Hi all,
I was just wondering about the following: In what way do places like Lazard, Rothschild (or maybe smaller international boutiques like Oaklins, Lincoln International) differ from dealteams at Big 4's. I'm not talking about the size of the deals or prestige here but actual services offered. Do actual IBD's like Lazard also do underwriting?
I was really curious because if they do not offer underwriting/cannot bring capital into deals it's hard to understand why they would get big M&A deals while bulge brackets can give the same advice and also help with funding.
Thanks!
Highly unlikely that boutiques with no significant balance sheet will be able to underwrite. Most of these boutiques you mention provide advisory services
That's what I figured, but why would a company then decide to give their mandate to a pure advisory firm instead of going for a bank that can offer capital when needed?
Multiple reasons, but primarily is the MD relationship. Most rainmakers at Moelis/Laz/Roth etc. have come from much larger firms and taken those relationships with them. Other reasons include but are not limited to: limited conflict of interest across services offered (eg. advisory and ER at JPM could have a potential conflict of interest whereas Centerview only has advisory) and privacy. Can't fully speak to this but I have heard bulge brackets have larger exposure to risk of deals getting leaked etc. Capital can usually provided by a co-advisor as a balance sheet bank for providing bridge financing etc (Citi M&A for example) or a variety of other lenders such as BDC's - highly dependent on the deal and situation.
Thank you for your clear response! SB'ed
Take a look at what happened with Terra Firma, EMI and Citi. There are a bunch of articles out there. Pretty messy situation...likely would have looked different if Citi wasn't also the lender.
The conflict issue mentioned above goes beyond simply ER - there can be real economic implications as well.
The idea of using an independent EB which does not underwrite or lend for advice on financing is because they will be able to get you more favorable terms (less onerous restrictions, smaller coupons or underwriting fess, etc.). If a transaction requires capital (let's say $1bn), an independent EB advising the company could help lower the coupon by 25bps - that's $2.5m a year and more than justifies the fee of the EB viz the financing component.
Doing research. what do you know about oaklins?
Lincoln International and Oaklins are both far from being Elite Boutiques
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