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Bulge Bracket vs Boutique Investment Banks: Can David Win Goliath?


bulge bracket vs boutique investment bankIn the good old days, aspiring bankers settled for nothing less than big-name investment banks.

A boutique (or mid-market) investment bank… are you kidding?

Fast forward to 2016. More people are now seeking smaller, boutique and middle market investment firms that may offer more job stability.

This sage advice came from the Wall Street Journal in 2007. Interestingly, when the article was written, the bulge bracket banks were roaring loud and hiring left and right. Almost four years later, these words still ring true. Those who heeded the advice of the financial journal of record and moved to smaller firms had a better chance of protecting their investment banking careers in the ensuing economic downturn.

Now that the economy is picking up, the middle market is still the place to be for investment banking jobs. Here is why:

Bulge Bracket vs Boutique: The Middle / Regional / Niche Guys

1. Safe Havens

The smaller investment banks have turned out to be safer than even the biggest and most prestigious financial institutions. Even those who managed to keep their jobs at a large bank likely ended up with their cash tied up in bank shares that worth little for years.

2. More Small Fish

When it comes to M&A jobs, bigger is not better. Smaller deals are not only more interesting to work on, they are easier to find. For each multi-billion dollar deal on the front page of the Wall Street Journal, you can find 10-15 smaller deals in the $100 million-$1 billion range.

3. Little Leagues But Heavy Hitters

Target your mergers and acquisitions jobs search at where the action is at in the post-Lehman-collapse world — the middle market. Many heavy hitters on Wall Street have left the big banks to establish smaller middle-market shops focused on M&A. No bonus curbs, more entrepreneurial culture, less internal politics…

4. Fewer Conflicts of Interest

Boutique bankers are subject to fewer conflicts of interest. The middle market M&A advisers are focused on, well, M&A advice and not on proprietary trading or cross-selling you fancy financial instruments that you do not need in the first place.

5. More Golf Time with Senior Bankers?

For investors, personalized service by specialists is a draw. Smaller firms can provide more client attention (i.e., you don’t have to compete with the Microsoft’s of the world). As a junior person on the team, you will get more exposure to clients and the senior bankers. Privy to higher level information and attention, you will advance faster your investment banking career, and you will learn the trade faster.

6. A Tailor-Made Career

In middle market firms the fit, or your ability to be a part of the team — whether it is working or socializing — is really important. To get started, check out the list of boutique investment banks here. Familiarize yourself with those companies, browse their websites and history, and get a taste for their niche focus and culture.

For Your Further Reading