Hello Everyone,
I will be an incoming first year at a top 5 business school this fall. I am looking to make the transition from consulting to investment banking. Can someone provide a clear understanding of an independent advisory firm (Lazard or Evercore). What fundamentally makes these type of boutique banks different than a bulge bracket? Also, why does it matter that these type of banks do not have a balance sheet?
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So essentially these firm only provide advisory services in the sense that they can help value companies in transactions or restructurings, but they cannot underwrite or raise any of the debt or equity needed to actually finance these deals. These advisory firms do have balance sheets with substantial assets, just not in the scale needed for major financing projects. Thus, you won't see any DCM or ECM groups in a boutique like this. Bulge-bracket banks, on the other hand, do both advisory and provide access to capital markets via underwriting.
Having said that, I've never stepped foot inside an investment bank of any size, so I'd be happy to hear a second opinion.
Well that's not exactly true. Smaller firms still have capital market advisory groups but they use larger firms with more sturdy balance sheets in the role where the capital markets desk would usually do any buying/selling of securities in a deal. The desk works in the same way at these smaller shops but the inventory risk of housing securities on their balance sheet (for any amount of time) is nonexistent.
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