What keeps people at micro boutiques?
I want to preface this by saying I’m an intern who doesn’t know shit.
I work at a consumer boutique in a west coast city of about ~15 people. I took the offer because I fucked up my recruiting and struck out at more prestigious banks. I’m not trying to gas my bank up, but all of the juniors are ex Ivy League, many of whom graduated with Latin honors. Originally I thought the appeal was that it was a bit of a lifestyle play: live in a west cost city and work on smaller deals than BBs/EBs but have a bit better of a work life balance than a traditional IB. Another big assumption I am making is that the pay is below street. They are certainly paying me below street (no mention of pro-rating analyst salary, flat $5.5k per month for interns). However, since summering at my bank, I realized that the juniors are still pulling 100 hour weeks and grinding hard which has left me a little bit confused.
In what seems like such a hot lateral market, this has left me somewhat confused. What drives people to stay at places like this? Can anyone that works at a similar shop speak on junior compensation?
Micro boutique is hard to define but from what I've seen, usually these factors (one or a mix):
1) Local ties. Sick parents, spouse, etc that has he/she anchored to the area, and as a result the firm
2) Brand equity. it takes time developing relationships, and usually they are a result of blood/hard work. It can be hard relinquishing that since the job sucks everywhere you go/look so why not stay put where you may have a bit more control/leniency when it comes to staffing?
3) Complacency. The income threshold for everyone is different - marginal utility of more $$ can be low if you've already hit a number that feels good already.
4) Lack of certainty regarding the future. Sometimes the status quo is most desirable as most of us only have a natural few moves where opportunity cost is low, the time to specialize isn't immediately present, and momentum is high. Investment banking retains high optionality throughout your first few years.
5) Lack of time/desire. Even if you end up getting a break, you probably don't want to put time into technical/interview prep off back to back 100 work weeks.
6) Lack of relationships. Big HHs typically look at NY/SF candidates first, even for Tier 2 city jobs, rather than the other way around. Buy-side recruit MM+ is mostly centrally planned and breaking in can be difficult otherwise.
This is strictly for sub-VP. There are a myriad of very different factors on why one might choose to build a career at a micro boutique long-term.
Can be a variety of things. Some micro boutiques pay more than BBs (not in your case), some do more interesting or targeted deals when dealing with LMM or MMM rather than larger transactions. People may also feel a better of belonging than being a small cog at larger firms. Additionally, if you know what sector to go into then boutiques can offer great exposure. There are also people that strike out, like you said, and just wait it out until PE because they can't be fucked to move. It depends on a variety of factors.
Agreed with the cog thing. I worked at a micro boutique before lateraling to a large IB and now want back in the boutique side. The deal exposure at the large IB has been great but I miss how much more cohesive the team felt in a smaller office and how much more valued I felt.
Your post makes it seem like everyone has opportunities to move on, but thats not how life works. Sometimes people forget it hard to land a new job at a better bank, competition can be fierce and most of the time you need to network or know someone to get your foot in the door. Sometimes people stay because they cant get anything better.
Another posted mentioned complacency, and ive seen that alot too. Benn guilty of that myself at times.
At the junior level being at a small boutique sucks, but the seniors have a lot more freedom and importance in the firm. Would you rather be 1 of a 1,000 MDs at a BB or the rainmaker at a 50 person boutique who calls the shots on what he does and how he does it? You also end up playing a big part of the whole firm's strategy and are regularly talking with founder/CEO on the direction of the boutique....not something you'll get to do at JPM.
Not saying that either answer is the correct one but you can see how a small boutique could be attractive, especially if the money is good which it typically is at senior levels. All that crap listed above about not having time, relationships, complacency is clueless bullshit. Almost all the senior folks I've known in LMM want to be there.
Disagree. Senior vs junior incentive is very different.
I think you're a bit clueless actually or lack reading comprehension skills because the question is clearly geared toward why a junior would choose to stay over re-recruit elsewhere. OP references a "hot lateral market", asks about "junior compensation" and is confused on why juniors "pulling 100 hour work weeks" choose to stay vs leave. He is a fucking summer. The lack of time and relationships + complacency are very real factors when it comes to why a 2nd/3rd year analyst might stay put and take the A2A promo or why a 1st/2nd year analyst leaves for a bigger bank in the middle of their analyst stint. You're extremely out of touch if you think otherwise
Ummm....maybe because if you stay as a junior eventually you become a senior.....and that's why my comments on being a senior matter and I outright say that being a junior sucks. So check your own fantastic reading comprehension and deduction abilities.
By the way, I worked at a LMM and saw several peers lateral to GS. I even had an interview at GS and MS for lateral positions. It's not lack of opportunity. Trained IB anlaysts and ER associates willing to jump shops are not a dime a dozen. At VP levels above, it becomes tougher to lateral, but at junior levels, I found it really easy.
EDIT: The argument that you work 100 hours a week but can't find a single hour to apply is just dumb. On the next week that you work 80 hours, take an extra 5 hours to send out 10 resumes for IB positions. You will hear back from 3 or 4....that's not incredibly difficult to do for someone working "100 hours". Or think about this...If you apply to just one other IB job per week at 30 minutes per application, you'll be lateraling in no time. Is that too much to ask? If you can't do this, you are the laziest person to ever work 100 hours per week....
Ive heard that pay can be good a few tiny boutiques (def not the average) like I saw a post on here about an associate at a boutique making something like $675k at a non-EB firm.
That’s uncommon, what’s reasonably common though is hitting MD earlier than at a BB without an MBA. Also the pipeline is generally much bigger in the lower middle market. If you’re at a BB seldom will you touch deals with sub $500MM clients, but lower MM EVs could dip down to 10MM and still work economically. MDs at these lower MM shops usually make mid to high 6 to low 7 figures.
There’s a number of reasons that people chose random no name boutiques.
Lifestyle Hours can be way more cush, better relationships with seniors.
Geography If you want to be in certain locations there are no BBs or decent middle market shops.
Focus Some shops are hyper focused, if you love the sector that can be great.
Career Considerations You can usually move up much quicker.
Another plus would be if you're lucky enough to make it to MD/Partner, you're probably getting a larger amount of commission per fees generated vs. bigger banks. Seen a few boutiques recruit top bankers from BB/EB to join their ranks for a bigger percentage per fees generated.
I did a summer at a shop that was a regional MM and I recall the CFO saying MDs got somewhere between half and two thirds of the deal economics. It can be a great model, but most are no base or best case a draw.
I'm the OP and haven't looked at this thread in a while. All great points. Just wanted to give an update. I don't think they are actually paying below street, just dicking interns (lmao), so it makes a bit more sense why people are staying I guess. Signed a return for $105 base, $20k signing which I found to be a compelling offer.
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