Level of complexity in TMT group or pure Tech IBD?

I've heard that TMT and pure tech IBD M&A is very complex and difficult to understand if you don't come from a tech or engineering background. Is this true? Is the learning curve steeper for tech? Is it the most complex IBD group?

 

It depends from what perspective. From a business model perspective, tech is relatively simplistic in terms of understanding how companies make money and what are the financial, business model levers they can pull (widgets, services, subscriptions, licensing, etc.). By comparison, FIG (specifically banks, insurance, and specialty finance not fintech or Asset Management) companies have substantially more complex business models and capital structures to understand.

From a macro/competitive positioning and "what do they sell" perspective, I have found tech to be more complex than FIG given that to understand macro/competitive positioning you need to understand technology roadmaps, disruptions, etc. and these are constantly evolving. For products, understanding how they work and function, identifying real differentiating characteristics and why they matter takes a fair amount of time. Anecdotally, as a pure finance background type, when talking to a business unit person at a client, I was usually able to speak fairly competently and with good understanding of a FIG company's products and services. In tech, I just try to exhibit a fundamental understanding without sounding stupid since, even with my lofty finance degree, I'm 100% certain these engineers, programmers and other tech types could run me into the ground if I chose to entangle myself in the science and engineering of it all.

Do you need an engineering degree to be successful? No. Can it help sure. Caveat being only if your engineering degree is applicable to your coverage sub-vertical. Tech is a super broad space with tons of differentiation and nuance between sub-verticals. Try talking to a chemical engineer about artificial intelligence and you will quickly find yourself staring at each other in silence...

 
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