McCarthy95
New member
- Jan
- 5
- 0
Should I go into FIG M&A?
Working within the FIG team at an investment bank will be a unique experience compared to that of the other teams. This article will address some of the features unique to the sector and hopefully help in assessing whether FIG is for you.
Technical.
FIG is renowned for being more technically demanding than other teams and this is due to the nature of the companies you’ll be advising. FIG can be broadly divided into the following sub-verticals: Banks, Insurance, Asset & Wealth Management, Specialty Finance and Financial Technology. FIG encompasses a broad spectrum of companies, some of which can be valued just like normal companies i.e. EV/EBITDA multiples and DCF models, whereas others demand a unique approach. Banks, Life and P&C insurance and Speciality Finance firms are typically balance sheet heavy and are subject to capital requirements. As such, these firms are instead valued off of P/BV multiples, RoE regressions and DDMs. Therefore, the level of technical complexity you’ll experience working in a FIG will be very dependent on which sub-vertical you focus on. For example, if you have a strong FinTech focus your experience from a technical perspective will be very similar to other teams such as TMT or Consumer.
Deal Flow.
Traditionally the deal flow in the FIG sector is strong and they usually generate a relatively large proportion on the IB division’s revenue. Typically, you’ll also have the opportunity to work with a broad range of companies. However, deals can be a little more uncertain and take longer to execute that other sectors; particularly in banking and life insurance where there is high regulatory scrutiny. Acquirers will also be very reluctant to go hostile given the reaction from regulators and governments.
FIG Companies.
Another important consideration is whether you have an interest in the type of companies you’ll be working with and the c-suites that manage them. Whether you’re fundamentally interested in FIG companies and the trends in the industry is completely a personal preference that you must decide on. Clearly, a CEO of a bank or insurer will be very different to a CEO / founder of a tech firm. However, in the FinTech space you will comes across a lot of exciting and innovative companies and management teams. If FinTech is of particular interest, then be sure to research whether the team you’re applying for has material deal flow in that area.
Pigeonholing.
Working in the FIG team will likely lead to a degree of pigeonholing. Therefore, it is important to consider which direction you would like your long term career to take when thinking of applying to FIG. However, the degree of pigeonholing is vary and is dependent on certain factors.
Firstly, pigeonholing can be dependent on which sub verticals you focus on. As aforementioned, the technical skills involved in evaluating FinTechs, Asset & Wealth Managers, Brokers etc. are similar to non-FIG companies. Hence, transitioning to other sectors should be smoother.
Also, if you’re in FIG at one of the top teams in the market, transitioning should be much easier. Unfortunately, if you’re in the FIG team at a less reputable firm you may initially struggle. However, after 1-2 years of experience you can always look to join a FIG team at one of the top teams then transition after that.
Exit Opportunities.
The good news is that most of the large funds invest in FIG companies. Furthermore, those with FIG experience can be particularly attractive to those funds who use financial companies (predominantly life insurers) as a source of permanent capital. Examples of this include Apollo / Athene and KKR / Global Atlantic, and this strategy is becoming increasingly popular.
However, due to the aforementioned pigeonholing associated with FIG, exit opportunities can be somewhat limited. In summary, there will be a healthy number of opportunities in the FIG space but landing a buyside role outside FIG may be challenging.