Middle Market Investment Banks: Career, Salary, and Application Guide

1. Middle Market Investment Bank

Definition: Middle Market Investment Banks are financial service firms that provide the same full range of services including mergers and acquisitions, financing, asset management, research services as bulge bracket banks but on  a smaller scale. In terms of deal size, they mostly handle mid-sized deals in medium businesses with annual revenue less than $500 millions. Given steep competition with large banks, Middle Banks also conduct multibillion deals every once in a while.

2. Investment Banks: Boutique vs. Middle Market vs. Bulge Bracket

To get a better sense of where middle market investment banks are in the banking industry, we first need to know the number of types of investment banks. As a matter of fact, every classification consists of more or less subjectivity. This one is no exception. 

People can have as many types of investment banks as they want, but at the end of the day, a bank is either:

2.1 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. 

Some really big names are:

Goldman Sachs

JPMorgan Chase

Citigroup

Morgan Stanley

Barclays

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. 

2.2 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). 

There are some more distinguishable features:

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 and Corporate Development, however, are a good fit for this category. 

2.3 Boutique Investment Banks: The Rising Stars

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Turning down a job offer from JP Morgan or Goldman Sachs for a smaller bank? That sounds completely CRAZY! But it only sounds crazy until the ascendancy of boutique investment banks. 

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. 

Well, sometimes, LESS is MORE. Boutique investment banks:

  • provide fewer services, 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. 

3. Distinguish between Middle Market Investment Banks and Boutique Investment Banks

While bulge bracket banks are international investment banks with easily recognizable names such as Goldman Sachs, JP Morgan Chase, Morgan Stanley, Bank of America Merrill Lynch, Citigroup, etc, it is hard to have a clear-cut division between boutique investment banks from middle market investment banks. 

Let’s take a look at the table below to see the difference, middle market investment banks are distinguished from boutique banks by the following attributes:

  Middle Market IB Elite Boutique IB Regional Boutique IB
Deal Size $10 million – $500 million or above $1 billion or above $50 million or below
Services

Merger & Acquisition

Financing

Restructuring

Wealth Management

M&A or Restructuring M&A or Restructuring
Industry Multiple Multiple Multiple
Location A strong local presence but far less of international an international exposure 5 or more offices Less than 5 offices
Headcount 100 – 3000 employees or over 50 – 250 employees Under 50 employees
Hours 65 – 75 hours 90 – 100 hours or more 50 – 70 hours
Salary Medium Very high Lowest
Exit Opportunities Medium-sized firms (Private Equity/ Hedge Fund), mid-sized companies Highly prospective (Private Equity/Hedge Fund), big corporations Limited/Unclear

 

4. Middle Market Investment Banking: Salary, Job Description, and Exit Opportunity

4.1 Salary

HC2

Similar to Bulge Bracket Banks, the middle market investment bank career path includes Analyst, Associate, Vice President, Senior Vice President and Managing Director. 

It is difficult to get detailed information about the compensation range in middle investment banks. Let’s take a look at the table below for a general overview about the career progression and the salary base for each position (for reference purpose only).

Position

Promotion Timeline Base Salary (USD) Total Compensation (USD)
Analyst 2 -3 years 60K – 80K 120K – 150K
Associate 2 – 3 years 130K – 150K 200K – 280K
Vice President 5 -10 years 200K – 220K 300K – 500K
Director/Principal/Senior Vice President 5 – 10 years 200K – 300K 500K – 700K
Managing Director   N/A N/A

 

HC44.2 Job Descriptions

Middle Market Investment Banks provide a diverse range of financial activities including Merger & Acquisitions, Debt Capital Market , Equity Capital Market services, etc. The job descriptions will cover the same aspects as those in Bulge Bracket Banks. However, you won’t have to simultaneously work on multiple deals as you would at Bulge Bracket Banks, and just 2 to 3 deal transactions at a time instead. The middle-bank advisors often work with existing, long-time clients. 

Typical responsibilities of an Analyst:

  • Analyze market data, build detailed financial models and preparing client presentations for mergers and acquisitions, leveraged buyouts and capital markets advisory
  • Manage client transactions from pitch to close under the guidance of our senior leaders
  • Come up with innovative and creative ways to solve complex, real-world business challenges
  • Learn how we help clients and communities grow, no matter their needs
  • Sharpen your technical skills
  • Build your professional network with mentors, senior executives and others

Typical responsibilities of an Associate: 

  • Analyze, structure and execute transactions on behalf of corporate clients, with a focus on Financial Institutions, specifically Asset Management and Financial Technology 
  • Prepare and review proprietary financial models, such as M&A, DCF and LBO valuations, analysis of comparable companies and precedent transactions 
  • Analyze accounting and regulatory statements, debt and equity filings and documents, financial projections and models prepared by clients in various formats 
  • Manage, guide and coordinate project workstreams and junior professionals’ work product, including reviewing financial modeling work and presentations prepared for transactions, corporate board meetings, investment banking pitches and client service projects on corporate finance topics; prepares, and reviews memoranda required to gain internal approvals from typical investment banking committees 
  • Present to clients, including at the CEO / CFO level, on topics such as strategic alternatives, industry update, capital markets activities, restructuring alternatives and corporate governance issues at board meetings and pitches and on conference calls 
  • Interact with senior and junior management team members on a regular basis to execute projects, provide updates and advice, and prepare presentation materials 
  • Manage deal execution, including preparing marketing materials, running due diligence processes, negotiating non-disclosure agreements and other legal documents with lawyers and potential buyers, organizing and attending deal and non-deal roadshow meetings, and liaising with other investment banks and other parties within the Investment Banking division
  • Manage end-to-end initial public offering process, including putting together pitch materials for bake-off, running valuation analysis, writing business section of S-1 during drafting phase, traveling with clients for testing the waters and roadshow meetings, conducting due diligence sessions and writing memos to clear internal commitments committee 
  • Review complex legal documents including offering documents and stock purchase agreements 
  • Supervise 1-2 Analysts / Junior Associates per project; works across several projects at one time

