If smaller banks say they offer juniors more deal exposure, why are bulge bracket positions still more highly regarded?
A lot of smaller banks (MMs, regionals, lesser known boutiques, etc) say their analysts get more deal exposure and responsibility compared to bulge brackets, and won't "spend 2 years in excel and powerpoint" or "just be a cog in the machine". However, you don't see incoming analysts declining their Morgan Stanley offers to go to Bob's Investment Bank, or buy-side recruiters rushing to pick up people from small boutiques over the guys from Goldman Sachs. Is this because a reputable bank provides better name recognition, or are the "deal exposure and responsibility" offered by these small banks less valuable, than the experience analysts get at a BB?
Think about it. Lets say you're applying to college and get an offer to Yale but Starbucks State University offers you a full ride, career mentor ship with their best adviser, any research position you want, and you get to be in their honors college. SSU is ranked 500 out of 5000 US colleges, top 10% not bad right?
I'd still go with Yale.
The same with the banks. Lets say MS offers you 85k a year but some random boutique gives you 40k a year (which means you didn't get a full ride to Starbucks) and you get the MS name. What are you picking?
Imagine exit ops as your first job at of college. Is MS even looking at Mr. Starbucks? So why would KKR look at Bob's Boutique.
Above is right, name brand is king.
Also.. bank used to training hundreds of interns and analysts a year will get you off the ground faster than a small boutique where most things end up being self-taught. With PE recruiting happening so quickly into the analyst stint, the better you are in the first few months, the more you have to talk about.
The EBs that offer a great training program and more deal exposure are often considered over the top BBs, so there is an argument for that deal exposure angle. The average local boutique doesn't offer enough with their selling point being just a little more deal flow.
I think a lot of it has to do with what having a top namebrand on your resume proves about your character. Top banks recruit from top schools mainly because they know if a guy can get into Harvard or Penn and pull a 3.5+ GPA, then he's got the grit, work-ethic and intelligence to excel in banking for sure. Similarly, KKR and Golden Gate know that a guy who kills it in Goldman Sachs TMT or PJT Restructuring can excel as a PE Analyst. Recruiting from the top namebrands is just the easiest way to guarantee quality. If I'm a headhunter for a MF and I'm searching for candidates via LinkedIn, I'm 100% searching for Morgan Stanley or Goldman analysts to find them, not Bob's Investment Bank so I can attempt to screen their 2-3 analysts when I know nothing about their analyst program.
Reputable banks, that lead the league tables, also have much more robust deal pipelines and work on a variety of sizeable/important transactions. A lot of boutiques kind of just throw the whole "deal exposure" phrase around to try and pitch analysts their low-paying positions, but the reality is that some of these places spend a lot of time pitching transactions for smaller companies that will never come to fruition.
If you manage to get into a big brand name, I would take it. A move than enables you to get good deal exposure and rise the ranks faster is 2-3 years at a BB then move to a smaller boutique where you're able to get much more responsibility than your 2-3 year equivalent at a BB would.
Everything is about the name these days. Anyone can fake transactional experience, but not the company that they work for. In a similar analogy, HBS isn't successful because of their education, but rather the success of the people that graduated from there, reputation trickled down to HBS. People assume success because they relate to brand.
In my view, there are a few key reasons:
1) Training received at BBs, EBs and top MMs dwarfs anything that you receive at the smaller boutiques. Although on-the-job training is very important, developing financial modeling fundamentals is vital. Those that did not grow up with rigorous formal training had to play catch up (myself included).
2) Deal Quality - Whether you are at an EB or BB, you know you are going to work on high-quality, sought-after deals. There are plenty of good boutiques that still end up taking on shitty deals and shitty clients. While you can certainly learn a ton from a hairy deal and botched process, it doesn't help with your deal sheet. This goes along with reputation and brand name, which has been mentioned repeatedly, but is more nuanced.
Also, many smaller boutiques and even MM shops are primarily doing sell side M&A. At larger firms, you get exposed to buy side M&A and other products if you are part of an industry team. Maybe recruiters don't view that as a differentiation, but I would if I were a PE or Corp Dev interviewer.
3) Risk - the initial thought would tie riskiness to brand name and deal flow. However, on the flip side, it requires substantial risk appetite for a student to believe in what someone at a boutique tells them about the actual role and responsibilities at their firm. I've seen that some good MM and lower MM IBs provide analysts with more exposure and involvement in deals than other shops (we have a great analyst that we allow to conduct some initial financial buyer outreach when there was no associate staffed).
But, I've also witnessed the opposite where we looked at applicants that claimed that they were heavily involved in deals at their firm and you quickly could tell they either lied about their level of involvement or didn't retain anything from these deals (I view these equivalently).
In sum, there is plenty of risk that what you actually are doing doesn't translate and make you a better banker. And if you have fewer and smaller deals, it just steepens the size of the mountain that you are trying to climb.
EDIT: Sorry for the poor grammar. Was in a rush while typing this out.
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