Think Twice before Recruiting for HOUSTON IB!!
Background
I am a semi-target student (Vandy, WashU, UVA) who somehow leveraged my connections to land a spot at a top bank in Houston last cycle. It's a great group, advised on roughly 40% of upstream A&D transactions while also ranking as one of the top midstream groups by sell-side volume
I did my internship and enjoyed my experience. However, I don't think I'll stay in the industry beyond my two-year analyst stint, TBF. Here's my reasoning:
(1) Exits are not good outside of Texas/Energy: Our group has placed analysts into some top-tier energy funds like NGP, Quantum, and EnCap, and even into the energy teams at MFs like Sixth Street and Blackstone. However, exits outside of Texas and energy are extremely difficult. Searchers tend to look down on energy groups, even though we have solid modeling skills and arguably grind more. From what I've observed, second-year analysts who decide to lateral to NY/SF tend to end up at LMM funds or another bank as associates
(2) The industry is cyclical, and so are our working hours: A&D activity is picking up in Q2/Q3 because of higher oil prices, and everyone expects a huge wave of PE-backed companies offloading their assets. I've seen first-year analysts pull two all-nighters doing analysis. Even the technical engineers work extremely hard during these waves. And by working hard, I don’t mean your typical 80-hour week. I’m talking 110+ hours when things get busy
(3) Good deal experience, but not necessarily transferable: Before I joined the group, I bragged about how O&G has its own specialized modeling toolkit and a complex supply chain. At this point, I've realized that many of those skills—type curves, Upstream map work, etc.—aren't particularly transferable outside of O&G. No one really appreciates them if you're recruiting for generalist PE. If you don't like real assets and are only using energy as a way to break into investment banking, your life will probably be miserable cuz all deals are almost the same and super commoditized
(4) Banks are competing for a smaller pie: The number of public companies has fallen from around 60 to 20, while Permian rig counts have declined from 300+ to roughly 240. PE dry powder has fallen from $100+ billion to around $20 billion, and there are fewer private targets left to acquire. I used to be a hater of the energy transition and thought natural gas would take significant market share and go to $5/MMBtu, but that never happened. Some EBs, like EVR and MOE, are now competing for ~$100 million mineral deals. You don't really see that happening in healthcare, tech, or industrial
(5) It's very hard for non-Texans to fit in: I love my intern class and the analysts I've worked with, but they speak an entirely different language. Many of them went to private schools like Kinkaid and already have deeply established networks. Their conversations are often about their high school's football team or some great Houston/Dallas restaurant I've never heard of
(6) Weather and traffic: Horrible. Anyone who disagrees has been drinking the Houston Kool-Aid
The only positives are that my firm’s culture has improved significantly and deal flow remains strong
Agree with what you said, but why did you recruit for Houston in the first place if you wanted to recruit on-cycle for NYC/SF buy-side?
Also, everyone knows which bank you’re talking about when you say 40% of A&D. Congrats on winning the sand volleyball tournament
For those of us not in the know, would you mind explaining the sand volleyball thing. Did Houston's best-known IB shop have a sand volleyball tournament for recruits?
The VDR operator every year will hold a dodgeball/volleyball tournament and invite every Houston bank, basically trying to retain those banks as clients. Nearly all banks will send their SAs to compete in this game
Houston sucks for all of those reasons above. Anyone with a pre frontal cortex usually sees it and gets out asap when they get enough experience. The only people who stay are actually from Houston or they got stuck there with a wife and kids somehow. My three years in Houston genuinely felt like I was serving a prison sentence.
No wonder you are now in Corporate Banking. Hope Mamdani can triple your tax rate
I was always in CB. I don’t live in NYC either.
The upsides are way more than those minor points you mentioned:
One is the huge talent gap. With all the brainwashing education from liberals, young people think O&G is evil and believe that inefficient clean energy and its evil sister, battery storage, will displace O&G. Senior people need to beg me to stay in banking and pay me a fat check
Two is more normal and conservative people who embrace Republicans. No brain-rot DEI Beckies. The only outlier is Evercore, which hires a bunch of Indian, Chinese, and Canadian
Third is that I am doing this for money: low taxes and a low cost of living.
Make Oil & Gas Great Again!!!
This really made me rethink tmt M&A for a minute until I remembered how pigeonholed you become
Who cares, Intern? Oil and Gas is the backbone of our economy and is what makes our country great, not some useless B2B SaaS
This is cope. There’s plenty of competition for O&G banking seats, everyone sees the money nowadays.
Just because the average post on this site is about TMT doesn’t mean there aren’t a crap ton of people recruiting for it.
Not competitive
I used to work in Houston IB then I transferred to NYC for the same reasons OP listed. I now deeply regret it. I make less money in NYC after taxes and I live like a peasant. My peers in Houston are building wealth while I’m “building a resume” supposedly. However, agree that if you are doing IB strictly as stepping stone to PE and are not from Texas/South, you will be limited in exit opps. The flip side is you don’t need to make 7 figures in Houston to feel like you have made it. Met plenty of people there making a couple of hundred thousand at a corporation who live way better than my IB VPs/EDs in NYC.
Congrats on tExAs!
Non-Texan in Houston IB weighing in here - completely disagree. This year our first years placed at elite buyside firms not just in Houston (Apollo, Blackstone, etc) so very much depends on how hard you recruit and network. People from cities like New York and LA usually don't thrive here since we actually talk to each other and want to be sociable outside the office. We also enjoy the idea of owning a car, so generally the only transplants I've seen miserable in Houston are in love with riding rat infested subways.
Even if you are defending Houston, I still think you should go back to where you came from. Proud Texan here
Who cares what an anonymous Texan thinks? Who cares what an anonymous Martian thinks?
Gotta keep the bar low and get the smart people out so you proud Texans can shine!
