Another way to look at league tables
Now that the FY-21 earnings are out for most major IBs. I thought it'd be interesting to see how the (public) investment banks rank by their advisory revenues, considering people always say that league tables are inaccurate because of undisclosed deals and credit given for financing/relationships. Keep in mind that these numbers aren't completely comparable as these numbers include ALL advisory deal flow (ex. RX revenue also included for EBs), and only banks that provide the break-down of their IB revenues are included.
1. Goldman Sachs ($5,653M)
2. JPMorgan ($4,381M)
3. Morgan Stanley ($3,487M)
4. Evercore ($2,752M)
5. Bank of America ($2,139M)
6. Jefferies ($1,874M)
7. Citi ($1,796M)
8. Lazard ($1,778M)
9. Moelis ($1,558M)
10. UBS ($988M)
11. PWP (~$800M estimate from 8-K)
12. PJT Partners ($763M)
13. Greenhill ($318M)
+1, super interesting breakdown that definitely helps strip out the "who's getting advisory credit" political aspects of league tables. Evercore absolutely killing it, Jefferies also playing way above their league.
Agree. Evercore is an advisory powerhouse
Not to trash on Greenhill but how can they still be considered an EB when they have more MDs than PWP and less than half of the revenue? I know they have a legacy brand, but at what point does the brand value no longer carry their reputation?
Now
I may be wrong but I have heard they are also focusing a lot on expanding abroad vs fixing the US mess. They opened offices in Europe and expanded the Asian ones just a couple years back.
Maybe that’s their strategy, develop an efficient business abroad to subsidize cleaning up the US
That's fair, but the European and Asian markets are pretty competitive as well, and I don't know how well Greenhill can expand in those regions considering so many banks are focused on expanding there. The independent advisory scene in continental Europe is dominated by Rothschild and Lazard, with CVP, PWP, and Moelis all focused on expanding there, while Rothschild and Jefferies are extremely strong in the UK. The banking scene in Asia may hold a lot more potential for Greenhill, but in Asia the BBs tend to be much stronger than the EBs, especially in cross-border deals, while the internal Chinese M&A scene is largely dominated by CICC/CITIC/Haitong.
PWP has more partners and MDs (like 110 vs 75) and nearly double the employees (600 vs 300) as GHL. TPH alone has like 100 employees and was a great addition To the PWP franchise (plus it helped win oil and gas RX work over the last two years)
I work at a boutique and have seen EB benchmarking internally
True - I only looked at the Partner headcount for PWP, and forgot to include MDs.
Really interesting post. Would love to see this get updated once Barclays and Moelis release their earnings to round out the public BB/EB comparison
Surprised at how high Moelis is.
Evercore and Jefferies absolutely killing it when you consider their advisory MD headcount compared to competitors.
what is their advisory headcount compared to competitors then?
As of December 31, 2021 and 2020, the Company employed 154(1) and 147(2) total Senior Managing Directors, respectively, in its Investment Banking business, of which 114(1) and 107(2), respectively, were Advisory Senior Managing Directors.
Not sure how many including MDs (level below SMD)
Damn no Barclays or CS?
I don't think they've released their detailed FY-21 results yet, and to the best of my knowledge DB doesn't separate debt/equity origination revenue and advisory revenue in their breakdown, so I couldn't include them.
ok
Interesting, GS is still the undisputed top bank, Evercore is the GS of independent banks, Jefferies is obviously making a killing on those sponsor sell-sides with undisclosed transaction values that don't show up on league tables, Citi's playing into their reputation as a balance-sheet BB that gets a league table boost through financing, and Greenhill is nowhere to be found. Judging by their YTD Q3-21 results, Moelis is probably going to land somewhere around Lazard with at least $1.5-1.6B advisory revenues.
ngl, the GS/JPM/MS disparity was pretty surprising. Obviously GS is the investment bank, but when you consider that MS has a reputation for M&A being their bread and butter and GS/JPM/MS are widely considered to be on the same tier, it's pretty surprising that MS's advisory revenue is only ~60% of GS.
Take it as you will. In my group at MS we benchmark ourselves to GS based on deal share of the largest X deals of the quarter to adjust for differences in volume and we go back and forth every year in 1) wallet share and 2) deals as lead. Only focusing on top deals is just another way to look at it
Real talk, can Greenhill rebuild? How can they afford the fat guaranteed comp packages needed to poach rainmakers when they have more advisory + RX MDs than PWP and PJT generating less than half the revenue?
That's a fair point...their best strategy may be to develop talent organically and promote from within.
