Why Equity Research Falls Short on Exit Opportunities
And implications for equity research professionals
Many of you pursue investment banking (“IB”) because of the abundance of exit opportunities, making it a popular path to top roles in private equity, hedge funds, and many finance roles at corporations.
Sell-side equity research (“ER”) might seem similar—you do deep financial modeling, write reports, and interface with lots of people. But despite these similarities, ER doesn’t offer as many exit opportunities. Why is that?
As someone who transitioned from the sell-side to the buy-side and struggled with a move to the corporate side, I’ll share my hunches in this article.
Please comment below if you disagree or if I missed any major reasons.
High dispersion of ER talent quality
The quality of ER analysts varies significantly, and therefore, the quality of ER associates also varies dramatically.
Working for a highly respected analyst with a strong buy-side and corporate reputation is completely different from working for an analyst who dresses like a clown on TV and rubber-stamps "BUY" ratings on all covered companies. That’s why I repeatedly emphasize the importance of picking the right analyst in your offer decision process.
I know former ER associates who are thriving on the buy-side, while other ex-ER associates are dragging down teams in corporate roles. This variance makes some employers hesitant to hire ex-sell-side research professionals, because likely these employers have been burned by a bad ex-ER hire.
In IB, the workload, deadlines, and quality expectations are uniformly high, and nonperformers are typically weeded out quickly. This standardization of experience and performance gives bankers a more consistent reputation in the professional world.
Tribal mindset
People prefer to hire candidates who are like them—those who have walked the same path and been in the same trenches.
IB, with its larger headcount compared to ER, produces an enormous pool of alumni who ascend to senior roles outside finance, where they become decision-makers in hiring. As a result, the hiring cycle defaults to favoring candidates with IB experience because it's a familiar and repeatable formula for sourcing talent.
This creates a virtuous cycle for investment bankers but leaves ER professionals at a disadvantage. The lean structure of ER means fewer associates to begin with, and the profession's longer tenure keeps many professionals within the field rather than transitioning out. Consequently, there are fewer former ER associates who have climbed the ranks in other industries to act as sponsors for current associates seeking exit opportunities.
This same tribal mindset explains why IB and private equity backgrounds dominate pipelines for most hedge fund hiring—because there are simply more hedge fund founders who began their careers in investment banking.
The founders and senior members often come from the same pedigree (examples below), giving them confidence that hiring candidates from similar paths offers a margin of safety in talent quality to the firm and to LPs. While this playbook doesn’t guarantee success, it has worked out reasonably well. However, this entrenched mindset makes it tough for ER professionals to break into these elite ranks.
Modeling skills
In ER, you spend most of time updating existing models: tweaking forecasts, adjusting valuations, and creating exhibits based on quarterly results. Building models from scratch is rare unless you’re at a bank with a heavy IPO pipeline. Of course, your lifestyle in ER at a deal-heavy bank isn’t great, as you need to maintain coverage and initiate on new IPOs.
IB, on the other hand, is all about transactions. Bankers run the numbers and make “projections.” Once a deal wraps up, they don’t follow the company but move on to the next one. This means they start fresh with a new company each time. Over the same amount of time, bankers model far more businesses than ER professionals do.
The extra reps in modeling are a huge advantage for buy-side exits. Bankers are seen as more versatile because they’ve had so much practice jumping into new companies and figuring out different business models.
It’s another reason why investment bankers often "eat first", especially in single manager hedge fund recruiting.
Internal finance is more like IB work
Exiting to corporate finance is similarly advantageous for investment bankers. How often do you see a corporate finance job description (FP&A, strategic finance) explicitly open to someone with an ER background?
Companies aren’t picking stocks—they raise capital to fund operations and/or M&A. Investment bankers are trained to structure deals, manage capital markets, and maintain relationships with capital suppliers—exactly the finance expertise corporations need. That’s why many CFOs with Wall Street backgrounds are former investment bankers.
While some senior sell-side analysts become CFOs through the investor relations track, for every Sarah Friar and Anthony Noto who made that leap, there are five Ruth Porat who’ve taken the same route with much less resistance.
It’s not that ER skills are irrelevant, but the transactional focus of banking aligns much more closely with the demands of internal corporate finance, which makes an ER professional’s exit to corporate finance less natural than you might think (and what I thought).
ER profession is not well understood
A few years ago, my friend moved from a hedge fund to a senior finance role at a startup. Throughout his time there, the CEO assumed he had been an investment banker before joining—likely because IB is one of the few finance professions outsiders know. Guess how many times non-finance people ask me “are you a day-trader?” when I tell them I used to be a institutional stock investor?
Despite offering a powerful mix of industry expertise, financial modeling, and strategic thinking, the lack of awareness about ER skill sets makes it difficult for these professionals to transition into other roles.
