by Brian DeChesare Comments (85)

Buy-Side vs Sell-Side: The Worst Way to Categorize Finance Firms?

Buy-Side vs Sell-Side
“Buy-side vs sell-side? That’s not even a question! This investment banking job sucks, I’m leaving for the buy-side ASAP.”

“Yeah, I heard everyone at hedge funds makes at least $1 million and gets a castle as their signing bonus.”

“So when’s your interview?”

Ah, yes: that classic debate about the buy-side vs sell-side. Although the conversation above is fictional, similar exchanges are taking place in cubicles across the world as you read this.

You hear about the buy-side vs sell-side distinction everywhere, whether you search online, browse through you message boards, or even (gasp) talk to people in real life.

The only problem is that “buy-side vs sell-side” is the worst way to categorize financial services firms.

Buy-Side vs Sell-Side: The Usual Divisions

Search online and you’ll find explanations like the one below to explain the buy-side vs sell-side:

“On the sell-side, you pitch products such as stocks, bonds, or entire companies in the case of M&A, and you persuade investors to buy them. On the buy-side, you raise capital from investors and then make your own decisions on where to invest it and what to buy.”

If Ari Gold is the sell-side, Dana Gordon is the buy-side.

To an outsider, this seems like a logical way to divide the industry: you earn money either via commissions on sales or by investing your own money and getting a return on that investment.

The implication is that the buy-side is “better” because you have the potential to make a lot more from investing than you do from earning commissions – which is technically true, but far from the average case.

Buy-Side vs Sell-Side: What Are the Real Differences?

Beyond the high-level difference above – investing vs selling, and earning money via investment returns vs commissions on sales – you’ll also find alleged differences in the pay, hours, type of work, structure of firms, and more.

Here are some of the more hilariously wrong (and sometimes, borderline wrong) points I’ve seen:

  • Pay: You become wealthy on the buy-side because you’ll be a better investor than Warren Buffett and get 80% returns every year!
  • Hours: In addition to better pay, you also barely work on the buy-side because you’re such a baller that bankers, traders, and brokers answer your every call and deliver mermaids and private islands to your doorstep every day, all in a feeble attempt to win your business.
  • Type of Work: While the work is mind-numbingly boring on the sell-side, on the buy-side you’re doing intellectually stimulating tasks all day and changing the world!
  • Structure of Firms: There’s too much hierarchy on the sell-side, so it’s harder to advance. But on the buy-side you’ll move up the ranks quickly because the hierarchy is flatter and they reward top performers!

The only one of these that’s even close to being true is the last one – many firms on the buy-side do have a flatter hierarchy, but many groups on the sell-side also have a flatter hierarchy as well.

Most of the points above are not even real, significant differences – the real distinction is something else entirely, which you don’t hear much mention of…

The Real Distinction: Deals vs Public Markets

Rather than this buy-side vs sell-side dichotomy, we should be talking about whether you work on deals or in the public markets.

That’s the more meaningful distinction, and the one that goes unnoticed whenever this silly debate comes up.

Just like ranking the banks or ranking schools or ranking anything else, it’s easier and more fun to debate minutiae rather than discuss something that’s useful.

Here’s what the grouping above looks like when you use deals vs public markets:

  • Deals: Investment Banking, Private Equity, and Venture Capital
  • Public Markets: Hedge Funds, Buy-Side Research, Sell-Side Research, Trading at Banks, Prop Trading, and Asset Management

And yes, the “Other Types of Miscellaneous ‘Investment Firms’ ” one could go either way depending on what they do.

If they buy and sell entire companies (as in PE) or large chunks of private companies (as in VC) then they would fall into the “Deals” category, while anything else would be public markets.

Definitions: Say What?

In case it’s not obvious, “Deals” means that you work on M&A deals, IPOs, debt offerings, or Restructurings – major transactions where an entire company is being bought or sold or where they’re doing something otherwise massive.

You could argue that venture capital does not belong in this category since VC firms never acquire companies 100% outright – but the actual process of investing in a company as a venture capitalist is time-consuming and closer to the work you do in IB and PE than to what you do in trading.

In contrast, “Public Markets” means that you follow, recommend, and invest in the stocks of publicly traded companies or in other securities like bonds, derivatives, commodities, and so on.