Finally, a useful post on WSO. SB'd
And it's coming from an intern.
"Perhaps I've treated you too harshly"
You will make for a very good monkey someday. Keep up the good work solider
Greenhill is the Pluto of EBs.
I've always seen PJT crushing it tbh. maybe even want to invest in the public stock lol.
Everyone's clowning on Greenhill but UBS deserves some as well. Produced significantly less advisory revenue than the larger independents + almost certainly Moelis based on their Q3 results, and barely beat the other independents.
What about SVB Leerink?
“major IBs”
Damn. Even my MM bank (in the Baird, Stifel, Piper, MacCap, Oppenheimer, Stephens, etc tier) had more IB revenue than Greenhill.
Is greenhill still worth working for from perspective of comp/culture/exits even if they've fallen off on dealmaking?
Bump, or if headed there would you try to rerecruit for FT
Greenhill exits have not fallen off in the slightest. Still perceived well by HHs, and a lot of UMM/MF interviews. That being said, not sure of what may happen in the future
What about Corp Dev exits?
What kind of question is this… “are they worth working for?”
While these are the "household" IB names, a few of the publicly-traded MM banks / privately-held firms had even bigger years than the firms starting from UBS.
I like this way of looking at things alot better, even though it doesn't allow for the coverage-level view, it still gives a better perspective on who is making fees. The only point I'd make is that this is probably most reflective of 2H20 -> 1H21 given how IBs recognize advisory revenue.
Obviously Barclays will be in top 10 but I'll predict moelis will be as well.
If you want to make this more interesting. Break this down by advisory revenue per advisory headcount. Then you really start to see whats what.
Easy to do for the boutiques but not really possible for investment banks that do more than advisory since they usually only list MD headcount for IB division as a whole, and different firms have different hierarchies (MD/SMD/Partner, etc). That being said, for the independents, the numbers are as follows (Senior headcount numbers from FY-21 reports if available or Q3 reports):
- Evercore: $3,205M Total IB revenue / 254 IB SMDs + MDs= $12.6M per MD+
- Jefferies: $4,423M Total IB revenue / 278 IB MDs = $15.9M per MD
- Lazard: $1,778M Advisory revenue / 182 Advisory MDs = $9.8M per MD
- Moelis: $1,558M Advisory revenue / 136 MDs = $11.5M per MD
- PWP: ~$800M Advisory revenue / ~110 Partners + MDs = ~$7.3M per MD+
- PJT: $763M Advisory + RX revenue / 71 Advisory + RSSG Partners = $10.7M per Partner
- Greenhill: $318M Advisory revenue / 79 MDs = $4.0M per MD.
Obviously the numbers aren't all comparable, since Jefferies and Evercore also do underwriting. Also I'm not sure if PJT has MDs below Partners, so PJT's numbers may not be exactly comparable.
Jefferies's per head revenue is pretty shocking. Also had no clue Evercore was that big.
Thanks for running the nums!
Damn my MM that gets shat on this forum did better than Greenhill on revenue per head metrics...
Believe Evercore MD = ED at others and Evercore SMD = MD at others. On earnings call, primary productivity metric talked about by management is Revenue per SMD and that’s how the firm benchmarks itself vs other independent firms
Centerview revenue is something like $1.3B (higher in 2021 probably) with only 60 partners. That's $20M in advisory revenue per partner.
Should be 120. 16 were internal promotes this year and not year end. So 120 MDs brought in $1.5BN rev.
HL boasts $2,299m in advisory revenue (right between BAML and Evercore). Furthermore, it ranks better than PWP and GHL in revs per MD. HL 2021 (Jan-Dec):
-CF: $1,615m in revs / 198 MDs = $8.2m per MD. From Dec '20 to Dec '21, the amount of MDs in CF has increased from 123 to 198. If you consider an average # of MDs of 160.5, then the revenues per MD are $10.1m
-RX: $414.0m in revs / 52 MDs = $8.0m per MD
-FAS: $270.8m / 34 MDs = $8.0m per MD
Wonder how CVP did in 2021 considering their past annual fees have been rumored to be around $1.2B and they likely blew that out of the water.
Yes, commented above but they did. $1.3B or so in 2020 and probably much higher in 2021 with just 60 partners (so $20M+ per partner).
What's the hierarchy at CVP past the VP position?
This list settles the “RBC Capital Markets is a BB” debate.
Where would they stack up?
