by Brian DeChesare Comments (74)

Planes, Trains and Capital Equipment: What You Do In the Industrials Group at an Investment Bank

Planes, Trains and Capital Equipment: What You Do In the Industrials Group at an Investment Bank

One question I’ve gotten a lot over the years is what different groups at a bank do.

Yes, everyone knows that M&A is supposedly more technical than other areas, but what about other industry and product groups?

Some of that has been answered with coverage of ECM and related groups – and today we’re going to fill in more of the puzzle via an interview with a reader who works in an industrials group.

Here’s what it’s like, how it’s different from other groups, who does the work, and how you get recruited into these groups:


Q: I get a lot of questions on which group is “the best” and how modeling and technical work is split among industry groups and product groups (M&A, LevFin, etc.) at a bank.

What has your experience been so far? Do the product groups do most of the heavy lifting?

A: Generally the product groups, such as M&A and Leveraged Finance, are more modeling-oriented – but the analysts there also don’t get much of the industry exposure that you would get from being in a strong coverage group.

The three-statement model or standalone operating model is the standard model used in any industry coverage group, so you do get exposure to that.

Many people assume that more modeling is always better, but like anything else it’s a trade-off – for me, the “best” group is the one that gives the most well-rounded experience and lets me work with companies I’m interested in.

I like being in an industry group because I get to work on a wider range of deals, rather than just M&A or just debt offerings.

I’m also more interested in industrials than other groups – I prefer to read about railroads rather than semiconductors.

While the work itself in a technology group and an industrials group may not be that much different, I find myself far more interested in the latter.

Q: Is an industry group always “an industry group?” What determines how much marketing work (pitch books) you do vs. how much deal and advisory work you do?

A: That’s a good point – there are actually a couple group variations:

  1. Origination – These groups just do marketing and pitch for new clients, especially on financing assignments.
  2. Advisory – This is the traditional M&A work that banks are associated with.
  3. Coverage – In this group there are elements of both origination and advisory work, but you’re focused on a particular sector.

Since I’m in a coverage group I do both marketing and client work – I bring this up because a lot of people incorrectly assume that an industry group is 100% marketing and a product group like M&A is 100% deal execution.

That said, there is definitely an emphasis on knowing the sector in coverage groups.

Q: Right, so it sounds like “industry groups” should really be labeled “coverage groups” if we wanted to be more accurate.

What kinds of companies do you cover in industrials and how is the group divided into different sub-industries?

A: Most investment banks divide industrials into capital goods (machinery, equipment, anything used to produce other goods) and transportation (railroads, trucking, and so on) groups.

Sometimes there’s overlap with related groups such as natural resources and chemicals; for example, a metals and mining group might fall under industrials or it might be classified under natural resources.

One of the areas I work on is aerospace and defense, which is usually a sub-group within industrials (capital goods).


Q: What types of deals do you work on and how is the work divided between your group and product / other groups?

For example, let’s say you’re working on a sell-side M&A deal – who would be responsible for the buyer list, the Information / Offering Memorandum, model, management presentation, and final negotiations?

A: We get exposed to all types of deals, but my group is strongest in M&A advisory followed by high-yield debt; we don’t do many equity issuances.

There is also some restructuring, for example, in the airline industry – though that is more of a transportation sub-sector. Aerospace works with the parts manufacturers (ex: Precision Castparts, Spirit Aerosystems, etc..) instead.

The split between different types of work depends on the deal and who’s busy at the moment, but usually coverage analysts run operating models for clients because we’re more familiar with the industry.

The rest of the work and other models may go to the M&A team, with input from us – especially on industry-specific issues such as identifying appropriate buyers.

If I were working on a high-yield debt offering, I would still be responsible for the operating model but the Leveraged Finance team would come up with the optimal pro-forma cap structure and do the analysis on credit ratios and other debt-specific modeling (ex: pricing).

If the assignment were even more specialized – for example, a restructuring deal – then the restructuring team might manage the entire process with the coverage team helping with tasks like finding buyers and summarizing the state of the market.

Q: That makes sense – I think the division of labor is dependent on the bank as well, but those are some good guidelines for anyone who’s wondering about this.

Is there anything specific to valuation or deals with aerospace and defense companies that you don’t see elsewhere?

A: The mechanics of models are similar – a merger model is a merger model, after all – but there are specific metrics and drivers for aerospace and defense companies that you don’t see elsewhere.

For example, for airlines you use metrics like revenue passenger carried, revenue passenger miles, and available seat miles.

