An elite boutique investment bank can be broadly defined as a firm that DOES NOT offer FULL-SERVICE investment banking, but AT LEAST ONE investment banking financial service. Being an employee at boutique investment banks means you will mostly work on Mergers & Acquisitions or Restructuring instead of Equity Capital Market and Debt Capital Market.
According to Vault Rankings, the Top 10 Most Prestigious Banking Firms for 2020 lack the presence of once top firms such as Barclays, Citigroup, UBS, Deutsche Banks, Wells Fargo. These firms, which were in the top 10 for decades, now have fallen behind Evercore, Centerview Partners, Lazard, Moelis & Company, PJT Partners.
The 2020 Top Investment Banking Firms are:
1. Goldman Sachs & Co
2. Morgan Stanley
5. Centerview Partners
7. Moelis & Company
8. Bank of America Corp
9. Credit Suisse
10. PJT Partners
Elite Boutique Banks are officially under the spotlight now. To name a few, renowned Elite Boutique Investment Banking firms are Evercore, Centerview Partners, GreenHill, Guggenheim, Lazard, Moelis & Company, Parella Weinberg, PJT Partners, Qatalyst Partners, Rothschild & Co.
2. Foundation of several Elite Boutique Banks
In the wake of the financial turmoil of 2008, former senior executives from Bulge Bracket Banks moved out to build their own firms. The founders of famous Elite Boutique Banks are typically famed-banking experts on their specialization from Bulge Brackets. Though the term goes along with “boutique”, the deals are not small. In contrast, they possessed a wide range of large clients in their portfolio. Some deals can be worth up to $1Bn
That said, many of the renowned Elite Boutique Banks were founded by top Wall Street bankers who decided not to work for too-big-to-fail firms to retain relationships with clients. Below are some top-tier elite boutique banks and their course of foundation:
- A group of Wall Street professionals including a former UBS banker and a former Morgan Stanley banker found Centerview Partners in 2006. Notwithstanding not having a long history of development like Bulge Brackets, Centerview Partners is in top 10 most-coveted banking firms now, according to Vault.
- Liontree Advisors was another Elite Boutique Bank founded by two UBS veterans, the firm focuses on media-related advisory.
- PJT Partners was named after Paul J.Taubman, an ex-Morgan Stanley banker. Although their biggest deal – Time Warner Cable-Comcast didn’t pan out, they have been handling various deals worth up to hundreds of millions of dollars.
3. Services of Elite Boutique Investment Banks
As said in the definition, Elite Boutique Investment Banking firms mainly focus on specific advisory deals including Mergers & Acquisitions and Restructuring. Several boutique firms, though not a majority, offer Asset Management. Yet it is extremely fierce to compete with Bulge Brackets in this realm. Asset Management can count as several boutique firms (not a majority) offer the service.
According to a Dealogic and Mergermarket, US Mergers & Acquisitions share by boutique banks has been on the rise since 2008. Since then, Elite Boutique Banks have held a number of over $1Bn M&A advising deals. As a result, they account for around 40% of global M&A deal volume in 2019, amounting to roughly $500Bn.
4. Advantages of Elite Boutique Banks over Bulge Bracket Banks
In fact, Elite Boutique Banks are specialized boutique firms. These firms are founded by individuals who worked within an industry group or a product group at a larger investment bank for several years and saw an opportunity to provide better services that larger banks cannot offer. These firms differentiate themselves hinged on independence, high-specialized attention due to the small number of deals and less complicated political culture.
Elite Boutique Banks are generally smaller in size with fewer divisions compared to Bulge Bracket Banks. This explains why they operate more efficiently, and the deals can go smoothly by less regulation and less multi-levels’ supervision than bureaucracy-laden Bulge Bracket Banks.
Elite Boutique Banks solely offer advisory service, they don’t get involved in sales and trading. M&A is considered extremely complex so providing both advisory and sales & trading service, as Bulge Brackets usually do, creates potential conflicts of interests despite the self-claimed “Chinese walls” by these banks. EBB can claim to be independent since they rarely struggle to weather a vast array of interest conflicts like large investment banks.
Elite Boutique firms majorly focus on Mergers & Acquisitions. The specialization is higher. The reputation of an Elite Boutique Investment Banks is largely hinged on the performance of every deal. From the perspective of clients, Elite Boutique Banks can provide them with advisory to the greatest extent. Advisory-specialized and taking clients seriously are strengths steering themselves through fierce competition with Bulge Bracket Banks.
