http://dealbook.blogs.nytimes.com/2010/05/24/behi…
Great article in deal book about current PE, LBO and M&A markets.
It will be interesting to see how PE's adapt to the the new carried interest reform and buyout arm carve outs. Although I saw another article about how Barclays is one of the few banks which still has a PE arm in -house. Am I missing something?
What about GS PIA? Morgan Stanley PE? What about BAML Capital Partners? JPMorgan's OneEquity Partners? DB still has their Global PE unit.
From what I gather none have shed their PE operations. Any comments on how you think this is going to impact IBD going forward?
I suppose there will be a meaningful pull back in compensation since a lot of the over head will redundant, won't be able leverage in-house contact/intel in the same fashion (questionable) and most significant IMO, you won't have the alternative investment divisions of BB banks with outsized profits padding the firms traditional bottom line. I don't know if its necessarily a bad thing. Who knows, banks may actually have to figure out ways to make money doing what they were made to do... make markets and provide advisory services.
Lets face it... research reports are informative of what the issues/drivers are for a company but seldom get much else right. M&A advisory services are extremely overrated... its not at all what it used to be as far as establishing a real relationship with a firms executive office and being a trusted adviser. I can't comment much on S&T, but it seems like these days one of the primary role of the desk in a BB bank is to make markets for the positions the bank's prop desk wants to take. And where did I read that 8 or 9 out of 10 of Goldman's TOP TRADES that they send out to clients lost money in Q1-2010... a period of time when Goldman did not have a single losing trading day.
We tend to be overly sympathetic to Wall Street. I think its partially because much of the people on this forum romanticize what IBD/S&T is all about. Its partially because a slight at Wall Street is a slight at us. But if you really look at what an investment bank does nowadays, I think its not a bad time to shake things up and force them to step up their game.
