If smaller banks say they offer juniors more deal exposure, why are bulge bracket positions still more highly regarded?
A lot of smaller banks (MMs, regionals, lesser known boutiques, etc) say their analysts get more deal exposure and responsibility compared to bulge brackets, and won't "spend 2 years in excel and powerpoint" or "just be a cog in the machine". However, you don't see incoming analysts declining their Morgan Stanley offers to go to Bob's Investment Bank, or buy-side recruiters rushing to pick up people from small boutiques over the guys from Goldman Sachs. Is this because a reputable bank provides better name recognition, or are the "deal exposure and responsibility" offered by these small banks less valuable, than the experience analysts get at a BB?
In my view, there are a few key reasons:
1) Training received at BBs, EBs and top MMs dwarfs anything that you receive at the smaller boutiques. Although on-the-job training is very important, developing financial modeling fundamentals is vital. Those that did not grow up with rigorous formal training had to play catch up (myself included).
2) Deal Quality - Whether you are at an EB or BB, you know you are going to work on high-quality, sought-after deals. There are plenty of good boutiques that still end up taking on shitty deals and shitty clients. While you can certainly learn a ton from a hairy deal and botched process, it doesn't help with your deal sheet. This goes along with reputation and brand name, which has been mentioned repeatedly, but is more nuanced.
Also, many smaller boutiques and even MM shops are primarily doing sell side M&A. At larger firms, you get exposed to buy side M&A and other products if you are part of an industry team. Maybe recruiters don't view that as a differentiation, but I would if I were a PE or Corp Dev interviewer.
3) Risk - the initial thought would tie riskiness to brand name and deal flow. However, on the flip side, it requires substantial risk appetite for a student to believe in what someone at a boutique tells them about the actual role and responsibilities at their firm. I've seen that some good MM and lower MM IBs provide analysts with more exposure and involvement in deals than other shops (we have a great analyst that we allow to conduct some initial financial buyer outreach when there was no associate staffed).
But, I've also witnessed the opposite where we looked at applicants that claimed that they were heavily involved in deals at their firm and you quickly could tell they either lied about their level of involvement or didn't retain anything from these deals (I view these equivalently).
In sum, there is plenty of risk that what you actually are doing doesn't translate and make you a better banker. And if you have fewer and smaller deals, it just steepens the size of the mountain that you are trying to climb.
EDIT: Sorry for the poor grammar. Was in a rush while typing this out.