Why would any associate+ banker choose a BB over EB?
I totally get the brand name argument as an analyst planning to exit, but what perks do being at, say GS/BAML/Citi, etc offer over the EBs in the long run? Looking at the bonus thread, EBs clearly pull a significant amount more in the long run at the associate to MD levels. From a reputation within the industry standpoint, I’d think being somewhere like Evernote is pretty comparable to GS when looking for deals, and you’ll make millions more over the course of your career.
Why doesn’t every senior banker at BBs just jump to EBs?
Some of us just prefer Gel Pen Morgan to Evernote
It's the suite of products. EB is primarily selling M&A, while a BB sells M&A, ECM, LevFin, Prime Brokerage Services, etc. People choose BB over EB because it can be hard to make a career as an EB banker if you're only offering M&A to a client, while the banker at JPM can offer everything the bank does and is a one-stop shop. More products = higher likelihood of business
Its significantly easier to build a book of business as you move through your VP years if you can offer other products and financing as opposed to pure M&A where you just have to email some guy with your great idea. Look at the investor presentations for top EBs like EVR or Moelis, they literally brag about trying to close in on 50% of MDs being internal promotes. Close to 100% of BB MDs are internal promotes. From a career development standpoint, its "easier" to move up in a BB than an EB.
Additionally, past your first associate year its easier to move from a BB to an EB (you know M&A in addition to other products) as opposed to moving from an EB to a BB (you only know M&A).
The dream scenario is to make MD at a BB, where you can have steadier and more predictable career growth, and then take an exit as an MD to an EB, where you get paid a lot more and can even make money as a percentage of the deal.
At strong MBA programs, people turn down EVR for BofA, or Guggs and Moelis for Citi, all the time, although you probably wouldn't see anyone trade down from a top EB to a Barclays for example. Tends to be a lot of gravity toward the American BBs because they have more balance sheet due to capital ringfencing requirements.
Interestingly, I think you have it totally backwards. Analysts choose EVR over a BofA and a Guggs or Moelis over a Citi due to the M&A and modeling reps they will get that will help them with PE recruiting, as opposed to working on products that may not be as applicable. PE recruiters dont really have a "brand name" problem with top EBs. Associates don't really think that way due to remote possibility of top PE exits. Also note, almost none of what I said applies to CV, which promotes internally quite well.
Good points with one common issue on this forum: People in real world care way less about "Prestige" than kids on WSO.
Bankers won't just look down each other because my bank is ranked two spots higher on WSO than your bank, you can have great exits from many of the places you mentioned without being constantly insecure about pedigree. Even PE/HF won't be like "we are not gonna hire you since you are at Barclays vs. Citi, you must suck and are a failure at recruiting." On a related note, Banks like CS, RBC, UBS are great places to be and well respected by wall street folks. I have no clues why college students would feel superior about sh*ting on them. Let's all stop these repetitive and meaningless rankings.
Disclosure: I don't work at any banks aforementioned.
I have never seen any associate turn down an EB for any BB below GS/MS or occasionally JPM (less common). At my EB, the only BB we lose more than 33% of our head to head recruiting offers too is GS.
Also, the only people at BBs who know how to do M&A are the ones in the M&A groups - and unsurprisingly, they don’t have any differentiated knowledge about other products. Every time I’ve dealt with a coverage group associate in an M&A process from a BB, it was worse than dealing with my first year analysts. They all have bad habits and know absolutely nothing, which at least the analysts don’t have bad habits yet. My bank has taken several lateral coverage VPs / Directors from MS/JPM, and they all fizzle out because they have to be dual staffed because they are basically dead in the water anytime a deal actually happens. And at an EB, if you can’t execute, you’ll need to be that much better at coverage because you’re literally a negative to the firm as a day to day worker. And the only ones who tend to survive that are the guys with strong Rolodexes already (so not your junior MD or VP that laterals, but your Group Head).
Also your point about there being 100% MDs home grown at a BB vs the EBs is aggressively dumb because EBs have been around for, on average, ~15 years. Obviously no 5, 10, 15 or 20 year old bank is going to be primarily home grown MDs. How many classes have gone through that have eligible MD promotes vs. number of MDs at any one of these? Unsurprisingly, it’s roughly proportional with number of home grown MDs.
