Transition from M&A to ER
Luckily I have a summer internship in M&A this summer at JPM/MS/GS. I’m not totally sure if M&A is for me and I’m more swayed to ER rn tbh. I know this could change depending on the internship but assuming it doesn’t, if I were to get an offer from the bank I’m interning at for M&A, would it be possible to move to ER within the same bank?
If I were not to get the offer from the bank, will the M&A experience help me with getting ER internship interviews? Is getting into ER FT at a BB hard?
Super vague but what is the future of ER? Are the myths about it dying out to automation actually true?
Responding to your questions in turn:
[If] I were to get an offer from the bank I'm interning at for M&A, would it be possible to move to ER within the same bank? - Yes. But why on god's green earth would you do that to yourself?
If I were not to get the offer from the bank, will the M&A experience help me with getting ER internship interviews? - Yes. The main skill 'gaps' would probably be the direct experience of 'pitching' a stock and writing initiations/earnings notes. Having said that, it's not that hard to prep a few pitches and the writing is super analyst-dependent. So long as you can speak clearly and in complete sentences and write at about a 9th grade level, you should be fine.
Is getting into ER FT at a BB hard? - Depends. ER departments are smaller than M&A departments so there are fewer openings at any given point in time (though there's also less competition). With the internship you described, I can't imagine you having any difficulty getting the interviews assuming the openings are available. And considering you landed a M&A internship at one of those banks, I imagine you should be personable enough to land an ER gig. Really will come down to team needs and your natural fit at that point.
Super vague but what is the future of ER? - Imagine a desolate wasteland. Now imagine the narrator saying "...and then it got worse". But all kidding aside, the industry has been in structural decline for like two decades now. There will always be a natural demand for good ER analysts, but the issue is that as the environment deteriorates with each passing year, the bar for what passes as sufficient will rise ever higher (i.e. increasing workload for decreasing/flat pay).
- I know one of the top HC analysts (i.e. anybody within HC investing would recognize the name) who flat out told me he was budgeting the rest of his career on a comp run-rate assumption of ~50% of his current earnings IF he maintained his current ranking. He couldn't really move up much in the rankings because he was already at the top. So, you tell me what the future of ER looks like.
Are the myths about it dying out to automation actually true? - Eh, automation is overhyped IMO. Could be dead wrong and Skynet could be coming for all of us, but I wouldn't actually worry about automation in and of itself. The bigger issue (which is closely related) is the massive fee compression in the industry. If your clients (HF/LO) see their active margins shrinking by a consistent 5%-10% every year, they're going to cut costs wherever possible. This may provide a short-term boost for the top sellside ER guys as they increase share, but eventually it'll catch up with them (i.e. being the best damn buggy whip maker on the planet as motorized vehicles annihilate your industry).
You’re talking a lot about the long term effects of mifid (more likely just parroting things that you’ve heard elsewhere), but why does a prospective associate care about that? It’s still a great learning experience so I don’t see why it matters to him that some random HC MD expects to make less money in the future. The experience at the associate level is unchanged over the past decade or so. If the OP thinks he has an interest in public markets, operating models and talking stock ideas, then ER is a fine pursuit for him.
It's a valid point to say that MiFID is a longer term impact on the industry, but you'd be sorely mistaken if you think it doesn't impact the associate experience now. Every team that I deal(t) with on a regular basis has significantly increased the number of stocks they cover without a proportionate increase in resources which has in turn lead to a clear decline in quality even over the last couple years. I even experienced this towards the end of my time in ER where we had immense pressure to just ramp up coverage to justify our cost structure and that led to us being stretched very thin in terms of depth of coverage.
Regarding the point of an interest in public markets, I don't disagree that sellside ER is a decent way to get experience in this field. However, my advice is simply what I would've told my younger self when I was in OP's shoes.
I too had a strong interest in public markets, but knowing what I know now, I would not recommend somebody pick ER over a M&A gig from one of the shops noted above. Many of my ER friends who came over from M&A ultimately regretted it or wished they just left the industry altogether as the marginal improvement in WLB was not sufficient to make up for the loss in compensation.
Lastly, if OP has any interest in trying to make a jump to the buyside (public markets or private equity), M&A at any of those firms would give him a huge leg up relative to sellside ER. I do not believe it would be good or fair advice to just say 'pursue your passion' when there are clear disadvantages to starting out in ER relative to other options he may have.
Ahh that bad. Surely the bigger banks won’t have that issue?
I prefer ER because of the better work life balance & it’s interesting esp if you’re following interesting companies. I feel after the first couple of deals, M&A gets a bit repetitive. Plus I don’t see me staying long in the industry, so long term issues aren’t really relevant to me.
The bigger banks will be able to deal with the environment better for sure. Specifically US banks because they are better capitalized and have competent management as opposed to their European peers (yes, all of them without exception).
ER WLB is probably better than M&A on the whole, but that is extremely analyst dependent. I know some teams where they work 10-12 hour days M-Th and leave shortly after market close on Fridays, with modest increases during earnings seasons. I also know some teams that work consistent 15+ hours Sunday through Friday, with expectations that you're on call on Saturday. The latter is not common, but it's a very real risk.
If you think ER doesn't get repetitive, then you need to do way more networking / informational interview because you're wearing some rose colored glasses my friend. The news flash that nobody wants to tell kids is virtually every job is repetitive. Everything from management consulting to banking to running a meth empire has a large element of repetitiveness. What matters here is whether you enjoy the basic 'thing' that you're doing. If you really like analyzing companies and writing about it, then sell side ER may be for you. If you care more about coming up with innovative financing structures for clients who need capital, ECM/DCM may be a better fit. If you want to get a front row seat to how companies execute on their inorganic growth strategies, M&A is probably closest to that. But don't look for a job that promises you it won't be repetitive because that's a lie. If there is a job that doesn't rely on skills developed through experience and repetition, it either means there are no moats to that job (i.e. anybody can do it) or it's such a chaotic environment that it can't be reasonably planned for in advance - even entrepreneurship has elements of repetition in terms of making and marketing the actual widget.
Lastly, if you don't plan on staying in the industry long, I'd argue that you want the job that best positions you for flexibility down the road. ER clearly loses to M&A in this regard. M&A can go into anything that ER folks can, but aren't pigeonholed in the same way. Of course the lifestyle is probably much worse in M&A, but if it's just about maximizing your options down the road, I don't know if ER makes the most sense.
what do you do for work now?
haha thanks man
I didn’t know about the WLB thing in ER, that’s crazy
And sure all jobs will get repetitive but some industries get more repetitive faster than others. You’re right that I don’t know much about ER, but from what I’ve heard about IBD in general is that you learn 80% within 6 months so staying there for 2 years looks boring. I feel consulting is the least quickest in becoming repetitive only because of the generalist element of it and consulting does look cool (I was thinking of chilling in ER, getting knowledge in a particular sector and then moving into strat consulting). I did hope for ER WLB to be really good though so I might bite the bullet with m&a. No idea haha
From a total stranger's perspective, I would do M&A. Know plenty of people in ER that wish they did M&A. I have not met anyone that's made it through an analyst stint in M&A that felt like they should have started their career in ER. M&A will keep all the same exit opps that ER is considered for open to you, and open even more.
trust me - do not move into ER especially if you get a job in m&a and especially if you don’t plan on staying for long. I’ve said this before but ER is always going to get cut first, and having the m&a background looks significantly better. if you think m&a is repetitive, then I would strongly suggest against going into ER, because it is going to be even more so.
Going to have to disagree with you on the repetitiveness of ER relative to the early years of IB. Job security is also highly dependent on the analyst, sector and firm.
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