I usually hear that the pay is pretty crap, the hours are marginally better (~70), deal experience sucks since you're mostly pitching and culture is hit or miss. Any insights? Thanks in advance.
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It depends on the purpose behind the bank's existence. In other words, it all comes down to why MDs win.
Are you a LMM bank specializing in a particular niche run by MDs with strong EB / BB / MM backgrounds that punch above their weight? If so, learning experience is likely to be good, # of deals closed should be decent (read >2 per year per Analyst), and comp should be sufficient (maybe 10-20k below market in terms of base with bonus discrepancy being firm and year dependent). Additionally, hours should drop to sub 60 when not on a live deal or in early phases of the deal, but may mirror bigger shops during crunch time. I think the main benefit from an hours perspective is there will be times when you have very little going on, and you can recoup some of your lost social opportunities. Again, due to the general nature of the post, a general response is required.
There is of course the flip side of LMM banking too.
1. Are your MDs white-haired (or worse, completely bald - not including ear hair), and relying on client connections they generated in the 80s?
2. Do many of their sentences begin with, "Back in my day"?
3. Do you still use the same CIM template from the early 000s (bonus points if it is in Word '97)?
4. Is your model designed to be one-size fits all despite covering numerous industries with extremely different business models, and does it have the old Bear Sterns logo on it?
5. Do you have a mandatory in-office 5 days a week policy despite not closing a deal since the Clinton administration?
6. Does your firm regularly get faxes?
7. Does your firm lack a subscription to MS Teams / Zoom?
If yes to 4 or more of the questions above, then yes you are guaranteed to likely get fucked on comp, have mediocre to terrible hours, and to close approximately 0.00 deals per year. Also, your exit ops will likely be FP&A Analyst 1 at McDonalds if you play your cards right, otherwise youll get promoted to Associate for a TC of $75k.
This needs to be on the site as its own topic so that it gets the attention and recognition it deserves 👏
Thank you, I appreciate the call out.
To anyone who feels like they are having a hard time deciding if a LMM bank is solid (from a junior employee perspective), there is a pretty easy way to tell.
1. Look at the number of deals closed within the past year or two. If they are actively closing multiple deals (scaling # of deals expected as MD headcount grows) then you know they have at least a compelling pitch process
2. Look at the Associates and VPs they hire. Are they ex-Analysts and Associates from strong MM / BB / EB experience within the vertical that the LMM firm focuses on? Or are they guys from TAS with limited relevant experience? If they can attract strong Analysts / Associates, they have won over smart and intelligent bankers and clearly have a decent value prop, or at the very least, the comp is very competitive.
3. Try and understand the resources available. If every employee has CAP IQ / Pitch Book accounts, odds are they are at least operating in the 21st century. This may seem like an obvious Yes but you would be surprised at how many banks dont meet this criteria.
4. Look at MD count over time. Successful and modern LMM banks are growing YoY, and looking to add new verticals or at least MDs. Shitty LMM often have the same number of MDs for 5-10+ years
5. Ask your friends at other banks how these guys compete. I worked at a LMM that would win business over many strong MM players, beating some of the "top" banks in their bread and butter verticals in some of the larger financial hubs. This firm is certainly not considered a LMM any more. I also worked for a small LMM that has yet to generate any new impressive business since I parted ways 5-10 years ago.
6. In the interviews, ask the bank what their growth plan is. This should give you a good idea of if they are forward thinking or merely trying to survive.
7. Look at where past Analysts / Associates are today. Did they go on to reputable banks or funds, or was their experience so dogshit that they were stuck working at tiny shops for the rest of their career?
Don’t forget the non premium slack and gmail vs teams and outlook LMFAO
At a LMM PE ($2.5 AUM) and still holds. 3/7 check out here, and indeed fucked on comp (30% below UMM) and close 0 deals per year (average of 2 years I've been here). Hours not that bad, 9-5 really (5 days in office).
Second this. Currently at a “MM” that can be considered LMM. My experience highly resonates with top half of post. Background and ages of MDs is everything. All MDs at my firm come from UMM firms who bring in lots of deals for relatively very small headcount, and learning experience has been much better than expected.
Very risky. Might get stuck with long hours AND crap pay.
I did an internship at one and the laptops were so fucking slow I wanted to kms.
Most banks have outdated technology sir
I also did my internship at one... I hadn't seen a laptop that thickkkkk since '05
Oh it's so bad
Why
LMM companies suck to deal with, they think so highly of themselves and always ask/expect too much. Buyers in the space sucks too. They know LMM is shitty so they want to pay little to achieve some return without having to grow it like crazy through roll ups. In the end so many talks fall apart because rarely do you get a match of expectations. Sometimes it happens but usually no. The work isn't intellectual or anything either. Most times you're just cold emailing/calling buyers/sellers.
