Just to BECOME an MD? Lets be honest here...

HAHa, this "prince of wall street" guy sounds dumber and dumber

im getting really tired of "prince of wall street" coming on here and spouting random garbage that has no basis in reality. this isn't the first time he's done it. "prince" you are just confusing the people on this board by throwing out untrue information. please stop.

next question, is it possible to make MD at 18 years old?

I'd say the "starting a fund" (or advisory fund) leap is a lot more questionable. It's not like most analysts enter the VC world as a GP immediately. As others have said, in this highly unusual and unlikely scenario, why would you throw away your amazing opportunity to go back into banking?

As an MD in banking or S&T who runs a business this typically means they have a P&L that is generating approximately $100mm in revenue at a BB. Sure people make MD and don't run a group or a business but their compensation is far lower and their power within the bank is much smaller.

I misunderstood the question originally. I didn't know you were talking about middle market and I really don't know what the appetite in the middle market is for what you are suggesting.

The Prince of Wall Street
http://www.princeofwallstreet.com

More likely (though still unlikely) way to be an MD by 29:

Graduate from college on the early side, age: 21
Two years as an analyst, age: 23
Direct promote to associate, 2.5 years as Ass., early promote to VP, age: 25.5
VP for 3.5 years, land some killer deals and make MD early, age: 29

Basically, start early and get promoted early at every level. Good luck.

is out of the question, because it has been done; that being said, altesv is describing exactly the opposite of what i am describing: why would i be an analyst->associate-> etc etc if i can just do smaller deals now, myself, and make 50k-250k+ per deal? i don't think you are understanding the point of what i am describing.

if i am doing deals, my age is really irrelevant; the point is, i am doing deals. the finance/wall street industry just happens to lack the innovation to encourage younger people to undertake the dealmaking/execution process themselves. this is a market inefficiency on the wall street side, not on my side: some of this is ego, alot of this is just backward thinking. i am not asking for anyone to argue the likelihood/unlikelihood of this scenario, because i doubt very many are well versed enough to be able to comment, unless you have started such a fund (either successfully or unsuccessfully).

my question is, given something like this is already established, would i be able to go to a bank and become an MD? i guess moreso my question is, if a bank were to buy my fund, would they place me as MD? they would have to i would imagine, given the fact that i am running it. i am just curious what people think of the "after" scenario, not the "before"; the "before" is not the issue in question.

different question that i have just posed; i am interested in responses to both. also, apologies for the harshness if any, it's just that i don't want anyone to argue how likely it is, because i already know how likely it is, it has already been done; my point is just, what are your thoughts on the exit opportunities that i am proposing. thanks much!

Just because something has been done doesn't mean its likely. Winning the lottery has been done, but I wouldn't count on it as a career strategy. Anyway, if you can do it, then more power to you.

i think it is an interesting analogy, the lottery, which is based purely on insane probabilities, to something else, that is based on effort, work, and market need. like i said, it is very tough for you to comment on likelihood; you can only assign a probability/likelihood to something if you have a scope of the selection space. i doubt that you have this scope (and this is no insult to you; why would you have any scope of the space, there is no reason for you to unless you are doing the same thing). versus, i can very clearly dileniate what the probability of winning the lottery is, based on the number of digits involved, the rules, etc etc. the only way you could assign a probability to this is if you've spent time actually trying to source deals, talking to venture capitalists, angel investors, etc etc... seen how much entrepreneurs hate bankers, and then gauged the need that is looking to be filled, as well as the likelihood of someone on wall street actually out there looking to fill this need, but chances are you haven't done any of this.

i don't know, i don't mean to sound like an asshole, it's just that i hate statements that are made with no backing; i feel like too many people do that on this forum already, why let it go when it happens? and again altesv, i am very glad that you hope i can do it, and that definitely means alot to me, so i am not bashing you for that, i am just making a point, and i apologize if it comes across acerbicly

If you've done all of this research, and you hate statements of speculation, why are you asking this question on an internet message board? You don't come off acerbically, you come off as whiny, defensive, and insecure. Are you trying to convince me of this, or yourself? The fact that you are even asking the question, and that you changed the assumptions (VC vs. advisory funds) mid-stream suggests that you haven't thought this through as much as you purport. Sorry if this derails off of your original question, but it seems clear that you consider yourself to be the only "expert" on this topic, so I guess you'll have to figure it out for yourself.

