Picking the Right Group
Many threads have been created over the years concerning which group is best, what exit opps are from each group, etc.
While strength of groups change with the tides, i.e UBS healthcare left for Jefferies, I’m only going to comment GENERALLY and on my OWN experiences at a mid-tier Bulge Bracket bank, so if you disagree, you're probably right so feel free to share your own experiences at your shop.
Now, if you’re at an elite boutique or mid-market, it’s going to totally depend on your shop and what that particular shop is good at. Example: Qatalyst and Allen obviously have their own niches that they’re known for and you’ll just need to do a search on that yourself.
With that said, hopefully this thread helps to answer a few of the repeated threads about what group to pick.
To begin with, at any BB that has product groups, your first pick should probably be M&A. from MS to UBS, M&A is usually going to provide you with the best exit ops and for the most part, it’s relatively safe from downsizing unless you suck. On the downside, M&A groups are usually among the sweatshop groups, if not THE most sweatshop group. But then again, if you can’t handle hard work, why are you in banking to begin with?
After that, really consider what buyside path you want to take. HFs don’t care as much about which group you’re in, as most are taking kids after just 1 year of banking while PE usually wants analysts to complete their entire 2 year banking stint before coming on-board. Therefore, HFs usually want creative and bright analysts so the group differentiation is not that important. For example, I've seen just about every group from healthcare to industrials send at least 1 kid to SAC over the course of 2-3 years.
The main differentiation between groups from what I’ve witnessed at my BB, is the likelihood of headhunters to pigeonhole you for VC or growth equity or PE based on what group you’re in. This isn’t to say you’re not going to get into PE from TMT, obviously many have, and if you’re at a bank like GS, you can forget what I’m about to write because you’re probably going to get what you want no matter the group you’re in.
Now for the group splits, but keep in mind any of the groups have a HIGH chance of being placed into a specific shop if that shop focuses on the industry (Silverlake for TMT for example).
Venture Capital:
Healthcare – Have seen several friends at my mid tier BB have a harder time getting into PE from this group. However, VCs and growth equity will be knocking on your door. This also depends on whether you’re in pharma or health services or whatever other specific sector focus. The key thing you’ll notice for all of these is whether or not you’re familiar with debt structures and FCF, which you'll need for most PE gigs. Another thing about healthcare is that at most BBs it means SWEATSHOP!
TMT – Again, heavy preference for headhunters to push you into VC/Growth equity. However, ignore this for top shops or places like GS/MS TMT. But at a mid-tier BB, I have 2 friends who went corp dev and VC after not getting much luck in the PE recruiting side.
Private Equity:
Financial Sponsors / Levfin – Obviously a preference here for HH’s to push you into PE shops, and especially into distressed shops and mezz shops if you’re in LevFin.
Consumer/Retail – Asset heavy + debt and lots of cash flow, obviously a huge bias for PE here. You can also expect distressed type shops from here if your deal experience is relevant.
Industrials – Same as above, industrials is a LBO favorite of PE shops, and you’ll be pushed to interview for one. You can also expect distressed type shops from here as there's been a lot of restructuring deals in industrials.
Oil & Gas/Energy – Now this is tricky. Most Energy guys I know go into PE, but at ENERGY specific shops. This is especially true for those in Houston, but luckily the competition isn’t that fierce because there’s a lot of energy gigs for those with the right experience. Or maybe my bank is just good at Oil & Gas.
Specialized Buyside:
Real Estate – Now this is where generalization actually meets truth. This group is the worst at my bank and has had consistently worse exit ops than the rest of the groups. The only few exits they’ve gotten is into REITs and REPEs. Yes, real estate does pigeonhole (somewhat).
FIG – If at a strong FIG shop, you can pretty much go wherever anyone else goes. But if you're at a BB where it’s not the strongest, you’ll have to fight tooth and nail to get out of FIG oriented buyside. JC Flowers type shops are expected, while the others get into smaller financial-oriented gigs or corp dev.
Notice I didn’t list M&A, but as the top group you’ll be likely pushed into PE/HF from there, as I haven’t seen many go into VC. Not that you can’t, but most don’t want to. As top headhunters will tell you, you should avoid VC if you’re unsure, because it’s a lot easier going UPSTREAM rather than DOWNSTREAM. In other words, it’s easier to go from Megafund PE to mid-market PE, and easier from growth shop to VC rather than the other way around. My shop for example would never consider hiring someone from a VC or sourcing growth equity shop, as the modeling/technical skillset simply isn’t there.
