(Elite) Boutique vs. Middle-Market vs. Bulge-Bracket Banks: Got Rankings?
NOTE: This is a revamped and updated version of a previous article on the site from a long time ago (2011).
Quite a bit in investment banking has changed since then, and the old categories of banks were too vague, so I wanted to revisit this topic, classify the banks more precisely, and sort-of-rank them (again).
If there’s one thing I love, it’s ranking everything imaginable.
From schools to banks to restaurants, what’s the point of life unless you’re ranking everything and constantly comparing yourself to others?
Just kidding – it’s a massive waste of time.
Despite that, it is helpful to know about the different types of banks, especially since the categories have changed over time.
And, while it’s stupid to “rank the banks,” it is helpful to understand the trade-offs of working at different firms:
Warnings and Disclaimers
First, this article is not a ranking: It is just a classification of different banks.
As you’ll see, many of the groups “rank” at about the same level.
Second, do not judge yourself based on any online list or discussion, including this one.
Finally, before you freak out and start wondering why I did not mention your bank, realize that it is impossible to mention every bank in the world.
The examples here are representative, not comprehensive.
Categories of Banks
Here are the rough categories:
- Bulge-Bracket Banks (BBs) – JP Morgan, Goldman Sachs, and Morgan Stanley; Bank of America Merrill Lynch, Citi, Barclays, Deutsche Bank, Credit Suisse, and UBS.
- In-Between-a-Banks (IBABs) – Wells Fargo, RBC, and many European, Asian, and Canadian banks, such as HSBC, BNP Paribas, Mizuho, Nomura, BMO, and CITIC.
- Elite Boutiques (EBs) – Evercore, Lazard, and Moelis; PJT Partners (formerly Blackstone), Centerview, Qatalyst, Greenhill, and Rothschild.
You could add a few others to this list, such as Allen & Co., Perella Weinberg, and Guggenheim, but there’s a lot of disagreement after “the top three” in this category.
- Up-and-Coming Elite Boutiques (UCEBs) – LionTree Advisors, Zaoui & Co., Robey Warshaw, Lakeside Capital Advisers, Dyal Co, and M. Klein & Co.
- Middle-Market Banks (MMs) – Jefferies, Houlihan Lokey, William Blair, Lincoln International, Oppenheimer, Cowen, JMP, Peter J. Solomon, Robert Baird, Piper Jaffray, Raymond James, Stifel, and Macquarie.
This list is also a bit controversial because there’s a thin line between “boutique” and “middle-market.” Also, I have no idea where Macquarie should go.
- Industry-Specific Boutiques (ISBs) – Leerink (Healthcare), Cain (Healthcare), KBW (Financial Services), Ziegler (Healthcare, Education, Religion, etc.), Marlin & Associates (Technology), Financo (Consumer/Retail), FT Partners (Fintech), and hundreds of others.
- Regional Boutique Banks (RBs) – Too many to list; if a bank operates in one location or smaller non-financial centers and works on very small deals, it’s in this category.
- Other Banks (Merchant Banks, Hybrid Firms, and KPOs) – BDT Capital Partners, Tudor Pickering Holt & Co., Raine Group, Three Ocean Partners, and Lepe Partners.
Particularly in the “In-Between-a-Bank” (IBAB) category, I have left out many names because I don’t want to list 50+ banks.
So, please do not leave angry comments wondering why Société Générale, Crédit Agricole, or the other Big 5 Canadian banks are not there.
How Are All These Banks Different?
Size is the most obvious difference, but that’s not the best way to think about these categories: Many tiny firms end up working on mega-deals these days.
Instead, you can use these four criteria:
- Deal Size: Does the bank work on deals worth less than $100 million USD? Or mostly deals below or above $1 billion?
- Geography: Do they have a presence only in one city or region? Are they global? Are they strong in Europe but not North America or Asia?
- Services Provided: Do they only advise on M&A deals, or do they also work on debt and equity deals? Do they also do Restructuring? Or does the bank focus on private placements?
- Exit Opportunities: Where do bankers at this firm move to afterward? Are mega-fund PE exits common, or are middle-market funds, other banks, or normal companies more common?
There are some other differences as well – for example, you often earn more at elite boutiques than at bulge-bracket banks. But it’s easiest to start with the four criteria above.
Bulge-Bracket Banks (BBs)
These are the largest global banks that operate in all regions and offer all services – M&A, equity, debt, and others – to clients.
