BB vs. Boutique? Why always BB

Analyst 2 in IB - Ind

Wondering why the sentiment for IB hopefuls is always BB or bust. I get the branding perspective, which, in a vacuum, leads to better exit ops. But from an actual experience, comp, skillset perspective, I think if ppl looking to break into the industry had a more holistic view and were less motivated purely by prestige/name-brand, more ppl would target going to smaller banks. I can think of the following reasons: (obviously I have limited experience, but nonetheless, my impressions thus far)

  • You stand to make significantly more money at a boutique relative to a BB. Obviously the fees are smaller due to smaller deals; however, the bonus pool is structured in such a way that you receive a much bigger piece of the pie and have more "skin in the game" so to speak. A lot of my buddies at BBs have capped bonus. At a boutique, the upside is theoretically limitless based on number/size of deals, etc.
  • You're more focused on executing deals, as opposed to always pitching. At boutiques, you're not working with blue-chip companies all the time; however, you are closing multiple deals a year and are able to function as a key member of each deal team. Also, based on ability, you're able to contribute towards all aspects of the deal (i.e. analysts can run the model, not just spread comps and create buyer lists etc).
  • At non-BB IBs you have the optionality of working on RX and other Strategic Advisory engagements; given that BBs are usually a lender within many industries and therefore precluded from such advisory work.
  • Boutiques offer more opportunities for direct client engagement. Largely due to leaner deal teams, you get far more opportunities to interact and work with the senior management at both your own firm, and with clients.

Interested to hear what the rest of the WSO community thinks.

Comments (13)

  • Intern in IB - CB
Mar 23, 2020

Would you rather play D1 football at Alabama, Clemson, Michigan, etc and be a part of an enormous program performing in front of thousands and being at the epicenter of college football. Or play college football for a NESCAC, not really well known, smaller teams, more playing time potentially. Both options you are playing football, practicing everyday, games on the weekend, etc. Guess it just comes down personal preference. Not the best analogy here but you get the point.

    • 2
    • 2
Mar 24, 2020

Are we still pretending Michigan is a program on that level to be casually mentioned with the likes of Alabama and Clemson? Only if we go to Michigan

    • 1
  • Intern in IB - CB
Mar 24, 2020

Absolutely, is that a joke? Sure they may not be winning a national championship every other year but you can't tell me Michigan football is not an enormous brand which is just as well known as Bama or Clemson. I'm not here to talk college football, I was making an analogy as to BBs compared to boutiques. And I don't even go to Michigan.

    • 2
Most Helpful
  • Analyst 1 in IB - Gen
Mar 23, 2020

Strange cause my experience of WSO sentiment is that it's one big circle jerk for EBs...

    • 10
  • Principal in PE - LBOs
Mar 23, 2020

If by boutique you mean EB, then no most people aren't bb or bust. Most of the people aiming for top bbs wouldn't mind ending up at a similar tier eb and it just comes down to a. luck with offers or b. which you like better given the choice. This is highly personal, but I know a ton of guys who've been in that position; some went bb some went eb it all depends. The model and experience are quite different, hence personal preferences.

    • 1
  • Incoming Analyst in IB - Gen
Mar 23, 2020

Why do you think man? Look at where people from Goldman Sachs go.. They are all over the government and in top level executive positions at the biggest firms in the world. Look at the Secretary of Treasury right now- Steve Mnuchin- was a partner at Goldman along with his father, like it or not but he has credibility due to the Goldman Sachs name- same goes for Morgan Stanley and J.P. Morgan. These are the most prestigious banks in the world and when they go for high level executive positions/ government office there is ZERO question about their reputation if they are coming from one of those banks as an MD/Vice Chairman type of position.

Of course working at Evercore or something is amazing experience- might be better than most BB experiences, but one thing I've been told from the BB im going to is that when you leave you will always be referred to as "the guy from JP" or oh that's Mike he was a VP at "Goldman Sachs" - if you drop these names in front of a chemical company's C suite they instantly believe in you and your ability because these are the best firms in the world- that's why they hire them for M&A and that's why they hire McKinsey for consulting- best in the business,

    • 9
    • 1
Mar 23, 2020

I've always wondered if this is just for GS/MS/JPM or if the other BBs still have that prestige advantage over boutiques in the world outside of finance.

Array

  • Intern in 
Mar 23, 2020

Wondering the same, I've seen this comment countless times, but does it hold true for those outside of those three?

  • Incoming Analyst in IB - Gen
Mar 23, 2020

I think that the "top 3"- JPM/GS/MS are the top in both the finance world and general mindset, but after those the finance world will recognize that PJT is more reputable than say DB or equivalent. But in terms of the general mindset (which includes government/corporation/executive positions/c-suite, and lay people) the bigger names will always carry more weight like BAML, CS, DB, UBS etc as opposed to Centerview, Moelis, etc.

This is why people seek out BBs (top 3) to begin with, its the best possible brand you can get in the industry and will distinguish you for the rest of your career- people still talk about the fact that Mnuchin worked at Goldman even though he hasnt been there since like 2004 and has been running various hedge funds in the meantime- its just impressive to people and noteworthy.

    • 5
  • Incoming Analyst in IB-M&A
Mar 23, 2020

Depends on if you know what you want to do. I knew I was interested in PE so chose to pursue opportunities with Evercore, PJT, Laz, MoCo, etc. If I had no clue about what I wanted to do after my analyst years, I would've been more inclined to look towards BBs. There is no doubt BBs have better brand names outside of high finance.

    • 5
    • 1
  • Intern in IB-M&A
Mar 24, 2020
Comment
    • 8
    • 1