Lots of generalization in this thread because to be frank, you can’t generalize the topic of what group is best for YOU. But there are trends, especially in the mid-tier BB range where competition is FIERCE. There, the group you are in can give you an advantage or disadvantage that could be meaningful, but of course the key to every story is that PERSISTENCE and your own SKILLSET is what ultimately matters. I’ve seen kids in the real estate group (worst group in my bank) go on to megafunds and similarly I’ve seen M&A kids (best group in my bank) strike out with 0 offers.
Best of luck out there.
great post, thank SC
+1 for mapping out a clear, actionable framework.
Is there any groups that place better (as an industry group into HF) other than just M&A?
Like I said, most groups will do well with hedge funds, except perhaps the "worst" performing one at your bank, which is different for every bank. In general though I would just say avoid real estate for hedge funds, and avoid levfin for long/short hedge funds, though levfin is obviously great for distressed shops.
Other than that, just about every coverage group can place you well into a HF. It's really not about intense technical modeling, and you'll see that once you interview. It's more about talking through your assumptions and ideas, making a concise and intelligent pitch and having a good idea on what the company actually does and coming up with a buy/sell recommendation rather than intense technical valuations.
Also another question, so say if you get an offer for a SA position and you need to get placed into a group. clearly if you are working long hours you want to fit in with the group you are working. How do you go about finding out about the culture of the different ground or at least the groups that you have industry interest with.
CTBanker: With questions like this it's best to go IRL and ask around, especially CURRENT analysts and maybe even fellow summers who have offers too.
Trust me, analysts are bored creatures when they're not running fire drills. I would have loved to talk to incoming summers about my group and give them pros/cons.
Call up some analysts and ask.
Wildcolonial: I've seen SSG groups interview bankers from any group, but for a distressed oriented strategy I would think they give an advantage to those with levfin and restructuring/debt experience, so probably retal/consumer/industrials and M&A as well.
M&A is usually always wanted just for modeling skillsets.
SanityCheck spitting truth...thanks for the post.
Wooops, posted in wrong thread. Disregard this. :(
Sorry, if this is a bit off topic. How do you get into a Specialist Situation Fund i.e. the guys running about picking up distressed debt for 25c and selling it 12mths later for 80c? What skill set, group do they target from? The Nine Entertainment deal Apollo and Oaktree just completed was awesome. Like they came in to town and slept with the leader of the football teams girlfriend (Goldman) while he had to watch.
Thanks for the help, great post
Great info! thanks man
Fantastic post man! I know now that I want to get into FSG or Lev Fin.
Could you provide more comments on the exit opportunities coming for a natural resources group. ie: how hard is it to break into PE knowing that LBO of natural resources coming are extremely rare. Do you think the "banking skillset" acquired can make up for the lack of "LBO prone industry expertise"
I never did energy or nat resources, but from the few friends I know who have, they usually exit into energy related PE shops. Places like Riverstone that are considered PE and other energy shops that make large equity investments rather than debt.
That's why I considered putting energy, which will include nat resources, into specialized buyside. PE is considered to be many things, but if you're talking about a non-energy related PE shop, it will be difficult from a mid-tier BB shop. You'll have to convince the headhunter and ultimately the firm you're interviewing with that you possess the skillsets needed and spin your deal experience as needed.
That's why I think most bankers in that group tend to just stick with a nat resources or oil & gas related shop. I would say it just totally depends and you should network and get your name out there and see for yourself.
Wow, very informative post!
How about S&T groups?
How do traditionally strong groups at the buyout PE level place in growth equity and VC opportunities? (e.g. M&A, Sponsors, etc.?
Monkey: Don't know anything about S&T, sorry
EJS: VC's will interview just about anyone if they seem capable and have the network, and at the junior levels, are interested in sourcing and have a knack for spotting good ideas. Having an entrepreneurial story somewhere in your interview will give you an edge.
For the most part you'll be fine from any buyout shop, as long as you can find a relevant deal you did that corresponds with that VC. For example I did a healthcare deal recently so that will be a good deal to talk about if I'm going with a VC who has a 80% healthcare portfolio.
Can someone in O&G, Metals&Mining or any natural resources group provide his input please?
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How to choose IB teams/desks (Originally Posted: 11/30/2010)
So before there is the usual barrage of threads where people ask to recommend IB sector teams at various banks, I thought I should start a thread to discuss how exactly should one go about this. What kind of research should people do when deciding. What all should be considered- general interest, reputation, exit opps, hours, team size etc. Lastly, what makes one sector better than the other?
