Why go from Elite Boutique to Bulge Bracket?

mathloubaml's picture
Rank: Chimp | 14

Hi,

I will have an interview with BAML for an offcycle in two weeks. I have been an intern at a boutique for 6 months and i was wondering how you could explain and argue during the interview the good reasons to move from Boutiques to BBs ? Since usually bankers tend to do the opposite, right? ( I cannot say that I failed to have a BB bank on the first time....

Thanks in advance for your help !

Comments (25)

Mar 5, 2018

A few avenues seem pretty logical:

1) If you're at a generalist EB and looking at coverage groups, say you want to cover that specific group.

2) You want a breadth of experience that includes all products, not just M&A.

3) If you think your EB doesn't promote from within, you could say the opportunity to work with and grow a career in the firm and you believe BAML offers a better opportunity for that than your bank.

It also seems like your on an extended internship (What banks do these?) and you are just looking for a full time gig, so that shouldn't need any explanation beyond why your bank isnt hiring full time.

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Mar 5, 2018

Is this for an OC in France? (would guess this on your pseudo)
Anyway, if the OC is in continental Europe, you could emphasize the fact that it would give you a genuine insight into country coverage + top notch deals. Deals which boutiques in continental Europe (except Roth/Laz for France, etc.) have rarely access to.

And yes, I would also stress the point as sais previously, that you would have the opportunity to work with other products than purely M&A.

Good luck!

Mar 5, 2018

You will never lead an IPO at an EB, which imo is an awesome experience and is actually pretty fun.

Mar 7, 2018

What about Moelis?

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."

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Mar 7, 2018

yes in France :)
Okay many thanks for your responses ! I will think about that.
So far, I must admit that I was focused on M&A, but I should reflect on ECM, DCM etc
I guess candidates shouldn't be focused on only one product in the industry
And I was wondering, what do you like most in your choice of specific group ( M&A, DCM, ECM ...) ? It is sometimes difficult for graduates to target what they really want to do at this stage. For my part, I think my first choice is definitely M&A but I am not enough aware of the other products in IB

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Mar 7, 2018

Standard answer would touch on the access to a variety of products and more resources. The better answer would briefly touch on those points, but then immediately turn to what this BB can offer than your EB or other BBs cannot. Perhaps you're interviewing with a coverage group that does not exist at EBs, or perhaps you are interviewing with a group that has completed a set of very unique transactions in the past few years.

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Mar 7, 2018

The majority of perks of EB's are only relevant at the analyst level. Regarding what the perks are, they are mentioned in several WSO posts (check out the blog post of APAE as well), but just to mention a couple:

  • leaner staff / more resp. as an analyst
  • higher pay
  • strictly advisory focus (M&A)
  • work life balance? (questionable because some of my EB peers were getting crushed)

Once you hit the associate level and start to approach IB as a career rather than just a 2-year learning stint, then the decks are completely turned - Any BB would trump an EB due to mainly 1 reason:

FINANCING

Remember you're trying to build a relationship with the CEO, but who do you think is going to have an easier time doing so? An EB VP (solely on the basis of "independent" advice) or the equivalent VP at a BB who is offering both advice and a $1b financing package for the acquisition? Give this some thought, and the answer should be clear.

There's a reason why 99% of all partners/MDs in these EBs are all former MDs/Group Heads at BBs. For them, they've built enough credibility throughout their careers that CEOs hire them exclusively just for their advice. Not so much for the EB VP trying to build up a client base...

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Mar 7, 2018

I would argue that a VP who specializes in M&A can probably provide a more focused expertise than someone who handles debt deals and equity raises in addition to providing M&A. Thus, they may be a more Trusted Advisor to a CFO who is looking to grow inorganically or is looking to sell. Have you ever been at a pitch where the CFO challenges the BB coverage group head in front of his product partners (ECM/LevFin/M&A) as to the conflict of interest his advice might come with? It is awkward. The reason 99% of partners/MDs at the EBs were formerly BB MD's is because the whole concept of a EB is fairly new. Where did you expect them to come from?

How do the leaner deal teams not affect the responsibilities of the Associate? More dealflow, less staff = more associate work. More work = more learning. Not sure what EB you are at. The higher pay thing exists at all levels.

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Mar 7, 2018

It is extremely rare for someone at the analyst level to leave an EB for a BB (unless they were asked to leave or something) unless they were planning to be career bankers.

The financing thing is real. However you can still be a great senior banker at an EB as both a relationship guy but more likely as a execution guy. Some of the best M&A focused MDs on the street are at EBs because the mid level guys at EBs get a ton of M&A execution experience. I know some MDs that don't really "own" relationships but CEOs come back to on a consistent basis because of their execution skills.

