Background: 1 yr boutique M&A, 7 yrs BB coverage (currently at a BB). Couple hundred bn in txns executed across products. Top bucket most years.
Current work/life situation:
I empathize a lot w juniors right now, although this sentiment has been a thing pretty much forever. COVID has exacerbated it for sure, as there is no (1) physical co-mingling and (2) separation of workplace and home. But in terms of hours, general treatment, temperamental personalities, that's how it's always been. The obscene hours commensurate to hot markets will never go away. Regarding treatment of juniors and making senior-to-junior interactions less negatively frictional, that can be changed. But let's level-set things here, generally speaking. The lack of a light at the end of the tunnel is and has been a perpetual feeling, unfortunately.
Solution(s):
The real question in my mind is "what's the impetus for change". I don't know what sort of meaningful change is likely to happen in this industry until boomers start retiring. My gut is that the millenial generation is more empathetic than those types, so any sort of long-lasting change is likely to be implemented once they are in power/in mgmt positions. But then again, money talks. I would not be surprised if the more empathetic types, including myself, lose empathy once our deferred stock packages reach significant scale. If IB mgmt can convince me that shareholders (i.e., myself) would substantially impact the bottom line by expanding the analyst pool by 50%, the cause is lost. To be clear, I think that such an argument is idiotic, but again once a significant part of my net worth is staked on that, the risk may be untenable. After all, "we all had to do suffer back in the day" right?
Personal outlook:
Tbh, I don't mind banking. Bilateral negotiation-driven M&A is pretty interesting, the rest mildly interesting. Definitely can get monotonous when processing financings for weeks straight, but the job ebbs and flows. Can't hope to be engaged 24/7, just asking for disappointment. That said, I do like sales, so if I can see myself as an MD, assuming I feel comfortable and excited about staying on to eat what I kill. From an exit perspective, based on what I've seen over the years, once you pass the ASO1 level, exits kind of blow until senior Director or so. Being a mid-VP, I could probably swing a senior corp dev job now. However, if I stick it out maybe 3 more years, I'm in contention for division leader or C-level spots. Obviously at smaller companies, but that fits my risk-reward profile anyway.
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I find it funny you think IB directors are in contention for C-Suite spots.
Only at really small companies and def not F200.
The only 2 MDs I know that jumped to corporate came in at a “regular VP” level after 10 years of MD experience + had to wait a few years for an SVP/EVP promotion
You’re right, it would be ludicrous to expect that at a scaled company.
To clarify, it’s smaller companies where this is possible. Software, biotech, emerging growth sectors, etc. Have seen it happen several times.
That said, these late-growth/crossover stage are compelling IPO candidates. Very attractive risk/reward profile.
The opportunity to own 10% of a 30mm mkt cap company is equivalent to owning 10bps of a 3bn mkt cap co.
For what it's worth, one of my friends was IB VP and jumped to CFO at a healthcare startup. Obviously, you are trading away salary for equity, and not everyone will do that, but the options are out there.
Just one data point but Mike O’Grady was an MD at BAML and left and within a few short years became CEO of Northern Trust.
Another data point, Paul Parker of GS went to Thermo Fisher as an SVP, but he was co-head of M&A at GS...
"regular VP" in corporate land is a very high position....
Depends on the company or industry. Title inflation is pretty apparent in tech.
most F500s have “VP” as the 3rd level from the CEO (ie. You report to someone who reports to CEO)
ive also seen it as a 5th level position
At most F500's VP is the spot right before EVP/C-Suite. Whereas Director in a F500 translates to VP in banking.
Idk why they do it like that, but that's the case.
This. If you are going into IB and expect C-Suite exits at MD/VP level, read this.
You could be a 50 year old MD from Morgan Stanley and exit into the same position that 34 year olds at PayPal are occupying. Which isn't bad by any means considering you'lll be earning 300k+ but it is nowhere near the ludicrous expectations that you can exit into a C-suite role at an F500.
The only exception is maybe its possible in like Industrials or some shithole industry that nobody wants to touch/work in
Thanks for the great post, I myself am considering staying in banking and had a few questions if you do not mind:
1) Mind sharing your yearly comp from analyst to VP?
2) What do you think seperates the regular MDs from the rainmakers / head of groups?
3) What made you switch from coverage to Boutique M&A (assuming you are at the boutique M&A now)
4) How difficult is it to lateral as an A2A? Currently an analyst in a lower tier BB - want to finish my two years here but then move onto a stronger BB or EB platform
Oops, my bad. I am currently at a BB.
In terms of comp progression, when I started as an analyst, the street paid 70k base lol. So first year all-in was 95k bc we did a stub like most BBs (at least at that time most did stubs). Analyst all-in ranged from that to $150k. Assoc all-in ranged from $275k - $375k. VP1 midpoint approx $550k (our base is $250k).