I would like it if the more experienced people here could give the newbies an idea of how they went about choosing sectors and teams when they were starting out.
Just went through this.
Here's what I did
I would start off by looking at the available groups to choose from and see which ones you have an inherent interest in.
Then I'd ask people on WSO or contact some analysts to see what the exit opps (and reputation as well since they are pretty much linked) are for each of the teams you are interested in.
Then I'd set up meetings with the groups and fly out or take whatever form of transportation you need to visit and interact with these people via informational interviewing to see which group you jive with best. This is probably the most important part because you want to work with people who you can connect/be chill around.
Hours will be pretty standard across all groups. I'd say it wouldn't differ by more than 10-15 max.
Team size matters if you are one of those people that would like to be buddy buddy with your MDs, but it does matter when you are doing PE/HF recruitment as you would want most of these senior guys to bat for you come that time.
Hope that helps. If you have any other questions, feel free to shoot me a PM
Thanks. I'm going to shoot you a PM now!
Here's the thing, I have had two previous internships and I have worked across Consumer, RE and FIG. I still don't know whether I want to go back to any of these or look for another group. I have accepted an offer at a bank which I hear has a good Oil and Gas team, I'm leaning towards that and have done some research but still don't know whether I should choose it or not.
Anyway, here are my choices: Consumer - Food & Drink Consumer - Hotels & Leisure Healthcare TMT Media TMT Tech Utilities Industrials Paper & Packaging Industrials Chemicals & Building Materials Transport Business Services Oil & Gas Transport FIG Restructuring Debt Advisory Equity Advisory
My top three choices at this point are: Oil & gas Consumer - Food & Drink FIG I have made these choices based on recent transactions done by the bank and its client list. However, I'm still trying to figure out how to develop an interest in a sector. Ideas?
Also, the teams above do both coverage as well as M&A unlike most banks where coverage and M&A execution and structuring are done by separate teams (UBS, RBS etc). What do people think?
Picking a group (Originally Posted: 11/29/2006)
Starting in IB next summer, any advice on selecting an industry/product group? How much does it matter? Does it change exit opportunities?
yes it changes exit opps, just look at all the "Which group is best for PE" threads.
Disclaimer: The post above has been made by someone who is not currently employed in IBD, and has not had an interview yet...
Oh, it matters. It matters.
Make sure you do your research as to number of hours, group culture, and the associates/VPs you'll be working with. This will determine the course of your life for the next few years.
Which group would you choose? (Originally Posted: 08/17/2007)
If you had to choice to start in one of these groups at JP Morgan or a similar bank.
Would you pick: Equity Capital Markets or Leveraged Finance? And why?
No one has any money. No one will loan the money.
Ah, the possibilities....
lol anyone?
Lev Fin. More interesting.
Which has better exit opps in the next two years?
Neither if I could help it.
But in this particular case, my personal preference would probably be leveraged finance, since my general bias is that any line execution department beats being on the desk.
But I'd probably cut myself shaving a lot since I wouldn't be able to look myself in the mirror every morning if I was a debt guy.
You can get into PE and some debt HFs from lev fin. ECM is harder to leap from.
Which division shoud I choose? PLEASE HELP (Originally Posted: 04/03/2012)
Hi, I'm a freshman at a target
I got a summer internship at some firm,
and it gave me the choice of division:
Management consulting Risk consulting Investment Advisory Transaction & Restructuring
Where should I go if I want to get into IBD later?
Thanks
transaction & RX
Investment Advisory - do they explain to you about this group in details? I am just concerned that it won't include transaction experience. Or else I would pick this.
If not, I will pick "Transaction & Restructuring" group. You should also ask them about deal flow, the kind of work each group does and what you will be doing "specifically" at each role.
I agree with the other comments, but as a freshman, are you really sure you want to do IBD instead of S&T? Risk would be good for trading as well.
Which desk to pick? (Originally Posted: 03/09/2008)
I'm going to be a summer analyst at a Swiss bulge bracket (CS/UBS). I need help choosing between desks. I got along with two of the desks really well; commodities and reinsurance. Does anyone have any insight between the two, particularly reinsurance. I heard that it was the most profitable division at my bank last year. Is the market going to be as big as people predict? What kinds of things will I be trading? What about Commodities? My long term goals are to go into a hedge fund, so I'm not sure if doing what I'm interested in right now will remove me to much from the markets...
depends what kinda HF you want to go to. if you want a fundamental HF you need a fundamental background (equity research, hy research, fundamental prop)
you want to trade commodities prop trade commodities sell side etc.
no idea about reinsurance trading
Which group should I pick? (Originally Posted: 12/30/2010)
Leveraged Finance Analyst at Bank of America Merrill Lynch.
