Do certain industry teams pigeonhole you for the future? Or is this BS?

scroogemcduck's picture
Rank: Monkey | 60

Hey Fellas,

During recruiting I noticed a lot of people giving me advice like "avoid Real Estate and FIG like the plague", presumably because they don't exit well into PE due to the nature of those industries. It is said that people who do RE and FIG are pigeonholed in the future.

I'm confused.

Doesn't every industry group get you pigeonholed into that industry for PE? Just like how an RE analyst has to recruit at a REPE shop, doesn't a TMT guy get recruited into a TMT coverage PE role? Or am I missing something? Can a TMT guy do infrastructure PE or something?

All else being equal (assuming equally good deal flow), are there certain industry groups that will keep your options open more than others? Can someone give me a low-down on the different groups and their exit opp versatility? Is there any other reason why certain groups like RE, FIG, and NatRes are looked down upon by certain people?

Comments (34)

Dec 30, 2015

Not an expert by any means, but I think it's because the work you do in RE and FIG is substantially different than work in other coverage groups. At the analyst level, most groups are similar, but RE and FIG are fundamentally different than say TMT or Industrials.

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Dec 30, 2015

Looks like we are on the same page. Hopefully someone with more experience could give OP more/better information.

Dec 30, 2015

Take my comment with a mountain of salt because I'm only an incoming summer analyst, but since no one has posted, I'll comment what I've heard/read. FIG valuation is fundamentally different from EBITDA-driven, "normal" companies, which gives you a bit of a different skill set. While logically this should set you up better for some roles and worse for others, I've heard that it only really pigeonholes you if you want it to. That is, you would still be able to find roles outside of FIG, but also have the optionality to stay in FIG (with the caveat that with the more time you spend in the industry, the more you'll be pigeonholed).

From what I understand, RE is less "technical" than other industry groups (including FIG), which makes those skills even less transferable in a non-RE role. I'm sure that you would still be able to find opportunities, but it would probably be harder than out of, say, TMT.

Again, only an incoming summer analyst, so if more senior people post a comment then you can pretty much disregard this.

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Dec 30, 2015

In my experience, RE and FIG IB skills are not that transferable to other industry sectors.

p(pigeonholing) > 0.80.

Dec 30, 2015

Do you also think this is the case in "top" FIG groups (like GS, for example)?

Dec 30, 2015
muffin_man:

Do you also think this is the case in "top" FIG groups (like GS, for example)?

Well, my experience is US MM. So take that for what it's worth (likely not that much).

Dec 31, 2015

Incoming SA as well. From what I understand, at a BB/firm that is typically considered very strong in terms of deal flow, your name brand is strong enough to overcome potential difficulty that comes from being in a specialized group (think JPM or GS FIG, or MS/GS RE). If it's a smaller firm that specializes in one particular area, you'll find that most analysts do end up getting 'pigeonholed' because that's all they get recruited for since they lack the name brand.

Would really appreciate someone who works as an analyst in FIG/RE or any other 'specialized group' (Power & Utilities?) to chime in.

Best Response
Dec 31, 2015
Kazimierz:

Incoming SA as well. From what I understand, at a BB/firm that is typically considered very strong in terms of deal flow, your name brand is strong enough to overcome potential difficulty that comes from being in a specialized group (think JPM or GS FIG, or MS/GS RE). If it's a smaller firm that specializes in one particular area, you'll find that most analysts do end up getting 'pigeonholed' because that's all they get recruited for since they lack the name brand.

Would really appreciate someone who works as an analyst in FIG/RE or any other 'specialized group' (Power & Utilities?) to chime in.

This is the most accurate so far.

FIG and RE are known to limit your options somewhat. RE in particular; it's a world unto itself and it's tough to move out, particularly the farther into your career your progress. FIG less so, but it still usually prompts someone to ask why you're interviewing for a generalist or non-FIG-but-other-sector-specific investing role. The better/bigger/more prestigious bank you're at, the less heavy that millstone around your neck will be.

GS FIG places really well. One, it's always been the powerhouse group of the firm. Chris Cole, J.C. Flowers, and numerous other hitters all launched that group and spent years in the group before moving on to more senior positions internally or something outside the firm. The legacy CME group that became TMT is only recently (in the past decade and a half ish) on the same level.

Two, since GS doesn't have a dedicated M&A product group (yes, there's actually an M&A group but it's almost entirely senior bankers who are essentially a think tank rather than product experts), all industry groups do modeling in-house. The strongest industry groups get really strong deal experience, so (in rough order) FIG, TMT, CRHG, and NRG provide a thoroughly technical experience that leads to analysts placing strongly.

GS FIG analysts place lights-out in both PE and HF roles, both FIG and non-FIG. TPG Growth, TPG buyout, Carlyle, KKR, Warburg (TMT), Maverick, Trian, Providence, JC Flowers, HIG, etc. Also beyond finance (know two at Apple).

I don't think a single other BB does as well for non-FIG roles. MM banks even less so.

