Advantages and disadvantages of private boutiques vs. large bulge brackets?

Hey guys. I was just wondering what are some of the advantages/disadvantages of mid-sized private boutiques such as Needham vs. the large public bulge brackets? Comparatively, how are the hours, the pay, experience, and exit opps?

Thanks!

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Comments (72)

Dec 11, 2010

you should use the search box; this topic has definitely been discussed before.

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Dec 11, 2010

Honestly who cares? Get an offer first.

Dec 11, 2010

Deal exposure.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Dec 11, 2010

A lot of kids are going to BBs too... Everyone is going to have their own unique reasons for choosing the firm they choose. Maybe they got into a phenomenal group at an elite boutique and they love the team and culture. It isn't like there is a massive phase shift toward boutiques over BBs. You will still see top candidates going to both and for different reasons...

Dec 11, 2010

^agreed

Dec 11, 2010

If you want to do sellside M&A or restructuring, go with a boutique. Otherwise, it seems to me like BB is still the place to start your career. More resources, better training, guaranteed deal flow...

Dec 11, 2010

Probably depends on the boutique. Places like Blackstone M&A are probably up there with the top bulge brackets.

Dec 11, 2010
WishYouWereHere:

Probably depends on the boutique. Places like Blackstone M&A are probably up there with the top bulge brackets.

Really surprises me that so many people here have a hard-on for BX M&A... Their PE arm without a doubt deserves its stellar reputation, but their M&A platform is certainly inferior to the other elite boutiques and most bulge brackets. Go ahead, peg me with your ape shit.

    • 1
Dec 11, 2010

The world is changing and boutiques are a much bigger force, at least in in the US.

Let's back this up with evidence for a change. Let's look at the "elite boutiques" -- arbitrarily defined as Moelis, Evercore, Perella Weinberg, Greenhill, Centerview and Blackstone -- separately from Lazard and Rothschild, which are a bit of a different animal. Then let's look at the M&A fees generated by these boutiques, as a % of the M&A fees generated by BB's, for announced transactions involving a US company as either the acquirer or target -- and how these numbers have changed over the last 5 years:

"Elite" boutiques
2006: 3.3%
2007: 3.2%
2008: 3.5%
2009: 11.8%
2010: 10.2%

Lazard/Rothschild
2006: 6.9%
2007: 7.1%
2008: 7.3%
2009: 11.8%
2010: 8.5%

(all data from Thomson Reuters)

This analysis far from perfect (eg, Moelis wasn't around in 2006), but it supports the story that boutiques have stolen a large amount of market share from BB's in the past few years. NB, they have done this while typically operating at higher revenue/headcount, ie they are more profitable.

One could make the case that more revenue/headcount translates into a better learning experience for a new banker. One could also make the case that GS TMT is, and will continue to be the best choice w/r/t exit ops.

Dec 11, 2010
wasteoftime:

The world is changing and boutiques are a much bigger force, at least in in the US.

Let's back this up with evidence for a change. Let's look at the "elite boutiques" -- arbitrarily defined as Moelis, Evercore, Perella Weinberg, Greenhill, Centerview and Blackstone -- separately from Lazard and Rothschild, which are a bit of a different animal. Then let's look at the M&A fees generated by these boutiques, as a % of the M&A fees generated by BB's, for announced transactions involving a US company as either the acquirer or target -- and how these numbers have changed over the last 5 years:

"Elite" boutiques
2006: 3.3%
2007: 3.2%
2008: 3.5%
2009: 11.8%
2010: 10.2%

Lazard/Rothschild
2006: 6.9%
2007: 7.1%
2008: 7.3%
2009: 11.8%
2010: 8.5%

(all data from Thomson Reuters)

This analysis far from perfect (eg, Moelis wasn't around in 2006), but it supports the story that boutiques have stolen a large amount of market share from BB's in the past few years. NB, they have done this while typically operating at higher revenue/headcount, ie they are more profitable.

One could make the case that more revenue/headcount translates into a better learning experience for a new banker. One could also make the case that GS TMT is, and will continue to be the best choice w/r/t exit ops.

Survivorship bias perhaps?

Might be more interesting to see if BB market share is going down.

Dec 11, 2010

voltaire -- I agree BX M&A doesn't have great deal flow, but if you check linkedin pretty much every analyst lands at a top HF/PE, which you can't say for pretty much any other firm. At the same time, they probably have the most qualified analysts so those analysts probably could have landed at those funds anyway.

