Why do people diss sell-side M&A?
When talking to bankers, why do they scoff at boutiques and say they only work on sell-side M&A?
Is it looked upon that much?
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think about it this way- the most fulfilling thing to a senior banker is coming up with an idea that is accepted by a client. This usually comes in the form of buyside m&a where we finally get a client to bite on one of our ideas after lets say 10 pitches and hundreds of conversations. Unless the company needs to sell itself for whatever reason, sellside is not as interesting. Boutiques are rarely on the buy side of the deal because they don't have the same access to lining up the bridge to get the deal going.
Wrong. The most fulfilling thing to a senior banker is a bonus check and sellside M&A equals an almost-guaranteed fee event. Buy side M&A means wasting your time as one of multiple bidders with only a minimal chance of success. I think analysts are the only people who care about deals that are 'interesting.'
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sellside is also very risky. Bankers spend a lot of time chasing targets and participating in auctions - most of the time which leads to nothing (maybe your expenses reimbursed and receipt of a small retainer). They do the buyside because they hope it will one day lead to a large fee via financing, IPO, sale process, or other.
Maybe some bankers like buyside because it involves a lot of strategy, not just creating a CIM and running an auction.
Buy side is WAY riskier than sell side
this,
Sellside is more risky than buyside? News to me.
You beat me to it. Sell-side is definitely less risky... you have a client that has already made a decision on what they want. That's half the battle. Nothing worse than spending 120 hours per week for 8 weeks coming up with potential acquisitions and making pitches for a client only to be told they're "going to go in a different direction."
Some places like the hit rate on sell-side much more, but it's obviously a bit more interesting and exciting when you pitch Pfizer a new pharma company and they decide to bid for it. Those opportunities are much rarer though.
Sell-side M&A is not frowned down upon at all. When you are advising on a sale, you typically get paid more and there is no negative stigma towards the practice. In fact, I would prefer it more if I were a senior banker since you are getting the call as the "trust advisor" from the management during the company's most important corporate life event as opposed to convincing them to go through with a pitch...
Technically, M&A is entirely on the sell-side since even when you are pitching companies to pursue M&A and buy companies, you are "selling" an idea. "Buyside" as a terminology applies to private equity and the likes... Boutiques are sometimes scoffed at because "naked boutiques" can really only peddle one product - M&A advice, whereas bulge bracket banks can make money through financing (debt and loans, which are extremely lucrative, and equity such as IPOs and secondary financings). M&A is actually a fairly high margin product since you are putting up no capital but naked boutiques don't really win any credible mandates since they don't have research departments and there are tons of shitty tiny boutiques that claim to be investment banks... Theoritically, even some dude in a t-shirt and jeans running an operation out of his apartment advising $500,000 companies can claim to be a "boutique" investment bank...
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