Working in a Boutique vs a Bulge Bracket Investment Banking Firm

There has been a lot of news in the media recently about how investment banking fees are at an all-time low and how those multi-million dollar bonuses are about to take a beating. But recently the Financial Times noted how boutique banks like Evercore and Moelis are doing well, and are attracting a great deal of interest.

Firms like Centerview and Moelis have even broken into the top 20 fee earners. But what are boutiques? What is it like working for one and where can you possibly go?

What are boutiques?

Boutiques are independent investment banks that have often been created by senior investment bankers. Houlihan Lokey, the largest boutique in the world, was created by ex-banker Scott Adelson. They often play on the founder’s strength, industry vertical specialization or regional focus, and focus primarily on deal advisory – M&A, Capital raising both in the public and private markets, restructuring and corporate finance.

Boutique banks call themselves independent and without conflict. Essentially this means because they focus only on advisory, there are no conflicts with regard to public trading. So they will never be in a position where they might be advising company A on sale while another department trades that stock.

Boutique structure

They are often top heavy, filled with rainmakers and senior bankers and feature a flat organizational structure. What does that mean? That means as an analyst you are going to work very hard but also gain more exposure while you put in the hours.

Analysts and associates are treated like resources, which are farmed out to deals. In a bulge bracket, it’s quite likely you will spend all your time creating pitches. In a boutique however, because of the flat structure, you might even be asked to come into meetings, be part of the execution and learn something.

An investment banking deal is made up of four parts- Origination, Execution (Marketing) and Execution (Negotiation) and Closing. A bulge bracket is often divided by Origination and Execution, which means you are either going to be making pitches or information memorandums.

At a boutique, industry specialists often divide teams and so if you belong to one team, you will find yourself doing work across the deal process, which means you learn more. Pay is also a little different. Boutiques pay less at the entry level but your potential to earn gets higher closer to the top because bonuses become a large part of your pay structure.

Close a deal and you earn a significant portion of the bonus pool, which is of course spread across a smaller base than at a bulge bracket. You might earn more at a bulge bracket but you will learn less.

How about career progression?

Since they are flat structures with fewer options in terms of departments, there’s much less bureaucracy and more transparency with regards to promotions. But because there are fewer departments and not that many levels, there’s not that far you can go. But that doesn’t matter.

Associates and VP’s in boutiques can often be seen heading to bulge brackets if they don’t find proper career progression at their old firm. Because of their intensive deal experience, they are quickly absorbed into both Private Equity and Bulge Bracket investment banking teams both in the Equity Capital Market and Corporate Advisory.

What are India’s top boutique banks?
Avendus Capital, MAPE, Veda Corporate Advisors, O3 Capital, Spark Capital, Dinodia. You also have global boutiques like Lazard, Moelis and Co and Houghlin Lokey.

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