When you’re making projections for aerospace companies you use drivers like the order backlog, capacity utilization, and the airline sector’s overall health (N.B: measured in the number of planes in the air, or how many are kept parked).

Defense companies rely on government contracts – which have long lead times – and the defense budget, so you need to factor those into any models you create.

You also have to be up on the industry and the latest trends to figure out which specific areas within companies might have room for growth (e.g. persistent intelligence, surveillance, and reconnaissance) and which might see decreased spending (e.g. C-17 Globemaster).

I would highly recommend the equity research report “Deciphering Defense – An Industry Primer” by Ronald J. Epstein, Bank of America Merrill Lynch, September 2009 if you’re interested in learning more about the sector.

Another quality guide is this BoA-ML report on the Commercial Aerospace sector from April 2009.

A few further resources and example pitch books for the industry:

Lifestyle, Pay & Recruiting

Q: What’s your average day like? Do you work more, less, or the same as analysts in other groups?

A: Hours are comparable to other industry groups – in other words, long, and definitely longer than more markets-based groups such as ECM or sales & trading.

I’m not sure how it compares to M&A or other product groups, but once you get to a certain number of hours per week you can’t sense much of a difference.

I usually start each day by reading the news and looking for details of companies in my industry “exploring strategic alternatives” (banker-speak for “looking to buy or sell”).

I also pay attention to developments such as management changes, government contract awards, and inventions and patents within the set of companies I cover.

After that, it really depends on what’s going on at the moment – I might spend a lot of time on an operating model for a company if we’re working on a deal, or my day might consist of working with other groups and providing input on pitches or deals they’re working on.

Q: Right, that seems consistent with what you mentioned before about how coverage groups operate.

I also get a lot of questions on how bonuses compare in different groups. At the junior levels I would assume that most product and industry groups are very similar – is this accurate?

A: Yes.

Q: Finally, how do you actually get placed in an industry group? Do they focus more on lateral hiring or recruiting straight out of universities / business schools?

A: Most of the time analysts are recruited directly from the undergraduate training pool (and associates from the MBA training pool).

Recently, with the market picking up, many firms have been hiring lateral analysts with experience in investment banking as well [N.B.: As of mid-2010].

Q: Great, thanks for your time.

A: No problem – enjoyed speaking.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hello there,

    I was just wondering what are the exit opportunities like within the industrials group? Is it possible to break into traditional PE as a young analyst? Compared to sectors such as Infra, is it more or less open? I am of the opinion that industrials is a diverse group with lots of transferable qualities. Is this correct?

    1. Yes, it is very possible to get into PE assuming you work in a reasonably good group. It’s easier than moving in from infrastructure because infrastructure is more specialized and you don’t really model entire companies in the same way since infrastructure is project/asset-based. See the end of this article:

      1. Thank you for the quick reply!

        I read the article and it mentioned that a common exit is industrial focused PE firms. Does this mean PE firms that solely do industrial investing or is it referring to larger PE firms with industrial teams? Following that, is it possible to break into mega funds and more well known firms that invest in a range of industries? For examples healthcare/consumer/TMT despite not having the industry experience?

        Also, you mentioned that infra is a specialised sector, would you say the same for NatRes? I know a common exit for infra/power/natres is infra pe, with an industrials background is it possible to also go into a infra pe firm?

        Thank you!

        1. Probably both. Industrials is fairly general so you might be able to move to something like a consumer, healthcare, or TMT fund, but as always, you have an advantage if you stay in the same industry. You always get more specialized over time.

          Yes, natural resources is also specialized so you will have a more difficult time moving to non-natural-resource funds. See:

  2. Hello M&I team,
    Thank you so much for the huge amount of work you’re putting in the blog, I have never seen such information elsewhere! I have a question regarding switching to coverage groups in IB from consulting.

    I’m an aviation consultant with an Aerospace Engineering background and am deeply interested in IB for a post-MBA career. After trying to get into a top B-School, what would be the chances to make a successful switch into IB in A&D/Transportation coverage groups for example?

    My second question would be: is it possible to join sub-groups (such as Aviation within Transportation) at the post-MBA Associate level or is it too specific for a junior position?

    Thanks a lot for your help and your work!

    1. If you can get into a top school and you do significant preparation before you attend, you have a good shot of winning an offer in the coverage group. It would be almost impossible to go as specific as a specific sub-group within the coverage group until you spend time working in the main group first.

  3. Avatar
    THE Rainmaker

    Hello Brian & M&I team,

    I’m a huge fan. Personally I love your work and I think your page here as an extra edge other blogs/sites do not have. Cheers to that

    Anyways, please share some of your experience & knowledge with me. I’ll make things short and simple.