Dec 11, 2010

You definitely do get a better experience at boutiques. Think about it this way, you are the M&A analyst AND the industry analyst, meaning you will do the work of both and learn the skillsets of both. Also, you are not precluded from any industry verticals, as well as restructuring, which is especially important if you want to do PE because you understand capital structure inside out

If you are an M&A analyst at a bulge, you are running useless acc/dils all day
If you are an industry analyst at a bulge, you will be spread comps/making pitchbooks/turning comments all day
If you are an M&A analyst within an industry vertical at a bulge, you will not get exposure to other industry groups

Lazard is not a fucking boutique. They are bigger than a BB's M&A group (20+ first years)
Evercore is not a fucking boutique. They are bigger than a BB's M&A group (18 first years)

PWP is a fairness shop - specialize in fairness opinions (2 weeks of hell and a bag of peanuts for pay). They are also paid lower quarterly/yearly retainers than other boutiques on the street for "strategic advisory" work. One of their analysts is an idiot and showed me one of their engagement letters. Fuck the NDA right? lol

Moelis gets some ad hoc creditor side tertiary roles on bigger restructuring deals (General Growth - Miller Buckfire did 95%+ of the debtor side work, Dubai - Rothchild/Deloitte did 90%+ of the work) Not hating on Moelis, just speaking the truth

Blackstone, Centerview, Greenhill and Gleacher are true boutiques.

Think about the bullshit that's spread here in your head. If you can't make a sound judgment, maybe you don't deserve an offer at one of these places.

Signed,
Second year going to $10bn+ PE shop

Dec 11, 2010
wasteoftime:

Let's back this up with evidence for a change. Let's look at the "elite boutiques" -- arbitrarily defined as Moelis, Evercore, Perella Weinberg, Greenhill, Centerview and Blackstone -- separately from Lazard and Rothschild, which are a bit of a different animal.

Slightly off-topic - I've seen Lazard considered separately from other boutiques before, but Rothschild as well? Is this how many of you see it? I'd always thought (from these boards mostly) that Rothschild was either at the lower edge of 'top-tier' boutiques, or at the higher edge of 'second-tier' boutiques...

Dec 11, 2010
dublin:

Slightly off-topic - I've seen Lazard considered separately from other boutiques before, but Rothschild as well? Is this how many of you see it? I'd always thought (from these boards mostly) that Rothschild was either at the lower edge of 'top-tier' boutiques, or at the higher edge of 'second-tier' boutiques...

dublin, you shouldn't take everything put here for granted. In Europe, Rothschild is regarded as a very prestigeous bank, definitely on par with Lazard reputation-wise. In the US, this bank doesn't have such a strong platform as of yet - hence the impression you might've got at these forums (which are clearly USA-focused).

Also, it's the oldest (existing) investment bank in the world, so to speak, and by far the oldest - should mean something.

Dec 11, 2010

the average analyst at a boutique will have better exit ops than the average analyst in a bulge bracket, especially since a lot of the groups in non GS/MS BBs are not great for exit ops

Dec 11, 2010

bunkerbanker, don't mean to burst your bubble but none of us are gonna rub one out thinking about your $10bn megafund job.

From your previous posts, it's obvious you work at BX m&a. You should shy away from telling prospective analysts that the work you do at a bulge is useless, seeing as you've never worked in one full-time and your last job at a BB was most likely as an intern. And to prevent any confusion among aspiring college students, Lazard, Evercore, PWP, Moelis, etc are ALL boutiques seeing as they don't dabble much in S&T or Capital Markets. To add to that, they are all great boutiques and you should definitely think twice before turning any of them down.

Dec 11, 2010
voltaire:

bunkerbanker, don't mean to burst your bubble but none of us are gonna rub one out thinking about your $10bn megafund job.

From your previous posts, it's obvious you work at BX m&a. You should shy away from telling prospective analysts that the work you do at a bulge is useless, seeing as you've never worked in one full-time and your last job at a BB was most likely as an intern. And to prevent any confusion among aspiring college students, Lazard, Evercore, PWP, Moelis, etc are ALL boutiques seeing as they don't dabble much in S&T or Capital Markets. To add to that, they are all great boutiques and you should definitely think twice before turning any of them down.

Voltaire I agree with what you are trying to say here, but Rothschild/Lazard are not really boutique banks in any sense of the word besides the fact that they don't use their Balance Sheet, so seperating them from other non-BB firms was well-founded. They do megadeals and consistently beat out many BB on mandates. These organisations have 30+ offices all around the world and 2,000+ professionals.

So no confusion is caused amongst college students Rothschild/Lazard are not BB and are not Boutiques, they honestly, as was stated before, are a different animal and the last large independent advisory firms remaining. Not to mention Lazard has an Asset Management Arm with $150bn+...

Anyways who really cares what they are called they are great firms as Voltaire alluded to, but just thought this point was worth mentioning.

Dec 11, 2010

Totally agree with Ivan. Rothschild is a tier 1 boutique in Europe and currently expanding its business in the Middle East and Asia.

