Product groups and industry groups are two key functional divisions within investment banking divisions (IBDs) of major investment banks. While industry groups focus on covering specific industry sectors and originating deals, product groups like M&A, ECM, DCM, etc specialize in executing different products like mergers & acquisitions, IPOs, bond issuance, etc. Understanding their key differences and synergies is crucial for those interested in investment banking careers.
M&A and ECM product groups execute complex financial transactions
The product groups within IBDs are organized around the main products like M&A, ECM, DCM, etc. The M&A product group provides advisory services on merger and acquisition transactions, valuing targets, structuring deals, negotiating terms, etc. The ECM (Equity Capital Markets) product group handles IPOs, equity issuances, convertible bonds, and other equity-linked products for clients. These groups undertake highly specialized work on complex corporate transactions and financial modeling.
Industry groups focus on client relationships and deal origination
In contrast to product groups, industry groups in IBDs are organized by sectors like TMT, healthcare, industrials, etc. They focus on building relationships with clients in their sectors and originating M&A or financing deals. While product specialists execute the transactions, industry bankers remain involved throughout advising clients given their industry expertise.
Junior bankers get well-rounded experience in industry groups
For junior investment bankers, industry groups provide more holistic deal experience covering origination to execution, though the technical work is shared with product groups. Product groups offer specialized product knowledge but more limited deal visibility. Choices should balance product interest and desire for diverse deal exposure.
Both have merits but product groups gain prestige on advancing
Industry and product groups have their individual merits and choices depend on bankers’ interests. But product groups like M&A and ECM are often viewed as more prestigious platforms for advancing to senior banker roles. Their deal execution roles give greater exposure to technical skills like modeling, analysis, complex transactions.
Though investment banks have industry and product groups, product groups in areas like M&A and ECM undertake the most technical aspects of complex transactions. They provide great training but more limited deal exposure. Industry groups offer more diverse deal experience but model execution is shared. Choices depend on interests but product groups have more prestige.