AMA: First-year Analyst at a "Micro-Boutique" Investment Bank

Consuming Goods's picture
Rank: Baboon | 130

As a brief introduction, I was a student athlete at a semi-target school in the Southeast. When I started looking into my options for jobs, I was drawn to investment banking because of the deal mentality, but I was not 100% certain it was the career I wanted for the rest of my life. Due to that mindset, I decided on working for a small "micro-boutique" industry-focused bank, which is also 90%+ M&A advisory, in the same city I went to school despite getting interviews with much larger firms, including a few BBs in New York. I am now 8 months on the job as an investment banking analyst, and after already succumbing to the mid-deal rush addiction, I plan on a long career in either M&A advisory or private equity.

My experience at the firm so far has been fantastic from a deal flow perspective. Due to some lucky circumstances (well, on my part) a number of junior bankers left the firm during my first couple of weeks for various reasons, and I have been the only analyst on the majority of deals my bank has worked on since I arrived. I have been part of two buy-side advisory deals, one sell-side advisory deal, and a capital raise that have all closed in the last half-year. Additionally, I am the only banker beneath VP-level on two sell-side engagements at the moment, one of which is a cross-border deal. Working at a smaller bank certainly has its downsides, but In my opinion, the pros of my experience have far outweighed the cons.

While I certainly do not think that this is the deal-flow experience provided at the majority of smaller (BBs. Since I feel like the smaller boutique bank demographic is often under-represented on WSO, I wanted to throw together an AMA. Feel free to ask any questions about the recruiting process I went through, the day-to-day work of an analyst at a smaller shop, or anything else that comes to mind.

Comments (55)

Jan 20, 2014

How small is 'micro?' Do you feel like your analytical experience is hindered because of the types of companies you work with?

Jan 20, 2014

When I say Micro, I'm referring to number of people more so than deal size. We hire 1-2 analysts per year. So I'm referring to offices with very few junior bankers. Deal size will obviously vary tremendously at these firms.

As far as analytical experience, I would say that there are some aspects of models that I would have been more frequently exposed to at larger banks that I am less proficient with due to working here. However, I have learned a lot about deal mechanics (APA negotiations, dealing with legal settlements in the event of a bankruptcy during a distressed sell-side engagement) that I would not have been nearly as involved with at a larger firm.

I don't think that missing out on analytical experience is the best way to describe it. The experience that I would reference missing out on is related to specific areas of models where a smaller firm does not need to get as in-depth (e.g. it's not worth building an APV or an LBO with a WACC that adjusts through time for a pitch if the CFO will have no idea what you are talking about). I occasionally do some modeling outside of work to supplement my understanding of the areas I feel I am less exposed to here.

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Jan 20, 2014

Comp?

Jan 20, 2014

Not willing to put an exact number on it, but salary was lower than larger banks (with a balance sheet, etc.) in the same city/area this year. From what I've gathered compared to by stub-bonus based on a half-year's work, bonus was significantly higher than larger banks here. Full comp probably worked out to around the same.

As far as NYC, probably comparable given living expenses, but to be honest I'm not sure. Certainly more per hour (60-70 hrs/wk, no weekends unless mid-fire drill) but it's difficult to compare totals with living expenses given that a good number of FY analysts in NYC haven't been paid bonuses yet.

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Jan 20, 2014

What firm do you work at, if you don't mind me asking.

VPA

Jan 20, 2014

I will not be posting the name of our firm, our giving it out via PM, to avoid any issues my firm might have with that.

Jan 20, 2014
vpa94:

What firm do you work at, if you don't mind me asking.

he probably minds, considering he is the only analyst and there are like 2 people working there.

Jan 20, 2014
prospie:
vpa94:

What firm do you work at, if you don't mind me asking.

he probably minds, considering he is the only analyst and there are like 2 people working there.

I won't name the firm, but a little research, and you can figure it out.

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Jan 20, 2014

Thank you for doing this. What is your comp?

Jan 20, 2014

What is the interaction like with the senior bankers at your firm?

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Jan 20, 2014

For work interaction, I'm usually working directly with one VP/director and one MD on all live-deals, pitches, etc.

As far as general office interaction, the entire office tends to grab lunch as a team, and I would describe the atmosphere as pretty collegial despite being mostly senior bankers.

Jan 20, 2014

I am interested in learning about the recruiting process. Did you reach out to MDs via email? If you are late in the recruiting process would you recommend attaching a resume in cold emails?

