Intrepid bankers will find Boutique Blvd jam-packed

Greenhill & Co

19/12/2022 15:07

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Jeffrey Goldfarb
       NEW YORK, Dec 19 (Reuters Breakingviews) - Deal advice
has become a crowded trade. The situation complicates things for
rainmakers considering their next steps in a weaker environment
for mergers and acquisitions. Making the well-trod move from
Wall Street to Boutique Boulevard will be much harder in 2023.
    The entrepreneurial spirit often hits investment bankers
when times get tough, and their mega-bank employers start
cutting staff or restricting access to the balance sheet. Such a
stretch is probably in store; Goldman Sachs  GS.N  analysts in
early December forecast a 20% decline in M&A volume over the
ensuing 12 months.
    The lucrative run for independent advisers makes hanging out
a shingle seem enticing. Two decades ago, firms such as Lazard
 LAZ.N  and Evercore  EVR.N  collected only about 14% of the
merger fees, according to Refinitiv data. Their share crept up
to nearly 20% of a much bigger pool by the time the global
financial crisis struck in 2008. Since then, they have vaulted
to claim 36% of the roughly $35 billion clients had paid out in
2022 through mid-December, roughly the same proportion as the
top five banks.
    It's easy to see how the likes of Blair Effron’s Centerview,
Robey Warshaw and Ken Moelis’ eponymous firm established
themselves. A decade ago, Barclays  BARC.L , Credit Suisse
 CSGN.S , Deutsche Bank  DBKGn.DE , Nomura  8604.T  and UBS
 UBSG.S  combined for 17% of the worldwide market. By late 2022,
their share had tumbled below 9%. Other Canadian, European and
American regional banks also lost big chunks of M&A business.
    The competition has become so fierce that boutiques may even
be snatching work from each other. Greenhill  GHL.N  and
Houlihan Lokey  HLI.N  are among those that have slipped in the
Refinitiv fee league tables. New entrants will struggle to nab
customers from stalwarts such as Goldman and JPMorgan  JPM.N ,
or even from smaller shops that have become go-to consiglieri
over the last 15 years or so.
    Only deal mavens with a unique specialty will have a shot at
successfully putting their names on the door. Byron Trott carved
out a place for his BDT with family-owned businesses, Aryeh
Bourkoff’s LionTree targeted media moguls, Frank Quattrone and
his Qatalyst captured segments of Silicon Valley, while Steve
McLaughlin collared a chunk of the financial-technology M&A
market with his FT Partners. Absent those kinds of
industry-specific or geographic relationships, idle investment
bankers may find themselves just spending more time with their
families. 
    Follow @jgfarb on Twitter
    CONTEXT NEWS
    Independent investment banks such as Lazard and Evercore
earned 36% of global mergers and acquisitions fees in 2022
through Dec. 12, compared with 34% for the top five banks,
according to Refinitiv data. 
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 (Editing by Liam Proud and Amanda Gomez)
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