Depending on the bank you're at, FIG may be verticalized. It's typically banks, insurance, Asset Management, specialty finance, and financial technology (although this may be siloed under TMT). Some banks give analysts a generalist experience across all those verticals. GS doesn't; you're staffed into one. If you're in banks, you're learning the wonky banks modeling. If you're in insurance, it's even worse. If you're in FTAM, you have the two EBITDA-driven verticals and your skill-set is no different than anyone in TMT, CRG, Industrials, or any other group. If you're at a bank that doesn't verticalize, you hope and pray you get some 'normal' stuff so you can sell it on your resume.

At the end of the day, smart people can move towards the roles they want. Certain industries will make it harder for you to move around, so if you care a ton, try to avoid getting placed into one. If you are, don't stress too much. Make sure you learn all the conventional modeling skills, but if you're interested in the buy-side, focus on developing critical thinking skills and thinking like an investor.

If you want a PE role, be able to articulate the nuances of each deal on your resume how a sponsor would. If you want to work in the public markets, have at least two ideas. Some people will say two is enough. I suggest knowing a third inside and out. Your interviews may be with four or six different people over the course of a day. It's mandatory to have a second name so when the team circles up later to discuss you, not everyone goes "Yeah, he told me the exact same fucking thing." Knowing a third means if you pitch someone your second, they question you, you defend it, and then he goes "Okay, give me another then," you don't automatically revert back to your first.

If you want to work in VC (no idea why you'd be starting in RE if you did; not impossible from FIG, especially if you were in fintech or asset management), know several spaces really well. Be able to point to one or two recently IPO-ed companies, explaining their product, go-to-market strategy (and how it changed as they scaled from idea to expansion stage), competitive landscape, and return profile to the Venture Investors. Be able to speak articulately about mid-stage (Series B or C) companies you found early and how your idea about their viability was either proven correct or incorrect. Know some seed stage deals that may not be on everyone's radar and speak wisely about their market opportunity and strength of the leadership (whether it positions them to succeed in that opportunity).

FIG and RE aren't a death sentence. You just need to work smart to get from there to your next role if that role is outside that industry.

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Jan 3, 2016

Great stuff. Thanks for clearing it up.

Jan 3, 2016

industrials.

Jan 3, 2016

What you listed is correct.

sponsors - lbo modeling
M&A - modeling across everything
LevFin- debt modeling across everything
Industrials - very broad and great for M&A and LBO

So go for one of those or work at boutique like me and don't worry about it.

Jan 3, 2016

How does healthcare pigeon hole?

Jan 3, 2016

double post

Jan 3, 2016

...do you want to do distressed/turnaround investing in real estate or in companies in the future? That is more or less your answer.

Being on the RE team will probably increase your future exit ops to be honest, but if you don't want to do commercial real estate you'll probably hate all of them haha.

Jan 3, 2016
CRE:

...do you want to do distressed/turnaround investing in real estate or in companies in the future? That is more or less your answer.

Being on the RE team will probably increase your future exit ops to be honest, but if you don't want to do commercial real estate you'll probably hate all of them haha.

Ideally on the company side. Its not that I dislike RE at all. I just fear that if I join that team when it comes time for me to explore other options in a few years I would be significantly more closed off then I would be if I just joined a product team and not an industry team...

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Jan 3, 2016

Ah I see what you mean. Can't give you much insight on group changes within banks though. Sorry about that.

Jan 3, 2016

Anyone give some insight?

Jan 3, 2016

only energy and fig pidgeonholes

Jan 3, 2016

So does Real Estate but the hours are usually pretty good...

Jan 3, 2016

I heard healthcare might pidgeonhole also?

I also think it depends on the firm. If you come from say, GS FIG or something, then you're probably fine...

Jan 3, 2016

Neither will you.

and yea real estate sucks

Jan 3, 2016

So you guys are saying that Energy & Power will pigeonhole you, as well as healthcare? What exactly causes the analysts to be pigeonholed in these groups? If someone could elaborate on this I would greatly appreciate it.

It sounds like you guys would say technology is the best...is that the general consensus?

Jan 3, 2016

Real estate doesn't suck. Its a very interesting group IMO but it is very specialist. That is all I was saying.

Jan 3, 2016

There is no "best" you idiot strivers always try to rank things. Maybe at GS TMT is best but not elsewhere. I'd rather do Sponsors most of the time, best pe exits.

Jan 3, 2016
mrbrightside:

There is no "best" you idiot strivers always try to rank things. Maybe at GS TMT is best but not elsewhere. I'd rather do Sponsors most of the time, best pe exits.

Don't be a douchebag, and sorry, Sponsors wasn't mentioned in the question you turd.

Jan 3, 2016

I recall seeing quite a few former FIG (and Nat Res) bankers from GS at SLP and The Carlyle Group as well. True, they may not be at KKR/BX/TPG, but it does seem like they're still at some of the top funds...

Jan 3, 2016

That's interesting aquamarinee, what is it about Energy & Power that pigeonholes an analyst anyway?

Also, is it true that healthcare groups at BB's tend to be the most rigorous in terms of hours (aka sweatshop)?

Jan 3, 2016

TMT is usually a sweatshop from what I know.

Jan 3, 2016

I heard that Technology (without MT) is pretty analyst friendly in terms of lifestyle. Maybe TMT is different with the addition of media and telecom.

Jan 3, 2016
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Jan 3, 2016