Boutique vs. Middle Market

Intern in IB-M&A

Let's say you couldn't get the BB/EB job you were hoping to get and had to choose between a boutique and middle market. Which one would you use? I realize that this changes based on a variety of factors but would like to hear initial thoughts.

Comments (12)

  • Intern in IB-M&A
May 8, 2020

which one would you use choose** sorry can't fix the typo.

May 8, 2020

I'm pretty vocal about my experience at a "breakaway boutique" (think Liontree, Allen & Co., etc.) It depends on the place, but I've personally had an incredible experience. Love the people and love the work. Pay is between >BB, <EB but hours better than both.

Feel free to PM me.

Debt is like the wind...always by my side.

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  • Analyst 1 in IB-M&A
May 8, 2020
Yasuo the Unadjusted EBITDA:

Liontree, Allen & Co but hours better than both.

so not lion tree then lol

May 8, 2020

Correct.

Debt is like the wind...always by my side.

May 8, 2020

Assume you've eliminated EBs and BBs from the equation, a MM vs a no-name/only somewhat known boutique is still you best choice. This assumption also eliminates the almost EBs such as LionTree, Allen & Co etc. I would say this simply because at an MM you're probably bound to get more deal exposure, even if they're in the MM range and that's what you want. If you don't have a brand name to rely on, you need to make sure you get tonnes of industry and deal experience to build technicals on. That's your only ammo if you're planning to move to PE when you speak to recruiters. And even if you plan on making a lateral move, having technical competences in your favour is your ticket to EBs and BBs. This is all under the assumption that your MM gets deals and is not a pitch factory.

I'll add that company specific nuances are key here, but if I had two buckets of banks where in Bucket A I have names like Piper Sandler, RBC and HSBC and in Bucket B you have boutiques such as Harris William, Cain Brothers and Leerink I would go with the former

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May 8, 2020

I would respectfully disagree. From my friends at MMs, it seems there is still a decent amount of pitch work involved, and if you get into a bad group in an MM like Cowen or RJ, your life can be hell. Your team is also bound to be larger, meaning you may get to take less ownership of your work.

At my boutique, precisely because we have a lack of brand-name, we never participate in bake-offs because we would always lose. Instead, we monitor companies where an MD has some type of connection and maintain an advisory dialogue with them, so on a day-to-day basis, we help them with everything ranging from evaluating acquisition targets to shareholder messaging to activist defense to general business planning. Once that trust is built, when an acquisition does come up, we are the go-to advisor.

This translates to a LOT of really interesting work. My favorite experience has been helping a $700mm market cap public company with their investor day. It was an incredibly interesting experience helping them with scenario planning, and as an analyst, I personally took the pen on writing the "script" to craft the narrative to express at the analyst day. Their stock rose ~5% the day of, and when it came time for the company sale, we were hired, and I'm currently on the transaction.

I also have 3 completed deals already under my belt as a 2nd year analyst, and we do get reached out to by HSP, Oxbridge, etc. So all-in-all, very good experience. But I will caveat by saying that this is pretty rare since our MDs are pretty competent and well-connected. Other smaller, less well-connected no-name boutiques may struggle more / have more pitch work.

Also with regards to recruiting, I always frame it as a personal choice to join a breakaway boutique rather than a BB/EB because of the smaller deal teams and differentiated approach to getting new clients which leads to more interesting situations like the above.

Debt is like the wind...always by my side.

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Most Helpful
May 8, 2020

All fair points and I agree with you that there are specific nuances to consider. If I wanted to get into Pharma/Biotech IB I would pick Leerink over most companies, including some MMs but as a general rule of thumb, I personally would go with the MMs. I also agree that many boutiques form because you have rainmakers who go off on their own and keep getting deals from a handful of close clients but you have a bit more of a risk there where you could end up with nothing if you lose the relationship or it isn't M&A season. I guess it also depends what the person is looking for. But at a boutique you also have to consider that you have limited capacity for how many deals you can take on at once. The same applies for MMs but you have more turnover and you can help out on more/multiple work streams all of which adds to your experience. There's also an element of luck because bad luck can land you at a shit group even in BBs whilst good luck can land you at a no-name boutique with plenty of work. Doing your due diligence is key in all cases and should be done by everyone, but generally speaking I think MMs are a safer bet.

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  • Analyst 2 in IB-M&A
May 8, 2020

I work at a MM bank and your statement is completely false. Our deal teams are extremely nimble (e.g. Analyst, associate, 2 md's). The entire business model is based around staffing deals with the fewest bodies required to push deals across the finish line --> higher volume of deals get done as the deal sizes are on average smaller than bb/eb. That results in strong resumes with more closed deals, "ability to play up," and a well-rounded analyst experience. Happy to point to specific examples but you are drinking too much of your bank's Kool-Aid.

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  • Intern in IB-M&A
May 8, 2020

Just out of curiosity, why do you split Piper Sandler and Harris Williams into different buckets? Aren't they both pretty similar MM shops?

May 8, 2020
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