    I’m entering 2nd year UK semi-target school i’d say. Currently interning in ER at a boutique. Targeting IBD next year. I plan on using my exposure and understanding in the tech / TMT sector to leverage myself into a Bulge Bracket’s IBD (industrial group) next year. You know, saying I like tech and got interested in m&a deals and all. I’d prefer to get an internship position in the UK but i’d settle for HK/SG too. Ultimately I just want to get my asian ass in IBD, I need to bring honor to my family *jokes* but seriously tho.

    What are your thoughts? What more would you use as leverage? What are my chances?

    1. Avatar
      M&I - Nicole

      I’d say you have a 50/50 chance. Your internship maybe useful, and if you want to work in Sing/HK, knowing Mandarin is probably essential.

  4. Thanks for this! What are some exits from an Industrials coverage associate after a few years? Are the exit ops any better or worse than coming from a product like M&A? Are you only limited to ops with the industry? Thanks!

    1. You could go to corporate development / corporate finance at normal companies, join an industry-focused PE fund or hedge fund, and so on. But as an associate it gets harder to move into PE or HFs if you’ve been in banking for a few years. A strong industry group and M&A are about the same, despite what people claim online. You can go outside the industry, but it will be more difficult.

  5. Would this group also work with automotive companies?

    1. Possibly, but they could fall under other areas as well (transportation, consumer, etc.).

  6. Hi Nicole,

    I recently received an offer for a Corp Fin/Corp Dev position. However, I am still very interested in pursuing a career in Investment banking. Is it possible to make the transition in the future?

  7. Hi Brian!
    I am currently writing my application for M&A internships at major banks, and I am telling them that I would be really passionate to work in the industrials team (following my degree in Mechanical Engineering)… Therefore, I wanted to find some big mergers done by each of the said banks, in order to include them in my motivation letter, but I cannot find them online (or maybe I am looking on wrong websites?)… Could you please tell me how to look for M&A deals done by banks like GS, MS, JPM, DB, CS etc? Thanks a lot for your valuable advice, keep up the good work :)

    1. Avatar
      M&I - Nicole

      With free resources, info can be limited – online websites such as – shd help. Banks’ websites also list the major, recent deals they have done
      Other sources are Dealogic (costly, subscription-based), Bloomberg (try to get a hold of a BB terminal at school)..

  8. Do Aerospace/Defense/Government Contractor organizations have a Public Finance division?

    1. Avatar
      M&I - Nicole

      I’m not familiar with this space. Perhaps you can do a google search

    2. “Public finance” generally refers to government finances – muni bonds, etc.

      All of those companies have capital markets groups. That’s why they have I-bankers that cover the sector.

  9. Hi Brian

    I’ve got offers from a middle market PE firm and an industry group at a bulge bracket bank. Which option gives me a better chance of getting into a top tier PE firm later down the line?

    1. Either one works, really – in either case you’d have to go through interviews at larger PE firms in the future. From what I’ve seen, it may actually be easier to move to a bigger firm if you’re already in PE.

  10. I graduated from a top 50 university with a major in finance, held a PWM internship at a bulge bracket firm and passed the CFA L1 exam. Post college, I have 2.5 years of experience as a financial analyst and marketing manager in the consumer retail industry. I am looking to break into a consumer retail industry coverage group, what are your thoughts or suggestions on switching to an analyst role?

    1. I would talk to headhunters and network with alum for your university that work in the field right now and see if you can get referrals in. Whether or not you move in depends on timing, how aggressive you are, and if you can get a solid connection to groups.

  11. Hey Brian,

    I’m a psychology major with relatively low gpa who recently accepted a IBD in NYC offer from a brand name firm.

    Needless to say, your advice was crucial throughout the entire process. Thanks so much for all the help.

    1. Awesome, glad to hear it. Congrats.

  12. Hi M&I,

    Is there any way I could receive that report cited by the reader, “Deciphering Defense – An Industry Primer” by Ronald J. Epstein? I’m interested in learning more about the defense industry. I couldn’t find it on the internet.

    1. Unfortunately I do not have access to equity research anymore so it’s hard to find that information – if you have a brokerage account sometimes they publish research there as well so it’s worth a look. Can ask around but I’m busy at the moment so it may take awhile.

      1. Forgive my naivete M&I, but is equity research like that usually available for free to an average person? In other words, will it be awkward/inappropriate for me to ask strangers for that research?

