Hardo Hot Take: Middle-Market Investment Banking is Not Prestigious or "High-Finance"
Selling a $7.5M EBITDA, mid-western based concrete manufacturer isn't exactly akin to being a "Master of the Universe" guys. It's hardly a step up from being a tertiary market real estate broker.
Now, being the MD at Goldman/JPM/Morgan Stanley as they restructure an entire country's sovereign debt, that is cool. But just playing business broker / salesman for hire to offload a founder-owned AC repair company, based out of Youngstown, Ohio with $30M in revenue a year? Ehhhhhhh, idk about that buddy. I mean, honestly, why the fuck would anybody sign up for that and work 80 hours a week if you're not doing market-shaking deals? You're better off just slinging software product at potential leads while working remote, for 40 hours a week. I cannot get for the life of me why people want to work IB hours just to sell shitty little industrials companies. You'd probably get paid way more for way less work, again, if you woulda just took a SaaS sales job instead of a MM, founder-backed, dogshit midwest company M&A sales job.
I'm genuinely not trying to be a jerk-off, I've just always wondered this. If you're not at an EB/BB, why not just take an easier sales job with the same comp upside and waaaaaay less grunt work? With the effort that IB Analysts/Associates are used to putting into their work, just to be middle of the pack, they could go sell HR software and probably be top dawgs because they know how to sell an ROI / earnings accretion story to clients.
Ha. Most junior bankers at middle-market firms make more than BB junior bankers for doing the same work. Only difference is the headlines that the transaction might make. What a weak take.
Ie, prestige
Following orders and restructuring debt is hardly being a master of the universe. Strategy consultants at MBB whispering in the ears of governments and CEOs are the true puppeteers.
Ratio
This thread right here is why finance people deserve to be made fun of like they are
Because half of them are shopping around little $50M, midwest industrial companies but think they're God Level Financiers? I agree.
I wouln't even describe that as middle market. Maybe "LMM" and that's being generous, really more in the "crappy local boutique" range. Most people at the junior level just see those spots as a foot in the door and plan to lateral.
That’s LMM boutique IB moron. Literally where does WSO find these people.
LMM is...wait for it...a segment of the middle-market, jackass.
.
Ignorant take, but on the off chance undergrads read it, some education:
*Rolls you up into a blunt and smokes you in one hit*
That'll do Mr. Middle Market, that'll do.
"I'm genuinely not trying to be a jerk-off"
Of course you are not...
Tons of mental gymnastics being done. If you need that many words to justify your prestige, you're better off just admitting that you don't work a prestigious job lol.
Not when each word is a dagger to the OP lol
Why do MM banking analysts get paid much more than their counterparts at BBS?
Typically, many MM banks are more advisory-based, which has higher margins. Additionally, when you don't have to support a big ECM, DCM, Lev-Fin, and/or Corporate Banking teams, then you can share more of the pot around.
I worked in MM before making the jump to BB. We kind of defined it as EV up to $500m is “middle market”.
I’ve found that the work can be quite different. I mostly did sell-side work at the MM and while the sell-side process is generally the same, there’s a lot more hand holding with unsophisticated sellers and we did a lot more diligence work than I’ve noticed at the BB. There’s also a lot less valuation work and “finance” analyses - partly because a lot of these companies aren’t public.
Came here to make half of these points. Hope the sophomores see this commemt. OP is surprisingly out of touch, I wonder if he's even actually a banker.
This is giving strong intern vibes. If you worked in banking, you’d know that GS and MS don’t have restructuring groups and would never reorganize sovereign debt lol.
Also MMs pay better than BBs at this point so I don’t really see what you’re trying to say. Blair and Baird paid way higher than pretty much all BBs last year.
I'm trying to say that being a business broker for sub-$100M companies isn't high-finance, it's basically brute sales with some excel work thrown in.
Dude plenty of firms that sell sub-100mm businesses do more than that and I think you know it. It is annoying when ppl are sometimes unaware of the seeming lack of significance in their transactions (although really, does it matter if you're selling a $5B business or a $50mm one, assuming we're not talking about prestige. More bragging rights and feel better about yourself if you're selling the bigger one? There's always a bigger deal out there you weren't on...)
Can bring up some of those points without trying to thrash ppl
To make things even funnier, the one group almost guaranteed to be on such a deal is in an MM firm - HL RX.
I’m getting “post-MBA associate switching from a career that had nothing to do with finance” kinda vibes.