Dec 11, 2010

bunkerbanker, don't mean to burst your bubble but none of us are gonna rub one out thinking about your $10bn megafund job.

From your previous posts, it's obvious you work at BX m&a. You should shy away from telling prospective analysts that the work you do at a bulge is useless, seeing as you've never worked in one full-time and your last job at a BB was most likely as an intern. And to prevent any confusion among aspiring college students, Lazard, Evercore, PWP, Moelis, etc are ALL boutiques seeing as they don't dabble much in S&T or Capital Markets. To add to that, they are all great boutiques and you should definitely think twice before turning any of them down.

bunkerbanker seems to know what he's talking about. And BX M&A is pretty legit from what I've heard/read. Ridiculous exit opps, basically interviews with whoever you want, above street comp (though that seems pretty common among elite boutiques), and prestigious as hell brand name.

I do agree though that work at BB's isn't useless, although I could see how you might not get as much training/experience working in the larger deal teams

Dec 11, 2010

They may be boutique, but that doesn't mean they are interested in boutique dollars

Dec 11, 2010

thanks for the explanation re: Lazard/Rothschild - appreciate the perspective

Dec 11, 2010

I have worked at a mid-size European full service IB, an 'elite' boutique and a BB.

Reality - life was easier at the Euro IB and the 'elite' boutique. Less product, less dealflow, less hours.

Note - I always sat in sector coverage teams (although both at the Euro IB and the boutique it was pretty much all M&A)

At the BB I get true exposure to a multi-product platform and am exposed to capital markets as much as M&A. It is better overall experience and will make you far more rounded as a banker (a true corporate financier so to say, with advisory skills)

Boutiques are great - but just M&A can get boring quickly. I am happier at a BB although I work harder.

Dec 11, 2010

I have never run into Blackstone M&A, on any deal, in my career. Not once.

We once hired a banker from there to do middle market M&A work for us. He struck me as being a typical middle market M&A type.

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Dec 11, 2010

The 3 boutiques you mentioned are more prestigious than Citi.

Dec 11, 2010
alexpasch:

The 3 boutiques you mentioned are more prestigious than Citi.

Yeah, that's what a lot of people on the board seem to think, but I didn't know how to compare them to Citi's M&A group, which is historically pretty solid, but seems to have hit hard times lately . . .

Dec 11, 2010

An associate right out of undergrad? Would you be an analyst at the boutique? Do exit opps still matter at the associate level?

Dec 11, 2010
August West:

An associate right out of undergrad? Would you be an analyst at the boutique? Do exit opps still matter at the associate level?

No, I'm in business school, but at a non-core school that doesn't send many into i-banking or boutiques so I don't have many 2nd years with a solid perspective on how the boutiques compare.

Dec 11, 2010

.

Dec 11, 2010

Rhetorical question.

Dec 11, 2010
karypto:

Rhetorical question.

I wish it was but I decided to enter the i-banking lotto a bit late in the game and am still in the process of gathering intelligence.

Dec 11, 2010

M&A is better all around

Dec 11, 2010

SA or FT?

Dec 11, 2010

FT

Dec 11, 2010

Bueller???

Dec 11, 2010

how did you get the BB FT offer so late in the game son?

Dec 11, 2010

M&A. Public Finance blows.

There was a girl that did public finance at JPM for 8 or 9 years before going back to grad school. She had a very difficult time getting interviews for traditional IB.

Dec 11, 2010

BB for the brand name and try to lateral somewhere later. BB also likely to provide better B school prospects because of name.

    • 1
Dec 11, 2010

From people I have spoken with, they say BB would be better for B school, but the downfall with public finance is the lack of integrated modelling. With M&A I would at least get transaction modelling experience. Didn't have an IB internship junior year, so LinkedIn creeping/networking and applying for every single IBD opening was the strategy.

Dec 11, 2010

don't know anything about JP/CS, but GS has a formal internal mobility program and you will easily be able to switch into something more appealing like traditional IBD after 2 years. just something to think about.

Dec 11, 2010

If the boutique has any name value then go M&A. Mostly depends on what you want to do later...

Dec 11, 2010

Public Finance is interesting stuff. I would go Public Finance route due to volatility of deal flow at boutique M&A shops. I say this due to being at a MM M&A Firm (in Chicago) that had to let people go (including myself) due to not having enough deals coming in.

Dec 11, 2010
Dec 11, 2010

ive heard that houlihan sucks in Chicago. you get killed and its super technical

Dec 11, 2010
roth:

ive heard that houlihan sucks in Chicago. you get killed and its super technical

Hours are better than most on average. The guys I know there get out between 9-12 most nights. It's no more technical than any other place. Banking is banking.

Dec 11, 2010

Going from a big shop to a small shop is easy, but from a small shop to a big shop can be harder. since your straight from undergrad, id recommend working for the bb. you could probably get "closer to the action" at a boutique, but i think it would be helpful to get a lot more transaction experience working for the bb.