Here’s why this is the better way to categorize financial services firms:

Buy-Side vs Sell-Side: The Type of Work

When you buy or sell 100% of a company, it takes far more work than just buying or selling a few shares here or there.

You need to pitch it to dozens of potential buyers, create marketing materials, do financial modeling and valuation work, and then negotiate the terms of the definitive agreement with the buyer; if you’re the buyer, you can skip those first two steps but you’ll spend a lot more time on due diligence and digging into all the material available on the company you want to buy.

A single deal might take months or years of effort to close, and the entire process is more like a marathon than a sprint: you’re not always working 100%, there’s plenty of downtime, and sometimes it’s stressful but your overall busy-ness fluctuates over time.

When you’re on the Public Markets side, by contrast, your average day is more like a sprint than a marathon: there’s little downtime, you have to follow the market constantly, and you need to be 100% focused at work.

But investments don’t take months or years to negotiate – even when you’re accumulating a huge position in a public company, it requires subtlety and patience but not super-elite negotiation skills.

And when your work is finished, you go home. That may sound like a small deal, but in investment banking and private equity you often get pulled into work on weekends and late at night when major deals are happening.

Before you leave a comment saying, “But I work in PE and the hours are still much better than banking!” I’ll say that the hours can be better at smaller firms, but when you’re busy, you’re still busy, and at mega-funds the hours are like banking all over again.

Buy-Side vs Sell-Side: Hours

…which neatly takes us into our next topic, the hours.

Going back to the buy-side vs sell-side argument in the beginning, the usual claim is that the hours are much better on the buy-side because you don’t have to answer to the whims of clients 24/7.

That is sort of true – in theory – but it’s not the best way to look at it. It’s better to divide the hours by Predictable vs Unpredictable.

  • Deals: The hours are more unpredictable because you never know when a huge deal will heat up and when you’ll get slammed with work at the last minute. Venture capital may be an exception, but even there you could always get busy when closing a deal.
  • Public Markets: Your life is more predictable because you work market hours. You may have to get in before the market opens and stay after the market closes, but it’s not like IB where you might get called in at 2 AM to fix a random problem that a client is complaining about.

In general, you will work more if you’re on the “Deals” side – yes, hours may be better in PE than in investment banking, but you’ll still work more per week on average than you would on the “Public Markets” side because of this unpredictability.

Most Public Markets jobs clock in at the 50-60 hour per week range – while some Deals roles may also be in that range, the average tends to be a bit higher, or a lot higher in the case of investment banking hours.

The size of your firm often impacts the hours more than the work itself.

Taking hedge funds as an example, people often claim that the hours are “good,” but at the biggest funds you’ll still be working a lot even if it’s a Public Markets role on paper.

Buy-Side vs Sell-Side: Stress

That issue with market hours vs unpredictable hours also means that the stress in each role is much different as well.

In banking (and PE, when you’re working on a huge deal) the stress is of the “Crap, something on this deal is falling apart and they need me to fix it ASAP even if it’s Saturday night at 10 PM… and now my VP is emailing me to get into the office” type.

In Public Markets roles, work doesn’t follow you outside the office as much – but when you’re at the office, there’s very little downtime compared to what you would see in a Deals role.

Traders, for example, need to watch their positions every second of the day and must find someone else to cover them if they leave for even a few minutes to run to the bathroom.

If you’re working at a long-only asset management firm, it may not be quite that stressful but you still need to monitor the markets closely and you can’t afford to screw around during market hours.

So pick your poison: do you want market stress or deal stress?

Buy-Side vs Sell-Side: Interesting-ness

This is another oft-debated point, but it’s also a silly one because there’s no real answer.

People like to claim that much of the work you do on Deals is mindless grunt work – which is not untrue – but you could say the same thing about a Public Markets role.

Sure, you don’t have to fix the font size in a pitch book at 2 AM, but you have to do plenty of research and comb through filings and other reports to support the Portfolio Manager and/or Research Analyst and other senior people.

This one is more about what you personally find interesting: do you actively follow the stock market and invest your own portfolio? If so, you’re probably better off in a Public Markets role.

If you’re more interested in business in general but don’t find the stock market that interesting or you don’t invest much yourself, a Deals role is probably better.

I’ve always found “Deals” work more interesting because there’s a different story and different scenario each time, whereas (to me) the markets all blend together after a point.