Who cares if you’re selling $5M ebitda companies if you’re making more money?
I know a guy who sells $2-5M ebitda businesses in a certain vertical and makes more money doing it than the head of my former investment banking group focused on UMM / large corporate. On top of that, he manages his own schedule and can do whatever the fuck he wants as long as the deals are getting done.
Prestige only matters if you need it to get another job and make more money. If you’re doing your own thing and making a killing, I think you’ll be fine without the approval of colleges kids on an Internet forum.
another guy I know literally started a company wholesaling toilet paper. Rich as fuck. Not prestigious at all. Do you think he gives a shit?
No, but he definitely knows how to wipe one up!
"Bro I know an autistic 13 year old who banked more running a roadside lemonade stand one summer than my entire SA class combined"
Riiiiiiiiiiiiiiight
Why would I make this up to appease lmm guys on a forum?
is this guy at a LMM PE fund or is he a fundless sponsor? Either way curious to hear about him if you're willing
I mean if you're an analyst at some tier 4 city bank selling 5m ebitda businesses yea maybe it's a foot in door / lateral type gig. But if my middle market you mean the market share leaders like Blair / HW they place lights out into some top tier funds and the mds there make bank so this is actually the coldest take ever. Sure working at a deep lmm local fund should only be a stepping stone unless you're a founder. Groundbreaking stuff
Completely agree with this statement. On a relative basis, Blair MDs make bank. Slight corrections is, with the HL model, the pay differential is fairly massive between group head and non-group head MDs. Non-group head MDs are capped below $1M TC similar to the BB model with the "Team Tag-Along" approach. However, I think this further illustrates that OP has watched one too many Wall Street movies and either isn't in banking or will wash out in the next layoff cycle.
Hot take... as a PE analyst for sell side processes between $500m-$3bn I've had a much better experience working with "violently" MM firms like Blair / HW / Piper Sandler / HL than BB's like GS / MS / Citi / CS. Anytime a MM bank has a sell side mandate in this size range it's generally going to be one of the biggest deals of the year for them so when they run the process they come with an army of bankers including the industry head, global head of M&A and the MD who brought in the client, each of these MD's also brings a ton of juniors which makes diligence / data requests a lot quicker and generally the data received is more comprehensive (i'm assuming bc it's gone through more seniors before it gets back to us). Also the quality of the work from the MM firms is just as good if not better than anything a BB would provide.
Another big thing that stands out between MM sell side process and BB is MM firms will consistently bring their A game even if the sell side process is for an add-on / bolt-on for an existing PortCo where as some BBs tend to drop the bar when they know the deal isn't going to be a buyout / go directly to a financial sponsor.
Completely anecdotal, but I believe MMs make more hires for 'finance' kids while BBs hire more holistically for 'talent'
I've worked in UMM (think of Blair / HW / Baird tier) and I've worked in BB. Here are my two cents:
My time in MM has been relatively lackluster compared to my time in BB. Usual transactions in MM are cookie cutter sell-sides; little to no thought being put in these deals. The work is mind-numbingly boring at the junior level. We never built detailed models, there was no thought put into anything quantitative other than looking at KPIs (classic sell-side diligence work). My time at BB has put me up on some of the most complex transactions I've seen (carve-outs, RMTs (pitched these, never mandated), complicated take privates, etc.). My time was spent more on actually understanding how the financials / model worked; some of these scenarios were intense, the math was difficult, and I (as a junior) developed a really nuanced view on both the transaction / our client.
Moving from MM to BB is probably the best thing I've done in my career. I don't care about prestige; but the learning experience was much more valuable. I'd never even consider going back into MM again.
This is spot on. I had the same trajectory and completely agree regarding the notion of UMM IBs as volume shops doing cookie-cutter, vanilla sell-side work. Those types of deals take insanely little true "analysis". Most of the modeling work takes long simply because the client keeps sending shit data that you have to find a way to organize and integrate into the model. You never actually deal with truly complex deals or nuanced structures. Hell, I didn't used to deal with any structuring concerns doing MM deals.
What is cool about working at a BB with good MDs is that you're actually providing tailored, thoughtful, sometimes creative financial solutions for massively important companies. Ie, how to monetize/divest/raise money for business subsidiaries, how to structure an SPV to borrow against, how to structure an acquisition, etc. MM deals are basically just build a three-statement model and a 40 page CIM then call every PE/Strategic group your MD can think of. There is typically no part of the process where you actually have to compare several different structures against one another or come up with a creative solution to a pesky problem. Ie, it requires VERY little thought and a TON of grunt work.
