Do you know why you want to work at a Bulge Bracket Bank? What is the difference between Bulge Bracket and Boutique Investment Banks? This post will look at what these two models of Investment Banking involve and whether it makes a difference whether you work at one or the other.
What is the difference between a Bulge Bracket and a Boutique Investment Bank?
Before we get into whether it is better to work at one bank or another as a junior banker it is worth understanding the difference between Bulge Bracket and Boutique Investment Banks.
Bulge Bracket Investment Banks used to refer to a set of large Investment Banks in the United States which were the largest and most prestigious of all of the commercial banks. It used to refer to very specific banks (i.e. Goldman Sachs, Morgan Stanley, Merrill Lynch, First Boston etc.)
Today the term is used a little more broadly. It no longer really refers to specific banks but it refers to what the banks do. Bulge Bracket banks are typically ones that are large and have departments that can cater to all of the needs and requirements of a corporate customer. Some of the services that full service banks offer include:
- Advice on mergers and acquisitions
- Sales and trading desks
- Equities research teams
- Debt Capital Markets teams
- Wealth management businesses
- Private Wealth Client businesses
- After the GFC many also have retail arms and some also have proprietary trading arms
Boutique Investment Banks by contrast rarely offer all of the services mentioned above. They are typically specialist M&A advisors who don’t have the ability to do many of the tasks (such as equity or debt raises) that the Bulge Bracket firms do. They are typically seen as more independent than the large Bulge Bracket banks and they are often brought onto deals as Independent Advisers to the Board.
Should you work at a Bulge Bracket or a Boutique Investment Bank?
This is a question that has been asked more times than I can possibly remember. Well there are pros and cons to both. I worked at a Bulge Bracket firm so just keep that in mind while you read this analysis. I have had several friends and contacts that worked at boutique investment banks and my opinion of boutique banks has been formed through their descriptions and experiences.
Generally speaking you will be working on larger deals at a Bulge Bracket bank. The Bulge Bracket banks tend to pitch for the larger deals much more than the boutique banks and tend to use their ability to roll in things like FX, equity raisings, DCM experience in order to land these deals. When Boutique banks do get on these deals it is generally as an independent adviser to the board.
As a junior banker it sounds like you should definitely go for the Bulge Bracket right? Well not necessarily…the problem of going for the bigger deals is that you’re constantly pitching for these deals and you don’t land all of them. Your counterparts in boutique firms are often getting more and better live deal experience with far less pitching.
The deals on your resume look better at a bulge bracket firm but you will often have have far less deals and experience under your belt.
The breadth of experience
You will get exposed to far more areas of the financial world in a Bulge Bracket Investment Bank. Unless you work in a major financial center (think London or New York) the chances are you are going to get roped in on deals outside of your regular team. You are probably going to see an IPO or two, an equity raise, a debt capital markets issue as well as the regular M&A deals that you will do.
You will not get this sort of experience in a Boutique Bank but you will have far more experience in doing M&A deals than your typically Bulge Bracket counterpart…because that’s all you’re doing!
This is the one area where Bulge Bracket banks come far out ahead (in my experience). I never heard of a boutique banker getting paid as much as someone working at a bulge bracket firm.
The work-life balance
At a Bulge Bracket bank the work life experience is a pretty standard experience across all of the major Investment Banks. Have a look at my post on a typically day in Investment Banking to see what I mean.
Boutique Investment Banks are far more variable. Some of my friends at boutiques had great work life balances and were out of the office at 8 every night. Others however were working far past my finish time ever night because their bank got mandated on a some seriously large deals and they didn’t have the junior banking pool to cope.
The exit opportunities
The exit opportunities are typically better from bulge bracket banks for a few reasons. The major one is reputation…the name of bulge bracket banks just look better than boutique banks and this makes a difference (even though it shouldn’t). Additionally as I mentioned above you will typically have had a broader experience when it comes to the deals you worked on.
So which one should you work at?
Well I’m going to be difficult and leave this one up to you. They both bring different benefits and downsides to the table. It is also possible to switch from one to the other if you decide that what you’re doing isn’t working for you.
I’ve seen people switch from Boutique Banks to Bulge Bracket banks because they wanted to work internationally and they wanted their resume to look better. I’ve seen people do the opposite switch because they wanted a better lifestyle and to concentrate on M&A deals.
You are never stuck in one role forever (which is often hard to forget when you’re trying to weigh up options) so my advice to you is don’t worry about it too much. Go for the job you think will give you the best experience and take it from there. You can always change your mind later.
Do you have any questions for me on Bulge Bracket Investment Banks vs Boutique Banks? Post a comment below or shoot me an email (or contact me @BankersPitch) and I’ll get back to you as soon as possible.