Why do MM IB shops get trashed on so much?
Header says it all, I'm interested to hear people's thoughts. This may not be the case, but I've seen threads on here that indicate so.
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People tend to trash on things that are worse. In general, not just IB firms
Because some people view HYPSW --> GS TMT --> KKR --> HBS / GSB --> Blackstone as the only successful career progression.
There are plenty of solid MM banks. Don't let the opinions of trolls / students faze you (in case you are at a MM bank / looking to move to one). All things equal, MM banks probably won't open as many doors as most BBs / "EBs" but jobs there are still hard to come by. People just like to talk for the sake of talking sometimes.
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Is the wb circlejerk not enough for you?
Find a negative review on WB on this forum I dare you. While in real life, I’ve never heard anyone take wb over RBC, UBS, the majority of groups at JEF, let alone EBs
I know someone that took WB over Barclays, Jef and CS (I think CS). Another took it over MF Credit SA
I took Blair over JPM and Citi. But I was coming in post-MBA so I guess the calculus is different.
Took analyst role at Blair over a top BB (GS, MS, JPM). Commented on the "Wb circlejerk" for why, but here's part of that post below because I think its helpful and relevant to this thread:
At WB you will work more frequently with clients, see more businesses, close more transactions, and you will understand the businesses better. It's much easier to actually understand how a $400M software company makes its money and its strategy versus understanding how Salesforce and Slack make their money and would effectively combine. You will learn more about broad growth strategy at a middle market.
At a BB, you will work less with clients and see less transactions, but the transactions will be larger and more complex. You will likely be much deeper in a complicated model and will have a better understanding of confusing capital structures or the logistics of an industry altering merger. You will very likely not understand the strategy of the underlying business because there are too many things going on. In other words you will be mad deep in the model and will have a hard time seeing the forest through the trees.
A point to understand for undergrads reading this: there are less than 300 transactions >$1B in the US every year. By and large, many BB and some EB business model's are a whale hunting model, where they might chase a $10B deal in a sector for years and if they get the transaction after a few years of effort, it justifies the effort. MM's have a different business model where there are many more fish, but no one fish is going to feed the bank for years. A MM bank isn't worse than a BB, it's a deliberately differentiated business model. If you are interested in VC or growth investing, a good MM bank is undeniably a better choice, if you want to do mega-mergers or layoff 80% of a workforce, destroy capex spending, and muck up the capital structure of a good business, while working in an industry that certainly is overly mature and will see significantly slower growth during our lifetime preventing you from ever being a partner, join a BB and be Mega-fund or bust.
This shows a remarkable lack of understanding of the motivation behind picking a MM.
In my class alone, 3 people took either WB or Baird over offers in hand from Citi, Barclays, Wells, Greenhill and RBC.
1) they are insecure prestige whores
2) you get worked just as hard as at an EB/BB without the exit opps or (in some cases) pay to show for it
As someone at a MM, I think one reason is that its not maximizing any strategy and so it seems worse from anyone's philosophy:
So, it just seems like the worst option of any strategy you undertake. However, I think there is a fundamental difference in outlook that these people have. They believe that specialization is the key to a prosperous career, and so maximization is inherently the best, meaning a MM is the worst. This is valid, however an equally valid philosophy is to attempt to get all of the above. If you believe that if you get everything, even if its worse quality, is better reality than specialization then MM is for you:
While this is all my opinion, I think MMs are a blend of boutiques and BB, and some really like that. Others think you are being dumb as you are not specializing and/or not sacrificing your sanity for 2 years to leave and do PE. IMO, a lot of career bankers or those who think they may be are at MMs, and it makes sense. Most people here are not that, as most people here as prestige questions and are obsessed with feeling like they made it (hence, BB/EB is best no matter what).
It depends what kind of boutique you’re talking about and what mm. Boutiques like moelis, Evercore, pjt, are all working on larger deals than mm banks. Conversely mm banks like harris Williams are smaller than many boutiques like Evercore so the teams are just as lean.
Of course. I'm more talking generally for everyone, there are obviously exceptions. Typically I'd say EBs are the best of all worlds but that depends, so I group them with BB's as you get into them the same way
Those are all EB’s, so are in a bit of a different bucket than the boutiques he was referring to (ie regional only players, small shops with super lean teams, or very sector specific). A lot of the EB’s are going to be working on those super-deals, hence their very competitive pay due to small teams bringing huge fees. MM’s are bringing a mix between the light deal teams of an EB perhaps, but also you’re getting a ton of deal flow, not just one or two giant ones. Working at a good MM, you’ll have the potential to cover a ton of processes, albeit for smaller companies, but that experience is still a huge draw. MM’s are between small regional boutiques and BB’s, and in terms of deal sizes EB’s are closer to BB’s, just with smaller teams. At this point I’m getting twisted up using the same acronyms over and over, so that’s all.
Honest question: When people talk about the top MMs, why isn't Jefferies put on the same list? by the league table it's almost always in the top 15 and is not a BB or an EB, so is obviously a MM bank.