"As an MD in banking or S&T who runs a business this typically means they have a P&L that is generating approximately $100mm in revenue at a BB. Sure people make MD and don't run a group or a business but their compensation is far lower and their power within the bank is much smaller.

I misunderstood the question originally. I didn't know you were talking about middle market and I really don't know what the appetite in the middle market is for what you are suggesting."

What does this mean? Sounds like total bullshit to me. Bringing in $100MM as the basic requirement to make MD at a bulge bracket is what you originally said; then you tried to back out of it with some nonsense.

Normally I would let it go, but this Prince of Wall Street crap + the never ending spam for your undoubtedly equally uninformed site makes it hard... seriously get in the industry and get some experience before you set yourself up as an expert.

haha, very ironic you'd call me whiny and defensive

anyone else?

Sorry, there are waaaay to many MDs at most BB firms in IBD to be making anywhere near $100mm per head. Even on the trading floor where it could possibly average out to this, since many prop traders are only directors because they do not technically manage anyone, I do not believe this.

You'd think that someone who can make MD before age 30 would have moved on to bigger and better things.

"We are lawyers! We sue people! Occasionally, we get aggressive and garnish wages, but WE DO NOT ABDUCT!" -Boston Legal-

So are you saying group heads must bring in $100 million? That is just SLIGHTLY different than your original all MD's comment.

I think we can all agree that GS is a BB. Goldman has roughly 1,767 MD's and PMD's. Did GS generate $176.7 bln in revenue last year? Not even close.

In IB, at the firms I have worked at, MDs have been responsible for circa $10mm in fees. Some places go on fees others on net operating profit (and thus ding you for transaction costs born by the firm). Firms will set a reasonable target based on your past fee earning performance, give you a flat bonus up to that point and then give you increasing percentages of your fee revenue above that target.

For reference, at the last BB I worked at a group with 10-15 MDs at varying levels had a fee budget of $250mm, the SVPs and directors brought in a few mill a piece, junior MDs 5-10 mill, and our one rockstar about 75-100 (he closed a mega deal that netted 75m all in for the firm with debt and advisory fees).

1) As everyone else has said, $100MM per MD is way too high. Group heads, maybe, if they can claim revenue from those under them. Just to put some numbers to this:

Goldman generated $7.6B of investment banking fees last year. Do they only have 76 MDs? No, according to the above poster they have 1800 or so... so around $4-5MM per MD. That seems a bit low, but actual fee expectations are much closer to that vs. $100MM.

2) Going back to the original question, ebitdame: no, I don't think you could go from an Analyst to your own fund and lateral back to a higher level.

Why?

Banks are VERY rigid in how they recruit and promote people. I've seen this countless times actually: someone with a lot of experience in another industry tries to come in and.... starts as an Associate! Or maybe a bit higher up, but you could not lateral in as an MD unless you were already an MD elsewhere in an established financial firm.

I know of several MDs who have gone off and done some work as independent/angel investors and then gone back into a more established firm, but they typically only do this after years of experience.

On a side note, ebitdame, I'm doing something in a similar vein but not exactly what you described here, PM me if you have any specific questions.

http://www.mergersandinquisitions.com/
Mergers & Inquisitions

Some of those 17 hundred odd MDs and PMDs at Goldman are
1) Retired - Don't they remain PMDs for life?
2) Exec level - CEO, CFO, etc.
3) Senior back office - I remember reading that their head of PR made PMD in the last round
4) Managing other MDs - Global Head of IB manages Asia Head manages Asia TMT Head manages a bunch of other MDs (I'm making these specifics up, but you get the idea)

Account for all of that and you could probably cut that number by about half to get an idea of the number of "ground floor" MDs who are responsible for their own business. i.e. $8-10 MM / MD avg.