        1. You can get some research for free on brokerage sites like TD Ameritrade but it’s limited. You can ask a stranger for research but it can be annoying to find / involve asking other people so I would only bother if you really need it and cannot find substitutes elsewhere. At a bank it’s easy to access through paid services they have.

    2. Here’s another report that’s quite good and similar to the one mentioned there:

  13. Brian,
    First off, God bless you for putting up this website!The amount of info I got from here was like drinking from a fire hose! Your site meant a lot to me!

    Now on to my question. I will be getting out of Purdue with an Aero major and a 3.2 GPA by next year Dec. Do you think I have a long shot at industrials? Or should I take a few finance classes thus “demonstrate” my interest in finance? Oh, and my cousin knows 2 ibankers at Morgan Stanley and one back office guy at Goldman.

    1. Depends on your internships… if you’ve had banking or finance internships, maybe, otherwise your chances are not great with that GPA and no relevant internships.

      1. What are my chances at an internship? Is it too “low” of a GPA? Can networking mitigate this? Thanks!

        1. Again, it depends on networking and your previous internships… all you can do with a low GPA is network and cold-call aggressively. Some people get in with low GPAs by being super-aggressive.

      2. Also, I thought that a 3.2 GPA at Engineering (esp. Aerospace Engineering (esp. at 4th ranking Purdue U)) wouldn’t be looked down upon so much, especially since (as you outlined in another article) IB’ers think of Engineering as “hard”…

        1. It’s not as “bad” as a lower GPA in a more difficult major, but it will still work against you.

          1. Thank you so much dude! I’ll do my best!

  14. Hi M&I,

    Do you have any suggestions for following up with analysts/associates after meeting with them (I toured several bulge bracket firms last week)? I realize these are very busy people; do you recommend including a question or simply thanking them for their time?

    1. Always ask a specific question… see the previous article on informational interviews.

  15. M&I,

    Just wondering, when’s the earliest/latest time you should contact a banker for a follow-up in-person meeting? As in after you already talked with them on the phone for the initial “mini-ask” stuff, when should you move for a face to face thing? Thanks

    1. Depends on when recruiting takes place… try to meet in the 3-4 weeks leading up to recruiting.

  16. Is “Walk me through your resume” story essentially EQUAL to “telling your story” with the 5 points?

  17. Hey Brian,

    I’m a junior undergrad at a non-target with a 3.0 due to failing a couple of courses (4.0 before that). if I retake those courses, I can go back up to a 3.6 because the grades will be replaced. Applications start this fall but should I apply after December with a higher gpa? and wouldn’t applying late affect my networking? in this case taking an extra year might help right?

    1. If you can get it back to 3.6 before December, do so – not worth taking an extra year if you can do that. Network now and then go through interviews December – onward.

  18. Hey Brian,

    thank you very much for the answers abouve.
    Another question (sorry if I am annoying you :))…

    I want to apply for those spring weeks but, surprise, competition is quite tough. So would you recommend any networking? How would it differ from the usual networking/informational sessions you recommend because actually you get your first-hand experience at those events. Wouldn’t it be strange to ask bankers for their experience/background in informational sessions (before the event), when the event is supposed to give you those informations/networking opportunities for summer analyst offers. The firms want you to sit many numerical and verbal tests followed by a superday.

    Do you have any input on that topic how to leverage anything I can get into a better chance of getting an offer to participate?

    1. Yes, networking is still helpful but in that context you should be more specific beforehand, focus most of your questions on what to expect during spring week, and so on. Contacting them further in advance is also more helpful in that context because then you know them, have spoken before, and can then contact them again right before applications are due just to remind them that you’re applying.

      1. Thank you great advice!

  19. Hey Brian,

    another question…

    If you want to go to a PE firm later but want to “live the dream” as investment banker a few years.. Is it possible to apply at an PE firm even when you are Associate with ease or do you have to apply/ call headhunters after your first year as FT analyst?


    1. It’s harder to get in as an Associate – much better to do it after 2 years as an analyst

      1. Brian, why is it much more difficult when you have become an Associate?

        How are chances if you have been VP, did chances decrease further??

        Thank you very much :).

        1. Because advancing makes you sharper, but more narrow – just like a pencil sharpener. PE firms want young, malleable analysts who can still work 24/7 as opposed to associates / VPs who are further away from grunt work and might actually have interests outside work.

  20. What are the differences and similarities between investment banking and corporate finance? To me they seem really similar yet in the banks, they are in different divisions..

    1. They are similar and sometimes used interchangeably. I think there is more of a difference in the UK, where “corporate finance” usually refers more to the debt and equity side instead of M&A (might be wrong there, feel free to correct).