Agreed. Having done both, BB is only worthwhile for the talent pool. The quality of people are just different between a Wharton modeling whiz and a midwest bro who prefers changing logos versus doing getting into the nitty gritty details and numbers.
This is a huge over generalization but it's true 90% of the time when you ask people who go from MM to BB.
Chiming in again here—maybe in the long run of a banking career this is true, but for someone that will do their 2 years and split—sell sides aren’t vanilla/ grunt work and easy. To build a fully functioning 3 statement model and grasp sell-side positioning isn’t something you learn until you see multiple transactions which takes at least the better part of a year no matter the shop. Frankly, I think it generally takes about 2 years to really understand sell-side M&A maybe less if you are sharp and at a place with great deal flow. As for the talent pool, just massive inflation regarding the difference between banks and that’s obvious based on anyone that has ever gone to a target university or worked in private equity. If anything, I found it pretty random how talent spreads and when I look at PE professionals that actually know what they are talking about they are from a variety of banks and schools. A place like evercore, WB, RJ, and Qat are going to be functionally very similar in the deals they do in tech with average deal size being higher for Qat, but substantial overlap on transactions and very similar analyst experiences across all of them. To assert differently is just disingenuous. Also if you are going to argue BB’s are the supreme destination for undergrad talent you are so lost in the sauce I don’t even know where to begin. They pay less and most people are just using banking as a stepping stone and are aware a place like Qat, centerview, or evercore is going to have just about the same branding in the US PE world as GS/MS.
when did you make the jump (# of yrs) and how was the lateral process (modeling, technicals in interview)? did you make a sector switch
;)
The number of people taking the bait in this thread is embarrassing.
who cares
Ill take the money and you can have the prestige
OP has never been to the Midwest, and potentially is not even in IB.
Congratulations, this was a very late entry but you are the winner of posting the dumbest comment on a forum I’ve read all year. Quite an achievement
…Yeah and guys like the one who made this post are always pissed when they find out a blue collar dude from the mid west makes $1m+ running said family business and still has his hair
Being rich in the midwest is basically like being hoodrich. There's nothing prestigious around to do so de facto you're still a middle-class weenie-bop. You just have like a super nice tractor to remove snow from the driveways and maybe best case scenario a little of your own land to kill mammals on like a caveman.
Tell that to the Kochs, Pritzkers, Crowns, Buffetts, Trotts, Ricketts and even a Walton. These names are some of the prominent ones (i.e. billionaires). Many other "hidden" billionaires. Countless CEOs.
But as a "master of the universe", you probably know better than all of them.
I don't really understand your point. The pay is essentially the same MM to BB. Yea BB's and EB's close larger, more prestigious deals but your post doesn't make a point about why that benefits you as an analyst or associate other than just stroking your own ego. As we speak there are MM analysts getting 80k bonuses while others at BB are getting 40k bonuses and I bet 90% of BB analysts couldn't give two shits about the work they did in between if all they got was 40k...
If you're purely driven by the big deal names you can drop strangers at a bar then good on you I guess. I'm sure your MDs love to exploit that.
I came out of a top target and work at a 15 man boutique that operates in a single T1.5 city (think Chicago, LA, SF).
Yeah there’s no prestige in the job. All of my friends went to BB’s/UMM firms, but I had pretty shit grades so ended up here.
I am now 1.5 years into the job, and have gone back and forth on the lateral. The one major plus is that when your bank is performing at one of these places, you are fucking eating. I started summer 2021, and got a 57k stub 2021 (base raised start of Q4 to 100k from 85k, 15k signing). I would say that was on par or higher than most of my top bucket friends elsewhere. The downsides are obvious, though. Less prestige, shitty companies to work with. And this year, we have gotten slaughtered, so I unironically collected a bonus lower than my 2021 stub but for the full year.
Maybe right now it is different, but even at the beginning of 2022 only six months into the job, I was getting hit up by tons of recruiters asking if I wanted to make a move. I definitely could have made a move and probably should have made a move, but ultimately did not. The calculus just wasn’t there. I worked maybe 1 ~100 hr week my first 6 months, probably worked 80 hrs on average even in a crazy market; life was good. At the time, I sort of thought what’s the point of moving. Hand a 22 year old ~115k for 6 months of work and you start seeing through the rose tinted glasses.