Re MDs, group head doesn't mean you're good lol. Idk if they get paid more, but honestly the group head either (1) is a good manager and appreciates the admin nonsense that comes w the job bc they care about cultivating a strong team or (2) they do it out of ego / potential sense of job security. In terms of rainmakers, it comes down to a few things. One, they craft a story very well to the client. They pull datapoints from prior deals and they're like "counterparty could go this route but based on XYZ, they will probably take the other option". That's the key in terms of the value add. At the end of the day, M&A is a lot like dating in that you're trying to guess what the other side is thinking and how you can be best positioned to capitalize on their current state of mind basically. In terms of client relationships, they're generally just cool dudes. Not necessarily to their juniors but to their contemporaries and to clients; to the juniors could be total pricks, just depends on the person.
Re lateraling, it's tough but doable. I recently lateraled to another BB and interviewing all-in took like 2 months. It sucked lol. But make sure you can walk through your deals and relate any technical stuff back to the deal. Like what was accretion, how did client get comf w mid-single digit accretion, how did you flex sensitivities, why x/y/z consideration mix, what were key concerns for rating agencies, etc, etc, etc. All specifically in the deal context, not in generalities. What I got a decent amount was "do you guys do much modeling since you have a separate M&A group". Just be honest and always say why any sort of weakness is actually a strength or how you got around it.
Thanks for doing this. Couple of questions:
1. Why did you lateral to a BB from a boutique? Did you consider buyside recruiting at all or knew you wanted to stay in banking?
2. How did you get and maintain the top bucket ranking?
Why boutique -> BB? For the money and the deal exposure lol, no other reason. Listen, smaller boutiques can be real cushy, but I wanted to work on WSJ-type deals versus churning out sales of fam business or small sponsor portcos. That said, they really can be great fits for many ppl here. Just not for me. In terms of staying in IB, yea if I'm being honest buyside recruiting was a swing and a miss for me, unfortunately. That said, I have seen senior bankers move to be PE partners, so there's still hope if I'm ever inclined to do that lol.
Re top bucket, I mean idk. I'm just good at this job (execution at least, we'll see about origination). At the younger levels, from what I've experienced, it really is pretty meritocratic when we're contending for the top bucket bonus pool. You obviously have to have a basic sense of office politicking, and maybe that isn't something that is natural for most, but wasn't ever really an issue for me tbh. That said, I got smoked for 5 years straight. The GS13 deck rings true in many ways, with the exception I was in the office versus the home, and I had the luxury of mingling w fellow analysts in the bullpen and all that. Honestly, that alone + the lack of separation of home and work would make the analyst experience substantially worse. But yes, many many extremely late nights and temporary health deterioration, etc.
replied to wrong thread. Disregard
Non-sequitur, but can any of you name IB MD's who are now CEO's of F500 Companies? -- I think we'd all be interested in this.
Do your own research.
https://en.wikipedia.org/wiki/List_of_former_employees_of_Goldman_Sachs
https://en.wikipedia.org/wiki/Lazard#Notable_current_and_former_employe…
Humana's CFO was a goldman lifer before he got that sweet gig. im not gonna review their proxy but i bet he has a great comp package.
And to reiterate, it's more common to see MDs join the c-suite at smaller companies; larger companies probably senior corp dev if not head, potentially treasurer to get to the CFO track. But remember, smaller company means you likely get a bigger piece of the pie, and if it's in a red hot industry, potentially sweet premiums paid if it becomes a sensible takeover target.
Instacart snagged GS's Nick Giovanni, head of TMT IB, as its CFO a while back I believe
PTON CFO was a C&R MD at JPM. Probably made 10x in stock comp vs JPM last couple years..
- Why did you switch across BBs?
- You probably don't interact with interns as much just by the nature of being a VP, but as an incoming virtual intern, what tips would you have for me?
- While you did say you are in a coverage group, do you think it's easier to rise through the ranks in a product group if you aren't very extroverted and are more technically inclined?
Switched bc there wasn't sufficient runway at the prior BB. Too top heavy, high number of VPs. Honestly, if there was a downsizing mandate, a few of us would have been the first ones out. Plus at the new BB, realistic pathway to MD. After your analyst years, the runway concept is key, I'd put it higher than pay if you're senior ASO or higher. What's the use of joining a Jeffco when there is almost no chance of getting that MD promo considering how many they already have and how strong they are across verticals.
Tips: (1) tick and tie numbers. If I see 21E revenue as $23.4bn on pg 5, it better say that same rev figure on pg 78. (2) be as resourceful as possible. know what all the data sources are, learn how to read company filings properly (rather, how to ctrl+f for what you need efficiently). do this before you start asking your AN how to approach XYZ. (3) Take some ownership. We're all human, I may ask you to re-word a bullet but I made a spelling error in my email comment. Don't just copy/paste it, re-read it to confirm it makes sense and doesnt have such errors. (4) if im up for it, ill think of some more, but the analysts should guide you from there. the aforementioned items are key priorities though.