Jan 20, 2014

Can you expand on any other areas that you feel like you might need to improve on to compete for PE and Associate roles? I only ask because I'm in a very similar situation to yours in terms of working for an industry-specific Micro-Boutique and want to make the same career advancements that you are considering. It's encouraging to see someone identify an area of potential weakness and address it proactively. Thanks for doing the AMA.

Jan 20, 2014

Networking is a big one. I do not have a bunch of junior bankers I work with daily moving to PE shops and other banks, so I do my best to work through friends from school to meet more people in finance. I am also joining ACG and taking the CAIA to provide some other networking connections.

The flip side of this that I have found helpful is you have a great chance to prove to your MDs daily that you will work hard. They are obviously more connected, so if you can build a strong reputation with the MDs, they will help guide you if you decide to look into buy-side offers.

Proving that you could handle additional hours is important to display on your resume IMO. Taking the CFA/CAIA, etc. shows that you can handle additional time commitments. You will never get credit for working 90+ hr weeks unless you do regularly, but it shows you can at least effectively manage your time.

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Jan 20, 2014

Apologies, but ACG?

Jan 20, 2014

How long have you been at the firm?

Jan 20, 2014

A little over eight months.

Jan 20, 2014

Is your firm a sub 10 banker head count?

Jan 21, 2014

Yes. Size fluctuates, but rarely above that number.

Jan 21, 2014

What are the typical exit opportunities for a micro boutique? Is it easy to transfer to larger BB banks later on?

Jan 21, 2014

I'm sure this varies from bank to bank, but I'll give you an idea of what I know based on where other analysts from my firm have gone:

1.) Best opportunities are to find a strong buy-side firm, but not mega-fund, that focuses on your boutique bank's industry focus and use the deal experience (the bulk of which will often apply directly to the industry specific PEG) and any previous contact you've had with them in sale-side processes to display that you can come in and beat out a generalist from a larger bank due to your expertise.

2.) A second option is to go to a BB in New York. From what I've seen, you can get your foot in the door much more easily with 1-2 years of IB experience if you can point to specific deals you've worked on and haven't been stuck doing just Bus. Dev. for your whole time there. However, you can expect to be "reset" as a first year analyst, which can be a huge pain if you've busted your ass for the last couple years.

3.) My bank has had a lot of success with getting into top B-schools (top 10 often, occasionally H/S/W). I think admission boards are interested in how you were able to take on a much larger role at the bank and have take on a more powerful management role early in your career.

I think it mostly depends on how much the senior bankers at your firm are willing to pull for you when jumping to another firm or when giving recs for b-school. Obviously, jumping to sell-side can be harder since an MD will be much less willing to call other investment banks to help you get a "better" sell-side job. It can be taken personal more often than wanting to switch to PE or go back to school.

Jan 21, 2014

Thanks for sharing. In terms of recruiting, does a firm your size hire mostly straight out of undergrad/MBA? What kind of chances does someone have of breaking into a boutique from say a corporate finance role, given the number of hires is so low to begin with?

Jan 21, 2014

For interns we only do on-campus recruiting at nearby schools.

For analysts, we'll look at a broader range of schools, and if we need someone to fill a role, we'll look at analysts from other banks, accountants, corp dev, etc.

We do not look into MBA programs often. They prefer A-to-A promotions, so bringing in an MBA candidate, especially one without previous IB experience in our industry, would be frowned upon by the MDs and would be taken as hostile by the current analysts.

Jan 22, 2014

What's your typical deal size?

Jan 21, 2014

Do you mind sharing what is the pay like in an average micro firm?

If you don't want to get too specific, maybe you can tell us generally how that compares to BB?

Jan 21, 2014

Hard to answer your question because an "average" micro firm is hard to define. There's a ton of variability.

Ignoring living expenses, I make around 20% less salary than people I know at BBs and 10% less to comparable bonus depending on what firm they are at. That probably varies a lot from micro to micro. Also, keep in mind that a micro-IB has a pay structure more like a PEG. A greater % of the bankers will be partners than at a large bank, and you will have years where you kill it and everyone get's absurd bonuses and years where you have to trim back based on poor deal flow.

Jan 22, 2014

.

Jan 22, 2014

1. Why would a company go with your bank over a larger or more renowned one? Do your MDs have that good of a reputation, or experience?

2. How many deals does your bank typically do in a year?

3. Do they still make you wear a suit everyday?

4. Can you tell us what sector(s) you guys deal in?

Thanks for taking the time to do this.

Jan 22, 2014

1.) Very specialized, so yes, MDs' and firm's level of experience.

2.) Fluctuates to much to peg a number.

3.) No. Business casual.

