People talk about bulge bracket vs elite boutique investment banks. But what exactly are they? These are investment bank jargon used to classify investment banks in 3 subgroups.
The investment banks in the “bulge brackets” are the biggest, most high profile and likely the most profitable (well, except in 2008) within the investment banking industry. Cream of the crop. Leader of the pack.
Besides the glamor, here are the characteristics:
1. Size and Scope
Bulge bracket investment banks are often international banks with global presence in North America, Europe and Asia.
Most of them are publicly listed. They can therefore easily raise funds via stock and debt offerings to beef up their balance sheet, and support their clients in financing exercise.
They offer full investment banking services i.e. corporate finance, sales and trading and research. Within these 3 divisions they are numerous groups to cater a wide variety of clients.
Some of the bulge brackets go full service with retail banking arm, as well as private wealth management, asset management and insurance. They make a lot of money cross-selling these financial services.
These firms target the fortune 100 companies and do not normally serve companies beyond the Fortune 500 list. Therefore, deal size tends to be bigger.
Since the 2000s these firm focus on the $1 billion plus dollar deals, although they are known to work on deals around the $100 million range when the economy isn’t too great.
Banks of this size and scope need a lot of headcount. Every year the investment banking arm welcomes hundreds of new hire in their analysts and associates’ program. Other divisions also hire a considerable number of staff.
Examples of Bulge Bracket Investment Banks
Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch, UBS, Citi, Credit Suisse, Barclays, JP Morgan, Deutsche Bank are among the bulge brackets.
There are some international banks with strong regional foothold (e.g. HSBC and BNP Paribas) that can be seen as bulge brackets in their respective regions. Check out these top investment banks for details.
These i-banks target the mid-market, so they are less in size, scope, offering, headcount… everything compared to the big guys.
For example, they are generally strong in their home countries. They may have some presence in other regions but much smaller than their competitors in the bulge brackets.
In many cases, these firm specialize in one particular business (e.g. restructuring for Houlihan Lokey) but ok-ish for the rest of the groups.
Examples of Mid-Market Investment Banks
Lazard, Houlihan Lokey, Piper Jaffray, Cowen, Jefferies, William Blair, to name a few. Check out these top-tier middle market investment banks for details.
At first glance you would have thought that boutique investment banks are those with even smaller scale than mid-market banks.
In a way, it is correct because they are many regional boutique investment banks servicing local businesses in their areas. These boutique shops don’t have the balance sheet to support lending and financing so they focus on advisory work, e.g. mergers and acquisitions, valuations and fairness opinions.
By Elite, I am Not Talking about the Regional Banks
But the ones I want to highlight is the elite boutique shops — they could be small, but are founded by the rainmakers in the bulge brackets. These banks also focus on advisory business (same issue of the lack of balance sheet) but the rainmakers’ rolodex enables them to land on high-profile deals.
These firm provide a unique combination of a collegial environment and exciting deal flows, and thus is often the most sought-after firms among candidates with financial background.
Examples Of Elite Boutique Investment Banks
Greenhill, Evercore, Perella Weinberg, Sagent and a few more. Here is a list of boutique investment banks for details.
It means that you shouldn’t limit yourself to the bulge bracket firms — there are a wide variety of i-banks that may better suit your background and working style.
In terms of bulge bracket vs elite boutique investment banks, I would generally recommend that you start at the biggest / most high-profile firm because this is going to be most helpful in your resume, in case you call it quit and look for another job.
Also, the big guys are more accommodating if you are tired of the existing work and want to switch to other areas, whether it’s to a different industry group within corporate finance, a regional office in another continent, or doing something different e.g. in research or asset management departments.
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