Sell-side research: If my analyst leaves, should I follow?

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numi

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In sell-side equity research, if a senior analyst leaves the firm for another bulge bracket firm, how often is it a "good idea" for his team of associates to leave with him?

I am presently working in sell-side research at a bulge-bracket bank on a two-person "team." Specifically, I work as the sole associate to my senior analyst covering a growing industry with significant client interest, and he is one of the most respected younger analysts at my firm. However, I believe my analyst might be leaving for another top bank. (By way of background, the bank we�re at now and the bank he might be going to would include two of the following: Merrill Lynch, Goldman Sachs, Morgan Stanley, Citigroup, Lehman Brothers, Credit Suisse, UBS.) I don�t want to get into details about how I have this hunch, but I�m pretty sure it�s correct.

I think that if and when he leaves, it�s likely I�ll also be offered an opportunity to join him at the new firm with a moderate pay raise. I was just wondering whether it is a good idea to stay at my current company or to move on with him. Basically, I don�t plan to become a senior sell-side analyst � my main goal is to do this for a few years, get a good recommendation and get into a top business program.

I like everything about my job right now. However, if he leaves, I'll have two options: I can either stay at my present firm or follow him to his new firm. If my analyst leaves and I stay, I'd be paired up with an analyst with whom I've never worked. However, if I leave with him and join the new firm, I might be part of a culture that might not be as good of a fit. Either way, I'd be taking a leap of faith.

The thing is that I spend 90% of my time working for my senior analyst right now, and our day-to-day team operations won�t change much just because we've changed "brand names." I enjoy my working relationship with my analyst and trust him to write me a great recommendation for business school. My main concern aside from culture is that the firm I'd potentially be going to might not have as big of a "name" as the one I'm at now, but maybe this isn�t such a big deal. I'm also concerned about how people might perceive the fact that I could potentially change firms after only working at my present job for a few months, even though I'd be working with the same analyst at another top bank.

Can anyone who is familiar with research at the top sell-side firms offer me some constructive insights as to the variables I should be considering right now? I just need help deciding whether I should stay or go, if I ever need to cross that bridge. Obviously the things that are important to a senior analyst are different than what�s important to a junior guy like me, so I appreciate any advice you guys can give.

Thanks in advance for your feedback.



Edited 3 time(s). Last edit at Saturday, April 29, 2006 at 06:36PM by numi.
 
If you like the guy you work for, follow him. He should know the culture of the new place well enough to know whether it's a good fit for him, and if you and he get along really well, you should fit in too. There are far more things that could go wrong if you stay behind, like getting a rotten new boss or getting canned because they decide not to cover your stocks anymore since there's no senior analyst.
 
i was in a similar situation at one of the firms you've listed. we were a 4-persons team: 2 senior research analysts and 2 research associates and in effect i was working almost entirely with one of the senior analysts and the other associate was working with the other senior analyst. my boss was offered the lead sector analyst spot at another BB and he jumped ship. while we had great work relationship, i have long-term career goals in research and felt that my current employer is better for that than the firm he jumped to, hence i stayed, switched sectors, and i'm very happy with my decision. also, i don't think it was part of his package to pick his associate. there are cases when a firm hires a whole research team from another firm, but in this case the deal was they wanted a senior person rather than a team.

"our day-to-day team operations won�t change much just because we've hanged "brand names."
maybe, maybe not. from friends who are also in sell-side research in other firms i know that the work dynamics are quite different in the different firms. little things, such as the way the morning meetings are conducted, the post-morning meetings follow-ups, the way the notes and reports are done/published, templates used, etc., do add up and make a difference in your work style. for sure, the way the notes are written vary hugely from firm to firm - i don't want to go into much detail on this as it's proprietary, but for e.g. in our firm we have specific guidelines on how many lines the bullet points on the front page should be, while other firms don't have bullet point format at all, etc. also, don't forget that the stock rating in some firms is absolute and in other it's relative - if you switch from one to the other, it's quite of a change too.

whatever you decide, good luck!
 
Thanks for your responses. Both of you brought up some very good points - anyone else have ideas?

ftse100 -- things like note formatting, morning meetings, templates used, etc. are not really a big deal to me. I adjust to this stuff very quickly.

I also assume you're familiar with the business strategies. I think GS, ML, MS, Lehman, Citigroup, and Credit Suisse are all pretty good at research, but they do have different strategies for research going forward.

How much do you think this matters, as far as the company's budget and business strategy for research, given that I only plan to stick around for a few years?

Also, for purposes of business school applications, how much does the "brand" of the firm matter? Are there some of them that don't belong in the same "tier" as far as research is concerned, or is this really irrelevant from the perspective of b-schools?

Thanks again for all your help.
 
ftse100 -- can you also tell me what reasons you felt that your current firm was more consistent with your longer-term goals than the firm your former boss went to?
 
numi, it's very true that firms have different views on how to develop research going fwd, one trend i'm noticing at my firm is making research more proprietary and more tailor-made towards tier 1 clients, which i quite like. i think it's likely that the top BB will maintain sell-side research, in one form or another.

re. your biz. school applications: i think what matters much more than 'brand' name of the firms you've worked for is what exactly you have achieved there and in what way your background is different from the zillions of other people who have worked for BB. my best friend has just been accepted at Columbia for MBA - she didn't study at an Ivy school for undergrad, nor she has ever worked for a 'brand' name, but in her several jobs she tried doing things differently from the 'standard' (without being afraid of the consequences!) and that's what the people at Columbia liked.

as for your last note: if i had jumped ship with my boss, for me it was going to be a step down in terms of 'clout', culture, and II rankings (move from one of the top 3 on your list to elsewhere). my boss was clearly attracted by the higher package at the other place, but he has more commitments in life (family, mortgages, etc.) than me, hence different priorities than me. and in any case i don't think my comp was going to be significantly higher as i'm not (yet!) senior analyst. considering the reputation and culture of my current firm i thought i can progress better here.
 
numi, I'm also a sell-side associate though at a smaller firm. The senior you're working for makes or breaks this job in my opinion. WhiteCollarRedneck is correct in pointing out that if you hang around, they may decide to drop coverage of your universe or split up some of the names among other seniors and you may be out of a job. To me, that's the biggest risk, not that you're not going to like the culture at your new firm. If you don't love your new firm, take the pay raise, pack away money, get your recommendation in a couple of years and move on to business school. I don't view one of the BB as carrying more cache than others in getting in to the business school of your choice. More important is a great recommendation or two, good GMAT and other intangibles.
I'd also consider not assuming you don't intend to be in the business for a long time. This business has a way of sucking people in, particularly with earning potential not found everywhere. I'd stay aligned with your senior, particularly if he's well thought of on the Street. That could pay dividends down the road you can't even fathom right now.
 
Thanks again for all your advice. Are there any particular questions I should ask the new firm if/when they want to meet with me? Also, assuiming that I leave with my analyst to go to the new firm, what concerns should I have about future employers/business schools seeing that I spent only three months at my current job? Are people more likely to look at me as someone who can't make a commitment to a single job, or as someone who was offered better opportunities and wasn't afraid to seize them?
 
I don't think you need to worry about people questioning the fact that you left so soon, if they know that you went with your analyst.
 
Thanks for all the feedback. I'll see how everything plays out in the next couple of weeks.
 
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