In this Market Maker podcast episode, host Anthony Cheung and guest Silvia dissect the two primary structures within investment‑banking M&A teams: sector coverage groups and product (transaction) groups. They define sector coverage as industry‑specific teams (e.g., Healthcare, TMT, Energy) that develop deep knowledge of market trends, key players, and valuation drivers, enabling them to generate ideas and pitch tailored solutions. Product teams, by contrast, are transaction‑focused (M&A execution, leveraged finance, equity capital markets, restructuring) and provide execution expertise across any industry. The conversation explores how banks differ in coverage breadth—bulge‑bracket banks often have many narrowly defined sectors, while boutiques combine related industries into broader teams. They discuss typical career paths, including rotational programs, early specialization, and the possibility of moving between coverage and product, emphasizing networking, proving technical or industry expertise, and aligning personal skill sets (modeling vs client‑facing strategy). Silvia explains why industry knowledge is crucial for winning mandates, as advisors must anticipate client needs, understand sector‑specific valuation metrics, and leverage networks. The episode concludes with practical interview advice: candidates should understand the day‑to‑day differences, assess their own strengths, and articulate a clear preference for coverage or product roles to stand out in interviews.
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Hello and welcome back to the Market Maker podcast, and I'm joined once again by Silvia for us to do a bit of a, a dive into a specific subject around M&A. And this one is about how sector coverage works in mergers and acquisitions, namely explaining the sector coverage versus product teams, how they're different, why it matters, and implications for your potential future career. So Silvia, where would you like to begin?
Perfect. Thank you, Anthony. Hi everyone. I think that's actually a really good topic to cover because reality is, um, one of the previous episodes we were talking about, okay, how do you approach your interview if you're interviewing for a banking role? Reality is another of those questions that could pop up are, okay, what's a product team you are specifically interested in, for example? And the reality is that if you don't really know, because basically you've never had some experience and so you just don't know what's the difference between sector coverage product teams, you may be starting like, 'Oh yeah, I really love tech products, so I would love to work for the tech team.' In reality, that's not really a good way to start because when bankers would think about product teams, they're not thinking about sectors and they are like something totally different. So yeah, I think it's worth like dissecting what one team focuses on and like what instead like product teams do on a day-to-day basis as well.
Okay, so let's start with sector coverage. So I often see these listed with different banks. So what exactly are we talking about?
Yeah, so as the name says, we, you will have some specialists in a single industry vertical. So you can work for the healthcare team or you can work for the TMT team. In that case, for example, you will be focusing on hardware, software, but also like media, telecom companies. You can have natural resources and energy. You can have real estate. So really it's just a division in terms of industries or sectors. So really. Basically, if you would be working on such a team, you become an expert in that specific field. You are not just a generalist, but instead, you know everything about like, who are all the key players, what are the most recent market trends or market developments, and like, how to value a specific company and like, what are the key drivers for a specific company based on the fact that it is in that industry and not just like as a kind of more general matter.
Given what you said then, would it be a case of I join one sector and I get known for being the coverage person for that sector? I'm like that guy, I'm the energy guy, for example, who you come to. So how much do you, does your early career define your sector or can you change sectors early in your career and then get a bit more fixed later? What's the typical path?
Yeah, that's a good question. This depends a bit on the programs from the investment bank you are starting working for. Sometimes there are some rotational type of programs so that maybe you can do 6 months in a specific sector team and then another 6 months in another one. And you just understand on your side and also on your team side, like where there is a good match. And then you can start really focusing on that sector and building up the type of technical knowledge up to the point in which you're really the master in that industry. And you can really be like so knowledgeable that you can be like generate ideas, go out and pitch them to your clients because you can really understand, okay, what they may need and what is something that might be really interesting for them, just like not as a general M&A transaction, but because there is like a specific trend in the market or like something that is happening, like also from a regulatory perspective that could benefit that company with a transaction.