When I say they MDs that have run a business I mean like I said in the my last post that they run a business generating $100MM in revenue.

Examples of businesses generating $100M would be:
Head of Financial Sponsors
Head of M&A
Head of West Coast Prime Brokerage
Head of Synthetic Credit
Head of West Coast Fixed Income
Head of European Leveraged Finance
etc.

Would the number of MDs running businesses that generate at least $100MM in reveneues be close to 76 worldwide? Probably but you can disagree with me.

Sure there are lots of ways to make MD at a bank (back office, strategy (office of the president or executive), risk analysis, etc.). I am not saying that all MDs are responsible for a business. What I am saying is that the best compensated, most powerful, and most respected MDs at any BB bank are those that run businesses. MDs that have not run businesses are not as well respected within the bank.

I am not talking about any MDs that are retired, working part time as a PMD at Goldman, or in an Advisory Director role at Morgan Stanley etc.

Feel free to continue to attacks but at least respond to what I am saying.

The Prince of Wall Street
http://www.princeofwallstreet.com

didn't blackstone's ceo schwartzman make md at lehman before he turned 29?

Ok not going to respond to this latest load of bullshit, but at least remove your site link from your sig... it's embarassing.

You said you would need 100mm in revenue to become an MD. How can you possibly change your argument to what you just put?? I used to think because you had a blog you must know what your talking about, now I just think your an idiot. This website is becoming useless the more and more people like you come on here, spew false, malinformed information for no other reason then to boost your pathetic little malnourished ego. Do everyone a favor and go away.

I'm not sure what to think of the Prince anymore. There's no denying he has the ability to write entertainingly if not eloquently, and he does stay informed on the general news of the banking markets. Though I'm pretty sure the articles are more summations of others more so than "breaking insight," it still does a good job at keeping readers informed of the street's latest "gossip." Additionally, the career-oriented, "how to network" or "things to do in an interview" articles are for the most part helpful and insightful. Overall, it'd be hard to argue that the blog doesn't have any value. Sure it's no Dealbook, but it does have its positives.

In the end though, nothing will change the fact he has not worked FT in the industry, and that overall, regardless of past internship experience and networking, he is still a senior in school. This thread is testament to the fact that the "Prince" does have cracks in his armor. That being said, the blog is still great and as long as he can resist the urge to provide misinformation on topics he is not that sure about, we can all benefit from his overall contributions. There's more good than bad here guys... for the most part at least.

If I'm mistaken about the accuracy of his articles, PLEASE correct me so I can stop filling my head with incorrect info. Otherwise, I'll probably continue reading on a regular/semi-regular basis.

hahaha, "Prince of Wall Street".

Wow. This is absurd. For you to think that MDs who run groups are the most powerful, respected and compensated is completely ridiculous.

"It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt" - Mark Twain, baby.

Haha, even the cover-up is as bad as the initial statement. Oops!

From an MD in prop trading at a BB's perspective:

BBs don't generally like to lateral someone in as a MD, now it happens if the individual has marquis clients he/she can deliver. Usually they like to bring people in one level lower and if they have the goods, a quick promotion to MD is usual (1 year is common).

The $100 million per year comment people are bandying about here is not something I have heard of and I've been around a while. Now, in S&T in certain areas such as prop there can be a rough gauge of $100m in CUMULATIVE revenue brought in as a precursor to becoming an MD, but that is often not the case as I've seen some get the MD way before $100m and others generate $150 million plus before getting it.

Hey, I just posted this line into this website (i.e. just grabbed a little piece of the web).

Any chance a VC would pay me a couple billions for this, and if so would I join as a partner or MD, or would this interest only to a publishing house who would throw oodles of $$$ at me for the publishing rights.