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The definitive guide to working for a boutique investment bank

Small investment banks are now kind of a big deal. Before the financial crisis in 2008, boutique banks accounted for around 12-15% of the total M&A feel pool as the bulge brackets dominated with large balance sheets, aggressive deal-makers and robust reputations. This figure has been climbing over the past few years and [efc_twitter text="the supposed minnows of Wall Street are now likely to gobble up 30% of the pie in 2014"].

It’s no secret that large investment banks have been struggling to hold on to advisory talent, which has been fleeing to private equity at the junior end and, increasingly, to Big Four accounting firms and now to boutiques in the senior ranks.

But is working for a ‘hot’ boutique such an attractive option? We’ve spoken to existing employees at large and smaller boutiques, headhunters who hire into these banks, and analysed the employee reviews on of Centerview Partners, Evercore, Houlihan Lokey, Greenhill &Co, Perella Weinberg Partner and Moelis & Co. Here’s the good, bad and the ugly.

1. Pay at boutique banks is all in cash!

The good: Almost universally, employees at boutique investment banks cited the pay as a positive. While regulators are forcing investment banks to defer more of their bonuses – or capping them at 100% of salary in Europe – boutiques are free to pay what they want. One boutique CEO, speaking at a recent conference in London, said: “I don’t want to get told by the regulator what I can pay my colleagues. It’s my business what I pay my analysts, associates and VPs”.

The bad: Not all boutiques are created equal. Larger firms like those listed above pay to compete with the bulge brackets (and headhunters expect junior pay hikes next year), but mid-market and niche sector players tend to pay less, says Andy Pringle, managing director of headhunters Circle Square, and bonuses – despite being all in cash – can comprise a maximum of 50% of salary. “Base salaries are on a par, bonuses are in cash, but not all boutiques compete on total compensation with the large investment banks,” says Logan Naidu, CEO of recruiters Dartmouth Partners.

The ugly: Boutiques have been known to keep the deal-makers happy at the expense of their juniors. “One boutique had a great year last year, the analysts worked like crazy, but received a derogatory bonus,” says Pringle. “It all went to the MDs.”

2. Boutique investment banks operate a meritocracy!

The good: Boutiques afford their juniors deal experience from the outset. Analysts and associates are expected to work hard, but will have client-facing responsibilities and juniors will not be ordered about by associates, VPs or directors, but will most likely be corresponding with their managing director. This is great for mentoring and ensures that your work is recognised by those that matter.

The bad: When you join a boutique as an analyst you are not in a large class of your peers, therefore missing out on camaraderie and networking with likeminded individuals who may help you out at other points in your career. In fact, you’re probably in a minority: “It’s an inverted pyramid – lots of senior bankers and hardly any juniors,” bemoans one analyst.

However, this in itself is not always bad: “There are lots of senior bankers and few junior bankers. It sometimes creates a lot of work, but being a sole analyst means I can have a taste of every aspect of the transaction,” says another analyst.

The ugly: You could be assigned to a bad MD as a junior, which could mean that your career stagnates. Vault has countless examples of employees griping about “bad senior bankers”, “difficult personalities” or “a lack of consistency in talent at the top”. If you’re operating under a difficult or incompetent manager, all the hard work means nothing.

3. Analysts in boutiques get deal exposure early on, and move up a steep learning curve!

The good: Most decent-sized boutiques have formal graduate recruitment programmes and will therefore train all new recruits in the fundamentals of investment banking. However, after a couple of years you will have “five years' relevant experience” that far exceeds that of your peers in bigger firms, argue current employees in boutiques.

“You get better access to richer experience, which can fast-track your career,” says Naidu. “You’re groomed by an MD from day one and if you take the view that on-the-job training is the most valuable, boutiques an excellent training ground.”

“You spend more time on transaction/execution mandates vs general pitching/industry update type work,” says one analyst.

The bad: Be careful what you wish for. High exposure early on can be “very stressful”, complain employees, and small analyst teams mean that juniors are “stretched too thin”. Almost universally long, and unpredictable, hours were complained about, but this can be said of any investment banking position. As a guide, juniors work “75-80 hours per week first year and 65-70 second year”.

The ugly: As cynical as most are about the difference ‘protected weekends’, which were introduced to ensure juniors don’t spent their entire life in the office, make at bulge bracket banks, they don’t exist in boutiques. “Terrible hours, lack of appreciation, no 'protected Saturdays' policy like some bulge bracket firms,” says one boutique banker.

