Bulge Bracket vs. Boutique Investment Banking: Career Advice for Students & Grads

Hello and welcome back to the Market Maker Podcast. Today we are unpacking an often misunderstood topic for students exploring investment banking specifically, and that is the real differences between bulge brackets and elite boutiques and boutiques in general. We're going to break down how each model actually works from business lines and deal flow to team structure, culture, career development, and also share how to position yourself in interviews depending on which type of firm you're looking to target in future. So whether you're drawn to the global scale of a, of a bulge bracket or the early responsibility of an elite boutique, I'm joined by Silvia to help give us a bit of a framework to understand the trade-offs and where you might thrive best.

Hey, hi everyone. Nice to see you all again. So yeah, it's a really hot topic. I believe I've been going around universities over the past month or so, delivering some of our M&A sessions or our corporate separate finance sessions. And every time I finish my events, students are coming up to my desk and they're starting asking me some questions. And there is one that is always there, literally all the time, which is, should I choose a bulge bracket or should I choose a boutique instead? And the reality is, like, as you will see, I'm not going to give you one answer. I will not tell you, you need to choose this one or the other one, but we can find out together why, which is basically you should be focusing more on your fit because it will be very different, the type of environment you can find in one or the other, and so even in return your day-to-day. So let's try to unpack it today.

Yeah. So maybe a good place to start then is, is the definition. How, how do you describe each one of these different areas?

Yeah, absolutely. So starting from the bulge bracket, you can think about this as JPMorgan, Goldman Sachs, Morgan Stanley, Bank of America, all these global banks that provide a range of very different services. So even if here we're talking about M&A mainly, they will not be institutions that provide only M&A advisory. They are going to have some trading desks, some equity and debt capital markets divisions. They're going to lend money to firms. So basically you can see them as a one-stop shop that can provide you with very varied services. On the other hand, when we think about boutiques and especially elite boutiques, these will be firms that are very focused instead on purely advisory. They are specialists in this area. And so you would not go to an elite boutique if you are going to ask to lend some money, for example. So this will basically be the starting point, really the definition, as you said, that will draw what is the key difference between the two. And in terms of the boutiques, of course, you can find some different categories in a sense. You can find elite boutiques, the likes of Evercore, Lazard, et cetera, Jefferies. And then you can find more middle market firms, uh, that would be usually a little bit smaller, but still working on really good quality deals.

Yeah, just on that point, when someone says mid-market, because that's another kind of jargon word, what are they— what do they mean? Is that mid-market is all banks, or mid-market is a smaller boutique, non-elite?

Yeah, in this context, we are talking more about these boutique firms that are the non-elite, which again doesn't really mean they're not working on some really interesting deals, but usually what you will find is that they will have a bit more of a sectoral focus, for example, and they would not be working on cross-border ultra mega deals, for example, because also of their actual size and the manpower that they have usually.

Makes sense. Okay. So maybe just go a layer deeper and look at, let's have a look at the business models and the types of services that they provide. So maybe we could start with the bulge bracket.

Yeah, absolutely. So again, we started by saying that our bulge bracket provide a range of different services to their clients. So they will be earning fees, not just in terms of their M&A fees, those from equity and debt capital markets desk, and even from financing, which is a really big part of it because essentially these huge institutions have very big, large balance sheets, and this enables them to be able to lend money to companies. So basically, if you are looking to acquire a firm and you need a lot of money in order to be able to raise that cash to do your acquisition. You would usually go towards a bulge bracket bank. Let's think about, for example, micro— the Microsoft and Activision deal. In that case, there was definitely a lot of money to be raised in order to be able to complete acquisition. It was a huge one. I'm pretty sure that everyone listening to this podcast heard about it. And also it was really regulatory heavy as well. It was a huge transaction that needed some expertise even outside of the pure advisory space. And so why it's been really crucial to select an important bulge bracket bank as key advisor for this one.

Yeah, I was just having a quick look because I think I remember talking about a deal recently and it was the JPMorgan and its involvement with the LBO, the biggest one in history, I think it was, wasn't it? Where they, the leveraged buyout of Electronic Arts, that was it, with the private equity players and they're financing part of the deal, they're providing advisory. Really multifaceted in that way.

Yeah, exactly. It's pretty much all those transactions here, which you do not only need the specialist expertise on pure banking, on pure advisory, but you also need to raise some money, you need the financing, and then you need some regulatory expertise as well. In that case, if you're choosing a global bulge bracket, that one institution will be able to provide you with all these different types of services.

So it really comes down then to the management team of X company deciding on what exactly is it that they need, what is it they want to do, is it really super specific, is there any conflicts of interest?

