DCM at One Man Boutique?
Just about to graduate from a non-target with a previous internship in DCM. I interviewed for a DCM analyst role at what I thought was a small firm, apparently it is one man small. The founder worked in DCM and syndicate at a bulge bracket for 15 years, then opened his own firm in 2012 doing exclusively DCM. He gets decent deal flow with a few bulge bracket banks and utility companies from relationships he had in his previous DCM roles, all co-manager roles but on large deals. He has been running this himself but is now looking to expand, hiring an analyst and searching for senior guys with client books, and considering adding ECM. Huge con, the office is in the suburbs. The analyst role would be very involved, and I would be able to start going to client meetings within a couple of years. Is this a great opportunity or the worst mistake I could make?
If he's been going at it alone for 15 years, ask POLITELY if you can see some tombstones to get an idea for the companies and industries he's worked with. If they have dates that show they were during his lone wolf period, then I would say it's a great opportunity. You will find that a lot of boutiques use tombstones carried over from their prior deals at BBs or elsewhere, so if he doesn't have anything relevant (i.e., if he's using something he worked on as an analyst 25 years ago), then I'd say stay away. It's one thing if he is starting up fresh with no deals vs. going 15 years with deals few and far between.
I joined a one-man boutique that was a fresh start, and it's been easy sailing. We've closed maybe 4 deals in the 1.5 years I've been there plus a bunch of ad-hoc, hourly advisory stuff. Had a few deals fall apart at the 11th hour, which is always a shit situation. It's very hands on when the team is small, so it can be great experience (also can be very annoying that the shit tasks aren't outsourced).
He was at a bugle bracket firm to start, then a large institutional broker. That firm was previously in other areas of the country, but he opened the NY office. He then left and has been working alone at his shop for 4 years. He is on a lot of DCM deals including BofA, Citi, JPM, and large utilities to name a few.
If they are relatively "current," I don't think it's a problem. I do, however, think that a couple years for client interaction is a bit ridiculous.
A 'couple of years' seems like a long time to keep your one employee away from the clients.
I spent a year working at a five-man boutique. Never again. If this is your only opportunity, take it, but otherwise, I'd walk away.
This "hands on experience" or whatever line they like to trot out is just that: a line. What they really mean is that they'll pay you the equivalent of what an admin makes at a BB, but have you put out the work of two BB analysts. This is not to mention the probable lack of resources like CapIQ, Thomson One, etc. No thanks.
I will say he/she is right on a lot of those points, but compensation is always negotiable. Make sure you discuss that with them if an offer comes. The thing about IB is that it's feast or famine (sure, some places will give you a hefty base comp, but if you're not completing deals, you'll get the boot). With that said, if they offer you something less than pleasing, ask about incentive structure. They may be willing to carve out some success fees that make up for a low base.
You make some excellent points. I would just add to be weary of a low base with promises of a high bonus. I was in this situation at my previous firm. The firm just came off of a record $200MM+ M&A deal (to put things in perspective, $200MM EVs are upper MM/lower BB territory) where they were the only sell-side adviser, and the entire interview process involved the senior MDs talking about the Ferraris, vacation houses, country club memberships, etc. that they bought with the fees and how my bonus could be sky-high and blah blah blah. Low and behold, the year that I was there, we closed one $30MM M&A transaction and nothing more. My bonus, which was 100% tied to transaction volume, was just under $3,000. Some would argue, and I would agree somewhat, that I should be happy to have gotten the experience, but it's tough when your buddies at MMs and BBs make almost triple what you do and work almost the same amount of hours.
Not trying to talk bad about these boutique opportunities, but I do want to mention these things because no one told me this when I started.
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