Considering to found my own Investment Banking Boutique
Over the past 2 years, I have failed to secure an Internship in Investment Banking either in London and in Paris. I have applied to over 100 programmes at both Bulge Bracket, Boutiques and MM advisory firms. I have been invited to a few interviews, and even though I always nailed the technicals, never made the cut. They told me I they went with other candidates that fit better. I think that not attending a target school did not help either.
After being rejected by Investment Bank, and seeing that Investment Banks, I am considering to found my own advisory firm, and advise small business on M&A, corporate finance and restructuring issues. For obvious reasons I can’t provide underwriting services, but I can advise on debt and equity.
I can get a banking loans by €115,000 and my family can parents can lend me around €75,000 from their savings.
I was planning on renting a small office in Lyon, hiring 3 or 4 interns part time, and spending some money on IT, some databases to conduct valuations, and marketing.
I will target small businesses, and I was thinking about providing some Pro-bono advisory at the beginning just to get clients and deals.
Has anyone done something similar before or known any Boutique founder? How did it go? What other expenses and CAPEX should I consider to set up the business? Any advise would be greatly appreciated. Thanks in advance.
How do you plan to acquire clients without previous deal experience and especially the corresponding network?
Best of luck in your endeavor. It won’t be easy, specially at the beginning. I agree with the idea of doing some pro-bono advisory to small firms, just to put some clients and deals on your track record.
Usually boutiques are founded by ex BB bankers who have good connections and can poach clients and staff from former banks rather than by Uni graduates with no experience in IB. You will have to come up with a good point to convince companies to chose you as advisor rather than more experienced companies.
Maybe you should take it easier and just hire one intern, otherwise you could run out of cash in a few months. Another idea could be to focus on one sector, and use this specialization as a leverage.
hows it going so far? I mean if you know your shit I definitely can see people doing the work because it mainly the connection that would of hinder to the ability to grow
A couple of people at my school founded a boutique IB with the help of a person that worked at another boutique IB for 3-4 years. The original boutique he worked at didn’t do many deals at all, which is presumably why he left.
They’ve all been working together for over a year and they have yet to close a single deal. They take like 10 interns from various schools each semester to aid in every step of the deal, but they mostly do sourcing work since they haven’t closed a deal yet. I understand this may have been impacted by covid since this past summer most SMBs got wrecked, but they weren’t exactly doing too well before the COVID liquidity crunch anyways.
It’s much, MUCH harder to start an investment bank than it sounds. You generally need strong contacts in the industry of your choosing, or you need to do free work for businesses that are too small to get advisory services from other boutiques (I’m talking in the <5mm range).
That being said, after you’re in the industry for a few years (after the inevitable struggle) you only need to close 1-2 deals every year to make a $100k+ salary. I interned at a small shop that was founded by someone with no industry experience. He took a couple of years to get the ball rolling but now he and his team all drive nice cars, have a normal 9-5 schedule (even when they have a live deal going on), and the founder spends more than 1/2 of his work time golfing with potential clients. I’m guessing that when they close deals that their take-home pay is anywhere from $100k-$500k/year each (<5 full time employees at the firm) after paying for the necessary expenses to run the firm, and we’re in a low COL state so it’s really a nice salary with a great WLB.
Not a great idea as you require connections and prior experience to have a successful advisory business. Why would any company take a chance on hiring you when they could go to a small bank with good experience and deal flow? IB is just not a great industry to break into as a new entrant without prior experience and connections.
I know if I were looking to hire an adviser, the firms I would look out for would be ones founded by individuals who failed to secure an undergrad internship in IB.
On a serious note, credibility is everything in this field - while you may have all the technical know-how, significant deal experience is needed to be able to start an advisory business.
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