Lifestyle/Comp of Industry Groups
At banks, do certain groups in IB generally receive a different compensation or hours worked. I know it varies by bank, but, for example do healthcare analysts work less than TMT but get paid the same? My understanding is M&A is the most prestigious and most labor intensive
My opinion, and I know it's going to make some M&A guys a bit butthurt, but M&A is not nearly as good as it used to be, I'd much rather be industry.
1) Exit opportunities: statistically, you're not going to stay in banking forever. If you're a T&T or healthcare etc, you're probably going to move to one of your clients at a decent level. Guys in M&A, FICC, Lev. Fin have much fewer options on the way out. Sure they are talented and hard working, but have generalist knowledge of industry and specific knowledge of a very narrow area which doesn't have a lot of applications outside of finance.
2) Work experience: When I was at a BB, we really didn't like getting staffing from M&A, generally we found that the quality of the A&As was quite poor. They can't really model that well, as they don't have industry experience to make assumptions. Either they make ballpark assumptions for costs, or rates or some factor, and have no backing for it, or you have to hand feed them everything, which means it's just faster to have an analyst from your own team do it. Further, since they don't know the industry (typically) you can't get them to pull a buyers list, or look at interlopers. They won't know implications from recent transactions, or competing processes.
Don't get me wrong, they can run a process, and the more senior ones will have a special knowledge of asset tests or listing rules and the such, but I found that the skill set is so narrow they weren't that useful.
To actually answer your question about comp. Banks pay the same base across all IB, but different teams will have different bonus pools, and they will split them as they see fit.
Thanks for the response.
Depends completely on who you talk to. If you are talking to PE guys, then the M&A skillset is highly valued given the execution and structuring knowledge you develop. If you talk to strategics, then often they will place a higher emphasis on industry groups given the deep sector knowledge you are forced to develop. Depending on the bank, you may find yourself in an industry group that is M&A focused. This is often the case at boutique banks, but certain BBs are structured in a similar manner as well.
I would say M&A within the finance community is broadly valued higher than many industry groups given that the skillset is transferable across sectors.
Now to answer your actual question. As stated above, groups tend to have the same base, but different bonus pools. When markets are consolidating and the M&A environment is hot, M&A groups are compensated better. The flipside is, during a dead year, M&A bonuses tend to take a hit.
Hope this helps
So if you’re interested in a specific sector is a big benefit to be at a bank where M&A handled by industry groups? The bank I’m working at this summer has industry groups and they do M&A and financing in those groups so there’s no separate M&A group and only a small ECM group
It depends on what your long-term goals are within finance, but in general, yes. If you are looking to work in M&A, whether it be at a bank, or tangentially within a PE/VC environment, then getting M&A experience via a sector specific industry group is ideal assuming the group has decent deal flow. This essentially allows you to develop the technical M&A skills while giving you exposure to the nuances of the industry group.
Salaries are flat across groups, but as stated above the bonuses differ based on how much the group brought in (high correlation between hours worked and bonus) so it only makes sense that the harder groups get better bonuses. For example Real Estate Financing is generally the easiest group on the street, but the exit ops and bonuses are also the smallest.
Also worth noting: M&A is different across banks. Apparently, MS M&A is the shit and PE firms stroke them hard, but at GS, Classic runs everything and M&A just helps out, which is why GS TMT is also one of the most recruited.
Culture of Different Industry Groups at Goldman (Originally Posted: 10/20/2017)
I understand TMT and FIG are the 'top' industry groups at Goldman, but I wanted to hear more about the culture of the different groups, e.g. how sociable the groups are, what type of people does each group attract, the hours, the level of competition, the level of intellectualness in each group. With regards to TMT and FIG being 'top', what does that actually mean on a day-to-day level? Is it just exit opportunities? Are there compensation differences eventually? Are the people smarter? Is it more competitive? Is it harder to stand out and be promoted?
For reference the groups are: Consumer Retail and Healthcare, Financial Institutions, Financial and Strategic Investors, Industrial, Municipal Finance, Natural Resources, Real Estate and TMT. If you have any insights on financing that would also be welcome!
Thank you!
aaym98, pure crickets, that's where I come in. Any of these useful?
More suggestions...
Fingers crossed that one of those helps you.
Good points.
Will also depend on the fee structure in the shop. What percentage of fee split goes to M&A (or Lev. Fin / ECM / DCM) vs. the industry team will dictate what the MDs get paid, which will determine the quality of MDs in the team re: rainmakers won't stay at shops where their comp is shit. Flow through effect is that teams with great MDs will have better training, culture, deal flow etc to the analysts, and the team will be better (more prestigious).
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