Is Prestige Really All That Important?

Prospect in IB-M&A

Hi you guys,

This will be a longer post (TL;DR: Which bank will have the most PE exit opportunities / significant career advancement within Houston?)

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Currently recruiting, I am trying to prioritize certain firms and have been wondering...is prestige the main factor when it comes to IB?

Vault effectively defines prestige as being well-known on "The Street."

How does this come into play regarding recruiting for PE? Are certain shops more highly regarded?

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Which would be the most important factors to prioritize in the case of PE recruiting in Houston?

• Vault 100 Prestige rank

• Total IB employees in Houston

• Total deal value in Houston

• Total Energy deal fees in Houston

• M&A advisory deal flow

(Let me know if I am missing anything)

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To put it into context:

• JP Morgan is the #1 bank by Energy and Power fees (globally)

• Citi is #1 in M&A Advisory deal volume in the past seven years (followed by Barclays, GS, Evercore, and JP Morgan)

• Evercore has advised on the most deals in the past seven years (followed by Jefferies, Citi, RBC, and GS)

• JP Morgan has the most IB employees in Houston (followed by Citi, GS, Piper Sandler, and Morgan Stanley)

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TL;DR 2: Which bank has the greatest possible (PE) exit opportunities in Houston?

Come to think of it, I suppose what matters, in the end, is going with the group with the most Energy deal activity, which would be JP Morgan, followed by Citi, Goldman, Barclays, MS, Jefferies, CS, BAML, RBC, and Evercore.

What are yall's thoughts?

What factors should I consider when choosing a (potential) offer from any of these banks?

Does anyone have an exact list of the top Houston banks by deal flow since last year?

TL;DR – JEF, Citi will give best exits based on energy prowess, JPM / GS / EVR based on brand name & high-profile deals.

Looking to answer your TL;DR Q2 of “Which bank has the greatest possible (PE) exit opps in Houston?

Last 12 Months (across US O&G, Pipelines, OFS): 

by # of deals: Jefferies (18), Citi (13), Piper Sandler (12), RBC (11), Barclays (10), Evercore (8), TPH (8), Bofa (8), Lazard (8), JPM (7)

By $ value: Jefferies ($15.2), Citi ($14.0), RBC ($11.1), Evercore ($08.6), CS ($07.8), GS ($07.5), Barclays ($07.5), JPM ($07.3), TPH ($06.4), Intrepid ($6.2)

To see the No. of analysts I ran a search on Linkedin for those working in Houston at specific banks with the title "Investment Banking Analyst" (ran by banks that were either top 10 by # or by $): data as follows: 

Citi (31), GS (29), Evercore (22), JPM (20), Piper Sandler (16), Intrepid (16), RBC (14), TPH (14), Jefferies (13), BofA (11), CS (11), Barclays (7), Lazard (4)

If you were to look at deal flow / analyst headcount, the rankings would be as follows:

Jefferies ($1.12 bil), Barclays ($1.10 bil), RBC ($0.79 bil), CS (0.71), Lazard (.500), TPH (.457), Citi (.452), Evercore (0.391), Intrepid (.362), JPM (0.362)

If you were to look at No. of deals / No. of analysts:

Lazard (only 4 analysts, 2), Barclays (1.42), Jefferies (1.38), RBC, (0.78), Piper Sandler (avg. of $170 mil, 0.75), BofA (0.72), CS (0.55), TPH (0.43), Citi (0.42), JPM (0.35)

So that’s a lot of data but I would honestly look at the data based on the no. of people working there – and analysts that is, not total group strength. I think its kinda clear from the data that JPM, GS are more of whale hunters – They have a large analyst class but not as many “big” deals and low general # of deals, so I would assume there’s a lot more pitching going around or general business development work as they pursue such whales.

The best energy experience will probably be at Jefferies – based on this data set - which is either at the top, or near the top in the categories. It is leading last year’s league tables by $$, no. of deals, and has a relatively small analyst class, which means almost all the analysts must be getting meaningful experience. I would caution that Jefferies is a very high beta group, when the industry is doing well Jefferies is the best Energy IB group in Houston in terms of experience. The current group of 2^nd years is exiting to Quantum, NGP (in addition to one A2A associate who exited there 3 months ago), Apollo, Carnelian, and one stayed on A2A with the group after being promoted mid-year with what I assume is a very lucrative retention package. The group is very sweaty (which you can probably interpret from the numbers) but also pays at the top of the street.

Citi will be another group that comes close, also leads the league after Jefferies in both $$ and # of deals but the only caveat being they have a very large analyst class and also have extreme first-year turnover – rumor has it around 50% of their first-year class quit before bonuses. Very sweaty as well but has a rainmaker of a group head and the balance-sheet gives it more stable outlook during downturns. Pay is below street.

JPM and GS both alike have very toxic culture. JPM’s cultural change took place when Jonathan Cox came over from MS and brought the culture with him. Favoritism is very common, know second-hand of a computer mouse being thrown at a summer intern by a VP, and some analysts have been paid <35k as a first-year bonus which doesn’t honestly make the experience worth it. GS is very sweaty and toxic in general. Either way the brand name helps the analysts get some top-notch exits but there’s also others that don’t place as well – which is expected given the large classes (there just aren’t as many tier 1 exits available as there are people).

Then I would probably slot EVR, Barc, MS, and TPH here in terms of the next best exits based on historical deal flow (as evidenced by the data you showcased in your post) as well as being in the top 6-8 deal flow wise recently. EVR and TPH will be more connected to energy. EVR has also had high turnover, TPH had 3 interns not return (1 didn’t get a return, 2 went elsewhere) out of 7 interns so that’s not a great look. MS and Barc have relatively small analyst classes.