Just because a bank is not a BB or an EB doesn't mean it is obviously a MM bank. There are banks out there that don't nicely fit in the BB, EB, or MM buckets. RBC and WF are other banks along with JEF that don't nicely fit into any of the three classifications. RBC and WF are not obviously MM banks either. They both have closed some pretty large deals over the past few years that a MM bank wouldn't be able to touch. Yes we can argue that RBC and WF have a balance sheet which allows them to work on bigger deals but that's not the only reason why they can compete. The middle market is defined as deals below $1B. A MM bank is one that pretty much does most of their work below $1B in transaction size. Historically, Jefferies was focused on MM deals and were appropriately marked as a MM bank. Now, they are a different bank and with different bankers. They've grown a lot in the past ten years and hired more bankers who have experience doing deals over $1B. All of this has allowed them to be listed in the top 15 of league tables that you see and they probably don't mention they are MM bankers anymore so that people don't think they are a pure MM player. EBs work on a good amount of deals that are less than $1B and by no means are we saying Moelis or Lazard are MM banks just because they do.
So how would you characterize Jefferies as? It doesn't even have a balance sheet like RBC or WF.
Short answer: This website has very little to no presence of individuals who are in their late 20's or older. Undergrads and recent grads are insecure and don't know what they are talking about. They will talk about "deals they have done" when they haven't actually even been at a pitch or begun to understand the process of what it takes to win business at a senior level at a bank. They feel the need to justify the path they took as the best path because the reality is much more uncertain and scary and makes them feel like, despite their sacrifice, they aren't winning at life and this is very upsetting. It's the same reason that popular girls and guys make fun of nerds and vice-versa, both sides want to value their life and experiences and feel like they are "winning".
Long answer: In college the decision to join investment banking is one without much information and college students often have no clue what they want to do, especially now that it starts so early. So, without much information, college students make the assumption that bigger=better and the names that they and others have heard of are the "best"(prestige). So the bigger banks, e.g. the Bulge Brackets, are the best in the minds of undergrads. Recently there has been some recognition that Elite Boutiques might also be good; however, it still is ultimately an obsession with the size of transactions. This continues to the PE level where many of the largest and most well known firms (the most prestigious) are mega-funds that do very large transactions. As you can tell based on this forum, most people's goals seem to be to work at one of these firms where they do large transactions in the PE space. I think many people want to work at these firms because they are well known and many other people want to work there, so if they get the job, they have validation they are "the best". Also, they often have the highest starting salaries at the junior level--pretty neat to say you are a 24 year old clearing 300k.
Now, If you are trying to do investing in large businesses (Megafund PE), like many people on this forum are, the most relevant experience is facilitating transactions (Investment Banking) in large businesses (Investment Banking at a BB or EB), it's really pretty simple. MM banks facilitate transactions for smaller businesses, so the experience at a MM bank is less relevant to large business investing (Megafund PE) than that at a large bank (BB or EB). But, if your goals are not to work with large companies, for example, you want to be an entrepreneur, venture capital investor, growth investor, or middle market private equity investor, MM experience will be more relevant to your goals. This is why I think it's pretty dumb to be dismissive of the field. However, in recruiting for private equity, many times those that worked on large transactions at BB's or EB's can often say that because they worked on large more complex transactions, they can easily work on less complex transactions. This is especially true when the junior associates are modeling the business. As a result, there is more optionality afforded to BB and EB candidates when they recruit for the junior investing jobs (associate positions after being an analyst at a bank). But if your goal isn't to do large PE investing, what matters much more is what you do on the job and the people you learn from.
Why MM firms further get trashed (ton of variance): As mentioned on another post, there are less than 300 $1B+ deals in the US every year. A majority of business done isn't actually involving large companies and those firms that do do investment banking services for those $1B + companies are very narrowly defined/ you actually could list them. Those that are less than $1B are not narrowly defined and there are way way way more. As a result, you can get a huge amount of variance, size of transaction, and ability in MM investment banking shops. In other words, saying you work for a MM investment bank could mean you work for a place run by clowns that did 3 sub $100m transactions last year or it could mean you work for a firm like Baird, WB, HL or others that do a ton of transactions, make a ton of money, and the workers and leaders at those firms are top 20 college graduates who have 3.8 GPA's. In other words, when I was an analyst at Blair my colleagues were just as smart and capable as those of my friends that went to BB's or EB's. Just my, and my colleagues, experience was one of seeing many smaller transactions and my BB and EB friends saw fewer, but larger, transactions.
To sum it up: The reality is, working with smart people where you learn skills relevant to your future goals is the best place to go. However, its very hard to know which skills are relevant to your future goals if you have no clue what you want to do long term. So, there is an obsession with optionality and jobs people know, but that doesn't mean it is "better". In fact, I'd argue it's almost worse. At a certain point, you will need to make a bet on a specialization and the longer you delay picking a focus and hiding behind the "next right step" and gaining credentials, the longer it will take for you to end up doing what you enjoy. One of my mentors helped build one of the largest hedge funds in world. He built the firm's training program off the credit training at a MM commercial bank. He found that that experience gave him an edge. A good job is a job that will eventually supply you with skills to do a job that supports your financial and personal goals. Optionality and prestige are overrated. MM's aren't worse they just are less relevant to the jobs many on this forum idealize, but they also are more relevant to other jobs. As a young person, you need to decide what is relevant and matters more and is ultimately "better" or "trash".