Mar 7, 2018

I am going through recruiting now and all the EBs have 0 Work life balance when compared to BB.

Best Response
Mar 7, 2018

There is a massive amount of misinformation on this thread.

Let me take some misnomers one by one.

  1. EBs are not a new phenomenon. Lazard has existed as an M&A specialist for the past 50 years, Blackstone had an M&A business for 30 years. In the 1990s, you had firms such as Wasserstein Perella and Wolfenson & Co., which was every bit as highly regarded as your Centerviews and Evercores. They had the same benefits and issues then as they do know.
  2. It is almost impossible to become a great senior banker having grown up at a boutique investment bank. It doesn't happen. You can count the exceptions on one hand (Antonio Weiss at Lazard and Robert Pruzan at Wasserstein and almost no one else). The street is littered with the bodies of really strong execution bankers who make Director or Jr. MD at a boutique firm, and can't get the clients to be an effective partner. Even the ones who make MD and stick around are struggling. These guys are often 40+ years, have no real clients of their own, carry the bags of the real rainmakers who came from BB firms, and make maybe $1.5mm a year. Do you really want to be that guy?
  3. A bulge bracket firm offers a lot more than financing to an aspiring MD. There are many other tangible advantages:
  • the most significant is resources. When you are a sr. Vp or a Director or a junior MD at a BB firm, you have an army of junior people at your beck and call. That means you can spend a lot less time directing work yourself and call on a whole lot more clients, and develop a much larger rolodex. The comparable banker in a boutique is always bogged down on deal execution or putting their own pitchbooks together
  • you have a far greater network of information about what is happening in the market, which makes you more relevant to clients as you are making your bones. Never underestimate how lonely it is a boutique where you don't have a large group of colleagues around the world gathering relevant information
  • sponsor relationships. Sponsors really care very little about boutiques because the driving factor in any sponsor deal is leveraged finance. Its all very to be doing large corporate deals when you are an established MD but sponsor business is the lifeblood of one's career when its being built, and that accrues primarily to the BBs
  • finally, financing matters, a lot. Unless you are Frank Quattrone, you are not a relevant technology banker without the IPO product. I've discussed the leveraged finance product above. Its hard to really understand all forms of M&A without understanding financing, and most homegrown boutique bankers come up short
  1. Conflicts of interest are part and parcel of life in banking. The way you answer the question on conflict of interest to a client is to say, "you have a lot of different ways to pay me, so I can be more objective about any single transaction given the long-term relationship". At boutiques, the only way you get paid is a successful M&A deal, so I'd argue the incentive is worse to push bad deals. But as I said earlier, there are always conflicts of interest. Good bankers manage them. Bad bankers don't know how. Good bankers get paid. Bad bankers don't.
  2. I don't deny the advantages of working at a boutique as an analyst or associate, but all of those advantages become disadvantages the day you turn VP and become career killers the day you progress beyond VP. The truth is there is no real credible banking career path outside the BB (maybe some smaller or regional firms like William Blair or Stephens, etc., but that's a different kettle of fish)
  3. Comp is higher at the boutiques at the analyst and associate level, probably equal at the VP level, and lower at other levels unless you are absolutely successful at the eat what you kill model. If a good group head at a BB is making $5-6mm a year annually, it is very hard to do that consistently at a boutique. That said, the upside is a lot higher at a boutique for the very top echelon (Blair Effron, Simon Robey, etc.)
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Mar 7, 2018

I have a friend who did this exact same move and I can relate. If you work on an industry with M&A deals only every so often with a lot of financing and ECM going on you can end participating in one deal every 3 years if you are lucky...and even then you are going to have huge competition.

Mar 7, 2018

@mergersandacquisitions78 , what are your thoughts on building a career at MM firms such as William Blair?

Mar 7, 2018

Good info. Any one else have thoughts good stories to share? Too soon for me to really opine, but always wonder on my side.

Mar 7, 2018

Delete

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Mar 7, 2018

No there's pretty much 0 value, especially since EB's tend to have appreciably better culture/lifestyle. Plus, EB's might have better placement in terms of exits than the average coverage group in both firms.

Mar 7, 2018

Any more thoughts on this?

Mar 7, 2018

Depends. Going from GHL to GS TMT makes sense.

Turning down a return offer from LAZ for MS Nat Res doesn't.

Mar 7, 2018

No point doing FT recruiting unless you have a shot at BX M&A/RR, GS TMT/FIG, or MS M&A. These five groups are just about the only ones that, by and large, have an edge over EVR/LAZ/GHL in terms of exit opportunities.

Mar 7, 2018
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Mar 7, 2018