Re moving up the ranks. You'll see on wall street, particularly on the sellside, that a lot of people fail upwards. Arguably many folks like this on the buyside too. So you can make it in coverage too, but your hunch is probably correct wrt product groups. That said, the best M&A MDs are very social and can craft a coherent story around any given situation. Frankly if the social aspect thing ends up being an impediment, you will face a pretty tough ceiling as you try and move up down the line. Just the nature of finance, it's ultimately a people business. But hopefully you can improve that aspect over time if it isn't top tier right now. Last, being technically inclined doesn't mean you're relegated to a product group. Very beneficial to be that technical guy in a coverage group. Gives you more staying power
Does the same apply on the buyside?
Any advice for getting a gauge on this at current firm or as you join a new one? Does coming in as a lateral usually give you a leg up in promotions? Have noticed a lot of seniors that made it up the ranks typically lateraled at some point in their careers.
What do you consider too top heavy? Looking at a move into a group/subvertical that has 5 MDs, 2 Directors, and 3-4 VPs plus me (and really just tagged to one of the MDs). I think the group is super productive and they all say there's plenty of runway but of course you're going to say that while in sell mode. Feels like a ~1:1 ratio means there's room and lower risk of downsizing but I'm coming from a smaller platform that runs pretty lean.
Thank you for doing this. Couple of questions
-What made you stay in coverage vs try to move over to M&A?
-At what level do you think you can consistently clear $1mm? Is it Junior MD level? Any insight into what the absolute best MDs in your BB group were pulling?
Idk, I got a lot of modeling experience despite being in a coverage group and I liked the concept of a calling effort. We'll see when I'm senior D or junior MD if I'm any good at said calling effort, though.
Consistently clear 1mm? Prob junior MD. If you're pulling in that kind of revenue at the Dir level, you'll probably be fast-tracked to the MD promo path anyway. In terms of best MDs, I honestly don't know. I'm pretty sure that it's upwards of $10mm. But remember that the curve is parabolic. Average MD prob clears like $2mm. We're talking a 55 yr old in the business like 2-3 decades. There's that one vice chair or maybe group head who absolutely crushes and that's the person making 10+.
Following
What are your thoughts on the marginal difference between BBs. This forum makes it seem that there are just a few groups worth joining. However, is there that much of a difference between GS TMT say or a Citi Consumer? Thanks
For exits? Yea, plenty of difference between UBS' worst group and GS' best group. But that applies to the analyst population.
Outside of analysts, no it's who you hitch your wagon to. Most groups at the BB level will have at least 1 really solid MD. Work w him and you'll be fine as you climb the ranks, get to know ppl across the street, and inevitably consider a move.
Thanks OP for doing this.
- Has your hour/life style improved meaningfully compared to your days as ASO/AN?
- How much more client interaction do you now get, and how much/often do you travel as a result?
- What are the KPIs for VP and what does it take to make it to Director?
- How much office politics do you have to play now?
- How did you keep sane/healthy(or not ill) through all those ASO/AN years? Any tips?
- How much of your total comp now is cash vs deferred?
Hours are definitely better but the stress is different. Now, it's my ass that's on the line. Even if an analyst accidentally goes off mute and says "wow our client is an idiot" and the whole world hears, it's my ass, not his.
I have a larger speaking role w clients. Wrt travel, I don't know. I graduated to VP at the beginning of 2020, and covid derailed that.
KPIs are mostly related to successful execution (did we get thru committee without much hassle, does client have a good impression of our team, did I make the MD's life easier, did I not bodybag the juniors) plus client interaction (how many times did I successfully play second chair, how many meetings w speaking roles, any de novo outreach), weighed close but not quite 50/50. At the Director level, add rev gen metrics and tilt weightage away from execution. At the MD level, rev gen weight skyrockets, client interaction now becomes an internal metric vs a firm-level mandate, execution still kind of a thing but more qualitative in that you don't eat up too many resources (i.e., crush analyst lives/spirits).
Office politics now, I mean I recently joined a new BB so yea I'm deep in it in a way. But had I stayed on, no I was established and no real politicking. I'm wary of going into serious detail here, as there are maybe 20 VPs on the street across BBs who focus on my vertical (same can be said for any sub-industry tbh) and could give too much away. Sorry
Staying healthy and sane? Honestly, I am not sure. Apart from exercising, I honestly think senior bankers are built different (as are senior consultants and lawyers). That may sound stupid, but most ppl cannot handle the stress and sleep deprivation for decades; you're already seeing what mere months of this can do to people. If you can find yourself taking pride in your work, maintaining a big picture attitude (appreciating the broader deal despite moving logos around right at this moment), and enjoying the actual finance as nerdy as that is lol, then you may be fine. But again, I think there's something physical to it. Like I have a higher tolerance for pain than average or something along those lines. Really don't know if that's legit or not, though. Regarding physical illness, feel like that's kind of unavoidable to a degree. Like I used to get over a cold in a couple days. Now it's pretty common that it'll last a week. Again, that could be in my head, idk, I never kept track.
75% cash, 25% deferred at this stage. This upcoming bonus cycle, assuming bonuses dont take a dump, I'd expect that to go to like 70/30 or 65/35, though.
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