Regional boutiques are not bad if
A) ex BB mds who were top industry guys at their firms run the shop
B) they have strong deal flow and a solid reputation
C) they have actual equipment and software and they’re not borrowing a fucking capital IQ membership off of an intern
D) the pay is on par with the street
If the shop is run by non ex bankers especially sales guys stay the fuck away from them. They’ll set you back years.
I disagree on the BB experience piece. Most of the BB guys that find themselves at that level are lackluster and lazy. They made some decent change but didn't have the chops to continue rainmaking, so they fade into some of these shops doing hairy, tough deals. There were several ex-BB guys at my MM and it was clear they didn't leave to move downmarket at their own chosing. None lasted more than a year or two and then they end up at shitty Asian banks that don't actually lead any deals.
I'd rather have a MM banker at the LMM level b/c they start with better relationships and, in many cases, a solid understanding of what a LMM process looks like.
How different are LMM and BB deals?
I would have thought bigger BB deals are more difficult than LMM.
Yeah you’re right my bad. I meant to say that they didn’t come from reputable shops and used BB as an example.
I did an internship at one (in Europe but should still apply elsewhere). Let me give you my personal highlights and draw a picture:
I would not want to re-live that nightmare and don't recommend a LMM boutique unless you have nothing else lined up.
How is there elitism at a LMM lol!
You would be surprised. I just noticed that whenever they have M&A printed on their business cards, they consider themselves at the same level as any other IB. Just delusional or copium idk
Where you can find Mergers and Acquisitions you can find elitism anywhere. Doesnt matter if youre at an Investment Bank generating $10M in revenue a year, on a Corp Dev team closing deals with an average TEV of $500k, or at a PE fund with $100M AUM.
People that can identify as M&A professionals (on both the buy and sell side) can always find a way to be pretentious.
This isnt a finance-specific thing either, attorneys are the same way. Real estate bros can follow suit as well. Unfortunately, anyone working in any prestigious-adjacent position can find a way to puff out their chest.
I worked at one before. They basically have a kool aid culture, think they’re unique and going to be the next ever core (no seriously). Look out especially for the “industry focused boutiques” because they’re likely guys who came from a specific industry and decided to one day open an investment bank that’s basically a boiler room selling their buddy’s companies. I’m telling you, they’re fucking delusional, they think they’re the best, the comp is absolutely dog shit and they think it’s good (kool aid culture again). They also have a variable bonus structure that they try and sell to you thinking it’s good in your favor. Meanwhile you’re working 80 hours a week and maybe get a 5k bonus while everyone on top gets several hundred thousands off of your back. It’s awful.
I’m telling you, even if you have nothing do not work for them.
Regional boutiques are not as structured as EB/BB/MM. You have lots of room to grow and get more responsibility early on; however, you're not paid for that extra responsibility when compared to your peers at EB/BB/MM. It's a great learning environment to figure out what you want to do long-term.
I work at a LMM / MM industry-focused boutique in NYC. Significantly above market comp, lower hours, clear path upward. Happy to answer any questions.
Any chance I could shoot you a PM? Would be great to discuss further
Why not just ask here?
Specify whether your Mds have an IB background. The LMM boutiques were trashing are the “boiler rooms” with MDs who were ex sales guys.
Yep, IB background. Know my type of bank is not the type being trashed here - made $240k as an AN1 and on track to clear ~$300k as an AN2 this year :)
The only consistent theme in the space is that there is no consistency. Pay varies from all-in being at street to god awful. Hours vary from 9-6 to 100+ hours a week. I’ve known people who love their lives and will make MD at the LMM where they started as an analyst and some who are desperate to lateral out as soon as humanly possible.
Be sure to diligence the firm as best you can.
I've been in banking for ~10 years at three separate LMM banks and I can say that much of what DT6 is saying is true.
If you want to to advance your career, you need banking reps, and many of these LMM shops are completely hit or miss when it comes to deal flow / quality.
An important way to measure a shop's deal flow / quality is to figure out what industries they specialize in and what makes them better in xyz industry vs. competitors. In this market, there is no way you are going to work on quality deals by working at a no-name generalist LMM shop. Think about it - why would an attractive prospect choose an unknown LMM shop if they: (i) don't have insight into your business and therefor, are less likely to know how to properly present it to the market; and (ii) have less familiarity with the buyer universe other than a quick CIQ search.
The LMM banks that really kill it typically have MDs that specialize / worked with companies in specific sectors and know the industry cold, consistently network with the main industry buyer universe, network at the key industry conferences, etc.
If you end up at one of these specialist boutiques that do tend to strike solid deals from time to time (within their industry), do you think it'd be feasible to pivot industry groups while lateraling upstream or is that too far fetched even if you have a solid alum network?
Depends on how early stage you are.
If you are an analyst / associate, which I think most industry professionals think of as execution monkeys and not as much client-facing, absolutely. M&A execution experience is very transferable industry to industry (maybe less so than energy, real estate and FIG).
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