I'm currently at a small, very profitable boutique firm that perpetually has rumors floating around about getting bought. Im curious if anybody here has ever been at a boutique firm thats gotten acquiried by a bigger bank and what your experience was.
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Working for Morgan Keegan eh?
No, much smaller
This is an IBD-related account, so take it for what it's worth.
I interviewed with a guy at Raymond James who was with Lane Berry before they were acquired by RJ. He took pride in the hard-working culture of Lane Berry and seemed to have an undercurrent of resentment toward Raymond James -- almost as if he felt Lane Berry did all the real work and kept RJ IBD alive.
In situations liek this, there's always going to be some tension related to which firm is bringing in more business, as well as some one-upmanship between the junior bankers.
"Where did you get these numbers? May I see the back-up?" "Found a bust in your model."
RJ energy and real estate groups together make up over 2/3 of banking revenue (mind you there are over 11 groups total)...
...Lane Berry does not do energy or real estate...
It's what he said to me. My intent was not to knock RJ, but to bring to light the inevitable tension that arises when firms merge. Geebus.
Looking in from the outside, my experience of such takeovers in London has been very negative. Sure you get to cash in your stock/ options, but a year down the line the buyer doesn't know what to do with the research, Corporate Finance and sales talent they've acquired, the best guys have left and the rest are getting made redundant. The name gets used for a year then dropped quietly and all the buyer is left with is a slightly enlarged client list.
The touchstone is: how senior do the acquired managers/ team leaders become. The answer is usually not very. When one boutique bank was acquired here in 2009, their head of research was demoted to just another analyst! By definition, the boutique staff are going to be treated as small scale newcomers to be subsumed into the general rump of the existing larger company, whose existing management structure won't change. The executives of the acquiring bank ain't going to vote themselves out of a job when considering the takeover -they want to keep the place at the board table and the key to the executive washroom, while telling their friends at the golf club about the bank the just took over and gobbled up!
Does anyone remember Schroders? Smith Barney? (ok they both got gobbled up by Citi) Warburg, DLJ, Fox-Pitt Kelton?
The only exception I can think of is JPM and Cazenove (who were hardly a boutique really) -full marks to JPM for making it work properly.
Worst case is if there's lots of sector overlap -eg how many telcos analysts does the new integrated research department need?
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