With those sectors you mentioned, there's like a wide variety. Would it only be the bulge bracket banks that cover all of them? So let's say, I mean, I don't even know how many there are, I'm sure you do, but so is it each bank will have slightly different sector coverage and how would boutiques fit into this? Like, so from a non-bulge bracket, if I'm working at a Lazard or an Evercore, am I just focusing on a couple of different areas?
Yeah, I would say that's, So there are two aspects. So first of all, again, and something that might be like important when you're thinking about interviews, there are banks that are like extremely strong for some of these sectors. These are definitely like their go-to. You can see that like all key players in the market are selecting the advisors from that bank when they want to do a transaction. They are the top bank for what regards that sector. Then in terms of like what you can find in one bank versus another versus maybe a boutique, it really depends. Usually what you will find is maybe in a really big bulge bracket bank, you can have a sector just focused on natural resources and then another team focused on energy. And then maybe instead, when you're looking at it from a boutique type of bank, you will have them put together in a unique team. So that single team will be looking at energy companies, will be looking at like renewable energy companies, will be looking at mining companies as well. You just have a different type of spread and division, let's say. So you would have like fewer teams in that case.
Okay, so we'll move on to product team. What's the definition of a product team?
Yeah, so if you're working for a product team instead, which again, thinking about product maybe is not that straightforward, it's not that obvious, but the product for a bank at the end of the day is what they're helping their clients on. So this can be a money transaction, this can be an IPO. So basically you are an execution expert in that case instead of being industry expert. So you will be helping no matter what is the industry with a specific type of transaction. So, you will have the M&A execution team, you will have the leveraged finance teams, the equity capital markets teams in case it is an IPO, debt capital markets, restructuring. For each, each specific team will focus just on one type of transaction and will be able to step in, in the deal process and help out no matter what the industry is.
Do, do you think young people going into this profession then know I think I'm a sector person or I'm a product person.
Yeah, I think, I think it's hard to know. I think like many young students maybe might be a little bit more drawn to the sector coverage just because it's a bit more tangible. Like you can think about it as, okay, there's this sector I'm really interested in, so I want to work for this team. But reality is that there is a good implication in terms of like, what is your day-to-day job? Looking like and like what are the skills that you need to have. So I think that really what should guide your idea when you are starting thinking about, okay, do I want to work for a product team or for sector coverage team? Okay. How do I decide between them? You can think about what is the type of job that you would be going to do. It's like the role and tasks of each will be quite different and can start shaping a little bit how your career will look like.
So what, superficially it's what, more modeling on one side and then more interpersonal skills, client-facing on the other?
Yes. Yes. That's literally correct. Like whenever we're thinking about product teams, it'll be more technical execution. So like way more crunching numbers, financial modeling. So if you're a modeling enthusiast, if you really love like building your models, analyzing companies, seeing how you can forecast their models to the future, then a product team would definitely be something that can raise your interest and where you can thrive. Whereas instead, if your interest is more into kind of strategic thinking, relationship with your clients, marketing sites, ideas generation, then it's more on the coverage team side. So yeah, you can see there are actually very different skill sets. And of course, movement from one to another is possible, but you may want to think about yourself as standing, okay, It's true that you will be doing some financial modeling in both. It's true that you will have some strategic thinking involved in both, but one is definitely more skewed towards these two areas.
From your experience, do you, are organizations, I mean, you obviously got to be good at your job and kind of not just delivering, over-delivering to have options, I guess, available to you. But in terms of like, you might go into a product team and actually demonstrates some characteristics that could be better. How do you actually engineer that switch? Is it you work with your manager or the hiring, the HR team? Do you need to serve out a period of time on the product side to go, right, yet now you've earned your opportunity to have that flex? What does that look like in reality?