4. Boutique bankers are ‘pure’ investment bankers!

The good: Untainted by rate fixing scandals and mis-selling dramas, boutique banks focus on client services – their relationships are what bring in the money, their advice is the sole selling point and is untainted by potential conflicts of interests found at bulge brackets. “Even now, fines from rate fixing and reduced trading volumes will reduce bonuses at large banks,” says Pringle. “Boutiques are not affected by this – their reputations are intact and they’ll pay people what they’re worth.”

The bad: Some boutiques focus on particular sectors, which means that if business in that area takes a turn for the worse, employees are exposed. What’s more, winning mandates without a big brand name is much harder, even if you’re well-respected. “This is the old model of investment banking and many times you will be required to dig much deeper than other firms because they don't have a balance sheet to leverage, only the quality of advice they give clients. That requires much more from the people that work here,” says one boutique employee.

The ugly: Despite claims of meritocracy and a lack of office politics, not all business areas have the same clout within the organisation. If, say, the firm has historical expertise in one particular sector before expanding its range, then the traditional sector tends to hold more sway internally. Boutiques tend to do a lot of restructuring work, for example, and because that's a big revenue generator, M&A bankers lack status in some firms. “It can be hard to succeed if you are placed in one of the ‘less important’ verticals,” says another boutique employee on

5. Boutiques are expanding!

The good: Yes, headcount is increasing, often at a rapid rate and this is unusual in the current environment. “We’re growing right now, and that’s incredibly rare,” Mark Aedy, head of EMEA and Asia at Moelis & Co told a recent LSE conference. “Whatever industry you join, make sure it’s growing. Investment banking has got to shrink – it’s grossly overpopulated. It’s been happening already, but there’s a long way to go.”

The bad: Growing pains – boutiques are “entrepreneurial, but lacking in structure”, according to some employees. What’s more, they might be hiring for the front office, but the infrastructure is lacking: “The back office support (IT, printing dept, etc.) is sub-par,” says one boutique banker. “No research department; all work is done by the analysts and associates.”

The ugly: They don’t always get the hires right at the senior level, which can make juniors miserable:Rapid growth in headcount means that there is an uneven distribution of talent across the ranks,” complains one.

6. Boutiques are a fantastic training ground with great exit opportunities!

The good: Banks like Centerview and Moelis are hot right now, swaying big-name bankers across and generating a lot of positive publicity. Boutiques are generally well-regarded, which means working for one currently automatically opens doors. This, combined with an extensive deal list early in your career and exposure to key industry and banking executives means there’s plenty of scope for exit opportunities. “Best environment on street to get buyside opportunities. Very easy to reach to out to senior people,” says one boutique junior.

The bad: Actually, the above argument has quite a few holes. Firstly, not all boutiques are well-regarded and starting your career at one can give the impression you couldn’t make it into a bulge bracket. For all the dynamic names, there are those who are small and have been stagnating for years. Brand names like Goldman Sachs and Morgan Stanley open doors – huge numbers of analysts move across to private equity every year – smaller firms are only well-regarded in certain sectors.

“If your singular goal entering an investment bank is to work two years and go into private equity, HL is not the best fit (although that route is still available),” says one Houlihan Lokey employee on

Even worse, perhaps, boutiques are an exit option for senior bankers who have made a career at a big name already: “The independence which we enjoy from this company structure is a competitive advantage, but it is most useful to the current MDs who come from 25-year careers at Goldman or Morgan Stanley,” says one junior.

The ugly: Boutiques aren’t just a harder sell, they actively discourage their juniors from fleeing to the buy-side: “The firm discourages analysts from looking at external opportunities even upon the completion of their analyst program. As a result, top analysts have not gotten the jobs they wanted,” says one Centerview employee on

7. Boutiques are decentralised organisations!

The good: Working for a US bank in London or Hong Kong means you’re cut off from the senior management and are often once-removed from the key decision-makers. It’s more fluid in a boutique, which usually have a fluid management structure and base senior executives across offices as diverse as Dallas and Atlanta, as well as New York and London.

The bad: Unfortunately, this way of working means it’s difficult to see people “face-to-face” and means that often boutique culture is lacking any “real identity”.

The ugly: Would you really want to be stuck working in Dallas while most investment bankers are based in New York? You’re away from the centre of the action.

AUTHORPaul Clarke
  • Re
    17 December 2014

    Working in a small organisation means you get visibility to learn as well as be seen. If you are any good , you move up fast. At the same time, personality can be an issue and you have no place to hide if you are not up to the task. I personally would prefer to work in a small place.

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