Should I choose Leveraged Loans in Charlotte or High Yield Bonds in New York?
I'm inclined to say high yield. Can lead to some great opportunities at distressed debt PE firms. Plus it's in new york.
I'd take High Yield Bonds in New York, sounds much more interesting than straight loans and plus you get to be in NYC.
HY bonds
//
HY bonds.
I don't have a clue what you should do, but since everyone else is saying HY bonds, I'm going to say HY bonds.
HY bonds.
well I have heard that I might get more LBO experience if I do leveraged loans which looks good for PE. Anybody have a take on this?
in general, most mid market lbo's are entirely loans and bigger lbos (or at least, the biggest ones post lehman) are usually loans plus bonds (ex: j crew) or sometimes entirely loans (ex: onex/tomkins).
i'm not too familiar with how baml's group is structured though so can't comment as to which you should pick. charlotte sucks though, so all else equal go with high yield
Charlotte job will likely be with the corporate bank, while the NY job will be with the investment bank - but you should clear it up
Nope, you are wrong. The way BAML is structured is exactly how the poster described it. Even if you are on the loan side you will still get to work on HY depending on volume. However, if you are on the bond side that is all you will do.
Got to choose from 3 Groups. Advice? (Originally Posted: 05/25/2009)
I'm joining a BB in London this summer and am currently being allocated into a group.
Basically, they have given me a choice of three groups that they have spaces left in: M&A, Industrials and Real Estate.
I don't really know much about any of them and I'm probably not going to get a chance to go and meet them because I'm smack bang in the middle of my finals.
Should M&A be my first choice? I understand it is the most 'prestigious' and working solely on M&A does certainly appeal to me. However, I'd heard from a friend that the hours in this group are terrible. He said, even during September/October last year when no M&A was happening, he watched analysts get frowned upon for leaving before 2am. Any other thoughts on the M&A vs Sector argument?
In terms of the sector teams, I am leaning towards industrials over real estate because I don't want to get pigeon holed, as such, and the industrials team there seems to have a great franchise.
I know it is hard from anyone to comment but any suggestions in terms of other things I should be thinking about are much appreciated.
x
I'd personally pick M&A because it's less likely to put me in a pigeon hall as you've said. If you don't like it I'm sure there will be opps to move.
Its MS. Does that make a difference?
umm isn't MS M&A one of the best groups in general...
I think you should go for M&A unless:
Why should I choose M&A though? Is it that more prestigious?
M&A or industrials, and between those two I would of course go with M&A. see ukon's post above mine.
Dude it's up to you. But considering you got an offer from MS, I'm surprised that you need advice on which of these groups to choose.
M&A is more prestigious/impressive and will probably help a bit more for future opportunities. But if you don't want the longer hours than choose another group.
M&A is the most "hardcore" group, but it's good to have on your resume. If you KNOW you can't take the hours, don't choose M&A. In my group, you're considered lazy if you can't take 90 hours (ABSOLUTE minimum). I pull all-nighters very often. I'm not saying not to take M&A, but make sure you know what you're getting into. Just choose the group that will get you where you want to go after the stint.
CAP'M CRUNCH http://capmcrunch.wordpress.com/
nigo, what bank do you work at?
Huh. I'm not going to tell you, out of anonymity, but I do work at a known sweatshop.
CAP'M CRUNCH http://capmcrunch.wordpress.com/
Thanks for the comments guys. Ended up choosing industrials.
Can you really get pigeon-holed in any group during a summer internship?? It's a relatively short stint (10-12 weeks) so I can't imagine an intern acquiring a very comprehensive skill set pertaining to his/her respective group. Not to mention you probably won't be having a profound impact on a deal or your team in general. So at the end of the summer, if find you don't like or want to work in that group after getting the FT offer, is quite easy/acceptable to transfer to another group within?
This was for grad, not summer internship.
should've chosen M&A
aaaghhh M&A all the wayyyy!
if you work 90 hours a week. Does that mean you have to eat dinner at work? And the only time you have at home is to change, shower, and sleep?
^ That's correct. I had to eat dinner at my desk on my birthday... and it was Friday at that. I went home only to shower and literally collapse in bed.
M&A and don't look back.
Why did you choose industrials?
Help Picking I-Banking Group for the Summer (Originally Posted: 04/29/2009)
Hey, I'm working at Barcap for the summer and am in the process of ranking the groups that I want to enter.