  21. Hey Brian, great article… i was thinking about going to an industry group in the future as well.

    Quick question, I participated in a Recruit Program specifically for finance just couple weeks ago that helps students build their network with the industry professionals, hear them talk about their experiences, etc.

    To be in the program, I was selected as one of the two students from a pool of 100 applicants. Do you think I can put this under my EDUCATION section as follows?

    (School name) Finance Recruit: Selected as one of the two to participate from a pool of 100 applicants

    Do you have any suggestions to improvise?
    And this DOES fall in the Education/Honors right? Or Should it go under Activities at the very bottom.


    1. That sounds fine, could go in either Education or Activities… Education is better if you’re not at a well-known school and want to sound more impressive. Maybe add in something that describes what you did as well and which banks you met the professionals at, name-dropping is always good

  22. Do banks ever recruit people from the industry for their industry groups? Would it be kinda situtation where you go and do an MBA and then move in as an associate or do they ever look at analysts with industry experience. (particularly interested in pharmaceuticals as that’s where I’ve got a job lined up as a pharmacoeconomist and I’m thinking a couple years down the line what my options are if I take this route)

    1. Good question. It can happen, but in practice it’s pretty rare at the analyst level. Most of the time if they want to hire someone from industry, they’ll find someone more senior – a VP of a division at a company, for example.

      I knew someone who was a VP at a semiconductors company and then moved into banking at the associate level, so that type of move can definitely happen even if it’s at smaller banks.

  23. nice change… really liked it..specially since I am also interested in this sector… one thing though.. How would you rate the chances of a coverage group guy to break into PE(sector specific or agnostic) later on ?

    1. Chances are good esp. if you have M&A / debt experience – only issue is that you would be more limited to industrials-focused PE groups.

      1. Alright.. so does that mean that sector agnostic PE firms prefer a product group guy, I mean even though firm might be sector agnostic but it would surely have some core sectors (favorites if i may call it).

        Also, off the discussion, how would Rating agency (I am thinking Fitch) experience stand against an IB experience.

        thanks for your time and keep up the good work..

        1. They might, though it’s more about the person to most PE firms. Ratings agency experience is ok but not as good as business development / trading / PE / banking and arguably PWM, maybe about equal there.

  24. Dear Brian,

    I’m a regular visitor to your website and I must say that I really appreciate all your effort and time in sharing all these wonderful insights and knowledge about the banking industry.

    I have one question for you though. If everyone is doing banking for exit opportunities, is it really okay to say that you’re doing banking because your long term goal is to get into PE. By the way, Im a senior in college and will be applying for analyst positions this recruiting season.

    1. I would keep it more open-ended and say, “I want to be in finance in the long-term, though I’m not sure where specifically quite yet – definitely interested in advising or investing in companies though.”

  25. Hi Brian,

    What technical knowledge is required for investment banking? I’m a math and econ major, and I think I’d be stuck if they were to ask me finance related questions. If so, would you recommend any specific classes?

    Also, I’m currently planning to graduate early by a year. Since my resume could probably be stronger from an extra year’s worth of work experience, would this be a good idea?


    1. This article covers the technical knowledge required:

      Graduating early is not a good idea unless you already have a bulge bracket internship / full-time offer lined up.

  26. Does being placed in a particular coverage group pigeonhole you to work forever within that group/industry? If for example an analyst in industrials wanted to exit into buyside tech. would it still be possible?

    1. You do get pigeonholed as you move up – not because there’s a good reason, but because headhunters need to save time by looking for really specific people. It’s worse on the buyside actually – very difficult to move from a fund that uses one strategy to one that uses a completely different strategy. Sell-side is a little more flexible but you do get labeled “the aerospace analyst” or “the semiconductor analyst” once you’ve been there awhile.

      1. Avatar

        I hope by “a while” you mean more than 3 years?

        1. Depends a lot on the bank / group… bankers/headhunters like to simplify everything into black and white and “the [Industry Name] guy”, just how the culture works

  27. Hey,

    Nice article. What are some exit opportunitites with a job in PWM? Is it very limited?

    1. PWM, other types of asset management, maybe trading or hedge funds.

  28. Hey Brian,

    nice to read sth about industrial groups – never read about them before :).

    Further, you sometimes speak about “your journal” when you recall certain days when you were still employed. So what did it look like? Did you note all your deal involvement into a journal/your day-to-day events?

    Thanks for your input!

    1. It’s very scattered because I was too busy to write for long stretches – it was more about other analysts and friends vs. what was going on with deals, as that was actually easier to remember.

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