Bulge Brackets and Boutiques: The rise of new generation of banks
If you're working for the M&A department of any investment bank, you have likely been having a healthy and busy year which is about to culminate with a fat check in your hand. According to Fortune, "Bonuses for associates and analysts….in merger and acquisition divisions of banks could range from $100,000 to $150,000". Assuming you're base salary is about $85,000, you are looking at a total high-end-compensation of $235,000, pre-tax.
This isn't totally surprising given that M&A sector has seen record activity and is on track to hit $4.58 trillion in deals this year.
Moreover, depending upon your work, you may even earn more. For instance, if you are working at an elite boutique such asor , odds are you will out earn your Bulge Bracket peers.
The Growth of Boutiques
In fact, boutiques have been on the rise. According to the Wall Street Journal, "In a sign of their prowess, there were just two financial advisers on the $40 billion-plus acquisition of Kraft Foods Group Inc. announced Wednesday (earlier this year), neither a big Wall Street bank:and LLC". Also, the recent IPOs of and PJT Partners only further highlights the growing presence of boutique investment banks.
The smaller the better?
Moreover, boutiques are also gaining ground on other metrics. According to Vault, Houlihan Lokey offers the best compensation, work-life balance and culture of all the banks. In fact, aside from some charts, most of the top rankings in any category sport a heavy presence of boutiques. For example, just look at this chart.
Granted that banks like Goldman and Morgan Stanely will offer you some of the best exit opportunities, having, or Lazard on your resume will secure you exits not too far from the known names.
Talent? Where does it flow?
So from the viewpoint of a budding undergrad who is looking to pursue a career in IBanking, boutiques offer an overall better work-experience, compensation, work-life balance and, at the least, match most of the offerings of Bulge Brackets.
Naturally, then, I would expect talent to heavily consider boutiques as an alternative to big banks, given that the boutiques are in the product and industry groups they want to work in.
Now, I know Vault rankings are to be taken with a grain of salt. However, it is still hard to neglect the fact that Bulge Brackets occasionally top their charts.
What happens next?
So, what do you guys think? Is the lure of Wall Street still going to continue to be dominated by, and the rest? Or, are we witnessing a fundamental transformation of the Street with the growth of newer banks such as , and ?