Exactly.

Things of that nature, would that be right?

Yeah, exactly. Because if you think instead, on the other hand, about some transactions in which financing might not be so crucial, and instead you really care about independence, about objectivity, Often companies would choose a boutique or an elite boutique for this type of transaction because they want that independence. They want to make sure that there is no conflict of interest. What a boutique bank could say is like, we are conflict-free because we are not trying to lend you money. We are not trying to upsell you some other services. We are here just purely to provide you our advisory as experts in the field.

So yeah, just interested then maybe point 3 around deal flow. So how does that differ? I'm assuming a lot of the bulge brackets work on these mega deals. So is it a case of fewer deals, bigger deals, and then the boutique's the opposite, or is it a bit of a mix and match?

Yeah, exactly. So for the bulge bracket case, first of all, they tend to really dominate the mega deal space. And this again comes just very barely from the manpower that they have. Often they will work on cross-border M&A transactions, so you will have teams from different countries actually collaborating together for this deal. Uh, they will work on like huge, uh, IPOs. For example, the Arm IPO, what could be one good example, has been like a huge one. And instead, when you think about, uh, boutiques, their hedge would really be that focus. So they would tend to win mandates where they have a really big expertise in specific sectors, or also in terms of relationships, because usually senior bankers at elite boutiques will have these really longstanding relationships with some companies. And so it is also that deep expertise plus relationship side of things that should enable them to win these deals, which again, could be some really big ones. You will often find actually elite boutiques and bulge brackets fighting for the same very, very, very big deals.

How does that work when they're fighting for the same deals when you might have one team that's got 30 people, another team that's got 5 people?

Yeah, again, I think It's a little bit of a balance and again, about what the company is really seeking. If it is that independence, objectivity, they might want a smaller team working on the deal. Or if instead they really need expertise on a lot of different fields, maybe from a regulatory perspective, maybe they need some financing. And so then, well, you would probably benefit more from a wider organization and from a wider team working on your deal. And something that you just mentioned, it's really interesting because reality is that from a pure how it works day-to-day perspective, when you have those mega deals in a bulge bracket, you will be maybe one of 30 analysts working on the transaction, whereas instead you could be one of 3, as I said, in a boutique. And so this actually also starts giving an additional layer of making you feel like, what is the difference for you as an analyst in your day-to-day job in terms of how it works and what your task will be, et cetera.

Yeah, so, so maybe we could go into that as a good segue then, like the division of responsibility, the dynamics of the team. So, so how, how does that differ between a larger or leaner team?

Yeah, I would say if you want to really find a couple of keywords that represent one or the other, you can really benefit from scale in terms of bulge bracket, when instead you would have a huge exposure in the context of a boutique or elite boutique, because indeed deal teams are definitely larger inside of a bulge bracket and often more layered, which also means there is a bit more structure. So you will have your analysts that are reporting to associates that are reporting to the VPs that are reporting to the MDs, for example. So you have this more structural hierarchical system in a way. And you would be, for example, one analyst, which becomes really focused, really specialized because you might be then always working on the same part of a model, for example, that is your expertise. And then there will be another analyst working on another part of the model, another one working more on the PowerPoint, for example, et cetera, et cetera. Instead, when we're looking at, uh, Elite Boutiques, it's definitely leaner in terms of team size. And this also means that usually analysts or associates will always be involved with all the parts of the transaction. You will all be working on the same model. You will all be collaborating in order to put together the materials. Often you even have like analysts and definitely associates being like on the client calls, joining them together with the MDs. So. You could see a bit of a more flat structure in a sense, and you get a different exposure in the two experiences because of course you become really specialized, really like the master of that area that you're covering in terms of the bulge bracket, when instead you would have exposure to very different type of things if you're working for a boutique.

Yeah. So, so maybe you could explain to me then a little bit more about, uh, how that translates then into the actual work environment. And the culture? I'm assuming that there's a lot of shared similarities of core competencies. So, financial modeling, attention to detail, hardworking, all that good stuff. But then what differentiates them though, beyond those core skills?

Yeah, no, definitely. And again, also because you would be empowered with some really excellent skill sets in both opportunities. They are just different in a sense, and it's different your day-to-day experience, because as you said, culture will be different. And it's not to say one is good and one is bad, of course, it's more where you thrive more, if it is in a huge, more structural organization that's, uh, on the other hand, can give you a lot of breath, or instead, uh, if you enjoy working more in a small team where you have really good exposure early on. Even thinking about, uh, when you join, usually you receive some trainings. So the trainings for a bulge bracket will usually be like 6 weeks, you, all the cohorts from different offices all go together in New York or in London, and they receive this very long type of structured training. Whereas if you think about boutiques, they, they will receive some training, of course, but most of it is really learning on the job. So if you really like to be thrown in the deep end, that would definitely, would be, definitely be where you thrive most because again, it's less structural, but it's more on the job from day one, you could be working alongside your MD on a very important deal, for example.