Dec 11, 2010

Most of the bulge bracket banks have clinics in their office... not because its a cushy perk, but because it reduces the necessity to take a full or half day off from work for a doctor's appointment. Same thing with health club membership: you stay healthier = reduced insurance costs.

Dec 11, 2010

so where's the different spin? I just see the same old question.

Dec 11, 2010

depends on where you think you'll get the best experience and learn the most. honestly, if you're choosing between Evercore, Greenhill, (i'll throw in Lazard) and GS and MS, you're going to get a great experience and have great exit opps.

just look at the people and see who you'll enjoy working with the most.

Dec 11, 2010

in the current market conditions, i think the elite boutiques are the safest (and therefore) the best choice

if you need to expand on this, send me a pm

  • aloki
  •  Dec 11, 2010

I would agree with PatrickBateman. Smaller firms have largely avoided the crisis. Although business has slowed, the impact is nowhere near what we've seen with the BBs.

Dec 11, 2010

I would go to a top boutique anytime before a BB at this point...

Dec 11, 2010

Every boutique is a different breed. I thought the same thing when I started my summer internship. Out a 5? 6? 7 is a late night?! Not that the guys I work with aren't motivated, but there just isn't the need. I was dedicated to being the first one in, last one out just out of principle.

It doesn't have to be a boutique versus BB thing, it could be THIS boutique. I'm at a quite smaller firm, and I enjoy the interactions I get to have with everyone.

Going through your points, why do you have to be sitting for 11 hours? Take a walk, make the rounds with some people you could possibly hang out with to resolve your other issue with the firm. As for your Third Point about not liking the job; I doubt a BB is going to respond better to your "original, creative, possibly risky ideas"...in fact, a boutique is where an individual like you may thrive.

Dec 11, 2010

.

Dec 11, 2010

just sounds like a shitty boutique

Dec 11, 2010

yeah i think its the boutique itself. i kno analysts at FBR capital markets in arlington work 9-5. no wonder they are going downhill.

Dec 11, 2010

TOO LONG DIDN'T READ

/thread

Dec 11, 2010

I'll address the point you bring up in going to a large company vs. fun work as an algo trader at small prop-shop. You need to do what you want and not what someone else thinks will look good.

Some hypothetical situations:

Let's say you did a stint at Morgan Stanley but you hated it and only did it for the big name. You probably won't get much from it and you will most likely do horrible in a full-time interview (when it really counts) because you can't show passion or real interest for what you did over the summer. Wasted time, really...

Now let's say you did some algo-type summer stint at a small shop; something you would enjoy from what I gather (correct me if I'm wrong). I am willing to bet you would be able to convey some sort of passion and legitimate understanding of what you did over the summer in a full-time interview. You would have an easier time discussing your experience at said-firm and you would come off as a more interesting individual to the person holding the interview.

I will say that in my life I have done things (wasted time) to "pad" a resume because I thought it would look good to others and not because I had a strong desire of what I was doing. In the long run I was even more miserable of what I got myself into than if I had done what I originally wanted. Just go for what is important to you and forget what others are going to think. Not everyone who works at Goldman Sachs is happy with that job; some just do it because it's something to impress at a cocktail party.

[/2cents]

Dec 11, 2010

Thanks, that's a good point. I agree that it doesn't make much sense to do an internship simply for the big name. As of now, I just don't have a good idea of how smaller prop shops are viewed in the industry, i.e. what the various companies reputations are and if they're considered desired places to work at. It's all a little more opaque in a sense that I don't have a clear image of what life is like at a small prop/algo trader (as opposed to the many stereotypes that come to mind for big IBs ) . Don't want to end up at a boutique firm that goes bust 6 months later or has a bad reputation in the industry.

Dec 11, 2010

The boutique prop-shops you mentioned in your original post all seem to have some reputation and staying power, so I wouldn't worry about them blowing up so soon. Maybe political repercussions could have an effect on them but you are going to need to speak to someone with more knowledge on that.

Whichever top three Ivy you are at will most likely have an excellent business department so I would check with a career counselor there to get a better idea of what you are looking for. They could shed some light and give you the real scoop on prop-shops (more so than the many disgruntled and inexperienced sophomores on this site who aspire to be the proverbial "badass" or "baller" in their career). I would also look through your alumni data bases to make some contacts at the places you are interested in; they are always eager to help aspiring alum.

The professionals who use this site are also a great asset for information. Lurk around the site for a couple of weeks and you may find some great info overtime.

Dec 11, 2010
Dec 11, 2010

I am going to call my kids Ctrl, Alt and Delete. That way if something is going wrong I can beat them all at once.

Dec 11, 2010