Good luck to all in your recruiting processes and careers. Best is yet to come and stick in there through this tough historical time.
It's almost pathetic at this point to see MM bankers type so much to validate their point so everybody knows they had a "choice" and their groups are the hidden gems.
Or, ya know, they did have a choice? And they’re doing this crazy thing called explaining their choice and not rationalizing it. I know, it’s a crazy concept to have independent thought, but it’s a pretty wild experience. You should try it some time.
Man is furious hahah wtf. Chief Baby Deals is out here crying grown man tears you got my man fucked up. The only time this man is right is on tombstones 😂 never been leftmost bookrunner lookin ass. King Rightmost lookin ass. Thinks he’s hot shit cause he’s still got a hairline ass.
I find that only college students and baby bankers give a fuck about the perceived prestige of different banks.
and those MF headhunters :(
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The fact of the matter is, there are arguments for all of the various types of firms (BB, EB, MM, etc) and pros and cons to each. But the job is, essentially, fundamentally different at each one of them. The experience is different, the mindset is different, and the skillsets people grow are different.
MM banking is a volume and certainty business. This means lots of sell side deals. Process work, marketing materials, operating models, diligence, MM Sponsor exposure, etc. People get really good at these processes for private companies because they bang them out in a, essentially, one size fits all manner. This is great experience for a lot of roles. But, these roles don’t teach someone how to be flexible or creative, they don’t deal with complex and/or public company issues, and they don’t teach strong valuation / evaluation skills. It’s a process oriented business. I’ve been on the other side of all the top MM shops when advising my public company clients on private deals and have been very impressed - the MM banks often are very strong in the business they run and sometimes better than I am / will ever be at many of those particular skillsets. But, I’ve also “co-advised” with a top MM shop on a public to public because of a board connection to throw them a bone and they could not have been more out of their depth. I spent as much time educating their team, including the global head of investment banking, on the basics of public company M&A and valuation as I did dealing with the Bankers on the other side. This isn’t to say one is better than the other, it’s just that those bankers were focused and much better at one part of the M&A world but poor in the world I spend my time in.
On the flip side of that, now at an EB, I don’t do a lot of sell side processes (when I’m on the sell side it’s usually a negotiated deal), so it’s not my expertise or strength. I also don’t spend much time on capital structure, so again I don’t have a lot to offer when thinking through complex ways to finance deals / growth (we have people at our firm who have this expertise, though, so I just loop them in). At a BB they are often much better at that side of the equation (but usually much worse on complex M&A exposure for junior and mid level bankers). It’s a generalization, but in my experience the mid level BB bankers are better at the whole suite of offerings, the EB bankers are better strategically and with public M&A, and the MM bankers are process runners. Meaning, it’s just different, so you have to solve for what you want, find interesting, and think will lead to where you want to go.
This is perhaps the most compelling answer I've seen so far. Agreed with all points as someone who worked at an MM and now at BB.
Good answer and my experience as well having moved from a MM that almost exclusively did MM sell-side work to an EB.
A common question I see asked on this board is why MM funds (who buy the companies that MM banks help sell) tend to recruit more from BB/EB banks rather than MM banks and the reasoning is that the technical situations that analysts have to navigate at BB/EBs are often significantly more complicated than putting together seller models at MM banks. Even though they probably won't run into overly complex situations at their MM funds, being extremely technically proficient is really important at the PE associate level as there is often no one really above you helping model stuff out in detail.
(other reason is pedigree as for better or worse the top talent tends to gravitate to the BB/EBs so that is the natural place to recruit from first)
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if you rely on where you work to be your source of confidence, you're probably ugly, retarded, or a bit of both ;)
Lots of good content on this thread. I would also note that the outlook for an analyst can be different than for a post-mba associate.
The short version is that most people on this thread are undergrads/analysts who have a narrow understanding of the IB landscape, much less a long-term outlook on a career. There is no doubt that BB analysts get stronger looks for large PE funds, and the upside of *potential* deal-size is different.
That being said, the "top" MMs (Baird/Blair/HW/HL) do strong work (both sponsor and strategic sales), have amazing deal-flow and offer a really compelling view of a career in banking. The MM overall can be compelling based on the variety of firms, the greater # of at bats, and guaranteed exposure to M&A.
There is a massive conflation between those firms and the generic "MM" terminology which is borrowed by regional boutiques which struggle for deal flow and deals over $100m.
Crude analogy:
BB = EPL
MM = Dutch League (Eredivisie) or French League (Ligue 1) *pre-PSG*
No doubt the EPL is stronger top to bottom, and the top 6 are a class above. But, would you rather play for Wolves/Palace, or for Ajax/PSV?
That's how many (especially MBAs) look at it. At Blair/Baird you're at the top of your league, winning titles (mandates) in your space etc.
People will surely have different opinions, but I think it's entirely rational.
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