Part One: IB & Funds

We recently sat down with an Investment Banker who has made the move back to IB from funds:

1. Can you recall why you sought a move to the buy side in the first place?
I was always interested in investing. A job looking at various investing opportunities – looking at different business models, industry dynamics, financial metrics, growth opportunities and then combining this with valuation was always on the cards for me. Working as a sponsors banker in my Analyst years, it was a natural step to go into an investing role. There is something appealing about being able to buy/invest in a business today, and then see it grow and sell it for a (hopeful) profit in the future.

2. You gave the buy side a decent nudge, working for a local boutique as well as an international firm. Any observations between the two? Any preference?
There were very significant differences, let alone the roles were very different – one being listed equities and the other being private capital investing – two very very different roles. Coming from IB, I was naturally more aligned and trained for transactions/deals. It is very different to covering 100+ global stocks and trying to be ahead of the curve – which is very tough. Working at an Australian based boutique vs. a global fund also had very different cultural differences, of which the latter was more suited to me than the former. My personal preference would be in the private capital role purely because it suited my personality a lot more – being able to look into a company with a very due diligence heavy lens and asking questions vs. relying on publicly available (and limited) data to make investment decisions. I also did not enjoy the volatility that comes with the equity markets – a lot of which is out of your control – yet you still remain accountable for the performance of your underlying investments.

3. How did the transition back to advisory come about and why? How were you received by the IB community?
There were a few factors that played a role, but you could say I wanted to think about the long-term and what I wanted to do and what made me happy. Yes, being in a private capital role was very fulfilling and interesting, but what I really missed was being able to work in a large office with large teams. That’s what I loved about investment banking – the wide array of personalities and smart people – and that’s what I had missed. I also missed the energy and intensity that banking offers – to come up with ideas to solve problems for your clients, to take calculated risks, to be there for someone when you need them – to me personally, this is what fulfils me. I couldn’t get that in the buy side. Finally, my personality naturally suits to meeting new people and being proactive with relationships. I felt this would be better valued in the sell side than buy side.

4. Do you think you make a better advisor having spent time on the buy side? As a sort of poacher turned gamekeeper turned poacher again?
Absolutely – I always ask myself, how things would have been if I had just spent my Associate years in banking vs. buy side – and the conclusion is I am a better and more respected banker because of my buy side experience. Not only did I develop a lot more relationships in prior roles that I have been able to leverage into my current role, but the ability to think like an investor and knowing what the key issues/considerations the PE funds will look at for their Investment Committee and diligence has been very helpful. You know the inner workings of the funds which makes your job as an advisor a lot easier. Another point that may be less discussed is that I believe I am a better communicator/presenter than if I had stayed in banking – because of the responsibilities you get in the buy side to present to the IC, to ask questions during due diligence, to talk to your counterparties, etc., you learn how to become a more effective and confident communicator. Similarly, when writing presentations and discussion materials, you learn to be succinct and to the point vs. creating large volumes of work (which banking tends to naturally skew to). I think the other important aspect is, if I had stayed in the sell side, I would always have the “what if” in the back of my head. The mentality that the grass might be greener or “I should try buy side”. Now that I have done this, you get a clearer pathway for the future in terms of committing because you have done both.

5. How has the transition to sell side gone? Met your expectations?
I was nervous initially, as I had been out for 4 years, but it couldn’t have been smoother. I am very fortunate to have a very supportive and close team, and this has been instrumental. It probably has been the best team I have worked for in my whole career to date. I would say after about 2-3 months, I felt very comfortable with the role.

6. Did the move to the buy side affect the level you were able to move back into advisory or did it not matter at all?
It did not matter to me – but that may be partly to do with my level/rank. I also kept very close relationships with old colleagues and other bankers during my time in the buy side, which definitely helped. I think they all knew I wanted to come back eventually…

Any other points you’d like to add?
Only other point I will add is – I think moving back to the sell side ultimately comes down to personality. You need to enjoy the thrill of the deal, the intensity, the energy, being around people and being proactive in developing relationships. That’s the best part of the job, but for others, it might be the worst. My hours are definitely longer and work/life balance is worse than it was on the buy side, and for a lot of people these are important considerations. Buy side can be at times more intellectually stimulating and interesting, but the role can be isolating (particularly in smaller team funds). It just comes down to what you like.

By Jon Michel

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