To answer the question empirically, RBC's IB advisory + underwriting revenue for FY-21 (they don't separate advisory revenues in their financials) was ~$2,110M (at current exchange rates), compared to $14,876M for Goldman, $13,359M for JPM, $10,272M for MS, $7,513M for Citi, $5,107M for BofA, $4,423M for Jefferies, $4,038M for CS, $3,158M for UBS, $2,969M for DB, and $1,654M for WF. So, from that, it seems like their IB division is still below BBs + Jefferies (don't know the information for DB as I think they include S&T revenues within their IB division for reporting purposes but I'd imagine that DB IB revenue > UBS IB revenue considering DB is a debt underwriting powerhouse), and above WF.
Deleted duplicate post
Sorry if this a silly question but what does it mean when a bank gets credit for financing vs advisory?
Often difficult to piece together the difference between the two. Many banks (ie Citi / DB) will appear as an "advisory" advisor when really all they did on the deal was provide balance sheet financing.
Financing = Lending money. Leveraged finance/capital markets. Title required for league tables credi: Joint Bookrunner or Joint Lead Arranger On Credit Agreement at closing. Commitment Letter - sign a commitment to lend $$. League table credit requires title of aj
Advisory = not lending money. Valuation heavy - IBD. providing advisory services thru deal process including Fairness Opinion, summarizing the valuation is fair based on comps - a requirement for M&A/LBO transactions. Sign Engagement Letter as role of Financial Advisor after commencement of Due Diligence. Ending at signing of Commitment Letter above.
Can we also see this for equity and debt issuance fees per bank? For this of us more interested in that side of the business.
I’m working on getting the underlying excel file. If someone wants to send me it, happy to do it
So Baird have more advisory revenue than UBS, wonder what the per head would look like too, even better
.
Frankly very impressed by Jefferies. With the way they are performing, how would you group Jefferies? Who are their primary competitors / comps? Seems like people refuse to group them in with the EBs, yet they are performing on par with them… please someone enlighten me.
Jefferies is impossible to group. Their primary competitors range from reputable MM firms like Blair, Baird, and HL, to top independents like Lazard and Evercore, to BBs. They simply operate everywhere (Completed 314 M&A deals worth $380.4B in FY-21 for an average size of $1.21B so they're way too large to be compared to top MM firms, but they clearly dip into the MM territory more often than most BBs. They also completed 102 M&A transactions >$1B last year, far more than every other top independent).
The other large institutionalized independents (Lazard, Evercore) are also similar in that their deals range everywhere from MM to mega-cap, but their average deal size is still larger than Jefferies as Jefferies does far more volume in the MM than them, and Jefferies doesn't have the entrenched reputation that they have. Asides from historical reputation, I think it'd make most sense to compare Jefferies to Lazard and Evercore as the same "type of firm" (have branched out and established AM and/or ER and/or S&T divisions, but are still first and foremost IB firms). Jefferies, Evercore, and Lazard also have somewhat close IB headcounts (Jefferies the largest, followed by Lazard and then Evercore). However, Jefferies has diversified their IB revenue far more than Evercore and Lazard, which are still mostly if not all pure advisory, so Jefferies doesn't belong there.
The top "pure IB" independents (Moelis, PWP, PJT, CVP) obviously don't fit with Jefferies, as Jefferies is a full-scale IB while those are pure/almost-entirely advisory firms. The next place to look would be BBs. Like the BBs, Jefferies offers multiple products, and I don't think "Jefferies doesn't have a global presence" nearly holds as much water as it used to (Jefferies is rapidly expanding in Europe, has solid deal flow from Asia and the Middle East despite not even having an office in the ME, and is very high in the ECM and M&A league tables in the UK). However, Jefferies still isn't a full-service bank unlike the BBs, and as a result, Jefferies does not have anywhere close to the levels of lending capabilities that the BBs build their IB divisions on, even though Jefferies's M&A and ECM practices are up there with mid-BBs.
Jefferies also doesn't really belong with the "in-between" banks, as the "in-between" banks (WF, BMO, etc) are much more like BB-lites (full-service banks, large balance sheets, IB driven by lending practice), but they simply have small IB divisions and advisory practices. Even though Jefferies isn't a full-service bank, their IB practice is way stronger than any "in-between" bank.
Thus, in my opinion, Jefferies doesn't belong in any category, but straddles somewhere between the BBs and the institutional independents.
Wow that was incredibly well-articulated and convincing
For some reason, I can't edit the posts, so here are the FY-21 advisory revenues for CS and DB below:
CS: $967M
DB: ~$559M
Do you have Barclays advisory now that they released 2021 results?
~$1,250M USD after converting from GBP.
.
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