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Merchant Banking is not synonymous with IBD. It primarily refers to the principal investing arm of an IB. Some MB's can act as discretionary equity funds (i.e. DLJ Merchant Banking) and others can act as arms-length support to a bank's financial sponsor efforts (co-invest, mezz, etc.).

As far as pay is concerned it really depends on the group, I would imagine. For example, I believe the likes of DLJ goes through hiring cycles identical to any other standalone PE fund and pays accordingly in the associate role. Other MB's that operate closely with their respective IBD's probably use more analysts from hiring pool and pay should be close to IBD.

 

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