5.1. A narrow range of services
Elite Boutique Firms can rarely fulfill the promise to jump to the next levels due to its specialization focus. They don’t have a full range of financial services as Bulge Brackets. The specialization, which differs Boutique firms from Bulge Bracket firms, means their limitations. They are strong in Mergers & Acquisitions, but they don’t have sufficient capabilities to handle Debt Capital, Equity Capital transactions, Sales & Trading, and Equity Research.
Several large clients want investment banks to act as professional underwriters, rather than just advisors. Underwriting means investment banks can provide services helping clients achieve two main objectives: advising on strategic transactions and distributing their stocks/companies to prospective buyers/investors. So Elite Boutique Banks cannot do that.
5.2. Less global presence
Elite Boutique Banks have less of a global presence. This is another challenge awaiting them.
But they just complement advisory roles inside the US. On a global scale, the roles are still predominantly played by Bulge Bracket Banks.
6.1. Bulge Bracket Investment Banks: The Superstars
Bulge bracket investment banks are the household names that everyone recognizes. They are the global titans of the financial world with thousands of employees and hundreds of locations distributed worldwide.
Bulge Bracket Banks are indeed the superstars in their field without limitations in their specialization, compared with smaller investment banks such as Middle Markets or Boutique Banks. Stars on the rise over the past 10 years, as Elite Boutique Banks have been, can rarely be all-star due to its size and structure.
Large banks hold multibillion-dollar deals. They often work closely with billionaires, biggest conglomerates on a global scale.
If put rising boutique banks aside, the most prestigious investment banking firms are as follows:
- Goldman Sachs
- JPMorgan Chase
- Morgan Stanley
- Credit Suisse
- Deutsche Bank
- Wells Fargo
- UBS Group
- Bank of America Merrill Lynch
If you are a fresh finance graduate, getting a job offer from any of these 10 banks is definitely your dream-come-true. Multibillion-dollar deals and Fortune 500, if not Fortune 100, clients are the words you hear most often about them. Whatever financial service is desired, they can satisfy.
6.2. Boutique Investment Banks: The Rising Stars
As mentioned above, In the aftermath of the Great Financial Crisis in 2008, rising unemployment and dwindling faith in banking giants inclined numerous high-profile senior bankers in bulge bracket firms to leave and establish their own boutique banks. At the same time, the outsourcing of all non-core aspects thanks to technological advancements makes it easier for one or few individuals to run a boutique bank.
Boutique investment banks:
- provide less service, but they are more specialized and industry-focused
- are small in size, but some of their deals are huge cash
- are not international, but they are regionally recognized
WARNING: They are going aggressively for a GREATER share of the M&A Advising market!
Yet, in general, if deals of bulge bracket banks are usually worth $500 million or above, the majority of boutique banks often handle deals worth $50 million, with a few worth up to $500 million.
6.3. Middle Market Investment Banks: Not That Big but Obviously Not Small
People usually want a clear-cut division between big and small, but the reality is not always just black and white. That is why middle market investment banks exist.
A simple definition of a middle market bank is an investment bank that lies between a bulge bracket and a boutique bank. They offer more services than just Mergers and Acquisitions and Restructuring, like Equity Capital Market and Debt Capital Market, but their deal sizes are worth less than that of a bulge bracket one (normally from $50 million to $500 million).
Some more distinguishable features, please!
- Middle market banks have a firm reputation in their home countries with offices spanning across multiple regions, but their international reputation is nothing compared to bulge bracket banks.
- The service range is wider than boutique banks, but the diversity and strength are not as good as bulge bracket banks either. Sales and Trading and Equity Research are their most significant services besides investment banking product groups.
- Exit opportunities, although brighter than boutique banks, are still somewhat limited with entry into small or mid-size private equity and hedge fund firms. Corporate finance, however, is a good fit for this category.
7. Pros and Cons of working at Elite Boutique Banks
Elite Boutique Investment Banks are highly desirable because:
Cash Compensation Can Be Much Higher Than Bulge Brackets: even as an analyst, the total compensation (base + bonus) of elite boutiques are higher than bulge bracket banks as they are mostly private companies with no intention of using stock as payment or defer compensation to senior managers like big banks.
