“My job is at a boutique,” said Todd arrogantly, adjusting his belt to reflect his retreated belly, showing that this was a hardcore New York male-anorexia and exercise week for him. By next week, he would bursting out of his pants after a weekend of depression binge-eating.

Todd paused and collected himself. “Yeah, I mean, I just really wanted to be closer to the deals, you know. Get more exposure.”

-The Boutique, Leveraged Sellout

When most people out there decide they really want to do investment banking, they usually go for the big names first: Goldman Sachs, Morgan Stanley, even UBS LA.

But occasionally someone asks me about the boutiques out there, whether they’re referring to the “top” ones like Evercore and Lazard, middle-market banks, or true regional boutiques that just have 1 or 2 offices.

Going to a top name is just not an option for everyone. If market conditions are bad, if you have no previous finance experience, or if you are trying to switch into investment banking from engineering or law or other fields, you might have to go with a boutique.

Would anyone actually want to go to a boutique? Maybe, sometimes a boutique actually has merits over a bulge bracket investment bank?

The Main Difference Between A Bulge Bracket And A Boutique

People most commonly cite the size of deals as the difference. While Goldman Sachs may advise on multi-billion dollar acquisitions, a boutique will usually stick to deals under a billion dollars and often far less than that. In the world of corporate finance, $50 million is chump change.

Another difference is that in a boutique, you get more responsibility, you work in smaller groups, and you get to do more than just number-crunching.

The above can be true; however, the biggest difference at the Analyst level is that your boutique experience will be much more random.

Challenged By Randomness

Make no mistake: you can get tremendous experience at a boutique and learn more about actual deals than you might at a bulge bracket. But you might also spend all your time creating pitchbooks and doing useless work if the senior bankers can’t make rain.

I’ve seen both scenarios. One friend at a boutique basically learned the entire job in 3 months because he was effectively running a deal by himself.

As for another friend, he spent a lot of time just writing pitchbooks, preparing coffee, and working on really small deals that he never learned much from.

Don’t assume that you will get a “better experience.” Your chances of getting good deals to work on and having good exit opportunities are much higher at a bulge bracket.

OK, So Am I Screwed If I Am Working At A Boutique?

No. But, before making the decision about boutique, you need to do careful research about the dealflow, work environment, and the people. To get a more down-to-earth view, try speaking with Analysts and Associates instead of senior executives.

Regardless of how much you research the firm, however, unfortunately there will be a time lag between when you apply and when your job starts, and much about the firm can change in a few months or a year.

Even at a respectable bulge bracket bank’s office like UBS LA, the fact that a few key employees left caused a huge commotion, and such happenings would have an even bigger impact at a smaller investment bank.

Still, you should do your homework as much as possible.

But Still, Is There Any Reason I Would Want To Work At A Smaller Bank?

I highly recommend that you apply broadly and consider all your options. Unless you have some sort of personal connection at a boutique, though, there usually isn’t any good reason to prefer it to a big name bank.

Lifestyle is typically not much better. Yes, sometimes there are one-off cases of Analysts only working 60 hours a week… at certain offices. But at the “top” names like Evercore, investment banking analysts work bulge bracket hours. And once you get up to around 80 hours a week, there’s honestly not much difference between 80 vs. 90 anyway.

Boutiques still offer exit opportunities, but such opportunities are relatively limited since a lot of firms always go to bulge brackets first for hiring.

At top boutiques and middle-market banks, the pay will be comparable to bulge brackets, but at smaller regional places, it can actually be significantly less… as in, 50% less in some cases.

One situation where you might want to choose a boutique is if you’ve received few offers from banks, you’ve confirmed that the boutique will give you significant responsibility, and you like the people and corporate culture after researching the firm. Your team is very important, and good experience is not worth it if you end up wanting to shoot yourself because you hate your co-workers.

Riyan Richter is a Associate Editor to several finance-related news and tutorial websites, including Breaking Into Wall Street and Mergers & Inquisitions. He writes about economic news, the job search, career advice, and networking.