They also have sales & trading, research, wealth management, and all the other financial services you could imagine.
They tend to work on the largest deals, usually those above $1 billion USD in size, though they sometimes go lower than that depending on the market.
Over the past ten years (2006 – 2016), there has been a split in this group, with the “Top 3” (GS, MS, and JPM) performing better than the rest.
The European banks have also moved away from investment banking and toward wealth management and other businesses, which has hurt their prospects.
Some people even argue that firms like UBS shouldn’t be on this list anymore, but I’m not sure I would go that far (yet).
Analysts at the bulge-bracket banks get into private equity firms and hedge funds of all sizes, but they’re more likely to do so if they’re in non-ECM/DCM teams, such as strong industry groups, M&A, or Leveraged Finance.
These firms are often strong in one specific product, such as debt, but don’t do as much business in other areas.
They also tend to work on smaller deals, overall, than the bulge brackets, but these deals are still bigger than what middle-market and boutique banks work on.
Wells Fargo is the classic example of the “In-Between-a-Bank”: Technically, it’s not a bulge bracket, but it’s also not a boutique or middle-market firm.
It’s strong in debt and ranks among the top banks there, but doesn’t do as much M&A advisory business (it’s around #20 on the global and U.S. lists currently).
Many of these firms also tend to be strong in one region, such as Europe for the French banks or Japan for the Japanese banks, but don’t do as well elsewhere.
You can win the traditional exit opportunities coming from these banks, but it’s safe to say that fewer Analysts get into the largest buy-side funds, and more tend to move to other banks, smaller funds, or normal companies.
Elite Boutiques (EBs)
These firms, with a few exceptions, focus on M&A Advisory and Restructuring rather than debt and equity, and they often work on the same deals that the bulge brackets advise on.
You’ll see at least one elite boutique on almost any huge M&A deal in the U.S. or Europe.
Despite that, these firms are still much smaller than the bulge brackets.
If a BB hires hundreds of new Analysts each year, an EB might hire only a few dozen.
Unlike true regional boutiques, the EBs have a presence in many regions, but often they are strongest in one place.
Rothschild, for example, is easily an elite boutique in Europe but isn’t quite as strong in the U.S.
Many Analysts from elite boutiques exit into the largest PE funds and hedge funds, and the success percentage tends to be high simply because there are fewer applicants.
However, there’s also a lot of variation in this category: Evercore, Lazard, and Moelis Analysts seem to place well, while there’s more uncertainty around some of the others.
Also, some of these firms place a heavy emphasis on internal promotions and keeping bankers “for life,” which makes exit opportunities tougher.
Up-and-Coming Elite Boutiques (UCEBs)
The main difference between UCEBs and EBs is that the UCEBs have much less of a track record.
They’re often founded by high-profile rainmakers at BBs or EBs, and they frequently work with their previous clients.
They’re even smaller than elite boutiques, they have less of a geographic presence, and they’re more dependent on a key individual(s).
Sometimes these firms fizzle out, but they can also keep growing and eventually become true elite boutiques.
Exit opportunities are unclear because of the lack of data. It seems possible to win traditional PE/HF roles, but the probability is lower.
Middle-Market Banks (MMs)
Similar to the bulge-bracket banks, middle-market banks also offer a variety of services and have a wide geographical presence, but they work on smaller deals.
Most deals are below $1 billion, though this varies a bit by the bank; some, such as Jefferies, tend to work on larger deals than the other MM banks.
You can exit to private equity firms and hedge funds coming from these firms, but it’s more difficult because Analysts at the BBs, IBABs, and EBs tend to get priority.
Also, the buy-side recruiting process at mid-sized-to-large-funds moves insanely quickly, and it’s tough to get “plugged in” if you’re at a smaller bank.
So, the most likely exit opportunities from here are:
- Smaller private equity fund or hedge fund that uses off-cycle recruiting.
- Corporate development or corporate finance at a normal company.
- Another bank, usually a larger one.
Industry-Specific Boutique Banks (ISBs)
These firms have a smaller geographical footprint than the others above, and they work on smaller deals than the BBs, IBABs, and EBs.
Deals are often comparable in size to the ones that MM banks work on, but that varies widely based on the reputation of the boutique.
As one specific example, Leerink, a top healthcare boutique, has mostly worked on equity and M&A deals for less than $500 million USD, with a few larger M&A deals.
That is more like “upper-middle-market” territory.
It’s tougher to win traditional exit opportunities from these banks, as they tend to favor internal promotions and keeping Analysts and Associates around for the long term.
