Am I wrong in choosing Capital Markets over M&A/Traditional Industry Groups?
Have some opportunities and offers to enter either traditional industry groups or capital markets as a summer analyst (potentially S&T too but that's a different story because haven't gotten an offer for that yet to add it into the equation). Despite all the talks of exit opps or 'prestige,' I have just become increasingly interested in the market side of things and feel that is what I would enjoy more than than just focusing on companies. But of course, I am just a sophomore so I don't actually know what the day to day on the job really is.
I'm not necessarily interested in PE, but I understand that traditional banking will open other doors and may just allow me a stable corporate job in a low COL city which I assume is not the same in market-oriented roles where you should be in NYC and exit opps are rather narrow? In terms of capital markets, my interest has leaned more toward DCM than ECM only because from my understanding in DCM you have more of an opportunity to work with the macro picture and sovereign bonds. Yet, my offer for capital markets is an MM which worries me as for DCM I may just be raising debt for small companies rather than sovereigns so ECM may be better in that regard?
I hear that cap market hours are slightly better with equal pay to M&A, but again you may be pigeonholing yourself to be in capital markets forever rather than move to a corporate role with even fewer hours from M&A. I find the markets, geopolitical events, and macro situations very interesting and would maybe see a global macro fund as some sort of exit opp down the road, but this would be near impossible from DCM at an MM? If it helps, I'm not very quanty or programming oriented person either. Any input or advice would be much appreciated from a lost sophomore here. Thank you
If your idea of exciting is writing internal credit memos and pulling together debt comps, it could be fun. The actual analysis of markets, geopolitical events and such will be done outside the group. Your job is to transform other people's analysis into a slide that can be presented to clients.
Here's a decent overview: https://www.mergersandinquisitions.com/debt-capital-markets/
Is the market analysis done by S&T groups? I imagine traditional coverage would also have similar mundane tasks no?
At an analyst level yes, coverage has a lot of mundane tasks (e.g., modeling, putting slides together, comps, etc.,.). There's a lot more variety within coverage however.
The difference is that as you get more and more senior, coverage and M&A become a lot more interesting. DCM remains pretty process oriented and more straightforward. This is compounded by the fact that you don't have nearly as many options coming out of DCM, so you're more likely to be stuck in the role.
Looking forward, there's also the possibility of margins being squeezed out by the large institutional investors (e.g., BlackRock, Fidelity, PIMCO) who could realistically cut out many of the functions DCM provides completely.
Interesting, thank you for the insight! Do you feel similarly about ECM? I've heard those roles are even more unstable and risk being axed during downturns as well.
Can't comment to stability / instability during a downturn, but I feel that there are similar downsides to ECM over coverage. It kind of depends on what you're looking for in a job. You can always try it out for a summer and if it doesn't work out try to move into a coverage or M&A group.
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