Many threads have been created over the years concerning which group is best, what exit opps are from each group, etc.
While strength of groups change with the tides, i.e UBS healthcare left for Jefferies, I’m only going to comment GENERALLY and on my OWN experiences at a mid-tier Bulge Bracket bank, so if you disagree, you're probably right so feel free to share your own experiences at your shop.
Now, if you’re at an elite boutique or mid-market, it’s going to totally depend on your shop and what that particular shop is good at. Example: Qatalyst and Allen obviously have their own niches that they’re known for and you’ll just need to do a search on that yourself.
With that said, hopefully this thread helps to answer a few of the repeated threads about what group to pick.
To begin with, at any BB that has product groups, your first pick should probably be M&A. from MS to UBS, M&A is usually going to provide you with the best exit ops and for the most part, it’s relatively safe from downsizing unless you suck. On the downside, M&A groups are usually among the sweatshop groups, if not THE most sweatshop group. But then again, if you can’t handle hard work, why are you in banking to begin with?
After that, really consider what buyside path you want to take. HFs don’t care as much about which group you’re in, as most are taking kids after just 1 year of banking while PE usually wants analysts to complete their entire 2 year banking stint before coming on-board. Therefore, HFs usually want creative and bright analysts so the group differentiation is not that important. For example, I've seen just about every group from healthcare to industrials send at least 1 kid to SAC over the course of 2-3 years.
The main differentiation between groups from what I’ve witnessed at my BB, is the likelihood of headhunters to pigeonhole you for VC or growth equity or PE based on what group you’re in. This isn’t to say you’re not going to get into PE from TMT, obviously many have, and if you’re at a bank like GS, you can forget what I’m about to write because you’re probably going to get what you want no matter the group you’re in.
Now for the group splits, but keep in mind any of the groups have a HIGH chance of being placed into a specific shop if that shop focuses on the industry (Silverlake for TMT for example).
Venture Capital:
Healthcare – Have seen several friends at my mid tier BB have a harder time getting into PE from this group. However, VCs and growth equity will be knocking on your door. This also depends on whether you’re in pharma or health services or whatever other specific sector focus. The key thing you’ll notice for all of these is whether or not you’re familiar with debt structures and FCF, which you'll need for most PE gigs. Another thing about healthcare is that at most BBs it means SWEATSHOP!
TMT – Again, heavy preference for headhunters to push you into VC/Growth equity. However, ignore this for top shops or places like GS/MS TMT. But at a mid-tier BB, I have 2 friends who went corp dev and VC after not getting much luck in the PE recruiting side.
Private Equity:
Financial Sponsors / Levfin – Obviously a preference here for HH’s to push you into PE shops, and especially into distressed shops and mezz shops if you’re in LevFin.
Consumer/Retail – Asset heavy + debt and lots of cash flow, obviously a huge bias for PE here. You can also expect distressed type shops from here if your deal experience is relevant.
Industrials – Same as above, industrials is a LBO favorite of PE shops, and you’ll be pushed to interview for one. You can also expect distressed type shops from here as there's been a lot of restructuring deals in industrials.
Oil & Gas/Energy – Now this is tricky. Most Energy guys I know go into PE, but at ENERGY specific shops. This is especially true for those in Houston, but luckily the competition isn’t that fierce because there’s a lot of energy gigs for those with the right experience. Or maybe my bank is just good at Oil & Gas.
Specialized Buyside:
Real Estate – Now this is where generalization actually meets truth. This group is the worst at my bank and has had consistently worse exit ops than the rest of the groups. The only few exits they’ve gotten is into REITs and REPEs. Yes, real estate does pigeonhole (somewhat).
FIG – If at a strong FIG shop, you can pretty much go wherever anyone else goes. But if you're at a BB where it’s not the strongest, you’ll have to fight tooth and nail to get out of FIG oriented buyside. JC Flowers type shops are expected, while the others get into smaller financial-oriented gigs or corp dev.
Notice I didn’t list M&A, but as the top group you’ll be likely pushed into PE/HF from there, as I haven’t seen many go into VC. Not that you can’t, but most don’t want to. As top headhunters will tell you, you should avoid VC if you’re unsure, because it’s a lot easier going UPSTREAM rather than DOWNSTREAM. In other words, it’s easier to go from Megafund PE to mid-market PE, and easier from growth shop to VC rather than the other way around. My shop for example would never consider hiring someone from a VC or sourcing growth equity shop, as the modeling/technical skillset simply isn’t there.
Lots of generalization in this thread because to be frank, you can’t generalize the topic of what group is best for YOU. But there are trends, especially in the mid-tier BB range where competition is FIERCE. There, the group you are in can give you an advantage or disadvantage that could be meaningful, but of course the key to every story is that PERSISTENCE and your own SKILLSET is what ultimately matters. I’ve seen kids in the real estate group (worst group in my bank) go on to megafunds and similarly I’ve seen M&A kids (best group in my bank) strike out with 0 offers.
Best of luck out there.