But your mileage will vary and there’s no correct answer here.

Buy-Side vs Sell-Side: Pay

Ah, now we get to the fun part.

And there’s a surprising conclusion here which makes this point different from everything else on this list:

The average pay on the buy-side vs sell-side is not that much different, but the ceiling on the buy-side is much higher.

So, this is the only point where the buy-side vs sell-side distinction makes more of a difference than the Deals vs Public Markets one: yes, my argument falls apart here (shh, don’t tell anyone).

The ceiling on the buy-side is much higher because if you invest well, the sky’s the limit.

For example, top hedge fund managers could make hundreds of millions or even billions in a great year.

On the sell-side, meanwhile, the ceiling is much lower for Partners and Managing Directors. No matter how good you are, you have a limited amount of time and you can only do so many deals or sell so many stocks in a day.

The exact numbers change from year to year, but earning more than a few million USD per year at the MD level in investment banking careers is rare unless the economy is on fire and you’re a Group Head or have another even-more-senior position.

But the more relevant number is the average pay on each side.

You can see typical investment banker salary figures here; private equity is not much different, and even in something less hierarchal such as trading, you see a similar progression from bottom to top.

And despite rumors that everyone at hedge funds makes millions of dollars, the average pay is $326K, with only 5% earning over $1 million according to compensation data.

The bottom-line: You’ll be in the top 1% or so of earners even at the entry to mid-levels in the finance industry, but yes, the buy-side offers a much higher ceiling.

Buy-Side vs Sell-Side: Hierarchy

This is another one where the buy-side vs sell-side distinction seems sort of true at first… until you look at it in more detail.

The buy-side does tend to be less structured in the sense that you don’t see lots of mid-level associates, VPs, and SVPs / Directors as in banking.

But, two points here show that this is not the best way to think about it:

  1. Many groups on the sell-side also have less hierarchy – equity research and sales & trading, when you make the sales & trading vs investment banking comparison, for example.
  2. While you may not see quite as much hierarchy in PE and VC, there are still more mid-level positions (e.g. “Principal”) than in, say, long-only asset management.

So once again, the Deals vs Public Markets distinction is the best lens through which to view the hierarchies.

You need more headcount on Deals because more work needs to get done and more people need to be managed: lawyers, accountants, financing teams from other banks, and even the occasional clueless consultant.

But when you buy and sell shares or securities, you don’t need a deal team of 5-10 people to make decisions: you just need the Portfolio Manager and their supporting analyst(s).

Buy-Side vs Sell-Side: Advancement

That difference in hierarchy also means that advancement differs in Deals roles and in Public Markets roles.

In both of them – and really anything in finance – it’s an “up-or-out” culture. Deliver results, generate fees or high returns, or get out and don’t come back.

But the key difference is that advancement on the Deals side – mostly in investment banking – is more structured and tends to follow a set “path” in terms of number of years required to advance.

It takes 3 years to move from analyst to associate, 3-4 years to move from associate to VP, and so on, and you can’t do too much to speed up the process.

But in Public Markets roles, advancement is more linked to your own performance, external factors like whether your Research Analyst is leaving, your reputation, and luck of the draw.

So you could advance very quickly if you perform well and get lucky, or very slowly if you never do anything to set yourself apart.

Exit Opportunities

Exit opportunities have already been beaten to death on this site, so I’m not going to go into too much detail here other than to say that it’s difficult to move from a Deals role to a Public Markets role and vice versa – with a few exceptions.

This is why it’s so common for bankers to go into PE but much more difficult if you’re in trading or equity research; it’s also why traders might move from trading at a bank to a hedge fund or asset management firm but wouldn’t go into corporate development.

There are some exceptions – for example, bankers can still get into hedge funds, and it can be difficult to move from the buy-side back to the sell-side (PE –> IB, let’s say) on the Deals side.

But your exit opportunities depend on whether your a Deals person or Public Markets person, for the most part.


You knew we had to arrive at my favorite topic in the world at some point, right?

This one’s simple: whereas the CFA is relatively useless for Deals roles such as IB and PE, it’s much more useful and often expected or required in Public Markets roles (except for trading).

I have no scientific explanation, but one possible reason is that the CFA itself just doesn’t cover most of what you do on M&A deals as an analyst or associate: the material is more general and higher-level, which is great but also not that applicable to major transactions.