Just another perspective…
A salesman is still a salesman at the end of the day…
Small dick energy post of the year. dude probably has nothing but D-Sol mixes in his Spotify
Hi! Thanks for spending some time making this post.
Sorry if this is a silly question, but if you don't mind answering, what does the EB acronym mean?
I know that BB means bulge bracket.
Thanks!
Haha oh boy…it’s a term (elite boutique) used to classify the “top” independent advisors in the industry. Realistically, no one uses the term outside of this site
Chiming in just to echo and reiterate the above. There is no real-world classification of these firms and the cringe-level required to use "elite boutique" anywhere beyond this forum is the exact reason people in this industry suck.
"Oh no no no, I mean, yeah, I guess I work at a boutique...but not one of those boutiques...it's elite"
Extra points for those debating on here which firms are worthy of the made up distinction.
I'm 99.9999% positive this is the same guy who argues on my post on the side of NY vs. "Tier 2" cities because of this same "prestige". Some of the pro-NY arguments were very valid, but his was literally just "prestige" and "prestigious hobbies" (wtf does this even mean, hobbies are supposed to be just enjoying life).
This might have been the dumbest thing I've ever read.
You clearly have a lot of insecurities and poor self image that you project on this forum. I'd seek some counseling if I were you. Some deep-seated issues.
Oh and saw your comment on "little patch of land where you can kill mammals like a caveman" - how is it exactly that you think we get meat? Are you a vegan (this explains a lot)? How do you think you can survive in a shoebox with concrete completely surrounding you, if it were not for the guy in the 1,000+ acre field harvesting for your self-righteous ass. Have a little fucking respect.
Until just now I assumed high finance referred to PE, AM and HF
agree
The Jefferies MD who snags hot Jefferies intern girls begs to differ. Take your prestige, he still gets more bitches
I built my entire career and all of my wealth on lower middle market industrial companies, including a sub $10M EBITDA mid-western concrete (equipment) manufacturer, and I retired in my mid-30s… Can’t believe threads like these still exist, but here goes:
There is a huge difference between the experience of a MM/LMM banker and that of a BB/EB banker. In the middle market, financial modeling is a minuscule part of the job. Transaction modeling is pretty straightforward for building the pitch deck and generally all the buyers will build their own models. You are likely to be tasked with developing an operational model that feeds into the historical/projected financials, but this can range from simplistic to moderately involved depending on the complexity of the company/client. Instead of modeling, you spend a lot of your time on the business and operations of the client as well as process management. This generally means diligencing the company, analyzing all their data, and crafting a story + memorandum that will be the foundation of your marketing materials. Once you’re in the market, you’re generally responding to buyer questions, cutting more data, and managing the process (including some boring aspects such as data rooms). You are expected to know the financials cold, but most of your time is actually spent on responding to business requests and cutting data. Conversely, the analyst experience at the BBs is much more modeling centric with far less interaction with the client and buyers.
I admit that my view is skewed as I was on the buyside for most of my career and worked in the LMM, but I don’t understand why junior employees hold modeling skills in such high regard compared to the qualitative aspects of the job. There is a reason why your MD doesn’t open up excel or spend hours combing through the model — (s)he simply doesn’t care because the relationship aspect and business aspect of the deal are infinitely more important than the model. Moreover, the buyers don’t just look at the sell-side model and say “oh wow, this company is going to double in size next year, it is definitely worth 20x.” They are using their own assumptions. For the deals I worked on, I pretty much always just ignored all the sell-side assumptions because, ‘shockingly,’ every company was always at an inflection point where it was about to grow like crazy despite lackluster performance over the prior three years. As for the deal structuring aspect — that gets outsourced to an accounting firm.
So you can make fun of the MM/LMM analysts working with midwestern industrial companies all you want, but they are developing a much more valuable skillset than the BB analyst. And, as mentioned above, the MM analysts at the reputable shops are indeed making as much (and sometimes more) than their bulge-bracket counterparts — and many of them in cities/states with lower taxes and lower cost of living.
Prestige chasing is why most people make fun of cucked finance guys
I actually have a massive cuckold fetish so you're speaking my language rn.
Hot take. OP has never worked in BB IB, just an average back office dude at Aon dreaming to join a bank like Truist.
False, I'm in architecture. Nothing is higher than the architect.
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