Why mid-market M&A jobs are best, by a banker who knows
The middle market is an interesting part of the financial ecosystem.
Everybody knows the bankers that work on the big deals at the likes of Goldman Sachs, JPMorgan and Morgan Stanley, but the past few years have seen big banks build teams to deal with smaller deals too - Goldman Sachs launched a 'cross-markets group' to target deals worth less than $500m in 2019, Bank of America began pushing (successfully) into the mid-market in 2016. JPMorgan is at it too and hired some new mid-market bankers in London in December last year.
But beneath the mid-market teams at big banks are entire firms devoted to mid-market deals. They include the Big Four, alongside firms like Alantra, Liberum and Shore Capital.
James Wolfe – managing director of Financa, a corporate training firm, and former mid-market (M&A) VP with London-based Alantra and others, says these firms can be the best places to work.
So… What’s the money like for mid-market jobs?
“More comparable to the bulge bracket than people think,” Wolfe says, although there is some variance between what he calls “premium middle market firms” (such as Houlihan Lokey, Robert Baird, and William Blair - although it's hard to differentiate many from boutique banks) and others. Premium firms “still work on deals which hit the headlines and work broadly comparable hours,” he says, which leads to higher pay.
Other firms in the middle market have a more flexible working culture than the bulge bracket and will have compensation between 70-80% of top banking pay. Like the big banks, “pay steps up at each level of progression and bonuses can be 70% to 100%+ of salary in good years,” Wolfe says.
You’ll climb the ranks quicker, too. “You can progress rapidly in middle market firms if you are a good operator,” Wolfe says. “There are many case studies of people making Director in M&A within 8 years of leaving university.”
And, of course, at higher levels – Partner / MD level – pay is uncapped.
How does mid-market work differ?
Much more interesting, really. “Bankers can be much more creative in how they shape M&A processes and deliver value for their clients,” Wolfe says, because they often work with private clients who are not under the auspices of the takeover code.
“You’ll be much more likely to have direct access to the management team,” he adds, and dealing with key stakeholders can make the job very different to a bulge bracket role. A family business, for instance, throws up shareholders “who may not agree with each other, and different types of buyers to manage,” he says. “You have much more optionality on how you position businesses for sale to maximise value.”
Your colleagues are likely not very different to a bulge bracket bank. “It probably is slightly less cutthroat in terms of how people operate,” Wolfe says, “but the focus on delivering for the client is laser like.”
Work-life balance varies massively from firm to firm. “At premier middle market firms, you will still be working until the early hours at busy points on a deal often and expect to be up all night when a deal is completing,” Wolfe says.
“However, there is a long tail of excellent middle market advisors with a much more flexible working culture and though pay might be less here, it means that corporate finance can be a career option for anyone,” he says.
The culture of middle market firms is also much more important than at big banks – and is an important consideration for the hiring process. “Expect a lot of questions around you as a person,” Wolfe says.
You’re expected to be much more human. “Management teams running middle market companies can come from much more varied backgrounds,” compared to bigger companies. “As a middle market banker, you need to be able to build relationships and get on with a broad profile of people,” he says.
What are the learning and exit opportunities like in the mid-market?
The middle market will definitely make you a “more rounded junior banker,” Wolfe says. “You develop excellent technical, commercial, and relationship building skills,” from an early stage.
You’re likely working with more entrepreneurial clients than a big bank does, too. “Companies in the middle market are in their growth phase and much more entrepreneurial, so you learn much more about how businesses grow, whereas companies in the bulge bracket are much more mature.”
As for exit opportunities, they’re much the same as for a bulge bracket bank. Moving up the bank hierarchy isn’t very common – but corporate development and strategy is, as well as private equity. “It’s not uncommon that middle market bankers move across to their private equity clients after they have done a couple of deals with them,” Wolfe says.
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