So yes, if you’re interested in a Public Markets role then you may want to consider the CFA – as long as you already have good grades, solid work experience, and brand names on your resume.

Buy-Side vs Sell-Side: Financial Modeling Training Programs

Most modeling training programs, including Breaking Into Wall Street, focus on the “Deals” side – how to value companies and how to model M&A and LBO deals.

That’s because there’s more modeling required for Deals roles to begin with – if you’re just investing in stocks of publicly traded companies, you don’t need to know the in’s and out’s of deferred tax liabilities and Section 382 for NOLs and book vs. cash taxes in M&A deals.

Sure, if you’re at a merger arbitrage hedge fund you’ll need to know more – but the modeling work is still less involved than what you see on major transactions.

And there’s more of a focus on valuation over transaction modeling – so the quantitative work is simpler because valuing a company is simpler than modeling an entire deal, especially since you can save time by not spending hours adjusting numbers in the comps.

Which Side of the Street Are You On?

The main flaw with this Deals vs Public Markets distinction is that the pay differences are more strongly linked to the buy-side vs sell-side.

But other than that, the key issues such as predictability of hours, the work itself and associated stress, and advancement all have less to do with buy-side vs sell-side and more to do with Deals vs Public Markets.

Another flaw is that some roles such as Equity Capital Markets and Debt Capital Markets may be “in between” Deals and Public Markets – so you see a mix of the differences above.

So… this revised distinction is not perfect, but I think it’s more helpful than viewing things purely in terms of buy-side vs sell-side.

The next time you hear people debating the buy-side vs sell-side or hyping up the buy-side, please punch them in the face and deliver a drop-kick or two.

And then send them a link to this article – they’ll need some reading material for when they’re recovering in the hospital.

For Further Reading

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Read below or Add a comment

  1. Hi Brian

    Quick one from me, what are examples (As in Firm names) of sell side Public Markets firms?


    1. An example would be something like an independent equity research boutique firm or a prop trading firm. Take a look at the articles on this site about those topics.

    Took all your advice and jumped from Valuations at a Big 4 accounting firm to a mid size IB in the tech sector

    I’ve been there for over year (15 months) . Worked on a few deals, but none of them closed unfortunately.

    Do you think that matters when recruiting for buyside? What do you think is the best course of action?

    1. Thanks, glad to hear it. Yes, it will be more difficult to win buy-side roles without closed deals. You could aim to recruit now, but if there’s any deal in your pipeline that might close within the next few months, maybe wait for that. If not, just recruit now.

      1. Thanks so much! I’m going to start recruiting now.

        I went through your experienced resume templates and for “Selected Transaction Experience” would you recommend just putting the project name and bullets although it didn’t close? Should I even mention that it didn’t close?

        1. Yes. You can just say it’s pending.

  3. Thanks a lot for the article! Really helped a lot!
    I am currently doing a M&A internship in a boutique, and the possibility of a full-time offer is high.
    However, I aim to work in asset management industry after 3-5 years.
    Is it possible ? (I guess the article implies that such transfer might be really hard)
    But the M&A opportunity is the best chance I could have so far, and it is quite difficult for me to find another research internship right now.
    By the way, could you kindly cover research or AM things in Asia, in particular Japan?

    Many thanks!

    1. Potentially, yes, but AM and M&A are quite different. If it’s just an internship it may not matter much, but you generally want to intern in related fields, like hedge funds or other AM-related firms to get into the field. See:

      We don’t have much on AM in Asia at the moment but hope to cover it eventually.

  4. I have seen Investment Bankers working on the buy-side during an M&A- Typically, advising on the purchase price. How does the IB team in this case earn? They certainly can’t be earning as a percentage of the deal value because they want to get the “best value” for the buyer

  5. Michael Abramowitz

    I am now retired after 44 years in the business, sell side of a major investment bank, and having made a substantial living, if I had to do it all over again, I would have gone in to business for myself, even if it was as simple as a steel jobber. I had clients over the years, who did very very well, some only self educated, but no one told them what to do, what their expectations were, and none had his future in their hands. They had a stable families with successful children and grandchildren.

