Was talking with a friend who worked there and he mentioned that the firm has a “one profit” model for MDs that incentivizes them to work together to maximize total fee generation rather than it being purely “eat what you kill.”
Is this true or just a salesy way to promote the bank? Does this mean MD comp isn’t very differentiated?
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Based on the most helpful WSO content, Moelis & Co. is known for its "one profit" model, which is indeed a key part of its culture and compensation structure. This model encourages Managing Directors (MDs) to collaborate and focus on maximizing the firm's overall fee generation rather than operating under a purely "eat what you kill" system.
This structure is designed to foster teamwork and reduce internal competition among MDs, aligning their incentives with the firm's collective success. However, it doesn't necessarily mean that MD compensation is completely undifferentiated. While the model promotes collaboration, individual performance and contributions to deal flow still play a role in determining compensation.
So, while it may sound like a "salesy" pitch, the "one profit" model is a genuine aspect of Moelis' operational philosophy and is often highlighted as a differentiator in the boutique investment banking space.
Sources: Another Way to Classify Boutiques, Does GS blow for post-MBA associates now?, https://www.wallstreetoasis.com/forum/investment-banking/how-ibd-makes-or-loses-money-and-why-that-matters-to-you?customgpt=1, The Work Always Gets Done, How is it to work at a small M&A advisory firm?
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Basically what it means is that the senior executives have discretion in awarding the bonus pool rather than you getting a 25% cut of what you bring in like at some other banks. It’s helpful because when you are on commission style you are reluctant to bring on other product or industry bankers to the deal team since you’ll end up having to split fees (it doesn’t work perfectly like this but that’s essentially what happens).
MD comp is very much differentiated. Top performing MDs are paid way more than low performing ones. What I’ve heard is that the comp is structured such that you need to consistently be a top producer in order to get paid the biggest bucks. E.g a one-off $20M fee year and then a bunch of $2-3M years aren’t going to lead to a way oversized payday on the big year - on the flipside your downside is better protected (aka you won’t get a fat zero in a downyear). This is done to better encourage long term client relationships and less pushing clients to down deals that are unwise (which the BBs in particular are horrible offenders of). Finally, if you’re bringing in $20M+ every year (which many MDs do) you’ll be making a lot of money, well in excess of the average and below MDs.
This is very helpful, thank you! Do you by any chance know what one of these top performing MDs would make on average? Because if a top performer is bringing in $20mm of fees they would normally get 25% or $5mm in comp which is fantastic, so I assume that under this model, Moelis would have to pay more than that to keep talent? Or does the consistency of pay make up for it? Thanks again for the insight!
I don’t think anyone really knows the answer to that but I’m guessing if you are consistently bringing in $20M a year you are making $5M+ for sure
Look at Navid the co-president. He’s still a very active deals MD in addition to his executive role. Probably brings in $50-100M in fees a year. His comp is publicly filed and he’s made $12-20M every year the last 4 years, more than Ken himself.
The consistency makes up for it, but Moelis also pays really well across the board.
It's a bit of a Moelis talking but but they do take it seriously and really try to make it part of the firm culture. Like willingness to go the extra mile and help execute stuff for other groups in tangential sector's (maybe they have the relationship but you have sector expertise) is factored into MD promotions. Your own book is still most important, but you get credit for helping out other MDs.
This is helpful thanks. If you don't mind sharing (can be broad range) what has comp been like for you as a VP and director? Hearing conflicting things and debating sticking it out.
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