As you can expect, the market for investment banking in Houston isn’t like New York’s investment banking market. For Houston, the industry focus is not diverse; rather the industries the investment banking in Houston work on are Oil, Gas, Energy, and Natural Resources segments. In Houston, the only requirement to get into Investment Banking is that you need to be ready to stay in Texas. If you are from a not-so-known school and ready to stay and work in Texas, you’re good to go.
Let us now look at the functions of Investment BankingFunctions Of Investment BankingInvestment banks perform various functions for their clients, including initial public offerings (IPOs), mergers and acquisitions, risk management, equity research, structuring of derivatives, merchant banking, and investment management. in Houston.
In Houston, the actual focus of investment banking is on the energy industry. Here are the following services that are provided by the top investment banks in Houston –
- Sell-Side Advisory: This service is relevant for companies in regard to the sale of assets and organizations. Each data set is important and a thorough understanding of macro & micro elements helps the team bring clarity to the deal.
- Buy-Side Advisory: In the case of buy-side Buy-side The term "buy-side" refers to entities that advise their clients like individual investors and institutional buyers on investments and securities purchases. Private equity firms, mutual fund companies, life insurance companies, unit trusts, hedge fund companies, and pension fund entities are examples of buy-side firms.advisory, the most important element is acquiring new assets and companies. The investment banking team helps the clients in valuation, tactics for negotiation, and the structure of that particular initiative.
- M&A Advisory: Public M&A advisory is one of the most significant services to investment banks in Houston offers. The team chalks out an ideal proposition to crack the deal and help the clients with their expert advice on the energy industry.
- Public Equity & Debt Offering: When the energy companies seek out ways of finding underwritersUnderwritersThe underwriters take the financial risk of their client in return of a financial fee. Market Makers like financial institution and large banks ensure that there is enough amount of liquidity in the market by ensuring that enough trading volume is there., investment banking act as the best bet. From serving as a ‘led-left’ on public equity offering to have significant knowledge and expertise related to the transactions – investment banks in Houston help their clients in all ways.
List of Top 5 Investment Banks in Houston
- WoodRock & Co
- Pritchard Energy Advisors
- Integrity Advisors, Inc
- M&S Fairway Capital Partners
- GulfStar Group
Let’s discuss them in brief –
- WoodRock & Co – This bank focuses on emerging and middle-market segment. This investment bank is a private bank and helps clients in regard to capital marketsCapital MarketsA capital market is a place where buyers and sellers interact and trade financial securities such as debentures, stocks, debt instruments, bonds, and derivative instruments such as futures, options, swaps, and exchange-traded funds (ETFs). There are two kinds of markets: primary markets and secondary markets. and corporate development.
- Pritchard Energy Advisors – This is another top-notch investment bank headquartered in Houston, Texas. This is a pure energy service provider bank that works on deals regarding upstream, downstream, midstream, and renewables.
- Integrity Advisors, Inc – This is also another Houston based investment bank. It was established in the year 2006. This bank focuses on the middle market business and it provides services related to corporate finance and investment banking.
- M&S Fairway Capital Partners – They specialize in services like corporate finance, capital raising, and transaction management for startups and small businesses.
- GulfStar Group – This is another top-most investment bank headquartered in Houston, Texas. This is one of the best investment banks in the middle-market niche. It provides strategic advice to middle-market clients.
Other than these, the bulge-bracket investment banksBulge-bracket Investment BanksTop 10 bulge bracket investment banks are - Blackstone, Goldman Sach & co, Morgan Stanley, J.P Morgan Chase & co, Bank of America Merrill Lynch, Credit Suisse, Citi, Deutsche Bank, HSBC, UBS. are also there, e.g. Barclays, Citi, Lazard, Evercore, etc. can be mentioned.
The most important thing about the recruitment process in Houston is that you need to live in Texas for a long period of time. And that’s why they even provide opportunities to students who don’t have an excellent track record. And they also offer chances to students who are from less-known schools.
One thing that will help you break into the energy finance industry of Houston is internships. If you have multiple internships, you will always be the most preferred candidate of all.
Plus, if you can network harder and know most of the people in the industry, job search in the investment banking industry would be easier.
You should prepare investment banking interview questions on valuations for upstream companies, various verticals like upstream, downstream, and midstream, being updated on relevant and recent energy transactions, NAV model, MLP, etc.
If you want to get the benefit of working harder and partying harder, Houston is not that place. Yes, you would be working as hard as you would do in New York if you’re engaged in investment banking. But in Houston, most of the nightclubs and bars are closed quite early. So when you retire from work for the day, you won’t have a place to hang out.
If you have a family, Houston is a great place. But for the single life, Houston wouldn’t be the right place.
Investment Banking Salaries in Houston
In Houston, the compensation of an investment banking professional is quite high but not as high as their peers in New York or in San Francisco. Here’s the average compensation of an investment banking in Houston per annum –
If you notice, you will see that the average salary of investment banking in Houston is 11% less than the national average of an investment banker in the US.
Investment Banking Exit Opportunities
In Houston, one of the most significant exit opportunities is private equity. Investment bankers that exit investment bankingExit Investment BankingAmong the several exit options available to investment bankers are: 1.Private Equity 2.Hedge Funds 3.Strategy Consulting 4.Fin-Tech 5.Advisory for large corporates. go for the private equity domain. Other exit opportunities are joining startups (especially tech startup) or working in the corporate finance industry.
And exit routes are also depending very much on the market position. If the market isn’t doing well, the investment bankers don’t get to work on attractive deals. As a result, they don’t seem to get opportunities to grow and reach a higher rung. And that’s why they quit and join a different domain or industry.
This has been a guide to Investment Banking in Houston, their services offered, recruitment process, list of top investment banks in Houston, salaries, and exit opportunities. You may also have a look at the following article for learning more about Investment Banking –