    There are only three jobs in the world, (1) work on a salary (which is always less than you are worth), (2) work for commissions (and compensation can always be adjusted up or down at the whims of management) (3) work for yourself and you can tell everyone to fuck off.

    1. Thanks for this post. Nice to hear from someone who really lived it long term. I would have to imagine you made some nice coin, ultimately was it worth it?

  6. Great article!

    I have one question referring to: “So yes, if you’re interested in a Public Markets role then you may want to consider the CFA – as long as you already have good grades, solid work experience, and brand names on your resume.”

    So, it is better to do a master degree in finance or financial markets before taking the CFA?

    It could be possible to take first the CFA and maybe in the future do an MBA?

  7. Great post!!! you’re helping me a lot for this upcoming internship I have, my boss recommended this site to tell me everything I need to know.

    Thanks again, keep up the great work.

    1. Thanks for reading!

  8. Justin Tucker

    Hello Brian,

    Great article as usual. I was wondering if you thought it may actually be easier to move from being a trader at a bank to working at a hedge fund (either being a trader or analyst). Also, considering that many hedge fund managers started out as traders, I wonder if they might like traders better.


    Justin Tucker

    1. M&I - Nicole

      Yes many traders from banks move to HFs. Some HF managers may prefer traders, and this is also based on performance. If you have a track record as a trader, then the managers would probably be more likely to “recruit” you.

  9. Hi, what is the difference between buy-side research and working as an analyst at an asset management firm or hedge fund?

    1. M&I - Nicole

      I am not 100% sure how to answer your question because both AM and HFs are on the buy-side. So when you say buy-side research, I had the impression you’re saying AM/HF research; the two (buy-side vs. AM/HF) are basically the same in my opinion. If you’re talking about sell-side research then that’s different. I think the work b/ sell-side and buy-side research are quite similar, but on the sell-side you may be working harder, longer hours, and you’ll have to deal with various institutional clients. On buy-side you’re just working for your firm and your PMs.

      1. In the article above, under the buy-side, buy-side research, asset management and hedge funds were all listed separately. Does this mean that working in “buy-side research” is different from working in a research/investment analyst role in an asset management firm/hedge fund?

        1. The roles are similar, but “buy-side research” is more about coming up with more critical views of companies, putting those views into reports and commentary, and then selling them to institutions that might use them. It’s sort of like a more critical version of sell-side equity research. But you are not investing directly, at least not in most cases, so it’s different from investment analyst roles at AM firms and HFs.

  10. Hi Brian,
    Very insightful article thank you for sharing and posting I found it interesting !
    Keep posting !

  11. great informative article! thank you, Brian

  12. Hi Brian,

    Deals vs. public markets is a great way to break the industry down, so thanks for clearing it up.

    If I’m interested in public markets, what valuation techniques and financial modeling are useful to learn?

    Thanks again,

    1. M&I - Nicole

      I’d say comp and DCF are useful to learn. I’d also understand how to value various industries (i.e. you use P/E and P/S in retail, P/B in utilities)

  13. Brian,

    Thank you for this article. I have an interview with an alternative investment management firm for the position of a trader in the investment team ( Fixed Income Emerging Markets). I had two questions:

    1. Is this position similar to a buy side analyst?

    2. I don’t have any prior trading experience. How do I tackle questions related to this during the interview?

    Thanks in advance.


    1. M&I - Nicole

      Not exactly because you’re interviewing for the role of a “trader”, which is different from being a buy-side analyst. I’d read up on the stock market and pick a stock you can talk about.

  14. Great blog: you’ve managed to make the world of finance so much clearer.
    May I ask you a question? I’m currently a VP in private banking with 8 years’ experience at a top name US firm. I have the CFA. Within the next 2 years I am going to need to switch to another geographical market, leaving all my clients behind, for family reasons. I’m therefore interested in shifting gears to another area in finance that might be more technically involving – and intellectually satisfying – than simply networking among rich people; e.g. possibly institutional sales.
    Any idea if this would be possible – or advisable?

