Houston Bulge Brackets

Well, the “bloat” of the current IB count in Houston shouldn’t ideally have much of an impact on the analysts starting right now (Class of 2020). For Class of 2021, my belief is that there will definitely be cuts at the summer associate level and potentially cuts at the summer analyst level. All anecdotal, but from my experience with the size of the Summer 2021 SA class, it just doesn’t make sense that they would extend more FT analyst positions. Of course, the banks will not tell you this to your face, and maybe they will be favorable and try to lateral those analysts internally to a different office. Hard to say.

Obviously a lot to unpack on the analyst experience, and this is all coming from my experience in the current environment. Who knows, things could be better down the road.

I would say the actual experience from the BB has been and will likely be sub-par vs peers in other groups. Low deal flow to start, then everything died with COVID, now every MD/VP feels like they have a target on their back to get cut, so they pushing unrealistic deals and jamming the junior team when there is little we can do in this environment. They are in a tough spot with their careers fixed to the industry, little to no hiring by coverage companies and banks on hiring freeze/downsizing. So We are getting jammed down random rabbit holes on deals going nowhere because the client wants to “see what things look like on the other side”.

Then on exit ops, they have historically always been O&G PE as expected. But the returns on that have been poor the last couple funds and I believe that COVID is the final nail in the coffin for some of these funds. It’s hard to see profitable exits for these funds in the near term as anyone with considerable leverage is getting smoked and E&P PortCos where getting into riskier plays. Ultimately see a lot of zombie funds that will be out there but not somewhere you want to go after banking. Generally, a lot of analyst are feeling stuck where it’s an uphill battle to get out of energy and the typical pool of energy PE funds is not looking as attractive as before.

All of this is from the view of a jaded analysts so please take my views with a grain of salt. I am sure there is a light at the end of the tunnel and things will improve. However, if you have the choice to gamble the beginning of your career on that “light at the end of the tunnel” or go to literally any other industry, I think there is a clear answer.