ECM during downtime
Despite the dearth of actual M&A activity (deals, etc.), advisory services are still proving to be lucrative for a number of banks. I was wondering if anyone working in ECM/DCM or who knows someone who does could comment on what work entails at the moment for the 'execution' side of the banking groups. Because there's a lack of IPO activity right now, how is that affecting ECM right now in terms of responsibilities and opportunities, and what is the outlook in the coming months? Thanks.
Leveraged DCM groups are financing secured lending and debtor-in-possession financing. Before the meltdown, no HF would touch them, but now they're happy to be a syndicate member of a secured piece with a decent yield. Investment grade lending seems to be warming up too. There's a lot of consensus that the aversion to leverage means equity will be big when things turnaround.
That said, I think most capital markets groups are a joke - you do lots of comps, pull together endless databases of deal terms, but don't build trading or fundamental skills. There's no analysis - just data dumping. My friends in capital markets are usually bored and working on a menial projects. But it's better than having no job.
I was under the impression that ECM is pretty analysis-heavy, essentially because the job is to locate/understand trends in the markets, and how that affects the pricing of a potential equity-based transaction (IPOs, etc.)
Not to hijack the thread, but the ECM guys that I have spoken with make a good living out of it and at the junior level (at least at one of the troubled BBs) these guys were making the same bonus as industry bankers (And less hours)
Yes, the money in ECM is good and yes, the hours are better than IBD, but you need to consider the substance.
PenInHand - "understanding trends in the market" is a euphemism for what I said in my first post. It's relegated to looking at prices, building comp databases, doing graphs of issue volume and prices over time, and reading security agreements. You've done comps once, you've done them a million times. There's no thought or analysis - you dump data.
You end up doing shit that the industry/product guys - the ones who do the real work such as modeling, structuring a deal, working with the company, et - don't have time/will to do. Honestly, if you gave 1-2 analysts per group some basic market research software, and made them put in a few more hours, you could almost do away with the group.
IMO, if you're going to bust your ass at a bank (and no matter what division you end up in, you work hard), you should come out with valuable skills. The only financially-driven exit opp for capital markets is industry; you won't have the skills to get into a HF or PE. Most cap markets divisions exist for sr traders and bankers who're tired of the stress/hours, but want to earn a paycheck. It's a terrible place for a jr person.
yep.. you know, I haven't thought this way about Capital Markets, but now remembering some situations in my bank, I can see that what yesman just said about CM kind of make sense ("Most cap markets divisions exist for sr traders and bankers who're tired of the stress/hours, but want to earn a paycheck.")....
DOnt ECM buys build models just like M&A guys to value the company somewhat that they are raising capital for?
My friends in DCM/ECM are getting a lot more work than M&A guys at the moment. Take that as you will.
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