    1. M&I - Nicole

      Yes, but you’ll have a higher chance if you’ve had some sort of relationships with institutional clients/can demonstrate that you can generate commissions almost immediately, especially at your level

  15. Hi!

    There is a lot of insight and truth regarding the myths and realities of the tenor of the buy and sell sides. But buy side and sell side terminology is vital for keeping us sane if we view it in the following way – this perspective was sort of overlooked here :)

    Buy side vs sell side would more accurately be described this way:

    The sell side “sells SERVICES”
    The buy side “buys SERVICES”

    This distinction is both accurate and inaccurate when we consider M&A is a little bit different in M&A, but this distinction is accurate in corporate finance, syndication, private placement, investment research, public market investors, etc.


    You mention traders (which would also include sales-traders who liaise between investors and traders) and , so let’s talk about the history of trading for a moment…

    In the old days you needed someone to broker your trading if you or your company didn’t own a seat on the NYSE, for example. You can’t get on the floor without you or your firm owning a seat. So how can you trade? You pay a firm who CAN get on the floor because they own a seat. They don’t care if you make money or lose money as long as you pay them a fee for the service they provide; taking a fist full of your investment dollars, walking onto the floor, and investing your money. Or they take your fee for the service of walking onto the floor selling your security, and returning, hopefully, with a fist full of your investment dollars.

    The sell side trader is selling you access to the floor, you are buying access to the floor (he is sell side, you are buy side). It has nothing to do with someone pitching a particular stock, etc. It has to do with buying the service he provides – access.

    Electronic trading can be considered the sell side, because you are paying for the same access to the trading floor.


    Similarly, let’s take sell side investment research; it is a service. Investors either pay money for their presumed expertise or it is given away as a freebie if the volume of your trading activity is sufficiently exciting to the firm as a revenue stream in and of itself. By the way, in general, the “buy”, “sell”, “hold” designations that sell side analysts offer does not help sophisticated investors (or amateurs) succeed more often – they’re as wrong as anyone. But, the “stars” may have either better connections with industry management OR fantastic models, OR both. There are few “stars” on the sell side, however. They’re only really useful for building earnings consensus on the street – after all, they are staring at models for as few as 10 to 25 companies in the same industry SECTOR every single day.

    Investors are considered the buy side because the PAY for sell side investment research either in cash or through “soft dollars” (because they trade through that company’s desk a LOT). So sell side investment research is a SERVICE.


    Imagine you are a private company and you want to go public. If you don’t already have representation, you don’t know what docs to fill out, how to structure the security you wish to release upon the world’s investors in order to raise more capital to reinvest in the company – or at least keep your balance sheet sound. Not only that, but you have no idea how to connect with investors who would buy it out of the gate or even down the road. Securities are not just structured and left at that – someone has to distribute it for you. This combination of SERVICES is why they are the “sell side”.

    You are the buy side because you are essentially renting the expertise of investment bankers. You are buying those SERVICES.

    They will tell you all about the docs, they will tell you how to structure shares, and THEN they will walk over to their capital markets people, sales, traders, etc., and they will set up roadshows and sell that new security – then hand it off to their traders who will get the transactions flowing (hopefully).

    So that is the definition of buy side and sell side in a nutshell; the sell side sells SERVICES, and the buy side buys SERVICES. That is why investment banks with both brokerage and IB are called “full service investment bank/brokerages” – they sell both SERVICES.

    Hope that helps!

    1. Excelent Adam, could not be explained any better.

  16. Hi,

    I’m interning at a BB doing equity research. I know you don’t have a public markets model yet, but until then, do you know of anything else that might come in handy?

    Thanks again

    1. The Fundamentals course will still be helpful and specifically the Bonus Case Studies included within (not yet even mentioned on the promotional pages) will be helpful.

      We give an exact template for a detailed stock pitch plus cover how to project revenue and expenses for different companies, which is what you do in ER.

      1. anonymous


        By “Fundamentals course”, do you mean the course on Excel fundamentals, or a course on fundamental analysis? (if you mean the latter, can you provide the link to the course).


        1. M&I - Nicole

          Brian meant the Financial Modeling Fundamentals course, which is included in the Excel & Modeling Fundamentals course – This course is actually two separate modules, “Excellence with Excel” (a prerequisite) and “Financial Modeling Fundamentals” – if you do not want the excel course, please email us and we can break the two courses apart.

  17. I want to be an agency trader at an Investment Bank. Can you tell me:-

    1. Is it true that computers are replacing humans in these positions ?

    2. If so, are there any asset classes where agency trading is still done by humans instead of computers ?

    3. How easy will it be for me to move to a hedge fund (as a prop trader) after few yrs ? Will my background (math/CS) be helpful in the agency-trading role and/or the hedge fund trader role ?

