Another Way to Classify Boutiques

The term "EB" is thrown around all too often on this forum, and while they share the characteristics of being among the most reputable independent advisory firms, the firms in the group are quite different. The following is a better way to break down EBs.

Evercore and Lazard: The Institutions

Evercore and Lazard are quite different from other EBs in that they are far larger and are more institutionalized, and are the "entrenched players" that really don't suffer from "key player syndrome" that smaller boutiques do. Both of them are far larger than the other EBs and have branched out of IB (Evercore with ER, Lazard with AM). Their talent benches are large enough that losing a single core MD is far from the end of the world. On the downside, as they've organically grown through promoting new MDs and poached MDs from other banks, they've increasingly aimed for volume rather than quality for deal flow, and are increasingly picking up mediocre mandates to ensure stable fees (and partly driven by new MDs trying to make a name for themselves, partly driven by the nature of picking up some average MDs from BBs).

Centerview, PWP, and PJT: The Advisors

The three firms are what you think of when you think of an independent advisory firm. A large portion of their deal flow comes from recurring white-collar clients, and especially at the junior level, quite a portion of the experience is on providing "strategic advisory" in addition to working on traditional M&A deal flow compared to other banks. The three firms are far smaller than Evercore and Lazard, and tend to be much more selective in poaching seniors from other firms. While Evercore and Lazard, in their haste to poach seniors, have poached many BB MDs that made their name off of the BB brand and not really their capabilities to act as advisors, these three firms largely hand-pick the seniors at BBs that have proven themselves to be capable advisors with large client bases, sticking to their heritage of being founded by the titan dealmakers of Wall Street (Effron, Perella, Taubman). Deal flow tends to be less focused on volume and especially for PWP and Centerview, a very large portion of deal flow comes from longstanding client relationships. A key risk among The Advisors is that they suffer from "key player syndrome" far more than Evercore and Lazard, where the firm can be hurt quite a bit with the departure of some key seniors. The pitch to mandate ratio at these three firms tends to be lower than the other categories due to their operating models and the firms' relative selectivity on what mandates they pick up.

Moelis: The Salesman

Caught between The Advisors and The Institutions in terms of size, Moelis also operates a bit differently. Rather than being selective with the mandates they chase down like The Advisors, Moelis is the scrappy salesman. The MDs at Moelis will pitch on anything and everything. Sure, the core group and top rainmakers at Moelis deal with repeat business from their handful of large-cap clients, but Moelis has promoted many new MDs and poached seniors that simply operate differently from CVP/PWP/PJT, and Moelis today is a volume shop where they'll pitch on anything and just about pick up any mandate. Essentially, Moelis is a upscale Jefferies. As a result, Moelis has developed the reputation for having one of the most intensive junior experiences of any firm, and while juniors learn a lot and get great deal exposure, the pitch to live deal ratio for the Moelis experience is far higher at Moelis compared to The Advisors. On the flip side, juniors at Moelis will also likely work on more deals throughout their experience, but that comes at a cost to WLB.

Greenhill: The Relic

Greenhill is a key warning for The Advisors. Once considered the premier independent advisory firm, Greenhill suffered a series of missteps after key seniors departed the firm, and is now a shadow of its former self. Greenhill today exists as a cautionary tale for The Advisors on a potential future that awaits them if they lose core personnel or make a wrong step strategically.

 

Qatalyst is more of a Salesman than an Advisor. The vast majority of their deals are sell-side deals for a reason. They're known for running a very aggressive process for their clients and driving up valuations, and most of their clients go to them because of their reputation of running an aggressive process rather than the clients being repeat clients. Qatalyst is the pre-eminent technology sell-side advisor, but they have a mixed reputation among seniors in the industry; they get deserved reputation for their success in delivering for their clients, but they're also not afraid to ruffle feathers (Boutros has developed quite a reputation for doing so).

 

Lol just left Jefferies for the buyside, and Jefferies is still the aggressive and sometimes sleazy salesman of Wall Street from my experience there. The supposed $3M engagement fee in my group was never respected by the seniors or MARC, and with how often the seniors requested an exception and MARC granted it the minimum fee may as well not exist. Remember working on an engagement for a sub-$400k fee split across like 3 MDs lol. Jefferies seniors are as a whole super fee-focused from my experience. During the SPAC craze every senior in my group was recommending every client in existence to just SPAC regardless of their situation to collect their fees.

 

PWP's had a pretty seamless transition, and Effron's definitely been prepping his lieutenants to take over in a few years.

 

Only thing this post forgets is the RX side. PJT, Lazard, and Moelis all land top mandates. Evercore is more O&G focused and a tier lower along with PWP and Centerview.

 

Restructuring is literally part of some of the firms’ business models more than others, which is what I was getting at. Wasn’t looking to turn this into a rankings post.

 

Roth - relic (at least in the US, not sure about Europe)

Gugg - institution

Qatalyst - advisor

 

Disagree on Gugg. They peaked in the mid-2010s. Had a strong client set with the senior Bear guys that came over, especially in Media but that’s not longer the case. Strong in HC, but that’s specifically in a few verticals. They still go to campuses saying they’re the go to banker for VZ/ Pfizer/ Disney when that’s just not the reality 

 

Not optimistic of their future as a boutique. They'll probably still have access to some of CS balance sheet, but itll be significantly reduced which will hurt their ability to win mandates. They've lost so much senior talent over the last 18 months so I can't see them becoming another "EB". Their best hope may be waiting until a Truist/TD type bank acquires them.

 
[Comment removed by mod team]
 

Is the difference between Moelis and CVP/PWP/PJT firm-led (in that Moelis encourages its MDs from the top to pitch for every mandate under the sun) or just driven by the type of MDs the firm has? 

 

I would say its a chicken and egg argument. Obviously most boutiques would rather be on an advisor level, as it has more recurring revenue and stable outlook, but it is extremely hard to poach the type of MDs that drive that type of business (hence why EVR / LAZ have lowered their standards as they scaled up).

Banks like Moelis probably hired a bunch of “sweaty” MDs in the past, which framed their business model into that segment. 

 

Also part of firm strategy. Moelis seniors on average have much stronger relationships with sponsors so they do a lot more sponsor-related deals (that tend to be more MM than large-cap). PWP/PJT/CVP's seniors tend to lean towards corporates.

 

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