The more you climb up the investment banking ladder, the wider the difference between the bulge bracket and the elite in terms of cash. We all know that global banks like Goldman Sachs or Bank of America pay big cash and bonuses, but they are nothing compared to William Blair and Jefferies
- In 2018, Goldman Sachs’ and Bank of America’ base salary for Vice President were $188.3 and $213.3 thousand respectively, but Jefferies’s was almost $300 thousand, almost 40% higher
- William Blair was extremely generous when paying double the amount of bonus for Vice President ($370 thousand) compared to Goldman Sachs and Bank of America ($166.1 and $146.3 thousand)
- Bonus for an Analyst in PJT Partner was even higher than base salary and bonuses of all bulge bracket banks (except for USB Group)
Great Exit Opportunities: when it comes to exit opportunities, brand awareness is always the first criteria. Being the top in their areas, elite boutiques can make you a competitive candidate for future entry into private equity and hedge fund roles.
“Niche sector teams line up very nicely for juniors to move into private equity and venture capital,” said Michael Pringle – a former head of equities at Citigroup
Deal Experiences Are More Exciting: smaller teams usually equate to bigger responsibility for each member in a deal. You will work less with boring administrative tasks like putting in weeks of work on deals that are never even looked at but still required by bulge bracket banks’ “volume of data is king” model. The majority of time will be spent on execution and origination is much more valued.
Politics-free Culture: putting work-life balance aside, working in smaller team sizes means a closer-knit atmosphere and more human-to-human, not cog-to-cog, interactions with one another.
Higher chance of getting a full-time offer: the chance of interns getting a full-time offer from an elite boutique bank is surprisingly better compared to a bulge bracket bank. Imagine fighting so hard for both banks, but one is more likely to let you go than the other, which one will you choose? While 90% of interns received the offer from Perella Weinberg Partners, only 80% received a full-time offer from Wells Fargo.
=> This is 10 more spots supposing there are 100 interns!
Great as it may seem. Working at an elite boutique investment bank is not as fabulous as it looks because:
ZERO (almost) brand awareness outside the finance industry.
- “I’m fed up with finance! Let’s explore other industries.”
- “What if I want to work in a tech company?”
- “What about government jobs?”
- Well, you had better get yourself great connections to land one in those industries.
Limited Alumni Network: 10% of 100 is surely much smaller than 10% of 1000 or 10000. The depth and breadth of your network at a small-scale bank will not be as great as that in a big bank.
Average Deal Still Smaller: as one or two mega-deals can tweak the whole ranking, the likelihood of advising on multiple less significant deals is still bigger than working in bulge bracket banks. The easiest way to confirm this is to look at elite boutique investment banks’ “Recent Transactions” pages.
New York City Working Experience is great! But there is no guarantee you will get the opportunity to work there. Conditions in regional offices or low-volume industries are extremely variable and unclear in elite boutiques.
Few hiring and hard interview equal extreme competition to win internships, let alone getting a job offer. Since their scales are small, elite boutiques can afford to hire only a few hundred entry-level employees worldwide while bulge bracket banks can hire thousands or more.
Losing key people is a potential risk as they are the heart and soul of the banks. Without their network and expertise, deals flow might be on the rocks.
Make sure you do your due diligence before accepting an internship/job from an elite bank over a bulge bracket bank. If you are competitive for neither, let’s not worry about that and start with a solid foundation of networking and banking 101.
8. How to get into Elite Boutique Investment Banks
Common pathways to get into Investment Banking
Investment Banking Short Definition with brief intro Investment Banking Division (IBD) as Tier 1, Sales & Trading (S&T), Equity Research (ER) as Tier 2
The step-by-step guide created with 6 steps (embed a link to 6 steps) gives you the best shot possible at landing one of the most lucrative careers in finance. However, in this article, the pathway to get into Investment Banking is summarized with 4 main steps as follows:
- Resume / Cover letter
- Internship / Relevant Banking Experience
If you want to learn about the detailed chance of landing in investment banks, you can check our Wall Street Career Planning Tool. The tool examines the chances of getting into Wall Street for different backgrounds. It provides the big picture of Wall Street’s job market and acts as a career guideline for you to land your dream job.
For freshman and sophomore:
- Tier 1 summer analyst internships at Bulge Bracket banks and Elite Boutique banks are getting more and more competitive. If you have little to zero relatable professional work experience, applying for an Bulge Bracket internship in your freshman and sophomore year is infeasible. However, freshman and sophomore year are golden times to secure a summer analyst in junior year. You should start early and apply for an internship / part-time position at wealth management firms (most realistic if you don’t have a strong network), or ideally boutique investment banks & small private equity funds – this takes a lot of smart networking and some relevant finance course / experience though.