Regional Boutique Banks (RBs)
Finally, these firms are very small and tend to operate in only one city, or perhaps a few cities outside of major financial centers.
They don’t necessarily focus on one industry, but they often focus on a small set of industries; they also tend to do mostly M&A deals and private placements.
Deal sizes vary, but many of these firms work on deals worth less than $50 million USD, and sometimes ones worth less than $20-30 million.
Exit opportunities are tough if you’re at one of these banks, and advancement is also tricky because there’s often no room to advance.
I haven’t seen firsthand examples of Analysts from these firms moving directly into private equity or hedge funds, but it’s possible, in theory.
The most likely exits are larger banks, Big 4 firms, or finance roles at normal companies.
Finally, there are other categories of banks.
Merchant banks, for example, operate as combined private equity firms and investment banks, offering advisory services and also investing in companies.
These firms are more common in emerging markets where people care less about conflicts of interest.
In India, “knowledge process outsourcing,” or KPO, firms do similar work for many banks.
They’ll create pitch books, crunch numbers, and do other tasks that the global banks prefer to outsource.
There are also hybrid firms that do a combination of consulting and investment banking, especially in areas like Restructuring.
If you want to work at a large bank or win a traditional exit opportunity, you’re better off going to a real investment bank than one of these firms.
There are some exceptions to that rule, but mostly in specialized fields (e.g., turnaround consulting can lead to Restructuring roles at elite boutiques).
So, Which Bank Should You Work At?
That’s completely the wrong question.
You should be asking which banks you have a realistic chance of working at.
For example, if you just graduated, you earned a 3.2 GPA (or a 2:2 with low A-Levels in the U.K.), and you only became interested in investment banking last month, you are not going to win offers at bulge brackets, elite boutiques, or middle-market firms.
You’ll have to target regional boutiques or small PE firms that might be open to off-cycle interns.
Or, maybe you skip banking altogether and go for independent valuation firms, Big 4 firms, or related roles.
On the other hand, if you’re at Princeton, you have a 4.0 GPA, and you’ve done two previous boutique IB internships, then you have a good chance at everything above.
If you have the option to do so, it’s almost always best to work at an elite boutique or bulge bracket because you get the best deal experience and exit opportunities.
Working at an IBAB is also a solid option, and even MM banks are fine if you win offers there.
You have to be careful with Up-and-Coming Elite Boutiques (UCEBs); I’m not sure I would recommend them over the others unless you’re certain you want to stay in IB long term.
Similarly, you have to be careful with Industry-Specific Boutiques (ISBs) and Regional Boutiques (RBs) if your main motivation is the exit opportunity.
In particular, I’ve seen a lot of students suffer after joining RBs because the role often changes, deal flow dries up, or their compensation is cut.
If you have competitive offers from both a bulge bracket and an elite boutique, here’s how you can make a decision:
- How certain are you that you want to stay in the finance industry for the long term?
- Not That Certain – Take the BB offer because it will give you more options outside of finance; the brand-name recognition is much stronger.
- Very Certain – It’s more of a toss-up, so you have to be more specific:
- You Want to Stay in IB for the Long Term – It’s almost always better to take the EB offer because you’ll earn higher compensation and get more interesting work.
- You Want to Move into Private Equity or Hedge Funds ASAP – It depends on your specific group. An M&A offer at an EB easily beats an ECM offer at a BB, but if you’re deciding between two strong industry groups, make a decision based on the people.
After running this site for almost ten years, my opinion is that most people don’t know what they want to do.
Especially in the last few years, I’ve seen a lot of students plan to go to mega-funds, but then get burned out after six months in IB and quit to join tech companies instead.
The Bottom Line: Even though elite boutiques do offer many advantages over bulge brackets, you’re still better off going to a BB unless you’re very, very certain of your long-term plans.
For example, if you’ve done four off-cycle and summer internships at banks of different sizes and concluded that IB is your passion, sure, accept the EB offer.
But if you’ve only done one 3-month summer internship, and you have EB and BB offers, you take less of a chance by going to the bulge bracket.
Most people spend far too much time “ranking” banks and not enough time thinking about where they have a realistic chance of working – or what their long-term plans are.
It’s good to know how the banks differ, but it’s even better to know what fits in best with your plans and what the opportunities from each bank look like.
Do that, and you’ll quickly realize the silliness of rankings.
As soon as you finish your current list, that is.
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