Coverage vs ECM/DCM exit opps - Corp Dev? Others?
Hey, cap markets associate girl at global and at that mark in my career (almost 2.5yrs) where I'm considering other options outside ECM.
I know it's covered in bits & pieces here on WSO but wanted to hone a little more into reasons/why limited opps for an ECM banker? Seems like it's a good long-term banking career choice for those who want to stick with it but moving out is hard.
Have interviewed a few places but personally feel like as an ECM banker, not getting recognition for my IPO/Follow-Ons at places like MM PE (this makes sense I guess?), Corp Dev (say I need more transactional exp?), other equity buy-side / funds (apparently still too junior / not enough 'deal' exp.?). Putting aside obvious PE exit pathways want to get some views from those who've gone down this path or seen it from friends of some exits? Open to anything, traditional or otherwise!
Like the title says, seems like my Coverage/M&A peers are finding it easier to move out of IBD even if from smaller platforms. Some older mentors have warned me about this closing/narrowing but at the time maybe I was too excited about going overseas for a bit
Thanks WSO :)
It's because your deal experience is different from your M&A and coverage peers. Think about what you do on an IPO versus what one of your coverage peeps do.
Coverage group comes up with the idea, models/analyzes, pitches and convinces the client. Presentations to C-suite, maybe board. Compare that to what you do.
Now think about what someone in PE or corp dev does at your level does.
I've done my time in ECM and it's fun, but the skillset isn't very transferable. Fundamentally, as an ECM banker, you specialize in one aspect of helping issuers tap the public markets - process. Frankly, for PE/Corp Dev, that isn't a high value skillset. Those roles typically demand a good understanding of the industry, modeling, and M&A process. Not saying it's impossible, but much more challenging than moving from coverage / M&A.
Edit: Wanted to add where my ECM peeps have transitioned to if helpful. Mostly hybrid corp dev / IR roles at private companies on the path to IPOs, some PE-backed. Others have gone into fundraising roles in early/growth stage tech. Some into IR roles which frankly do not get due credit on WSO. It's a fun gig if you're salesy and like networking, crafting messaging/investment theses etc.
Appreciate this, finally a response from someone who understands the nuances of each team rather than the mountains of general IB drivel on WSO. Thank you!
It really hit that even despite my bulge brand, the skillset doesn't much weight versus even MM/Boutique peers (I'm sure this would be an eyeopener for those on this forum - I've long put behind the brand chase but the reality hit me recently). I get that day to day, ECM is process and quasi sales/trading almost. But I would have thought understanding investor styles, questions about various companies, ability to sell (but as you say, really it's the coverage / sector team's ideas) etc. would be a powerful tool. Sad that it doesn't translate.
If you can share (given you are/were in the ECM space as well), where's next for you or what are some feasible exits or any other perspectives on this? Really not keen on investor relations. And despite everyone telling just look at equities buyside...they aren't that plentiful. Should I hold it out for an internal move to the M&A and coverage teams? Or would say a VC in perhaps a "raising" role?
Thanks rabbit and the advice is really welcome
I did a brief stint in ECM at a BB very early in my career. I really enjoyed my time there, worked on incredible deals, including two of the largest IPOs of all time. I thought that would open doors. Other than ECM opportunities, absolutely did not so I moved to TMT. It also struck me that everyone in that group was an ECM lifer, literally everyone from the group head down. They'd bounced around firms per usual, but always in an ECM role.
The experience is not really transferable other than to very select roles. Coverage and M&A help you develop a more holistic skillset better suited to the buyside. I would argue anyone can be taught that but preference is always for those that require less training.
If you're keen on typical PE / Corp Dev, moving to coverage or M&A would be the best path.
As a disclaimer, I don't want to discourage anyone from ECM/DCM. They're fantastic roles, really fun work and at BBs, you'll do marquee deals.
Thanks! That's really great to know. So thinking through:
1. Corp/Dev & IR hybrids - I imagine they'd still be up against traditional Coverage peers (hence why private given the greater importance in pre-IPO raisings?)
2. Fundraising roles early/growth stage tech - Would say a tech coverage banker be equally or more positioned? Since they also look at ECM but with an even more technical sector lens?
3. IR: Does sound fun, but maybe not for me!
I'm glad your friends found ways out, I'm feeling a little stuck so trying to gauge where I sit in the pool of roles!
I believe this might be due to what you do everyday on the job?
For example, in APAC, people work on a lot of IPOs/equity financing deals. I'm in a coverage group which as rabbit said above, comes up with the pitch and some front-end analysis on the "strategic alternatives (I know this can sound stupid)" for say a subsidiary of a big company. For example, if they sell in through M&A, they might only get $300mn, but a public market float can fetch say $1bn. There's some trading comps and illustrative DCF analysis here, and board presentation materials for their stakeholders to discuss.
Then, with management assumptions coming in, it would be a more meaningful DCF outlining financial projections of this company 5 years down the road. The numbers are still illustrative, but it's "somewhat technical".
As another person said in the thread "what happens during live deals", modeling is actually a small (yet still important, from a PE-exit PoV. It matters less in HF from what I hear) part of the job. It's more about process management and advising the client about what to do and what not. I believe this is one of the reasons ECM is not attractive to companies because in ECM your main job is to sell stocks to investors.
And to answer your question above: no the coverage bankers I know (most are junior) do not go to IR roles. Plenty do go to Corp Dev. I personally don't have strong feelings for Corp Dev unless I get to run a small team to test waters. A.k.a it's more of a product manager role at a bottom-up company, which is rare nowadays because most product strategies are top-down and product managers are more like useless robots drawing Axure charts.
I could be wrong tho,
Fair points - thanks for that! I suppose it's true that in my ECM role, we run with what the coverage gives us. We get involved in the process management as you say - roadshows/ investor meetings, bookbuild (record keeping of bids / investor interest), some specific slide work for the coverage team, facilitating equity research involvement). As said before, thought ECM's interface with funds would be useful plus sheer volume and diversity of deals - we do every cap raise / IPO doesn't matter the sector!
However, from everything I've seen at work and hear, coverage peers are always involved in these same project management / roadshow processes too and therefore are more equally equipped with project management skills and a deeper sector knowledge. And I guess the strong fund relationships are with the senior, senior ECM bankers anyway so as a junior / mid, there's not much more than execution, which coverage peers can do anyway. When I think about it, let's put aside lack of modelling (which I think is only one part of it, since there's so many options in corp dev/other roles whatever they may be (not just PE or nothing!)) it's simply that ECM is so niche and process heavy (less sector knowledge or varied experience across corporate finance spectrum).
Reality seems like it's perceived (or really is) just execution / support heavy in a specific product area, i.e. equity raisings/listings which coverage teams understand or know anyway. Food for thought for sure (sorry to any budding ECM kids, I love doing it don't get me wrong so don't be deterred, but when it's time for a change harder than it looks to get out!). Oh well, I've done my time and learnt heaps regardless so hopefully something comes up!
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