For junior and senior:
- If you are unable to secure a Tier 1 IBD, S&T internship at Bulge Bracket banks, you should focus more on Tier 2 positions at Middle Market & Boutique banks or Sales & Trading and Equity Research. These are considered less competitive, yet still require a lot of smart networking and selling your relevant banking experience on your resume (link to our product). In the worst case scenario, you are struggling to land an investment banking internship, then internships in Private Equity, Hedge Funds, Venture Capitals, Corporate Development, Management Consulting, Big 4, and Valuations can be viable options. These industries provide a significant overlap or deals directly with investment banking. After equipping yourself with relatable experience, you can apply for full-time analyst roles whose recruitments happen annually.
Top 20 MBA programs:
- Associate roles at Elite Boutique and Bulge Bracket Banks are highly sought-after targets by MBA students. Top 20 MBA students have a decent chance of getting into both Tier 1 & 2 careers given the school’s prestige and strong alumni network. They are often approached by Elite Boutique and Bulge Brackets’ recruiters right at the campus. The key to win a full-time associate role upon graduation is to grab a summer associate internship right after the first year of MBA. You will need to bankify your resume and know how to sell your background (link to our product), especially if you did not work in Finance before your MBA.
Outside-top-20 MBA programs:
- Though students outside-top-20 MBA have less competitive advantages than highly achieving top 20 MBA students, they have certain chances of landing jobs at Bulge Brackets. Provided that you have strong finance-related work experience, and do a crazy amount of networking through LinkedIn or profession connection, you can stand a good chance of breaking into Bulge Brackets. In addition, you should consider Middle Market banks and Boutique banks since your chances there are higher. If your work experience is much irrelevant, or your background is not as strong as top 20 MBA students, then your chance is slim even at Middle Market banks and Boutique banks.
- Professionals with several years of relevant work experience in Big 4, Consulting, Valuation firms, etc can apply for associate roles and some customized professional programs. Over the past few years, Bulge Bracket banks have offered many slots to experienced professionals. A lot of recruiting programs and events are designed with the aim of diversifying the human capital. The programs vary from firm to firm. For example: Goldman Sachs has Neurodiversity Hiring Initiative, Career Pivots series for professionals who want to learn about the firm and get into the banking career. For this category, your chance will be more decent if you apply for associate roles at Middle Market banks and Boutique banks. The key to win a job at large banks always sticks with having relatable practical work experience and an extensive network (embed a link to network products) with pro-investment bankers.
For a detailed assessment of your chance of getting into these Tier 1 & 2 division/ careers, leverage our Wall Street Career Tool.
Make your resume stand out and finance-oriented
The investment banks generally look for two key differentiators on your resume.
1. History of excellence (i.e. GPA / test scores, awards & honors, brand name, competition wins, leadership)
- Quick fact: Goldman Sachs recommends applicants to submit their SAT scores to increase the chance to pass the application round.
2. Interest for finance, specifically investment banking (i.e. school major, clubs, related coursework)
- Relevant Experience (i.e. past finance-related internships, past relatable work experience)
- Investment banking internships (i.e. IBD internship) work best.
Mistakes: Candidates often just list their activities rather than putting their accomplishments.
Beyond basic mistakes listed out above, what are some of the other common mistakes candidates make? If your resume is not “bankified”, it will be difficult to get past even the 1st screening round. BankingPrep Resume Toolkit is here to make your resume stand out among the piles of thousands of prominent candidates, and make it finance-oriented even for non-target backgrounds. Your profile will be proofed properly to make sure it has absolutely NO mistakes.
Once you have finance-related experience, the most effective way to get an Investment Banking interview is to network with your school’s alumni. If there’s no alumni at your targeted banks, you better find current professionals in investment banks by connecting with them on cold calls, LinkedIn, or emails. (Need a template for this type of networking)
You should start networking as soon as possible. The ideal time to start networking is 6-12 months before the application begins.
For MBA graduates:
You have to start networking as soon as you get accepted to MBA programs. Similar to the undergraduate group, you should reach out to your school’s alumni first, then current professionals who can give you the most insightful information source.
Mistakes: A lot of students reach out to investment bankers when they do not have any finance-related experience. It won’t look great. You still can connect with them, but it will be better if you can explain detailed plans for your upcoming internships and jobs, and you are looking for their advice.
