Can MMs be the best option if you don't want MF / UMM PE?
I have seen some debate over this on other threads but I wanted to get more input from the WSO community. First, let me provide some context:
I am an incoming first year analyst at a MM in what many call a 'tier 2' city. I have no interest in going to MF / UMM PE. Rather, I am far more interested in working in VC / growth equity or joining a fast moving startup after my analyst stint. I am looking to lateral to a stronger bank in NYC (after maybe a year?) and want to begin networking now.
I was wondering if a solid MM bank could position me more favorably than a BB or EB for working with earlier stage, higher growth companies, since you really learn how these companies function while working in the MM space. Sure you won't get to see complex carve outs, distressed companies, or multi-segmented $5B+ companies, but does that matter if you have my goals in mind?
I am curious what you all think of this, since I only have a virtual SA stint under my belt.
To be honest the top tier MMs still want the best candidates so EB and BB. Not worth lateraling if you want to end up in MM PE anyways though.
EB BB are best
The comments above have no clue. It’s pretty straight forward—if you want to invest in smaller deals is facilitating smaller transactions over mega mergers more relevant? Anyone with half a brain would say yes. That said, there are two caveats:
1) Location—depends where you want to go and where your office has a presence. If recruiters or the investment firm hasn’t heard of your bank, you might have a problem.
2) It isn’t a “middle market” firm that really is just a POS ibank that lacks competent individuals. A good mm market will undeniably get you in the door anywhere you want to go if it’s mm or below if you are a decent candidate. They aren’t only going to only look at Goldman Sachs or Evercore recruits lol. The notion that “EB’s are best” is the sort of retardation that explains why people are so gung-ho for mega funds despite a lower expected value of earnings compared to smaller funds. Honestly, ignore this message board and call a vc fund or growth equity shop and ask point blank or call a recruiter and see what they say. The benefits of being in the weeds of complex models are pretty meaningless when most investments made are going to be in businesses sub $600m. Honestly most junior roles growth equity and below likely will have a heavy sourcing component anyway.
the MM PE firm I'm headed to only recruits from BB/EB
would you say that MM provide first year with a more hands on experience since teams are usually smaller?
Bud you have no clue how PE recruiting works, let the adults here do the work.
Spoken like a true moron who has never been on the other-side of the table. Look, the original post didn’t ask to work at a umm fund, he said venture capital potentially or middle market below. This is what I get for checking wso as I take a dump.
But to those who look at this forum, advice still holds true. Don’t listen to college kids or A1s, heck, I could be a high school freshmen right now. if you think you want to work for a specific vc firm, growth equity, or mm player, give recruiters a call or those who work at the firm and they will point blank tell you. You also could likely inquire about why they chose that end destination and that would help you narrow down your decision between Vc or later stage investing. My firm isn’t going to pass on a compelling candidate because they went to a mm bank instead of evercore because we aren’t modeling a billion+ business. These kids get so butthurt because they need to prove to the world that their sacrifice was worth something and they are somehow in another category compared to anyone else, due to some 3am nights and blown up vacations. Unfortunately, you still are going to have to interview and sell yourself and your experience no matter where you go. Better or worse? So depends the firm and long term and short term goals. Do yourself a favor and call real people!
As someone who has worked in MM in a tier 1 city I can add some color.
If these are your goals, lateraling would likely be counter-productive as in MM you work with smaller companies and so have the ability to specialize in how to push growth, where as at a BB or EB the momentum is so strong and there is such a hierarchy that you wont actually gain any real network in VC / growth equity outside of just people your MD or VP may know. Sure you may get to be on a big IPO but after that IPO they are essentially a large company that a VC / growth equity would have no part of. In terms of skills, MM probably gets you more bang for your buck in terms of smaller company growth training/modeling and actual VC and PE contacts at startups. Sure, CapitalG would really only recruit top BB/EB kids, but tbh there are so little spots that matters less than networking and skills. Being in a solid MM tech group would be way better than analyst number 30 in a BB industrials group for example.
That being said, if you can get say a top BB/EB tech group or a sponsors group you can always learn those skills later, and you will never regret the overall prestige. As such, this is my informal ranking from my experience but this is my opinion only:
It goes down more but I would say its also very MD and group dependent. If your MD is having a great year it makes little sense to leave especially if you get to run processes.
Thanks so much for your insights, I really appreciate it. If my current MM does almost solely IPOs, but in the industry that I am interested in, would it then be worth it to lateral to another MM coverage group where I'd get some more M&A exposure?
Its tough to ever answer the "worth it" question. IPOs are great experience for growth funds and VCs as a form of exit, but not so much later stage PE in tech which would do more LBOs and M&A to assist companies. M&A is always good to have as it seems like the baseline product anyone in that space does, but I think you can get some of that at your current bank just ask around to see if you could be staffed on one or maybe do a rotation in a different group. Really you just need a few deals to get experience and talk about in an interview.
At the PE associate level, PE firms want to recruit analysts who have strong modeling/technical skills (who then can be groomed to be good investors). Having lateraled from a MM to an EB, the modeling experience and variety of technical situations you get exposure to is dramatically different.
MMs tend to do a lot of similar/vanilla sellsides and creating a seller model for a smaller $300mm company is just not the same experience that EB/BB analysts are getting working with public companies or larger, more complex businesses with more nuanced financing structures.
You get great experience learning the M&A process at MMs (and that experience is valuable no doubt) but it is fairly easily taught/understood after doing 2-3 of them. For that reason MM funds and recruiters will continue to target EB/BB analysts (even if there is a mismatch in deal experience size vs. fund target size) first because they have the learned technical experience that is much harder to replicate in training.
Re-reading the OP though, for VC/"name brand" start-ups you want to be in the best Tech group you can be in if you are getting in through the banking route (it's much less structured than PE recruiting though)
Maxime fugiat modi voluptas ut. Et voluptatum neque assumenda odio quis velit quis. Voluptatem numquam adipisci ut mollitia. Aspernatur quasi repudiandae id et. Vel unde quod nam fugiat nobis aut fugiat. Autem natus soluta alias tenetur a repudiandae consequuntur.
Adipisci rem natus asperiores nesciunt sit et. Omnis recusandae voluptas non eligendi nam maiores. Eligendi modi quia accusamus dolorum aut et. Est sint molestias consequatur quisquam voluptatem.
Delectus laudantium excepturi maxime ex pariatur sunt distinctio. Atque consectetur dolor iste quae voluptatibus sunt. Excepturi vitae quos aut. Voluptate perspiciatis et quo perferendis. Autem cum rem quibusdam voluptate dolores velit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...