There are reasons to choose different platforms depending on what you want and what you excel at, but your post is not it.
Thanks for replying. You probably have a better perspective as a VP. I think you may be correct if you are at PJT, which to my knowledge nobody from my MBA program. has turned down (although they also give very few offers) but the other EBs off the top - EVR, LAZ, MC, Greenhill, PWP. All of those lost candidates to non GS/MS/JP in the last few years from my MBA program. We did have not have anyone see a CV offer so you would probably be 100% correct with CV as well.
I see your point about the home grown MDs. But EVR has been around 25 years and is still way less than 50% (looks like 70/37 split for 2020 SMDs in advisory). I tried to poke through Lazard's 10-k because they would obviously be the best case study after being around forever but they dont appear to break out. The only thing I found was a news article about their London office not promoting a single MD in over a 3 year stretch.
To your point about coverage MDs not being ready to execute. Some other comments in this thread seems overly optimistic about moving from a BB to an EB after starting in a BB as an associate. I agree with you that this could in general be a very bad idea/career move for the reasons you laid out.
Just finished banking recruiting at a top MBA - not a single person turned down a top EB for GS/MS/JPM, let alone C or BoFA...
Some fair points, but from which "strong MBA programs" do kids turn down Evercore for BofA?? This is virtually unheard of at Wharton, CBS, Chicago Booth and other similar top 5 programs. I can pretty much guarantee you that kids at the top 5 or top 7 will choose Evercore over JPM/MS (let alone BofA/Citi) 9 out of 10 times. Just one guy I know chose GS over Evr and that was due to a relatively specialized sector coverage reason.
And speaking from first-hand knowledge, almost no BB has close to 100% MDs as internal promotes. There are a lot of laterals between both BBs and EBs and BBs, and a JPM/MS healthcare group that I was part of only had 70% homegrown MDs. I can think of at least 5 GS TMT MDs who came from other BBs, EBs, and even MM banks like Jefferies and HSBC.
In terms of building a book of business, this really doesn't concern you until mid-VP level. And banks like Evercore these days are often involved enough in IPO, ECM and DCM for juniors to get enough "technical" experience from these products.
Bottom line, most of these factors shouldn't sway Associates' decision on EB vs BB. Go to the firm where you vibe well, has strong deal flow and pay accordingly.
Saying EB bankers only work on M&A is a gross simplification. Products I've worked on include M&A, restructuring, recapitalizations, activist advisory, debt/equity advisory, etc. The only thing EBs don't principally do is underwrite but given the proliferation of private debt, PIPEs, etc., a lot of revenues for EBs are increasingly coming from intermediating the placement of debt or equity directly with companies. You develop a great skillset on the capital structure side as well (arguably better than generic DCM goups that do investment grade bond offerings) once you've had some exposure to more complicated restructurings/recaps.
The other thing that is evolving quickly (and that EBs are very good at) is SPAC transactions which are changing the way companies are taken public. Aside from bookrunning the actual blank check company, EBs have great platforms with their M&A advisory to effectuate these transactions. I think you'll see more and more of these going forward as it is simpler and faster vs. the IPO process (which requires a bunch of regulatory hurdles and steep valuation discount).
Considering that something like 80% of post-MBA bankers leave banking by the time they would be nearing director, and 50% are out even before the VP promote, it’s a head scratcher that people take a pay cut for a BB. I guess people convince themselves they’re going to be a banking rainmaker, but life happens and even bankers are shit at accurately assessing their own outcomes and long term plans.
I just don’t buy the brand recognition of a BB over actual EBs. And for that, you likely gave up hundreds of thousands that would have compounded over a lifetime. To laymen, sure, I get it, but if you’re exiting banking and even finance it’s pretty safe to assume that you’re not take an FP&A role at a small family business in Des Moines, IA. Everyone who is anyone at a decent sized company is generally aware of Evercore, Lazard, Centerview, Moelis, etc., and they’re also pretty easy to Google.