Yeah, I want to be honest, that will really depend a bit from your bank, like how this movement is possible or not. Sometimes there will be certain needs in the team you're working for, and so they will be really keen to like keep you in that team, but the reality I would say your approach to start with really kind of like networking with people from other teams. Let's say you are now working in coverage, in a coverage team, for example, like oil and gas, and you would like to explore the product team side of things, like connect with those teams, like chat with some analysts, chat with some associates from those teams, understand really, first of all, again, if you want to make that move, because that is something interesting for you and what you may need, like what are the expectations from your side? Because again, if you're in a coverage team and you want to switch to product, you really need to be able to prove you have that super good, highly technical expertise to be able to do great work, maybe rather than what you're doing right now, more on the idea generating process and relationships with your clients, more like maybe your work is best when it comes to numbers and negotiation and similar things. And then again, it will be literally the same if the case is the opposite. If you're in a product team and you want to switch to a sector coverage team, you will need to make that effort to make sure that you can build that understanding and knowledge about that sector, because again, they are expecting someone to be the master of the industry. And so, you will need to like be able to prove that in case.
Okay. You had a note on, uh, that you sent to me about why industry knowledge matters. What do you mean by that?
Yeah, because like at the end of the day, we can think about, okay, we have our product teams, but why do we need sector coverage? Cannot we just have all generalists? All deals are pretty much the same, and we just serve the clients as they come. Reality is not really, because first of all, For example, thinking about technicals, thinking about the valuation of a company or like the key drivers of a company. This will definitely be really different if you're working for one specific industry or another. The drivers for a tech company might be annual recurring revenue or daily active users, for example. This will not be the same if you're looking at a pharmaceutical company, for example. And so your ability to really understand the future projections of a company, of the company can grow and thrive and what the company may need, will be really different from industry to industry. And then again, the structure of the deal in turn can be different, that rationale behind it, why it is happening, can be different. If you think about oil and gas, many times we have vertical integration at the core of it as like key reason why two companies are integrating. It will not be the same for another sector. And again, I think that the bottom line basically is there are so many investment banks out there. When a client, a company decides to do a specific transaction, can choose any of these banks, how you can win the mandate, how you can make sure that the company is selecting you will definitely be based on how much can you anticipate their needs, how much can you go there and show that them, you already are mastering that industry. They don't need to explain you the basics because think about it like you're the company, you're coming to me and I'm like, okay, explain me how your business model works so that I can start building my model. It becomes like really kind of a waste of time for the company. Like the company wants to make sure that the advisor is already on top of it, already knows how it works in and out. Also because you will have also wider network that allows you to select who is the right target for the company, if the company is interested to acquire another company perhaps. And so, yeah, it just makes it easier. For you to succeed at getting those mandates and be a successful advisor if you are really mastering the art of like knowing that specific industry.
Yeah, I was just thinking as you're explaining, it's very much similar on the market side. So if you're trading a specific asset class or even within an asset class in FX, are you trading a high-volume FX pair like the euro or the Aussie or the yen, or is it something more more obscure, less liquidity. And generally these traders will own that one book and they know that product intimately, how it moves, when it moves, who the buyers and sellers are typically, when they— and it's, yeah, it's interesting, like the crossover and that specialism that people generally have. Okay. So if you were going to summarize then, what would be the key sort of takeaway points then to wrap up? This conversation?
Yeah, absolutely. I think the takeaway from here is know what's the difference between the two, understand how these differences make it easier for you to take a choice between one or the other based on what's the day-to-day work looking like, what do you want for your career, what do you want to specialize in, whether you're more a relationship, strategic thinking type of person, or whether you really love crunching the numbers, thinking about the negotiation side of things, because this will actually skew how you can select, again, one team with respect to another, and really being able to thrive, confidently talk about it in an interview, and smash it on your role.
Yeah, good stuff. All right, well, look, when we share this on Spotify and YouTube, I know that you can leave comments, so please do. Any questions at all, I'm sure Sylvia and I will help if we can. Otherwise, we'll see you for the next episode. Thank you, Sylvia.
