I'm looking at potential focus areas for sell-side & buy-side M&A advisory in the lower middle market. Given that M&A advisory is extremely crowded and competitive I'm curious to see what target industries people see as being underserved or emerging. Software and healthcare seem like they are oversaturated. Any other ideas on verticals?
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Based on the most helpful WSO content, here are some potential underserved or emerging industries in investment banking, particularly for sell-side and buy-side M&A advisory in the lower middle market:
Video Gaming: This sector is growing rapidly, with increasing engagement across demographics. Video game M&A is active in the $100M-$1B EV range, focusing on startups and emerging companies creating the next big hits. It's still considered niche compared to mainstream sectors, making it a promising area for young bankers passionate about the industry.
E-Gaming and Sports Hardware: As suggested in discussions about sports private equity, e-gaming and sports hardware are emerging verticals. Making small angel investments or networking with founders in these spaces can help establish credibility and connections.
Founder-Operated Growth Companies: In the lower middle market, founder-operated firms expanding rapidly but lacking a fully built-out corporate development function can be a significant opportunity. These companies often need tailored M&A advisory services.
Media Infrastructure: This is another niche area with potential, especially as media consumption patterns evolve and new technologies emerge.
Specialized Niches in Consumer Goods: While consumer goods are broad, focusing on specific sub-segments or emerging trends within this vertical could provide opportunities.
Industries with Limited Corporate Development Functions: Companies in fragmented or less mature industries often lack in-house M&A expertise, making them ideal targets for advisory services.
These verticals are less saturated compared to software and healthcare, offering opportunities for differentiation and growth in M&A advisory.
Sources: Arctos Sports Partners / Sports Private Equity, Video Game IB/VC/PE, https://www.wallstreetoasis.com/forum/investment-banking/investment-banking-is-broken?customgpt=1, Investment Banking is Broken, 2020s Investment Banking Outlook
It's not clear to me what you're asking - are you a graduate entering the industry, or a seasoned professional?
If you're junior then it doesn't matter too much. The world will have moved (and you'll have much more commercial awareness) by the time you're in the position to be generating fees, and you'll be told which verticals to focus on in your new role. If this is about selecting a firm in the first place, I'd make the decision (if you're in that position) to focus on a firm which is rock solid, generating dealflow, regardless of the industry.
I don't think that you're a seasoned professional (8+ years of experience) based on your question, but if you are, then the right answer is definitely "whichever vertical you're experienced in and have contacts"
BPOs
That’s interesting…..what areas of BPO do you like?
Outsourced IT / cheaper developers overseas. Know quite a few companies in this space that quietly exist and are valued in the tens of millions.
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