Why are investment bankers so highly sought after?
Based on my understanding, it seems that at some large investment banks, there is a M&A group that does most of the modeling work while the coverage groups don't do much modeling. If that is the case, are coverage bankers highly sought after for P/E positions or corporate development roles? Is it just about the prestige?
Varies bank-by-bank / group-by-group how much modeling coverage analysts do, but their familiarity with a certain industry is a point of value if they join a team at a PE firm with a similar industry focus. Knowing how companies trade / should trade in the market is a valuable skill that negates some assumptions a person with an irrelevant industry background would have to make and allows them to sift through the bullshit quicker. Some banks also don't have M&A groups (e.g. GS)
My advice - shoot for M&A and industry groups; I wouldn't target Financial Sponsor groups as all of my friends in them have said they really don't do / learn much in comparison to other analysts
Hmm, but there are plenty of other jobs that give you industry experience. Equity research is one example, yet it seems like bankers are more attractive to employers than ER.
I'm not qualified enough to answer this, but it seems to me that this follows the same train of thinking for why IB recruits from target schools: the most intelligent, driven, and hard-working people are more likely to be at target schools for recruiting, and then as such PE firms are more likely to find the kind of people they want from IB. Because IB carries the historical prestige with it, higher achievers are more likely to be drawn there, and PE recruiters have a better chance of finding who they're looking for there.
Agreed, but it's tough to get experience strategizing how to market a business which translates into knowing what the material investment considerations are / aren't without being apart of the sales process in IB. Companies are also valued off of wacky metrics determined by MDs that sometimes only apply to the company itself (e.g. - most education business are valued off of adj. contribution margin, and the adjustments can be extremely subjective, which is where the IB experience comes in)
Your understanding of who does the modeling is a generalization and frankly wrong. Analysts in the coverage groups at like CS, Citi, MS, etc. are all doing quite a bit of modeling work despite having an M&A coverage group as well.
I like hiring ex-PE guys/iBankers (for ops roles) because they can learn fast, have no problem putting hours in, are detail oriented (yes those PLS REVISE from Lord MD did pay off), and obey well.
I think you have it a bit backwards. The question should be "why are investment banking JOBS so sought after?" The banks don't need to pursue anybody as there are thousands upon thousands clamoring for these slots. It's like saying entry level actors are "highly sought by studios".
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