As previously noted, most job listings are open to candidates with experience in investment banking, private equity, or management consulting, but often exclude equity research—not out of malice, but to keep descriptions concise. This is likely a trade-off, as the equity research profession is smaller and adding such qualifications would only attract a limited number of additional candidates.
However, this exclusion hurts ER professionals seeking exits. Recruiters, following these job descriptions rigidly, may wrongly assume ER professionals lack the necessary skills for the roles in corporate finance or buy-side positions, which couldn’t be further from the truth.
Without enough decision-makers advocating for ER professionals within companies, they struggle to even be considered for roles as straightforward as FP&A—despite the likelihood they would immediately add value in such positions.
These dynamics force ER professionals to pitch themselves just to get a foot in the door. It shouldn’t have to be this way if the skills they bring were better understood.
Work ethic perception
The IB workload is rough, with late nights, weekend work, and constant fire drills.
On average, ER offers a relatively better work-life balance. While ER associates work hard—especially during earnings season—it’s not as bad as the grind of banking.
Even though most exit options—like buy-side roles or corporate finance jobs—don’t require banking hours, there’s no denying that the pressure-cooker environment of banking builds a certain reputation.
Firms like hiring people who’ve proven they can handle the grind. That endurance signals to employers that you’ve been battle-tested, making them desired candidates for any jobs that come after IB, which is another area where bankers have a better brand perception.
Implications
If you work in equity research, my goal is to help you understand why things are the way they are so you can take control of your career now.
Be proactive in your own development. Don’t wait for others to train you. Spend your own time modeling and valuing businesses across different industries. If you’re curious about how different businesses work, you’re likely already doing so.
Dive deeply into the companies you cover
Understand their strategies and industry competition within a structured framework. Who’s winning (Nvidia), who’s losing (Intel), and why (how do you miss two paradigm shifts in mobile and AI?!)
Evaluate management quality critically.
What holds most people back isn’t access to knowledge but the willpower to level up. How many successful founders emphasize the importance of reading and learning? Nearly all of them. So, take that cue and act on it.
At the end of the day, your senior analyst’s reputation will only take you so far. What truly matters is your ability to add value.
Once you’ve honed your skills, build your personal brand aggressively. Don’t rely solely on applying directly to roles—recruiters don’t know better. And remember, staying longer in ER won’t automatically make you more marketable unless you’re actively working to improve as a candidate.
The good news? It’s not the end of the world. You can get where you want to go, as long as you’re good. ER juniors get better access to company management than IB juniors, take advantage and cultivate those relationships.
The real question is: are you willing to put in the work?
Please share your thoughts in the comments if you disagree or if I’ve missed any major points, but let’s avoid rabbit holes like “ER is on equal footing with bankers for multi-manager pod shop roles.” There’s more to the world than pod shops.
Thanks for reading. I will talk to you next time.
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Honestly it’s a well-written piece but it misses the point IMHO. I’ve worked in corporate finance, group strategy, on secondment at government doing substantive transactions, and then equity research. It’s an unusual path and I went into research for a strategic reason to build a brand and add another major leg to my network. And I got that. I am now pursuing what I have wanted to do for many years - setting up my own business. Newsletters are an important part of that - but not the only facet (I also note in a previous post your conclusions on choosing to do a newsletter versus a sell-side role and I can tell you that I left a sell side role in which I was the consistent top performer to do this out of choice - which is at odds with your own (albeit broader) conclusions). That’s the context. To get to the point re why I think this note misses the point, firstly ER sell-siders do have quite a few exit opportunities. It’s all down to the individual and their own experience & skills but most go down the route of either buy-side or IR. They’re not usually tapped up for corporate / strategic / commercial roles because: a) they’re often quasi-academic (indeed the role is quasi-academic IMO); b) they’re very often not strategic thinkers in fact (no matter how much they read about strategies) and are almost all looking no more than 2-3 years forward; c) they build extremely limited experience of negotiation, real-life commercial decision-making, and some can be easily suggestible / very easy to placate by their more cunning peers in other parts of the firm / seniors. Also many just run with management guidance and bring very limited levels of original / critical thinking to bear (in fact the industry is so conflicted it often suits the bank/brokerage and their corporate clients for the analyst to be that way) - it’s not as if the firms earn that much for the research anyway (it is - and always was - a loss leader if one calls a spade a spade). My own experience is investment bankers are, on average, a lot smarter, savvier, adaptable, and strategic. It’s almost an entirely different subset of skills that are needed (anyone with half a brain can learn to model but not everyone can learn to negotiate hard, effectively and strategically et al.). I appreciate that these are sweeping generalisations and I know many analysts who break the mould. Everyone is different. But I absolutely disagree with your broad conclusions and I think one really needs to work in a few areas to understand how different the necessary skillsets are. There are very good reasons why corporates & PE firms don’t seek out ER pros. So, I respectfully disagree but I also want to say that I’m enjoying your posts and your candour. Keep it up!
Good read 👍