Technology IB Coverage Group - Exits, Interview Preparation, etc.
I'm currently considering pursuing technology as a coverage group for 2021 SA recruiting at some firms in SF/NY. Can anyone with relevant experience/knowledge add some insight on the industry? Are the exits only technology buy-side firms or are exits to generalist PE firms common? Is SF truly the best place to be for technology? As for interviews, what questions should I be prepared for 1st round/superday technology firms? Should I actually have a burning passion for technology to recruit for it?
There's probably some information about this on the site but every time I search for technology it's just people asking about prestige and rankings, so I'd appreciate some advice on the actual group itself. Thanks!
Going to a top tech group (GS TMT/MS Menlo/Qatalyst) so can provide some insight. Groups that will position you best for exit opps within tech are MS Tech M&A Menlo/ Tech NY, GS TMT SF/NY, JPM Tech M&A SF/NY, and CS TMT SF/NY. Exit opps tend to be tech PE/GE/HF/VC/Corp-dev due to nature of the group; however, you will receive headhunting for most opps (generalist pe/hf) even in NY from SF firms besides maybe Apollo/BX (especially at GS TMT SF/NY and MS Menlo/NY Tech) and it will come down to how you interview and what your preferences are.
For interviews, know the types of verticals (Hardware, Software, Internet/Digital Media, and Semiconductors) and the nature of each business as well as key valuation metrics (customer acquisition costs, churn rate, customer life time value for Saas, etc). I would also have a few tech deals that you know well and tech trends. Also, why tech? If you have any Qs, feel free to PM me.
I appreciate the advice. I have some follow-ups because you're anonymous so I cant PM you -- with the nature of tech as EBs take MM deals, what do you feel about MM firms in tech like Lincoln, Jefferies, Houlihan, William Blair?
Also, when you recruited for your internship, did you solely focus on tech banking or also recruit generalist at the same time? I'm simply looking to break into banking but I'm from a WC school so I'm targeting SF for strategic reasons, although I'm still interested in the tech industry.
Don’t have much insight on the MM space but would assume overshadowed by most EBs and ofc top groups GS TMT/MS Menlo/Qatalyst. In regards to recruiting, I had options for NY but received a top tech offer and ultimately thought it would be the better option due to breadth of exits in the tech industry while also having opportunities to recruit traditional generalist buyside opps. Exits are definitely comparable to top NY groups especially for GS TMT/MS Menlo as well but again comes down to your preferences, how good of an analyst you are, and dealflow.
Great & accurate post- thks for sharing. I know JP also has a tech coverage group in SF. Wonder how is the group positioned compared to SF M&A, which covers tech.
+1 I'm highly interested in this as well, if anyone here has any insight
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Would you mind PMing me the report? In same position recruiting
Above poster summarized the space well for BBs. For EBs, Qatalyst is a clear cut above the rest and from what it seems like, they get plenty of looks from all headhunters but have more people interested in VC than any other EB.
Evercore, Lazard, Moelis, and PWP also have strong and comparable practices, and when I was networking before, it did seem like a lot of strictly tech deal flow (not media or telecom) flowed through the SF/Menlo offices of these places. I’m not sure about NY tech exits but I know multiple people at each place in the SF/Menlo offices who have gone to MFs. But more work on tech dealflow may be offset by the geography of NY offices, so I’m sure exits are comparable.
Also, the historical exits at the EBs are better per analyst than comparable BBs except GS/MS.
Going to a top tech group and can share some insights into the MM space (particularly SF) as comments above did a good job talking about BB/EB. Jefferies has amazing deal flows albeit sweatshop culture and often punches above its weight by being hired on billion dollar mandates. Liontree kills it in the Media & Telecome space while WB kills it in the Technology space (particularly software). In my opinion, those three should be tier 1 MM banks for tech coverage that are way ahead of the rest.
How are other MM’s such as HL, HW, and Lincoln perceived? What type of exits opps should they expect?
+1, interested in this as well
Definitely agree with most of points made previously, with a few caveats. Will say that CS TMT SF/NY has dropped off significantly from where it once was, with multiple senior bankers leaving the firm. Not sure how their exits are, but JPM and CS are both equity focused shops that don't have exits comparable to the big 3.
GS,Q,MS are the clear leaders in the field, with a very wide margin between these groups and others with regards to both exit opportunities and dealflow. By their nature, analysts will tend to exit more to VC than to traditional buyout PE, but those opportunities are more than plentiful if you are at one of these shops. MS tends to get mandates on the biggest IPOs, while GS and Q both tend to get the biggest M&A deals, but again, not a hard and fast rule.
The interview process for the tech teams is much more technical, and you need to know the in's and out''s of all the verticals within the industry. The valuation methodologies differ significantly even within the tech sphere (for example, a fab semiconductor company vs a high growth SaaS company are entirely different beasts).
Make sure you have a very solid reason as to why Tech, as each of the firms will drill down very hard to make sure you know what you're getting into. I noticed that a fair amount of analysts had dual comp-sci/engineering degrees (Penn M&T etc..), definitely not a requirement, but helps a ton to demonstrate interest.
I’d just like to add that even though CS SF TMT has gone down in recent years, they do have a solid pipeline into Silver Lake Partners. A lot of CS SF TMT people represented at the firm. Also, I see more Growth Equity and Tech PE exits from GS/MS/Q rather than VC, but again they do receive headhunting for most buyside opps and it comes down to the analyst and not the firm/group.
All good points, definitely agree
Have people from CS SF left for Silver Lake recently? This seems to be more of a historical, outdated statement.
Yes. Silver Lake had an associate join from the 2017 CS SF analyst class (left summer of 2019 from CS). Also there are over 5 people from CS SF in the SLP Menlo office location so as long as they have decent representation in the office, I’m sure they’ll keep pulling from CS.
Great post, been looking for this info on WSO for some time. Does anyone know, besides the various valuation metrics for different verticals, the actual valuation methodologies one should know in additional to the traditional ones? For example, I've heard LBOs are often used and asked about in tech IB interviews. Any other prominent ones in the tech space?
Just know the three main ones (DCF, Pub Comps, and Acq Comps). You should also know that when you do build a DCF for a smaller tech company, it'll likely be a 10-year DCF. You should also be able to walk through an LBO at a high level I'd say. At max you'd get basic LBO math in an interview.
Yeah GS TMT/MS Menlo/Qatalyst def are more technical since you are directly recruiting for some of the BB's top groups and Q is self-explanatory, so I second everything above poster said.
What is Citi’s tech coverage group’s reputation in SF? Does anyone know how solid their placement is for buyout type PE? Also curious about BAML’s m&a team in Palo Alto. Heard it’s a smaller group but seems pretty legit in terms of exit ops. Thanks!
Heard the group is dying with no deal flow and horrendous exits
I can second that.
I can third that.
Can anyone rank NYC tech groups for all the BBs?
northwestern mutual should not be overlooked. top feeder into VC
What are exit ops like for lower BB's (DB,UBS)?
Not sure if covered above, but IT services is considered a prevalent vertical within the mid market space as well. I’d be curious to hear if this holds true at the bulge bracket level given many of these companies operate around a ~$500M - $1B valuation range before being acquired by a sponsor or strategic.
In this context, IT services refers to cloud consultancies.
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