Evercore’s Robey Warshaw deal sums up key-man risk
30/07/2025 11:19
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. By Liam Proud LONDON, July 30 (Reuters Breakingviews) - Sitting across the negotiating table from Simon Robey is an inherently uncomfortable place to be. A long list of blue-chip companies hire the City of London deal consigliere to help them out-think counterparties on mergers and acquisitions. The particular challenge for John Weinberg of Evercore EVR.N, the U.S. investment bank that on Wednesday agreed to pay $196 million for Robey’s firm, is retaining the former Morgan Stanley banker’s services. It’s just about possible to see how the two old friends can make it work. Robey Warshaw has built a dominant position among City deal advisers since Robey and co-founders Simon Warshaw and Philip Apostolides hung out their shingle in 2013. The firm had a 3% share of announced deals with a UK target last year, according to LSEG data, and 11% in 2023 – an extraordinary record for a business which as of March 2024 had just 14 employees and four partners, including former UK finance minister George Osborne. Marquee transactions over the years include advising LSEG LSEG.L on its $27 billion acquisition of data group Refinitiv, and U.S. media giant Comcast CMCSA.O on its $40 billion purchase of broadcaster Sky. In one sense, it’s a coup that Robey persuaded Weinberg and Evercore founder Roger Altman to pay anything for the business, since the deal essentially equates to hiring a handful of well-connected individuals. Robey Warshaw’s average annual revenue over the three most recently reported financial years was almost $80 million, with the partners pocketing about three-quarters of that sum, implying annual average earnings of slightly under $60 million. So one way to think about the $196-million cash-and-stock purchase price is that Evercore is handing Robey and his partners more than three years of take-home pay early. For Evercore to have any hope of recouping that outlay, it’s therefore imperative that their new London crew stick around for much longer. That explains why the two sides have set up an earnout structure which stretches for at least six years, people familiar with the matter told Breakingviews. The deal involved no external financial advisers, perhaps unsurprisingly given the principals involved, but instead rested on highly detailed and bespoke legal agreements designed to lock in Robey and his colleagues while giving them a further financial incentive to grow the pie. Any real upside for Evercore will come from slotting the team into a wider machine that spans other regions and additional business lines, like equity capital markets. For the buyer to recoup the purchase price over six years, Robey Warshaw will have to add about $33 million a year to the Wall Street firm’s bottom line. Given that Evercore’s investment bank pays out about two-thirds of its revenue to employees, according to analyst estimates, that will require its new acquisition to bring in $100 million of annual fees – a 30% uplift from Robey Warshaw’s recent rate. In other words, Weinberg is betting that the 65-year-old Robey will be no less motivated and productive in his new and larger home. It’s hard to conceive of a purer example of what M&A advisers like to call key-man risk. Follow Liam Proud on Bluesky and LinkedIn. CONTEXT NEWS Investment bank Evercore on July 30 said that it had agreed to buy UK M&A adviser Robey Warshaw for 146 million pounds ($196 million). The payment will be made in two tranches, with the first portion comprising Evercore’s U.S.-listed shares when the deal closes later this year and the second comprising either stock or cash after one year. Evercore also said that there was a “potential additional consideration” based on performance, which two people familiar with the situation told Reuters Breakingviews had a six-year time horizon. Robey Warshaw was founded in 2013 by Simon Robey, a former Morgan Stanley banker, and former UBS dealmaker Simon Warshaw. Robey said in a statement that he had made a long-term commitment to playing a part in Evercore’s future. Robey Warshaw's lumpy but chunky financial results https://www.reuters.com/graphics/BRV-BRV/klpybnoqavg/chart.png (Editing by Peter Thal Larsen; Production by Oliver Taslic) ((For previous columns by the author, Reuters customers can click on PROUD/liam.proud@thomsonreuters.com))