HC or M&A IB Group for HF
I was curious which makes more sense in this context. I know that coverage groups aren’t rly getting super deep exposure to the point where HFs solely take ppl in a coverage group. However, as someone who is primarily interested in HC markets and investing, would it make more sense to stay in this coverage team? Or would being in a product group still be more valuable (and possibly give more optionality, since I’ve heard many biotech focused funds or MMHFs with bio arms favor MDs/PhDs anyway).
Would love color on this, since I’m not very familiar with how HF recruiting works for this sector specifically.
Based on the most helpful WSO content, here's what you need to know:
If your primary interest lies in healthcare (HC) markets and investing, staying in a healthcare coverage group could make sense, especially if you want to build deep expertise in the sector. Healthcare-focused hedge funds (HFs), particularly those with biotech arms, value sector-specific knowledge. However, it's worth noting that many of these funds also favor candidates with advanced degrees (MDs/PhDs) for biotech-focused roles, which could limit opportunities if you don't have that background.
On the other hand, being in an M&A product group might provide broader optionality. M&A groups often offer more rigorous exposure to financial modeling and transaction execution, which are highly transferable skills valued across various hedge funds, including generalist funds. This could be advantageous if you decide to pivot away from healthcare-specific roles in the future.
Ultimately, the decision depends on your long-term goals: 1. If you're committed to healthcare investing: Staying in the HC coverage group aligns with your interests and builds sector expertise, which is attractive to healthcare-focused HFs. 2. If you want broader optionality or stronger technical skills: M&A might be the better choice, as it opens doors to both sector-specific and generalist opportunities.
Keep in mind that networking and demonstrating a genuine passion for healthcare markets will be critical regardless of the path you choose.
Sources: Post MBA IB: deciding which group?, Move from ECM to coverage / M&A, Healthcare Investment Banking Q&A, Credit Suisse, Barclays, and Jefferies Healthcare, Questions about Healthcare M&A
Which group do you like better? Which group is stronger at your bank?
Very little of what your learn in banking, aside from modeling and being detail oriented, is applicable to HF. If you like healthcare a ton and see yourself investing in that space, join that group. Optimize for the environment you're going to learn from and remain engaged in at 1:17am on a Tuesday editing the font of a pitch deck no one will look at for >13 seconds.
Thanks for the advice. Fair enough, and I do appreciate this sentiment.
However, I’m also just trying to have a bit of a realistic gauge from a recruiting perspective solely. It’s not like im averse to other sectors/ a more broad approach in banking (as id get in a product group).
Biotech specialist here. Nobody cares. You will have to be self-motivated enough to learn the right skills to recruit for HFs anyway. Can guarantee you the PMs and senior analysts do not care where you get your knowledge from or what group you come from. Most of us do not know or remember the detailed differences in banking groups because we’re not in that industry anymore.
Usually though, coverage groups are the ones who actually cover companies over time and know the core details of the businesses. M&A is execution focused and jumps from project to project in as necessary in a quite disjointed manner. Are you sure you understand the differences here? Pick the one you’re interested in. None of them translate directly over and we don’t care.
Thank you very very much for this information, rly good to know.
One more question if I may, since u mentioned it doesn’t matter “where” we get our information/knowledge from, is this safe to assume that most biotech focused funds would be fine taking in bankers? Mainly asking since I’ve heard there are quite a few that target primarily post docs or MDs, or is this more of a minority in the industry?
Thanks again
As with many things in life, the truth often lies at the middle of the supply and demand curves. It’s not “most” funds who look for advanced degrees only, nor is it a “minority.” Both a college grad like you with beginner sector knowledge and an overcredentialed nerd like me with intermediate technical knowledge can contribute meaningfully to a fund.
The investing job market is usually very efficient. If a fund only invests in early to mid stage clinical names, then of course the target candidate needs to know how to interpret mouse/NHP models and messy small n clinical data. If a fund only invests in later stage commercial names, then the target candidate needs to know how to conduct competitive intelligence, analyze market data, and maybe, just maybe (oh no holy science lords please say it ain’t so!)…..even model out cash flows and EPS?
Now if a fund invests in both, then what would the ideal team look like? If I'm the PM, why would I not want a model monkey (in the best way possible) to crank out my models with the reasonable assumptions that I can teach them? Should I instead insist on being an ivory tower schmuck and only hire Harvard Med grads so that when a company sells off future royalty streams or refis some term loan, I can get a deer in headlights look when I ask what the impact is on their N12M cash situation?
You also have access to LinkedIn so it’s not like you can’t find out that the majority of biotech podb0is are not advanced degree holders. It’s not a secret lol
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