IB M&A = RE Brokerage

Wasn't sure whether to put this under RE or IB but someone tell me where I'm wrong here...

IB M&a is nothing more than an intermediary, a broker, for companies. You get a client to ask for your services, you create a memo/deck explaining why this is a good investment (equivilant to am OM in RE). Then you market the company.

Only difference in RE brokerage is instead of companies it is single assets, portfolios, and sometimes RE OpCos.

In the real estate world brokerage is pretty much bottom of the ladder. You have to please your clients and anybody with the actual money to do things pretty much just throws out your work and re-does it themselves cuz they know it's fluffed up so you can get your fees.

So with that...why is IB such a coveted and glorified position. You're literally just a broker. Pretty shitty spot to be in pleasing clients to get by. Not to mention the hours.

Someone please prove me wrong.

 

It's coveted because you are learning the foundations of corporate finance/valuation in many cases, demonstrating that you can work under intense and stressful conditions, showing an ability to have excellent interpersonal skills when managing clients (even analysts get on calls and sometimes need to speak up- takes some fucking guts to speak to the upper management of billion dollar companies), and lastly proving that you can think on your feet.

All of these skills do not even take into account the fact that in order to just get into the door you need to be a a top 1% applicant from the best schools in the country. Think about it like Harvard- anyone with a pulse can pass and graduate (has literally the most famous grade inflation out of every school)- but getting in is incredibly rare and significant if one can do so.

Combine this with the fact that Investment Banking has for the past 100 years been one of the most selective and high paying roles that one can attain not only out of college but just at any point throughout one's career- that makes IB pretty coveted.

There is way more to this what I wrote- the above barely scratches the surface. Real Estate on the other hand...well ask any joke on the street in NYC and there's a 10% chance they'll tell you they work in real estate- not the case for Investment Bankers.

 

You say this as if top CRE brokerage is somehow "lesser" than banking. It's not, it's basically banking but at the asset level not the corporate level. Tons of CRE IS or D/E Analysts follow similar (real estate-oriented of course) paths to IB Coverage or ECM/DCM Analysts.

 

I would agree that you are just a broker. However the asset you’re selling as an M&A banker (an operating business) is inherently much more complex than a piece of real estate.

Successfully positioning a business to investors requires understanding the product/service itself, it’s market, and ultimately the operational and financial drivers of profitability. On top of that, a strong banker will know who, in the universe of potential buyers, is best suited to find the most value given the specific attributes of the business (i.e. are there certain sponsors that are experienced in the sector/geography, are there certain companies that can leverage certain existing functions, etc.).

You probably need to do all of those things to a certain extent as a real estate broker but with fewer “moving parts” since ultimately you’re just selling a certain type of building in a certain location.

 
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