So I know that talking to students, often they'll feel quite a degree of pressure between the selection that they make at a very early stage, even an internship, for example, might define them down a certain route that they can then no longer move across from bulge bracket to boutique or vice versa. What does that development from a career perspective look like if you go down each route, and is there a degree of flexibility to move between?

Yeah, I would not say that it really defines you. Like, you can start in a bulge bracket and then decide to move to a boutique, or literally the opposite. What is really important is to understand, for example, if— what is that you value most? So, if, for example, you would definitely like to move around a little bit, whether this is from one region to another region, or whether you would like to move, for example, for M&A to ECM. If you want to provide yourself that flexibility, because maybe when you've just finished uni, you're going to your first role, you're not that sure yet that that will be your life, basically, that is much easier in the context of a bulge bracket. And again, it's because of like their size, because of how much more structured they are, it is way easier to move around from one office to another, from one division to another. In this context with respect to whether you are in an elite boutique. But again, the, on the other hand, you really get that good depth of understanding if you work in a boutique, because these also allow you to be less specialized and from day one to work on a lot of different things, a lot of different activities. And so this also equips you with something really important, because if you're looking to move then to a bulge bracket or you're looking to move, like, wherever could be another area, private equity, for example, you have received that very full-on, not 6 weeks training, maybe, but on the desk, everyday mentorship from your MD and ability to take on your responsibility, be accountable, but also have a lot of exposure from day one, which instead you might have a little bit less, especially when you're starting as an intern or as an analyst in a bulge bracket.

Okay. Well, you started the conversation by saying lots of students ask you questions about this. I'm sure lots of them finish by asking you, what are some tips for if they're interviewing for, for one or the other? So what would you say in response to that?

Yeah, that's a very good point. Also, because I believe that it's really hard whenever you're doing your interview and the question that comes up to you is, why this bank or why a bulge bracket with respect to an elite? Like, it's really hard to answer this question. It's like, I feel it for students and I remember back in the days when I was applying. And I think that the very important thing is basically aligning what is your decision to your fit, basically, and trying to be a little bit balanced, if it makes sense. Of course, you don't want to give them a too political answer, basically not saying anything, but at the same time, you also don't want to go in there and say something like, I prefer boutiques because they have better hours. First of all, it's not always true, I would say. So, be careful with that. And also, you don't really want to just position that as the reason why you're deciding, because, well, it's of course a strong decision from one perspective if you value your own free time and you want to do other things outside of work, but from the point of view of the investment bank, it would not go down too well, I would say. And on the other hand, you also don't want to go to a bulge bracket and say, oh yes, I want this because I want the prestige. Or just something like that. I want the money. You should instead emphasize why that is a type of environment where you think that you could thrive most, that you could thrive better, and that is really for you. So, for example, if you're choosing a boutique, you could talk about like the specialization, the independence, the type of exposure that you get really early on, the fact that you really enjoy working on smaller type of teams, taking on your responsibilities. And instead, if you're interviewing for a bulge bracket, you can talk about the global scale, the chance to work across different types of products, to move across regions, this global reach and structure, even like the learning opportunities, I would say, because personally, for example, when I started working, I went for a bulge bracket and something super important for me very early on was just like getting as many learning opportunities as I could. And so those more structured trainings and opportunities also to look around different areas was super important for me.

Great. Cool. Well, I was taking some brief notes while you were talking. So to kind of summarize then, I think you did a great job there just wrapping really, but the main thing to remember, bulge brackets give you sort of breadth, global coverage, capital markets exposure, formal training you mentioned there. On the flip side, boutiques, depth, responsibility, hands-on advisory experience from day one. So thinking about whether you value the structure or autonomy, brand or exposure, and then tailoring your interviews to show why that platform fits your goals seems to make the most sense. So reminder to anyone listening, if you enjoyed Silvia's explanation there, then we did record a previous episode which was entitled M&A Interview Techniques, where Silvia, I know you did a really good job just breaking down how to describe talking about a deal, because that's often one of the hurdles you need to jump when you're going through the application process for IB. So I will put the link to that in the show notes, but any questions at all or any comments that people have, any future episodes with Silvia that you would like me to put some questions to her, let us know in the comments section. Be happy to do so. But thank you, Silvia. Appreciate it.

Sure. Thank you, Ant, and thanks everyone. Bye-bye.