I'm most interested in FIG. According to them, they are ranked #2 globally. The two specific groups I'm looking at are Depository Institutions and Specialty Finance. I feel like these two groups will see a lot of activity, and they seem to be the best out of the other options (Insurance & Asset Management). I really like this division because it involves all aspects of Corporate Finance, including M&A, & you get to develop a wide variety of skills. They also say you will have a lot of involvement with the deals, because it has a small group feel, so you'll be able to do less than bitch work and work with more senior bankers. An added bonus is that they say they are 'flexible with time off and availability', which I consider good because I'd like to have a small portion of my day to work out (I am certainly willing to go without this).
That sounds really good and enough to make my decision, but everyone tells me the M&A is the best division to work in. I am certainly interested in it too, it seems like it will have a lot of deals and will give me a great experience. Some downsides are that it's ranked 9th globally (compared to 2nd globally of FIG) and I really like FIG a lot.
I want to go into Private Equity after I do the Investment Banking stint, so that's another thing I'm considering when making my decision. I heard M&A is really good for Private Equity, but you also do get that experience with FIG too.
So can you guys offer any advice? Thanks
You can't be placed into the M&A group at Barcap,M&A is within the coverage groups.
Sorry, I should've specified, the coverage groups that they offer (at least I think these are coverage groups) are Communications, Consumer/Retail, FInancial Institutions, Healthcare, Industrial, Media, Natural Resources, Power, Real Estate, & Technology.
If I had to rank my top 5: Financial Institutions Natural Resources Industrial Power Technology
I think your list looks good..even I am working for Barcap IBD NY this summer..got the email about the group selection process..also consider culture of the groups while picking your top choices..natural resources is a great group but their culture is very different from others..
Yeah, I heard that, aren't they the one that came over from Lehman? The biggest appeal of that group to me, is how good it is (number 1 in the world) and how much activity is going on.
I'm also thinking Exclusive Sales would be good too, because you get to work more closely on all of the deals, work more with senior bankers and clients, and you get to network with a lot of different people, including Private Equity guys, which is something I want to get into eventually.
Also, is Media a bad group to get into?
Don't you also have to pick 3 product groups as well? What are you thinking?
Comm/Media is one of BarcLehs' best groups so no...it's not a bad group to get into....
Don't pick a group because of the ranking. Seriously. You may end up hating the group and hating the product and this directly correlates with your reviews/offers/etc. if you think the product is interesting and you like the people, then having a good ranking is just icing on the cake. Just remember you'll be working with these people for 16-18 hours a day. Group selection is usually a crap shoot. When I was in banking, we were able to submit our intern choices (via their resumes) and alot of the decisions were made by our MDs (who also functioned as interviewers for the alum schools) and they had a lot of pull in getting kids they interviewed into the groups they wanted.
Natural Resources is very good (ex-Lehman) and the Power group is pretty decent as well (also ex-Lehman). There are distinct differences in culture between Barclays/Lehman but I know they've been working hard to integrate. Just remember that those groups will be very competitive to get into because of the Lehman legacy brand and the fact that they are very well-respected on the Street. moreover, power/natty res is very hot right now in terms of sector. The Power group has changed with the times and looks at quite a bit of renewable energy.
FIG is legit and they work a ton.
I think as far as product groups go, DCM is really good and emerged even stronger after the merger. You'll probably go into a sector-focus though if you do DCM (same with Lev Fin. So, you may be in FIG DCM). I think restructuring is also considered one of the product groups.
Ok, so I've been doing more research on the different groups and this is what I have so far:
Corporate Finance: FIG Natural Resources Industrial Power or Media Technology
Product Groups: DCM Private Capital Markets Restructuring
I keep hearing about the difference in culture between Barcap & Lehman's former groups, can any of you guys give me a characterization of the two cultures, and their differences?
Would DCM still be good, given the market? I feel like companies wouldn't be raising as much capital through the debt markets right now, because it's hard for companies to sell their debt.
Also, I'm thinking of calling and emailing several analysts for some information and to get my name out there, so when they are choosing the interns for their groups, they'll at least know my name. Do you think this is a good idea?
Thanks
Given my choice, I wouldn't pick Depository Institutions and Specialty Finance. Banks are really boring. They all file very specific forms, so you can gurantee that if you need XY number it will be on form AB line EF box 2. As a result, modeling is non-existant. You always use the same base model for everything.
Insurance and AM often require you to build a model from scratch. You will find this much more interesting and challenging than dealing with banks. Just my opinion - but you can't go wrong with FIG.
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