ECM, the high finance brain drain
It could be argued that ECM is the high finance brain drain. While coverage bankers may see ECM as an incompetent group of want-to-be coverage bankers, sophomore interns, non-revenue-generating seniors, and ex-sorority/frat stars with <3.5 GPAs at semi-targets, they have a huge leg up.
While coverage bankers slave away on models, working group lists, S-1 drafting, ECM bankers are outputting boilerplate market pages and taking notes on TTW calls (easy, mindless, can’t-fuck-up tasks).
Meanwhile, they work 75% of the hours, 50% of the weekends, and net 100% of your comp.
But they don’t have exits you say… why yes, they can’t go to private equity, but they’ll go A2A in 2 years and match your PE associate comp. While you’re doing big private equity things like looking at shit industrial companies, doing in-house bitch deal work, and speaking during meetings, they’re … you guessed it… outputting boilerplate market pages and taking notes on TTW calls. With new BB base and bonus raises, they’ll hit your comp too.
They might not be able to walk you through a DCF or a merger pay down, but they can damn sure tell you the largest institutional investors in YTD tech IPOs that they found during repeated cross-shareholder analyses, and that’s where the real value is created in advisory and underwriting.
You best hope that your modeling skills and “ability to burn the midnight oil” will translate well to outputting boilerplate market pages and taking notes on TTW calls, because ECM is the hidden gem of finance.
It's either this or Corporate Banking... MS me for ECM, SB me for CB.. let's settle this once and for all
What about DCM? I think IG DCM groups work 9-5 (actually) and make street comp
Huge misconception that capital markets folks work 9-5... These teams consistently work ~7:30-11pm Mon - Thurs, 12 hrs on Friday, and the occasional weekend work. Hours are way more predictable than coverage, but having to be "on-go" at 7:30am consistently is not easy. Less ebb and flow than coverage, so you're usually tied to your desk for more of the day. Definitely not a walk in the park. COVID and SPAC craze for ECM teams was ridiculous. Same goes for DCM teams.
ECM/DCM is far more sexy than IB coverage or M&A at the analyst/associate level.
People shit on ecm because there are 0 exit opps but my associate 3 cleared 450k working 50-60 hours a week at a “tier 4” type bank. Not a bad gig if you want to be a career banker. Very little weekend work. Unless you get brought on at a deal last minute, you have a very predictable schedule. Job is mindless but money is money and I love making 10% less than my coverage partners while working 30% less and rarely cancelling weekend and evening plans.
I worked in ECM and fully agree here. I think the few significant downsides people mention are 1) exits, and 2) mundane work
I think 1) is often overblown because people think that no PE = no exits when that’s not the case. ECM people can exit, just to less sexy/desirable roles that aren’t hyped. Great skill set to work in an investor relations role at public companies or buy side firms - not an analytical gig but good pay, very sales/people oriented. Many also do strategy or FP&A roles at startups or clients, although I think this is less important to mention because a) coverage counterparts are better candidates for the same roles, and b) you don’t *need* an ECM skill set to land these roles. It’s also the best place to be to lateral into coverage if you consider that an exit.
I think point 2) is important though. You can argue that coverage is mundane work, but compared to ECM it’s really not. In ECM, it really feels like every deal is the exact same. It’s very process oriented and having in depth knowledge about clients or their industries is just not part of your job in ECM except at very senior levels. You are very siloed into the equity product and the investor landscape and you learn a lot about that very specific niche, but it’s not super applicable outside of the role. The only upside to ECM work is the velocity, you have a super high quantum of deals on shorter timelines, so you can be so busy that it feels more exciting than the work actually is if that makes sense.
I heard ECM guys have been working 70-80 hours nowadays, no?
Interned in M&A at BB, Interned in ECM at BB, Interned at PE.
I take ECM anyday. Sure work might not be so "challenging" / analytical but tbh who cares? Especially sell-side M&A is 10% modelling, 70% monkey work and 20% running a process (dont judge me by the numbers). Plus, if you like to be involved with the market, ECM is sweet. I enjoy reading about politics, macrofinance etc on a daily basis over micromanaging working capital or discussion the "other operating assets" position with a B4 on a FDD call. Just my two cents. Fully looking forward to join ECM.
Currently an associate and work in ECM.
Tbh I have been having this debate in my mind since I joined ECM on day 1 on whether ECM or coverage/industry group is “better”.
My 2 cents are below:
Hours: ECM is considerably better than coverage/industry, at least in my bank. If hours were the same, I would have chosen coverage/industry
Work itself: ECM is more “boring” than coverage/industry undoubtedly, but coverage/industry is also “boring”. As I discussed with my friends, I can say 90 out of 100 tasks of ECM are boring, but I would also say 70 of the 100 tasks of coverage/industry are also boring. The bank Im at mostly do IPOs and seldom do M&A. Ie I can see coverage/industry mostly do execution work on IPO which can be very boring too. They build some models but thats not the focus of their job
Exits: agree ECM only has “edge” to go to IR, maybe some ECM coordination role in long-only/hedge funds. Obviously ECM can also have other exits, but they just dont have the “edge” to do so vs industry/coverage peers
Skills: again, ECM people develop skills that are for ECM jobs. They don’t gain modelling skills on the job as thats done by industry team.
Job security: ECM tasks are “easier” and hours are better, so turnover is lower and people can or choose to stick around a bit longer. Most of my batch mates in coverage/sector are gone. So I think it is easier to get up the ladder in ECM in a bank vs in coverage/industry.
However, if you are fired from your ECM job, I’m not sure how easy it is to get a new job (no matter ECM or none ECM), given you have less skills?….
Above are facts, but even until today I’m still not sure which group is better. I do appreciate ECM has lots of cons, but I try to “mitigate” these downsides by doing below:
Work itself is boring / skills => I try to develop interest outside of work to make my life more fruitful instead of trying to get fun put of my job. For work itself, I try to read research reports / models myself to understand industries and companies better when I’m free. I also try to read some investment books myself
Exits: This very hard to mitigate. If you want to go to PE, don’t go ECM
Job security: again I think staying within ECM is safe. But once fired, you options are less than your peers given limited skills set.
Overall I think ECM is a good job, boring but good pay and better hours. And the more senior you get, it seems to me all the jobs / groups / tasks are kinda boring anyways…
But one thing I’m most worried about as a ECM guy is that if you are fired, your options are less. So I’m trying to “gain more skills” myself when I’m free (ie read research understand models companies myself). I’m not sure if I’m wasting time doing this (as I assume industry/coverage people have more resources to naturally gain these skills, while I have to try harder to gain the same skills).
Not sure what your take is on this. Welcome any thoughts!!!
As a client, the ECM guys are some of the few bankers we really want to hear from. Industry coverage guys almost never have: a) an original idea; b) better info than company management on what’s happening in the industry / market; and c) the slightest bit of creativity.
ECM guys bring us information that we can’t get ourselves. I’ll happily skip meetings with banks who’ve come to pitch dogshit M&A ideas but rarely skip ones where I can get color on market receptivity to recent deals, TTWs or NDRs.
Just my $0.02.