5 Reasons to Avoid Working in MM Investment Banking (Other than Prestige/Exit-Ops)

Gmonster's picture
Rank: Baboon | 110

Worked in MM and wanted to share some thoughts. It seems that most people on this forum are obsessed with prestige and exit-ops and see these items as the main reasons to avoid MM. In my experience, you should avoid MM but for completely different reasons.

If you have a few solid years of deal flow experience, know your field, and can network, you shouldn't be too worried about exit-ops no matter where you were an analyst or associate. BB will not necessarily make you a better analyst/associate. I've worked on deals with JPM/MS/GS as the counterparties where the deal teams were absolutely terrible.

With the prestige and exit-op arguments aside, here are 5 reasons to avoid MM: (Please add on your own onto the list)

1. You work just as much as the BB or more

I think that there is a misconception on this forum that MM is sort of taking it easy and BB is real deal. Honestly, reading some of the posts on here, BB might have it easier in certain cases. Sitting around waiting for the staffer and playing around on the internet is something that never happened to me at a MM. I worked 80 to 110 hours per week and every single minute of that time was occupied. MM is smaller; so the deal teams are smaller....aka everyone knows when you're not doing something.

2. No Training

Maybe not true of every MM bank but it seems that a good bit of them don't have formal training processes. You're just thrown straight into the fire. There is no time to study for the Series 7, 63, 79, etc. You just do that on your own time after working 80 hours.

3. "MM pays less"

See above....potentially same amount of work or more....worse pay. Do the math. Enough said.

4. "Lack of MD's influence in the overall bank"

If you're in MM, it's likely that IB is a side business. That means your MD is not that important in the organization as a whole which means less money for bonuses, hiring, etc. Furthermore, the whole thing doesn't run like a well-oiled machine. One year, you might get three new analysts and the next year, you get one analyst just by how the budget shook out. It's not a lot of fun to get promoted to associate and you're still doing analyst work because of internal bank politics. Same goes for VPs doing associate work etc.

5. "Deal flow can be bad"

Some MM banks are just not getting deals. However, that doesn't mean that you'll be doing less work. It just might be more pitchbooks and less live deals. See #1 above. Again, do the math, same workload but less deal experience equals not good.

Feel free to add on:

Comments (26)

Oct 13, 2017

Lack of MD influence? MDs at MM banks have more relative influence than at BBs and it's not even close. The others at least can be true.

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Oct 13, 2017

I would say that some of your reasons don't apply to European MMs - on average.

The one thing to be cautious about is understanding if your MM is really only a 1 geography shop. Most will say they aren't, but if 90% of their deals come from one country, then you should take that into account, and if you want more of an international career, or are an international in that said country you should also think twice about this.

Cheers,
ibc

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Oct 13, 2017

It sounds like you work at a LMM that's trying to dress like an MM.

LMM firms are always try to wear some Obnoxious Orange Tuxedo to get into the MM black tie affair... What they don't realize is that a bow tie doesn't sophisticate a redneck. There needs to be a deeper substance: more deals, better training, and set infrastructure and processes.

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Oct 13, 2017

MM is in line for the black tie affair hoping they'll get in. LMM just wishes they were cool enough to even be in the line.

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Best Response
Oct 13, 2017

1) Be OP
2) Get job at Grant Thornton on Transaction Advisory Team
3) Think that you work in banking
4) Lie about hours worked
5) Write this article

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Oct 13, 2017

realjackryan, I like that your post reinforces the exact misconception that I was referencing above. I don't work at a BB so I must surely be lieing about those hours. Nope those hours were very real and that's exactly why I'm passing on some of this advice. You gotta be real careful in picking MM banks. You can end up doing a whole lot of work for nothing.

And no, it was not something like Grant Thornton. Think legitimate bank with a large balance sheet but crappy investment banking division. Our VPs and upward all came straight from BB backgrounds.

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Oct 13, 2017

Sounds like you worked for Regions Bank or PNC or BB&T etc. Commercial lenders who happen to have investment banking arm. Am I close at least?

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Oct 13, 2017

Yeah this definitely sounds like a firm that's more of a boutique. Any real MM like Houlihan, Piper, Baird, Blair, etc. will not have most of these issues.

Oct 13, 2017

I'm happy you commented on this because I was scratching my head a bit since I never experienced any of this at my MM. While I'm sure BB analysts receive more in-depth training and BB MDs pull in more deals, I never felt like I was getting a raw deal (no pun intended) or anything like that.

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Oct 13, 2017

Totally agree that there are MMs out there that are just killing it. In fact, in my sector, I can name a few MMs that I would rather work for than the BBs, but that said, there are plenty of garbage MMs out there.

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Oct 13, 2017

OP almost all of your listed problems are bank specific. You are painting with an unbelievably wide brush stroke and it is doing the readers of this forum a great disservice.

My sense based on your description is that you work for a HSBC, Nomura, BNP, etc. type investment bank - many of these are caught between an awkward space of wanting to do large cap M&A deals (using a large cap balance sheet) but not getting them and then competing with established MM advisory firms (like Blair, Jefferies, Baird, etc.) and not getting those either. I think a lot of these platforms are finding it is incredibly difficult to build an investment banking platform from the ground up and often times you get the washouts from the actual top tier banks (hence all your VP+ are from this background).