    Thanks !

    1. M&I - Nicole

      1. This is a trend though I don’t think computers can replace all humans
      2. Most
      3. Depends on how good you are. Yes.

  18. Dr. Dreams

    Well written! I enjoyed your content and style

    This is my first question on this site so I really hope I get a decent answer :)

    1> If my goal is the top roles in PE and currently I’m an undergrad student at a top school in my country; can I just enter PE directly upon graduation (and get experience, learn, network and start moving upwards) or should I enter into IB for 2-3 years then head out over to PE?

    What are the advantages/disadvantages for doing that (if any) …I really would like to just progress upwards in PE from the start, if possible (I am in Canada, so not sure if its different from US)

    Any insights would be much appreciated :)

    1. M&I - Nicole

      You can try though it is easier to break in from a top tier IB program (from a BB)
      Starting out in IB can give you the skills in PE; IB firms give you proper structured training. Harder to obtain that in PE firms esp cause they are small and expect candidates to be up and running ASAP
      Depends on what kind of person you are – if you can be up and running when they hire you and have a genuine passion in PE, I think going straight into it is a more direct way

      1. Dr. Dreams

        Thanks so much for the advice! Just to follow through, would 1 year in I-banking be enough to enter PE? Or do I have to do 2 or 3 years? (Does it make a difference in terms of salary or knowledge/prestige?)

        I really appreciate the help!

        1. M&I - Nicole

          2-3 years or above is better

        2. Just to add here, many people at top banks actually interview for PE and land offers before year 1 ends, and then start after 2 years.. sometimes even before that. Doesn’t really make a big difference, but generally it’s better to have at least 2 years experience before you start *working* in PE even if you interview before that.

          1. Dr. Dreams

            Thanks a lot Nicole & Brian, I really appreciate it! Keep up the great work, you’ve done a solid job with this site!

          2. M&I - Nicole

            Yes thanks to Brian too!

  19. Hey Brian,

    How can you tell if a company is focused more on sell-side or buy-side if they do both?

    Also, how can you tell if a company is buy-side or sell-side in the first place?

    1. M&I - Nicole

      Buy side – mutual funds, hedge funds, private equity firms
      Sell side – investment banks

  20. When recruiting for Equity research do banks like people who have a big buy-side network?

    1. That may be a plus, but I don’t think it’s a key concern at least for entry-level positions. Probably gets more important as you advance.

  21. Hi Brian,

    I hate to reply what all others have been saying above, but it’s true though, once again a great post…

    I’ve been wanting to ask you this question for a while:

    I am looking to get into M&A although I am not to sure that I’ll succeed without getting an MBA first (I am currently working in Risk Mgmt and have a non-finance background). Would you nevertheless recommend applying for the full-time M&A job before going to business school? I’m wondering whether I should be worried about not getting in after obtaining my MBA as a result of my ‘bad performance’ the first time. Do they keep records/… or am I not risking anything by applying now and try again within ‘2’ years?

    Many thanks!


    1. M&I - Nicole

      If you apply and don’t get in this year, no one really cares if you reapply again unless you made a really bad impression on an interviewer. Even if they keep records, they might not remember. Just apply now and see where it leads you.

  22. John Smith

    Hi M&I,

    Thanks again for the continued advice.

    One theme I see running through just about everyone’s career is being able to make a good living, while still doing a social good.

    1. I know that finance certainly does the first one. However, is there any room to do the second? (i.e. do a social good by donating money, etc.).

    2. In the end, does corporate finance really add value in the majority of cases? (I.e. I’ve read that many companies are worth less after merging or acquiring than they were both worth separately before). Frankly, the investment banking industry in particular seems like “snake oil sale”.

    1. M&I - Nicole

      1. Yes you can always donate $ or support a worthy cause or start your own business to help others. Money can do society good; it depends on how you use it
      2. Yes, corporate finance, like any other business, can add or not add value depending on how you see it and who is doing the deal etc. You have to look at the context before you make a statement

  23. What are the exit opps for Public Markets? In deals it seems pretty clear that you go into corporate development or business development. What if you work at an IM/HF/AM and your recommendation fizzles out? What do you do then?

