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23 Jun 2008, 15:53
Kudos
Bookmarks
Since we discussed research in detail, I thought it might good to get a thread on S & T. I have heard that T compensation closely represents M & A without as many hours.
23 Jun 2008, 16:46
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lanter1
From those I've talked to, S&T people always laugh at M&A people for doing more work for the same amount of money. However, in M&A there are a lot more VP and MD positions because of the way the teams work, as well as more potential managerial responsibility. Analysts and associates do the work, and VP's and MD's get the deals together. S&T, you could be a trader forever, managing nobody forever because they want you at the desk doing what you do best, albeit making 7 figures. The S&T people can't stomach the M&A hours, and M&A people can't stomach the S&T pressure cooker that is trading hours.
23 Jun 2008, 17:38
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djhouse81
This is a good analysis. A few other points that I wanted to bring up:
1) I believe that M&A/IBD made up a large portion of the banks revenue streams in the 70s/80s/possibly even 90s? Nowadays, if you go read the annual reports of most banks you will see that investment management and S&T make up a significantly larger share of overall revenue than do the fees earned from investment banking.
2) In S&T, there are guys that can pull down $25M/year, $50M/year, and obscene sums of money like this if they are good. I wouldn't find it surprising to see the top trader at a bank be compensated the same as the CEO in a good year. It is also very easy to measure contributions and compensate people accordingly. IBD Managing Directors for the most part can expect to cap out at the 2-5M range unless they attain group head/global head of M&A type titles.
3) S&T is obviously very quant oriented. At the junior levels, IBD is about analysis, but at the senior levels it is just as much about building relationships. S&T people laugh at IBDers for working the long hours, but IBDers often have the rebuttal that their work is far more interesting and that S&T work is repetitive and somewhat anti-social.
They're both very different paths that require very different skillsets. Accordingly, the exit opportunities out of each are very different as well - S&T going mostly into investment management or hedge funds, and IBD going to private equity/corporate development.