Taking your comments in turn:

1) Yes, at successful investment banks you will work a lot. BB's can pay a lot because they are generating massive fees and quality MM's can pay similar because they are cranking out volume. Whether you are doing 5 deals a year as a MD at MM vs. doing work for a large corporate every week for 5 years to get a big fish fee - you are going to work a ton. If you are a fledging investment bank you are also going to work a ton trying to get deals, this has nothing to do with BB vs. MM

2) No training is bank specific. Baird/Blair/HW have fully developed training programs and you will come out ready to rock

3) Not necessarily true - bankers at the aforementioned MM's are making a lot too and generating a lot of fees, it is just on volume vs. deal value. The HSBC's of the world are not going to be able to pay that much because they aren't landing enough deals, not because they are MM

4) Lack of MD influence is also HSBC/Nomura type specific. Those banks were built around the retail operations and not the other way around. Make no mistake about it, the research, Asset Management, S&T, etc. that exists around Jefferies is to support a flagship IB division.

5) Deal flow can be bad anywhere, entirely bank specific. You will get a ton of deal experience at HL, HW, etc. - you'll end up completing far more deals than any BB counterpart

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Oct 13, 2017

Agreed with your comments. Very good write up. But I would point out that you yourself list quite a few bad MMs and quite a few good MMs. And I think that's what's tricky about MM especially for kids just starting their careers. For every good one, there is a terrible one. It's more than just a couple of bad apples. There is a decent bit of MM banks out there where you can work like a dog and not get much of it.

Now, that can happen anywhere...it can happen in BB if you get on the wrong team but what I'm simply saying is that it's something you have to be more careful about in MM as it is more likely to occur there. As I noted above, under the right circumstances, you can get way better training at a MM than a BB.

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Oct 14, 2017

Here's the point I want to get across - the reasons for the issues you cited are bank specific and has nothing to do with doing investment banking work in the MM space. You can get great deal experience and get paid very well in the MM.

What your post should really say is 5 reasons to avoid the non-BB balance sheet banks, which I think is a legitimate argument. I'm not one for bold predictions but I would guess HSBC/Nomura end or significantly cut back their IB presence in the U.S. over the next 3-5 years as it just has not been a success. They would be much better served to focus on their core competencies like Wells Fargo/Mizhuo are doing (i.e. crank out investment grade debt offerings rather than try to compete on M&A deals).

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Oct 15, 2017

Can confirm that horrible hours exist at MMs. Currently interning at an EU office of a us mm, and I do 80 hours M-F, alone and coming in on weekends as a bonus.

Oct 15, 2017

wait, there are long hours in IB? since when?

Oct 16, 2017

Lol. I'm just confirming his statement. A lot of monkeys on here act like MM firms have awesome hours (I've heard 0900- 2000 for instance) while my current MM firm is more like 0900-0200.

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Oct 15, 2017

"Lack Of MD's Influence In The Overall Bank"

Seems like this would be even less true at the BB level, individual MDs hardly decide anything, there is still a budget to abide by, head count restrictions, need to get expenses approved, and you are an even smaller cog in an even bigger machine. All relative.

Oct 16, 2017

OP I can't believe you posted this...how Piper Jaffray of you

Next time when you're writing a post you should make an effort to be more Evercore, to get to the Blackstone of the matter. If you follow this advice then your thread will be pure Goldman Sachs. Otherwise people will throw Barclays all over your thread and you will feel like you just got Morgan Stanley'ed

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Oct 16, 2017

Disclaimer: I worked two years at a MM bank

  1. True. Smaller deal teams = more work for you. Biggest thing is most MM banks don't have both coverage and product analysts on a deal team
  2. We had a full-fledged training program so i guess this is going to be firm dependent
  3. Very firm dependent. MM shops like Harris Williams consistently pay above street average (especially if you do a COL adjustment)
    4/5. Firm dependent as well

Reasons you may want to go MM:
1. More responsibilities as an analyst. You may have fewer deals overall vs. a BB analyst, but your involvement is much greater.
2. You want to be a career banker - This one is probably firm dependent as well, but your path to MD can happen a lot quicker at a MM vs BB
3. You don't want to do MF PE. A lot of MM PE shops prefer to hire MM IB analysts. They just have more experience dealing with company's they actually look to invest in.

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Oct 19, 2017

Would say a lot of those are group dependent. Some industry/product groups at MMs get great deal flow and have great MDs. Doing a ton of work sucks, but getting reps in early in your career isn't a bad thing. I would say maybe a regional bank won't have training but any reputable MM trains at least a bit.

Regarding pay, would say it's form/group specific with bonuses as well, but that's the cost of missing the cut to the ebs and BBs. Given trends with CS, UBS, DB, its very likely that their US offices may get less pay for analysts from what I hear from people there.

Ultimately there are a lot more people looking in from the outside who'd like to even be at a MM and IB isn't rocket science so if your sense of self-value exceeds your paycheck, either re-evaluate yourself or go sell equities in Dallas.

Oct 19, 2017
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