  24. What is the dress code for information session? Should I wear suit?

    1. M&I - Nicole

      I’d say business casual is fine, suit if you like

  25. I would love a ‘Public Markets’ modeling course. I just don’t understand how you can make decisions on these bullshit valuation techniques. IMO comps with 1 or 2 yr forecasted 3-statements is the most accurate.

    1. I couldn’t agree more with your view that valuation techniques are BS. I go into a rage and tear new a-holes when I see NPV analyses on peoples’ presentations. Comps might work if they actually existed, but usually don’t.

      So when I’m asked “how did you come up with that valuation”, I usually answer with “by using the HW technqiue”, “HW?”, “ya, the Hand-Waving method”.

  26. Great post, of course.

    Sorta realised this some time ago – I’m hoping to eventually end up as a venture capitalist, but that’s not really very feasible in Asia. So I figure I’m going to have to work my way through the IB system and somehow worm my way back to the USA so I can move to Cali.

    1. There are VCs in Asia but it’s still a smaller industry and still definitely centered in Silicon Valley. Might want to think about the AVCJ conference for Asia though.

  27. If I want to do school year internship, is it fine if i can’t work every day? How many hours each week are required in order to do the job? Thanks.

    1. Most of them are 10-20 hours but varies by firm.

  28. I met a PhD student on campus randomly, she happens to know a few quite established bankers for some reason. How should I follow up on her? Should I send her an email and directly ask for referrals? Thanks

    1. Yes just keep it very short

  29. This is perhaps the most credited post on this blog. Great job.

    1. Haha thanks didn’t realize that

  30. A bit unrelated, but would an internship with a tax accounting firm that does tax returns and other accounting work for PE firms look good on a resume for investment banking?

    1. Yes, or at least better than doing something less relevant.

  31. Love the humor Brian! It’s one of the main reasons I keep reading these articles!

    1. Thanks! Yeah otherwise these topics would be too boring to cover in-depth.

  32. Once again, another great article that structures knowledge of what one doing.
    Why did you say that PE->IB transition is difficult?

    1. Yeah in general it is more difficult because most people only do the reverse. You would need a really good story about wanting to learn something specific / work in a bigger team or something like that to make it work.

  33. I should point out that VC has a rather big “sell-side” component to it as well when you’re fishing for an exit. This is arguably more important than the work you do in preparation for an investment. Actually, VC is a classic case of the stupidity of the buy-side/sell-side dichotomy. Deals vs markets is much better.

    1. Yeah that’s a really good point, and I’m guessing that with a lot of VC portfolio companies you don’t have bankers lining up to help out. So sell-side vs. buy-side is sort of useless there.

  34. Brian – this is a truly insightful article. I also find the buyside/sellside distinction to be rather useless and even confusing. Your categorization is wayy more intuitive for me.

    Keep up the great work!

  35. Brian- thanks for the great insights. One question:

    “Traders, for example, need to watch their positions every second of the day and must find someone else to cover them if they leave for even a few minutes to run to the bathroom.”

    Is this entirely true? I know a handful of traders who picked up smoking so they force themselves to take their eyes of the screens and not “micro manage” their positions (and obviously to deal with the stress). They said it helps them stay decisive, disciplined, and patient (i.e. make the call, set their targets, put in stops, limits, etc. and then monitor them regularly, not every second).

    1. You might be right there, I’m not sure what percentage of traders actually do that. And depending on the type of trading you don’t have to necessarily micro-manage, but it still requires more focus than working on deals.

  36. Brian,

    What do you think the deals vs. public markets distinction means for business schools applications? Do you think they prefer one over the other?

    1. I don’t think it really matters. What you did there, the reputation of your company, and accomplishments outside work matter more.

  37. Brian,

    Thanks for another excellent article. Could you please throw some more light on the valuation vs transaction modeling. Are we talking about DCF vs Merger/LBO modeling over here


    1. Yes, and comps. You still need to understand the others but won’t actually do them as much.

  38. Brian- thank you so much for setting this straight! After realizing this summer I’m not a “deal” guy, I realize this is well more important than this horribly misleading buyside vs sell side argument!

    1. Thanks! I don’t think it’s “horribly misleading” necessarily (the headline was more just to get attention) but I do think Deals vs. Public Markets is the better way to look at it.

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