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.
Evercore and Jefferies absolutely killing it when you consider their advisory MD headcount compared to competitors.
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.
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.
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.
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.
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