4.) Consumer

Jan 22, 2014

Did you have to take the wonderlic exam as part of the interview process?

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Jan 22, 2014

What is it like to work for free? Im just joking. Can you PM me id like to talk to you about your dealflow.

Jan 22, 2014
Barboone:

What is it like to work for free? Im just joking. Can you PM me id like to talk to you about your dealflow.

Interested in this as well.

Jan 22, 2014

You sound like somebody I've networked with before :)

Jan 22, 2014

how do you go about networking for exit opportunities?
is it any different than compared to a BB?
or do you have to do most of the legwork yourself?

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Jan 22, 2014

Local headhunters will contact you, but if you're looking to recruit with the bigger/NYC funds, you'll most likely have to build connections through legwork.

Jan 23, 2014

Hello,

I have a superday interview coming up with a elite boutique's satellite office in their ECM group. The team is under 10 people, went through a first round 10 minute phone screening, 2nd round included a modeling take home case then a 2 hour mini-superday with 4 people of mostly fit and some technicals to walk them through the model I did , and now an in-person final round Superday. Do you have any suggestions or advice? Will it be mostly fit or technical?

Thanks!

Jan 24, 2014

Based on the take home case, I would assume mostly fit. Probably have some questions on trying to gauge your long-term interest as well. Most smaller banks are very specialized and do not want to spend time getting a bunch of others up to speed. IMO, they will probably vet you on how long you'd be interested in that industry, city, and bank. Get very familiar with their deals and be able to talk very intelligently on why you would have loved to be a part of x, y, and z deal.

That doesn't mean you can not review technical though. If it seems to be coming down between you and one other, a technical question is often the easiest way to choose between two good fit candidates, so make sure to review that.

Jan 24, 2014
Consuming Goods:

Based on the take home case, I would assume mostly fit. Probably have some questions on trying to gauge your long-term interest as well. Most smaller banks are very specialized and do not want to spend time getting a bunch of others up to speed. IMO, they will probably vet you on how long you'd be interested in that industry, city, and bank. Get very familiar with their deals and be able to talk very intelligently on why you would have loved to be a part of x, y, and z deal.

That doesn't mean you can not review technical though. If it seems to be coming down between you and one other, a technical question is often the easiest way to choose between two good fit candidates, so make sure to review that.

Thanks for the reply! Do you have any idea what they would even ask me at the superday? The second round felt very much like a superday except it was on the phone and the MD wasn't there to speak with me. 75% of the interview was fit and one analyst asked me exclusively bond questions and the VPs asked fit and I walked them through the model I worked on. I feel like they would've run out of things to ask me already.

Feb 2, 2014

Do you also help in business development? Or are you all busy enough so that you mainly focus on the numbers? For the companies you target, do you ever get business/develop relationships from cold emails/cold calling, or 100% relationships?

On average, what is your time break down like (percentages for business development, financials, target list, etc.)?

Feb 4, 2014

Help in BD - Yes, mostly research, Cap IQ screening to watch for developments that would give us an in, etc.

Cold calling - not usually. if so, just setting up a conference call with MDs if they are too busy to make the initial call that day. I sit in on as many of the initial conference calls with the MDs and potential clients as my work load permits.

Work breakdown - Fluctuates week to week -- could be 100% any one of these three for multiple days depending on what's going on, but here a general breakdown: Usually 1/3 excel cleaning financials & modeling, 1/3 ppt docs and process documents, 1/3 research (which includes BD, buy-side target lists, industry news scans, etc)

Sourcing clients - cold calling initially or referrals from our other clients/industry contacts, but by the time they are actually selling/buying (and not just talking to us to get opinions on how their financials look or getting set up with our contacts, etc) it's a long-standing relationship.

Mar 4, 2014

Hey there, what kind of financial platform / database / crm software do you guys use? You mentioned capiq, but what about others? (Ie. bloomberg)?

Jul 13, 2014
hermes_paris:

Hey there, what kind of financial platform / database / crm software do you guys use? You mentioned capiq, but what about others? (Ie. bloomberg)?

Oct 7, 2014

First off, thank you for making a post detailing small boutique banks. This past summer I was an analyst at a "micro" boutique bank, and I loved it. The deal exposure I got, along with the culture really appealed to me. Like you mentioned, there was no set training model, however, a lot of the things I had to teach myself. I loved the fact that there this "hit the ground running" mentality when working for boutique firms. If you could send me your email in a message, I would love to connect with you over email and ask a few questions regarding the firm. Thanks.

Dec 23, 2014
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Jul 4, 2016