I kinda get the thought if you’re dead set on being a CFO or something, as having the capital markets experience is worthwhile, but EBs do a lot of that kind of work, at least on the advisory side (I know, because at my EB we’ve thought about optimal times for a follow-on raise for a client, etc.). Other than that, it’s a hard sell, but of course I’m biased.
I think people here have covered it pretty well, but to reiterate: it is hard to make a living as a VP/MD at an EB bank. The reason they've been so successful, especially in recent years, is that they've poached rockstar MDs from BBs with existing client relationships. If you're a VP (or even a green MD) at an EB, good luck getting a client to trust you to advice them on any sort of M&A deal when they can turn to someone they've had a decades long relationship with. It's much easier to build that relationship over time if you can participate in their revolver, joint bookrun debt/equity offerings, offer some sort of derivatives, etc.
I'm pretty far removed from that world so this may not be accurate, but a solid career path to me would be to start at an EB and lateral over to a BB as a mid/senior VP. That way you can take advantage of the pay differential, better intense technical M&A reps, and more client contact before getting to a spot where you can leverage the rest of the BBs products to start building relationships.
Regardless of EB or BB, it’s just hard build relationship from scratch with large cap or even middle cap public companies. So many banks are around and so many will do financing for them, you won’t get c suite exposure easily. Differences happen if one of the mid level guys you worked with move up, or like anything in banking - someone recommends you or you know the guy from MBA or something.
The best window to build the relationship is getting the sell side when it moved up from MM banks and sell it to a large PE and be around the IPO. Or be at IPO period. Overall these relationships are built over the years which is why older guys at Centerview do well - they’ve known their clients for years through GS or ML. You’ll also find that in most cases it’s a same group of older individuals in boards and same bankers who works with them.
But doesn’t mean at EB you can’t build relationships. If you are targeting $10bn public companies only - it’ll be tough. Moelis has done well becoming more specialized with sponsor owned sell sides under <$1bn and the more you do in a sector the more people hire you. You won’t be on WSJ front page but you do 4-5 of those and for $25mm in fees. Get 20-30% of that and you are not poor.
Also lot of commentary around execution skills. As someone who moved from BB Coverage to EB and doing a whole bunch of M&A - it’s overrated. Most BBs have M&A team who do the ugly work, but remember it’s mostly acc/dil, setting up DD calls and dataroom. All the middle market banks do it fine. You do it once or twice you get a hang of it. Being execution guy gets you stuck at director. If you want to be MD focus on coverage skills and finding new opportunities.
The standard answers about being able to sell multiple products and being able to rely on the balance sheet to faciliate relationships are true enough but none of that shit matters at all until you're a director. Literally at no point in your career will you be up at 2am thinking "holy shit i'm so stoked that I get to add a few coverage slides to a LevFin deck" or "oh god oh yeah balance sheet expand that rolodex bby". That shouldn't be anywhere in your mind when you're making an EB/BB decision. Here's the shit that matters:
1. Money. The compensation differential of EBs over BBs is significant and gets larger over time. It's in the range of 25% - 35% to start and rises from there.
2. Protected policies and general respect for holidays and vacation. Probably group dependent, but BBs will generally have more formalized and enforced policies.
3. Firm resources. BBs have bigger budgets for support staff, software etc. More likely to have third party affiliates who you can send bitch work to, more likely to have 24/7 print services people etc.
If you want a balance sheet when you're a director or whatever you can lateral over to a bulge. But nobody does that, and you won't do that either. Because you'd be taking an immediate and massive pay cut. If people are leaving an EB but staying in banking they're probably doing it for lifestyle reasons and jumping to a lower middle market /regional type shop with chill hours, not jumping to a bulge to make substantially less money AND still get reamed.
Yield on Summer Associate Offers at a Core MBA Program This Past Cycle:
CVP: 100%
EVR: ~70%
PJT: 100%
GS: ~50% Lost a lot of cross offers with the top EBs and other top BBs
MS: ~70%
JPM: ~65%
BOFA: ~40%
C: ~50%