Is Merchant Banking a Viable Career Path Over IBD / PE?
Currently an IBD analyst at a mid-tier BB who has been approached for a lateral opportunity to a merchant bank. Had originally planned to go into PE but the pitch that was given to me was the merchant bank would still allow me to do PE while engaging in advisory work from time to time. The biggest qualm I have with banking is that I have no control over my schedule and that I can be asked to drop everything at a moment's notice.
I want to know - is this still going to be true for a merchant bank given that I will be doing both advisory and investing work? Does long-term work life look more similar to IBD or PE seniors? If I want to move into a PE fund later after an MBA, does a merchant banking experience translate to having experience?
Thanks guys, could really use some help here as I am not familiar with merchant banking at all
Bump.... could really use some advice here, especially from the more senior members....
Ermm.....merchant banking is simply an old school name for private equity, but usually (although not exclusively) done using a bank's balance sheet. I think Goldman Sachs is the only bank left on the street that does true "merchant banking" at any scale. So expect classic PE style workload and exit opps.
Thanks for your reply! Would you say that BDT / Raine Group follow a similar model to GS Merchant Banking?
From my experience in looking at/interviewing with merchant banks, it really depends. Merchant bank is a term sometimes used to refer to a family office that's registered in a way that allows it to accept opportunistic advisory assignments and get paid. Some will be much heavier on the advisory side and not as active on the principal investing side, or some will do mainly PE with an occasional relationship-sourced advisory mandate sprinkled in. Its also important to make sure you understand how your time will be split between the two activities as you progress in the interview process, or if you'll be a dedicated resource for one side of the house vs the other. I have seen merchant banks where some folks only do advisory or principal investing, but not both, so beware.
If there is advisory involved, you will always have less control of your schedule. At every level. That's the way it works for all service providers. Lawyers, accountants, etc. you're paid to be on call for your clients, period.
Curious how you were approached for the role. Have been interested in finding a lateral opportunity like this
It was just through a headhunter like other PE processes.
Very helpful guys. Anyone have any thoughts on post-MBA hiring if I were to switch over to a merchant bank? Given that I get to engage in some investments, will I be competitive for PE roles vs. those who go to a MM PE firm?
Any insight into Piper Sandler's Merchant Banking group?
Bump
Personally if you're interested in PE I would just go straight to PE
Most of these answers are very wrong. I currently work at one of the few merchant banks left out there and I love it. I enjoy understanding new businesses and M&A processes from the advisory side and then applying those skills on the investing side. With that being said, merchant banks tend to work pretty long hours because they all run lean and you have to balance traditional advisory work with additional investing work. Additionally, not all merchant banks are the same. Some focus more on advisory (Raine) and some focus more on investing (BDT). Overall, I have loved my time in merchant banking thus far from a culture perspective, the pay has been great, and I would take my current role over an EB or BB except maybe CVP or PJT RSSG.
Have to agree with above. I don’t work in merchant banking but have two good friends that both do at different banks and they speak very highly of the experience . The work is essentially no different than regular PE at some of the biggest names and you’d be surprised the number of solid firms that were spin outs. Henry Cornell and Cornell capital is one of the more notable I can think of, as he essentially started GS merchant banking. They pretty much exclusively recruit from Goldman because of this.
I agree with all of the above with the exception that your miles may vary depending on the firm. For example, Cornell Capital isn’t a traditional merchant bank. It’s just another private equity firm similar to Goldman Sachs MBD. They call themselves a merchant bank, but those firms only invest.
If you go to a place like Raine, BDT, etc., you will do both advisory and investing. The mix can vary significantly so if you’re interested in investing, just go to PE. You have to be interested in the merchant banking model (advisory / investing) to be successful at the pure merchant banks.
Can't think of too many well known Merchant banks out there besides BDT and Raine, both of which are great places to land. As others have mentioned the mix of both advisory work and investing can be interesting in the sense you get to do a bit of everything, but also a challenge in the sense that you have to do a bit of everything, especially if you're a junior. I've heard of folks that get an amazing balanced workload between deal work and advisory work, which builds a broad skillset. I've heard of others who get stuck with a majority of doing advisory and/or ops work, and it that case, it just because a worse version of banking given less dealflow. I'd be wary of any shop that isn't a well known name. Other than that, go in eyes wide open, ask questions about the balance between the two side of the business, look at the opportunities that alums have, and then decide from there. It's a great role if you can find the right balance.
Would also add Intrepid Financial Partners, pretty big merchant bank in the energy space but most work focuses on advisory, and Incentrum Group which is very new and recruits heavily at targets but has yet to make/advise a notable deal.
Incentrum did the RMT merger for regal beloit / rexnord. Don’t recall the exact details but was definitely a $1bn+ deal
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