I'm so sick and tired of...
I'm sick and tired of people saying "boutiques" are the next biggest thing, "boutiques" > "bulge brackets."
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Spoke to a partner at Evercore (what most of you consider the "prestigious boutiques") and they are looking in their strategy to expand to a full service ib like your BB. At the end of the day, all boutiques strive to be a BB. The only difference is that the partners have more equity in their own PARTNER & CO rather than in a BB.
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It makes sense for senior people to be in boutiques because they can be a partner, but at the analyst level, it really doesn't make any sense. They are only trying to sell you the whole story so they can attract the best talent to further their firm since they have a huge stake in it.
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This whole boutiques offer unconflicted advice is such bullshit. $50mm in fees means literally nothing to a BB. It really changes the earnings of a boutique investment bank. So who's incentive is it really to give "unconflicted advice." Boutiques are more likely to put together companies for the sake of the fees if anything. Also, refer to #1. Evercore was the biggest advocate of the "unconflicted" advice, and they are looking to build out capital markets and other products.
At the end of the day, there will always be more boutiques since there will always be MDs at BBs who think that they can make more if they started their own firm. The only way for boutiques to compete with a BB is if they follow in the footsteps of BB and expand geographically and product-wise.
not sure if you understand the "no conflicts" thing. obviously firms are eager to get the advisory mandate (both boutiques and BB). but in providing the advise, boutiques are not conflicted with capital raising, etc. this focus provides the independence all the boutiques sell. but at the same time, firms that NEED the capital will have to go elsewhere. this is where boutiques fall short.
Yeah Moelis is trying to become a full-scale investment bank as well. Sure BB's will always be a bigger deal than Boutiques. But that's not what most people on this board are arguing about. They are wondering what's better for their career, a boutique or a BB. And boutiques have some big advantages over BB's at the analyst level.
Disadvantages: -You don't have that 5 week standard training a BB will give you -You don't have a 50-100 person analyst class, which is a great network to find friends and contacts down the road -You don't get experience in the full product offering of capital raising through various debt and equity instruments -Boutiques aren't well known outside of banking/PE, not prestigious -You won't always have tech support or a production resources on hand to do your printing for you
However I would say the advantages far outweigh the disadvantages.
Advantages: -Much less pitching, you do work that really needs to get done, and there's little face time compared to a BB -More time spent on execution. You will most likely have much more deal experience after a 2 year program at a boutique compared to a 2 year program at a BB. And 8 months into your program you start recruiting for PE, so you want as much deal experience as possible by that time -Guaranteed to do M&A and not coverage. Also most boutiques are a generalist program in which you do M&A/Restructuring and can work across all industry groups instead of just being in Tech or Healthcare. -Much more responsibility at analyst level -More interaction with senior bankers -More client interaction
The only people who shouldn't consider a boutique over a BB are those who didn't go to an undergrad B-school and really want that 5 week training program, or those you want to move outside of finance and feel having the MS name will carry more weight in their career.
moelis want to be full-service, but greenhill and pwp have no desire to do so and, in the words of a senior banker at a rival firm I recently spoke to, "I don't think evercore even knows what it wants to be."
jordyirons lays out the pros/cons pretty well. you can get good analyst experience either way. also, besides gs or ms, boutiques generally offer much better exit ops that the BBs if you hope to go the pe/hf route.
Correct me if Im wrong but Ive often heard if you go to a non-target BB is better then a boutique due to the fact you will finally that you finally become branded
Sorry if I was unclear. I meant to say that if boutiques are selling the "unconflicted advice" argument, why are they in the process of becoming full-service providing financing as well?
I didn't mean to associate the impact of the fees on boutiques with conflicted advice. I'm just saying in a way, boutiques are more likely to push clients to do M&A, as opposed to a wide range of possible alternatives that they don't have the capacities for.
And just a bit of background on myself, I am going for MS over what you guys call a "prestigious" boutique for the exact reason that I believe in the BB model more than pure advisory model. I also feel like my experience will be better at MS...
I don't think the argument that BBS are less conflicted because they care less about a deal really makes sense. You think that the head of M&A at MS says, "Oh well I care less about this deal than EVR because this affects their bottom line more than MS's bottom line. Maybe I'll let the traders make up for this missed deal later." If you see a head of a group while you are there, ask them if they guys at boutiques care more about their deals and see what they say. Just because the group is part of a bigger bank doesn't mean it is going to pitch an M&A any less or want the company to do the deal any less.
And as far as other conflicts go, that arises from trying to do too much. Boutiques charge flat fees for advice whether or not the company issues debt or equity or buys back those hybrids or buys those hedging derivatives or do whatever else is in the ridiculously long pitch book.
I think for me, I see top boutiques as being better at the analyst and MD level.
PROS
MD level: come over from a BB, get paid more, get more say in what deals you want to work with, deal less with bureaucratic bullsh!t
Analyst level: get great experience (essentially doing equivalent work of an associate at a BB), get GREAT exit opps into PE/HF, are more likely to be a successful at those exit opps
CONS
Associate/VP: I feel that the partner/MD level at boutiques will always be filled with people coming from BBs, and they will groom you into an attractive person to start a boutique or move over and get paid $$$. I see it as near impossible for someone to join a top boutique out of b-school and rise to the ranks of a star MD like you could at MS, GS (correct me if I'm wrong).
Therefore, in summary I believe the best route to go (if you want to be a career banker) is Top Boutique (2yrs) --> Top PE/HF (2-3yrs) --> HBS/SBS/Wharton --> Top BB (stay until you make MD) --> whatever you want, right?
I think a top boutique analyst program will give you the better chance to get a job in and succeed in a PE/HF because of the experience you get. However, if you want to be a career banker, going to a boutique at the associate level could potentially limit your future possibilities.
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