You don't own the damn state
What a useless life for those putting 100 hour weeks into a bank in houston. Obviously anything not NYC is shit, doesnt take a moron to understamd that either
Tulaner, take your meds and TDS. Every single comment you’ve left so far is just you bad-mouthing a place or a bank
Congrats on getting taxed 50%+ and bowing down to Mamdani
Every comment I see of this dude is just the dumbest take on this entire forum.
Congrats on JEF bro, hope that volleyball game was fun
Classic Houston thread comments. People will dunk on each other like they’re in The Hunger Games. Love this.
del
crayz comments lol :) Every discussion under the Houston Post tends to be on the toxic side
Yeah...there was this one guy who used to comment on any Texas finance thread saying anyone from Dallas or Austin are all "liberal pussies", even though Harris County is about as blue as it gets lol so either he's a troll or has no idea what he's talking about. Not even trying to make this political but for whatever reason bringing up Houston or Texas gives people here a total brain aneurysm
Why would you recruit into energy if your plan was to exit to something else?
Houston recruiting starts very early, and I didn’t want to renege on the offer. Plus, as I mentioned, bankers I spoke with convinced me that the energy group would give me stronger modeling skills and help me stand out. I’m also in a top group at the bank, so I thought it would be a good opportunity
Fair enough.
Tbh, I think energy is dope. Macro and geopolitically sensitive, capital intensive, creative ownership and deal structures etc.
Other than the very specific analysis/modeling, there is lots to learn that is transferable if you sell it right. Especially with deal experience, which frankly I find fairly level across the board to be honest bar a few niche things.
O&G bankers are either the best person you know or the worst
Texas bankers are nicer and more normal than NY bankers for sure
People are completely ignoring the fact that you can save about 2x as much in Houston than NYC after taxes and cost of living. You get what you pay for, but if you bank the savings, you’ll be lightyears ahead by 30.
any HF recruiting that happened? I have texans ties but I have been debating on whether houston IB is the move to do under this current economy.
I have seen several people exiting to Balyasny and Fortress Investment Group, but most exit to strategics or PEs
Houston is a horrific city to visit, let alone live in. No amount of money is worth living there.
That's exactly why consultants are regarded as parasites and morons now. A place that is not a good place to travel does not mean it is not a good place to live in the long term. Cancun is a great place to travel, but it is not a good place to live because of the high cost of living relative to local wages, the humid weather, and libtards
Houston is the opposite and is a paradise. Low cost of living, low taxes, cheap gas prices, good food scene, conservative culture (no libtards), and bankers' total comps are on par with or even higher than NY
I guess some liberal consultants are too dumb to understand that
Congrats on Houston! You live in a glorified highway. Enjoy the BBQ.
Houston tortas > West village girlies
SMU/TCU babes > NYC/SF Purple-hair fags
Why are all you people so viscerally angry lol
They call it Southern Hospitality
They have an inferiority complex and get angry when someone states facts. Their egos can’t handle it and they’ll cope desperately.
I mean I'm talking about both sides lmaooo.
Corporate Banking loser pops up again. Better delete your account imo
The whole Western Hemisphere is viscerally angry right now. Bad vibes up in here bruh, about to sell everything and move to Thailand.
Good Texas does not welcome you. I can call ICE if you want a cheaper way to exit
Houston's a great T2 city if you aren't a prestige whore, people are nice. The only requirement is that you have to like football to fit in
Holy fuck I haven’t laughed at a non-troll thread like this one in a while
Applying for internship: "Wow Houston O&G seems cool and unique, let me accept this offer and move down there"
Starting FT: "Don't go O&G it is niche and limits your opportunities outside of Energy / Houston"
...sounds like you didn't think that all the way through (guessing u went to WashU with how u tried to loop them in the same sentence as Vandy and UVA)
I never thought my thread would turn into another War Between the North and South
I took a different path, doing my analyst year in NY and then moving to Texas to do my generalist PE. Texas has a lower cost of living, but a different lifestyle overall
I wouldn't say you're wrong, but it truly is a YMMV situation. As someone who grew up in a wealthy, non-woke Asian country outside the U.S. and is currently NY-based, I'd much prefer working alongside Texans regardless of which group I'm in bc they're sociable and don't have a fucking stick up their ass. Can't say the same for the retards in certain EB's here who can't hold an authentic conversation without bursting into flames.
OP isn't wrong. I left NYC because of COVID and I didn't like the direction the city was going. Ignore my rank in title. That said though, you really got to have a passion for oil & gas for Houston to work, and it's really becoming more of a niche industry. If you don't believe me, in 2010 XOM was the largest public company and now it's NVDA and other big tech. The upside is Houston now has more power groups and renewables groups, and some renewables now have real commerciality to it than just climate bubble SPAC nonsense.
My honest advice if you don't want to do NYC long term, maybe at least consider it for a couple years, get some experience, and then once you have that on your resume, then bounce to whatever your dream city is.
The social scene in Houston also is ass. If you're married already, maybe not an issue. You have like a handful of cool places. Sante, Eberhard Social, Clarkwood, Melrose, 1111, McIntyre's in Heights, and that's about it. It's not like West Village in NYC or even West 6th in Austin. Anyone saying go to Lizzards, just disregard everything else they say after that point. It's the new Armando's and that's not a compliment. In NYC terms, it's Brass Monkey or whatever the intern bar is nowadays where it's like 80% finance dudes and minimal women. Houston didn't always used to be like this. The city was rocking in the 2010s at the height of the shale boom. You can see old threads here on WSO talking about it. Look up the old Energy Rodeo threads from like 2010-2011 around then. Washington Avenue was lit. But that was then. If I stayed in Texas long term it would be Dallas or Austin.
Houston Heights tho on White Linen night
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