4 Topics You Should Know Before Applying for Opportunities in Investment Banking.

Before you start applying for roles in Investment Banking, you should be very familiar with the different types of banks that you can apply for. Read our quick summary below!

There are 4 main types of banks:

1.     Bulge Brackets

2.     Elite Boutiques

3.     Middle Markets

4.     Regional Boutiques 

Bulge Brackets

• These are banks with global recognition such as Goldman Sachs, Morgan Stanley, and JPMorgan Chase.

• Large deal flow and have large balance sheets meaning that they have the ability to underwrite and lead financing deals due to their large stores of capital. 

• Large analyst classes at around 100 - 150 analysts per year and are a great platform for those wishing to seek exit careers in private equity or business school after a few years with the business. The name recognition of these firms are powerful outside the IB world and will hold a lot of weight for future job applications.

• Expect long working hours! 80-hour weeks are the norm, with the workload reaching 105-110 hours during a live deal week. 

• Large analyst class size also means that people tend to become anonymous unless they are outstanding performers. This stints progression within the bank. Management also does not support analysts looking to exit. So, recruiting for private equity jobs is substantially more difficult at bulge brackets because they must do so on top of the pre-existing workload. 

Elite Boutiques 

• Elite boutiques have large deal flow, but do not carry balance sheets. Their independent advisory is a subtle criticism of bulge brackets, as their multiple departments often lead to competing interests that can work against the best interests of the client.

• They usually have smaller operations and deal teams. They carry around 15 - 20 new analysts in their class per year. These are ideal for students seeking better work experiences and dedicated to remaining in finance. People must sacrifice name recognition outside of finance, though their reputation within the industry is as sterling as the BBs.

• Work culture at EBs is similar to BBs in terms of workload and sheer hours, but the leaner deal teams ensure analysts develop relationships with their seniors. This creates a more interpersonal environment which allows progression within the firm. 

Middle Markets

• These banks are structurally the same as BBs, but have significantly smaller deal sizes and slower flow. 

• At the analyst level, the work experience is incredibly similar to BBs because they are responsible for mergers and acquisitions, underwriting, among other functions in the suite of a full investment bank.

• These banks have market-competitive compensation (though it can be lower depending on how small they are), but the lack of name recognition harms analysts’ exit opportunities inside and outside of finance. Analysts at these banks still have successful careers, but generally face a more difficult path to the same opportunities available to BB and EB analysts.

Industry/Regional Boutiques

• These banks function like EBs, but have smaller deal flows. This category sums up the rest of the investment banks not covered by the other three categories, but have some differences among them. 

• Some firms separate themselves by industry, such as Financial Technology Partners, which only focuses on mergers and acquisitions in the technology sector and operates mostly out of San Francisco. On the other hand there are boutiques that serve their particular region or which are too small to qualify for EB status.

• Most regional boutique founders have similar backgrounds to EB founders but are usually earlier in the life cycle of an independent advisory investment bank. These banks have market-competitive compensation (though it can be lower depending on how smaller they are), but the lack of name recognition harms analysts’ exit opportunities inside and outside of finance. Analysts at these banks still have successful careers, but generally face a more difficult path to the same opportunities available to BB and EB analysts. Industry boutiques, however, have name recognition in their corners of the market.