Financial Modeling Program 

How to close the skill gap between formal education and becoming an Investment Banking Analyst

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HC44.3 Exit opportunities

There are always ways to enter prestigious Private Equity firms, Hedge Funds for Middle Market Bankers, as long as you have a detailed action plan to exit Investment Banking.

The exit opportunities that most investment bankers are interested in are buy-side jobs and corporate development. 

It is unlikely that middle market investment bankers will get into the biggest Private Equity and Hedge Fund firms or corporate development. However, smaller Private Equity firms, Hedge Funds and Corporate Development can be their exit opportunities. 

EBIT1Buy side: Private Equity, Hedge Fund, Asset Management. 

If you work on financial modellings, valuations in mergers and acquisitions deals, you can be a strong candidate for small Private Equity firms.

If you are interested in securities such as stocks, bonds, and derivatives, you can apply for small Hedge Funds, Asset Management. 

These buy side jobs are often considered more interesting and the working hours are slightly better. 

Corporate Jobs: Corporate Finance, Corporate Development

If you want to work in corporations, you can work in Corporate Finance and Corporate Development. Knowledge and skills gained from investment banks can totally apply in these fields. In addition, the jobs offer better working hours than in investment banks.

5. Pros and Cons of working in Middle Market Investment Banks

5.1 Pros:

  • Timing: If you happen to be a late starter or change your mind during the career path at the last minute, recruiting of Middle Market Investment Banks is less competitive than that of Bulge Bracket Banks. You can win the internship or full-time offer at these firms even if you do not have a great chance at larger banks.
  • Better Culture and Deal Experience: You will have to do more on each deal as an Analyst or Associate since there are fewer junior-level bankers. Middle Market Banks handle fewer deals, making them potentially more appealing if you want to pursue a long-term banking career.
  • Cash Compensation: In terms of cash bonus, Middle Market Investment Banks pay all-cash compensation and bonus with no intention of using stock as payment. Meanwhile, large portions of bonus, paid by Bulge Bracket Banks, will be converted into stocks or deferred until next year.

5.2 Cons:

  • Exposure: direct exposure to clients is not always better if deals are small and simple. If the scale is too small, you will not gain much experience or technical skills. 
  • Brand Name: brand name is lesser known. This makes it more challenging to exit finance and work in another industry.
  • Alumni Network: network is actually just as important as when you first apply for a job. Middle Market Investment Banks, due to their small size and scale, cannot provide you with connections in multiple locations.
  • Compensation: compensation is complicated and unclear. For some, if you close many deals, your cash compensation can be higher than at large banks. Although it is 100% cash, most of the time, due to the smaller deal sizes, bonuses are significantly lower.
  • Highly Variable Work Experience: highly variable is the word best for describing middle market investment banks’ work experience, cultures, working hours and salary. Some groups are fairly consistent, while others fluctuate a bit, and the experience is dependent on key individuals.
  • Exit Opportunities: reputation and experience with big deals are the main criteria when it comes to exit opportunities. Without big names like bulge bracket banks, your chance of getting into the biggest Private Equity or Hedge Fund firms is limited. 

6. How to get into Middle Market Investment Banks?

MMBSince the Middle Market’s recruiting process largely resembles the Bulge Bracket’s one, you can check on these steps mentioned below. Though the competition at Middle Market is considered less severe than Bulge Brackets, it requires you to sharpen yourself a lot, and to do a vast network to increase the chance of getting in. If you happen to be a late starter, a career switcher, or your background is not as strong as target school students’, your chance to land a job at Middle Market is more decent. They offer the same range of advisory services as Bulge Brackets, you’ll learn a lot across various industries and multiple types of services while the working hours can be slightly better and comfortable. 

6.1 Common pathways to get into Investment Banking

Classification: 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:

  1. Resume / Cover letter
  2. Networking
  3. Internship / Relevant Banking Experience
  4. Interview

If you want to learn about your specific chance of breaking into 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 undergraduates:

For freshman and sophomore: 
  • Tier 1 summer analyst internships at Bulge Bracket 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). If 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. 

For graduates:

Top 20 MBA programs:
  • Associate roles at 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 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 professional 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.

Professionals:

  • 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 workforce. 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 is always sticking 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. 

6.2 Resume

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).
  3. 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 (embed a link to resume product) 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.

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6.3 Network

Healthcare network

For undergraduates: 

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. 

Banking Prep Networking Guide 

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6.4 Internship

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. 

For undergraduate: 

  • 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. 

6.5 Interview

Healthcare InterviewThe 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 myriad 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 ithe interview.

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.  

Hedge Fund

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 leadership), 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, the interview 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.

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