The internship is considered a prerequisite to land a place in bulge bracket investment banks. Although relevant finance internships in other financial corporations and firms are appreciated, investment banking internships always work best.
- To improve your profile to break into large banks, you need to have at least 1-2 finance-related internships. If you do not have an internship from a bank or a financial services firm, activities such as student-run investment funds in college can be used to support your profile. This is an example of a student’s resume without an internship (link to resume product)
For MBA graduates:
- Internship is particularly important. That’s why you definitely have to have one finance-related experience pre MBA or during MBA. If your pre-MBA full-time jobs are irrelevant to banking and finance, it will be very difficult to get into. Let’s equip yourself with at least one summer associate internship at investment banks/private equity firms/ hedge funds. Here, Investment Banking internships (summer associate programs) always work best.
The interview process will include multiple rounds. Normally, there will be three rounds.
The first round of application is to screen candidates’ resumes.
The second round of application is to assess candidates’ practical abilities via short interviews. Specifically, if a resume is qualified, the candidate will be sent a link to complete a video-recording process – HireVue as some firms are deploying (i.e. two behavior/technical questions to test the analytical abilities, presentation abilities, etc) or phone screen, which is still popularly used by investment banking firms.
The final round of application is Superday, when chosen candidates are gathered in the office or nearby hotel to meet interviewers in person.
Superday (U.S)/ Assessment Centers (EMAM) are designed to assess both your technical capabilities and physical/mental stamina. Here, in order to receive offers, most highly-achieving candidates will have to get through an intense interview day (simulating the real working pressure) with a ton of questions largely hinged on their respective division/industry preferences in their application.
What do recruiters evaluate?
Investment banks will evaluate your skills, your technical knowledge, and how you are interested in the position you apply for. Many questions are designed to test these competences. Simply put, interview questions will be around 3 main parts:
- Behavior questions (often asked in HireVue/Phone Interview)
- Fit questions (Superday/Assessment Centers)
- Technical questions (Superday/Assessment Centers)
In which, behavior questions largely resemble fit questions asked during Superday. Some say that HireVues/Phone screen just asks you behavior questions. However, as mentioned above, you can be asked both technical questions and behavior questions right after you proceed to the second round. The full list of interview question samples and what you need to prepare, let’s check on investment banking interview questions (embed a link to interview question articles). Presented below is the short version of what you should do to have an upper hand in interviews.
How to prepare and ace an interview
You can visit our interview questions articles for analyst and associate roles for more details.
#1. For fit/behavior questions, this is the part where you tell your stories with interviewers. Thanks to these questions, recruiters will learn how your previous academic and work experience fits into the division/industry you apply for.
The questions in the first place always surround:
- Introduce a little bit about yourself/Walk me through your resume
- Your strengths and weaknesses
- Your achievements and failures
- Future plan and why Investment Banking?
What you should prepare here are crafting your own stories (reflecting your achievements, past experience, transferable skills and leaderships), and backing up small personal stories to answer questions related to strengths and weaknesses.
If you have some disadvantages in your profile such as low GPA, non-target background, fewer outstanding accomplishments, fewer finance internships, and etc., you have to prepare stronger responses to make up for these “real weaknesses”.
#2. For technical questions, what you will be interviewed always sticks with accounting, finance, valuations, and practical deals.
- Accounting: Financial statements (types of financial statements, links between different types of financial statements), revenues, operating costs, EBITDA, debt & equity, etc.
- Finance: Equity Investments (stocks), Fixed Income Investments (government bonds, corporate bonds, commodities, currencies) , Derivative Investments (options, futures, forwards, swap), etc.
- Valuation: Valuation metrics and multiples, (Discounted Cash Flow, LBO modelling, etc.), knowledge about mergers and acquisitions, etc.
Beyond technical comprehension, investment banking’s recruiters also want to test your knowledge about the market, practical deals and companies. Your work is to keep abreast of news about markets, imminent IPO, bond issuances, and mergers & acquisitions on a daily basis. The questions largely depend on your experience shown on your resume. That means if you present your active involvement in transactions/deals, you might get many questions about it. Discussing the deals is considered the most challenging part in an interview.
BankingPrep Interview covers topics and knowledge systematically, providing you comprehensive guides to ace an interview for banking roles. What stories you should tell, deep-dive interview questions you should rehearse will be included in the Investment Banking Guide.