Rise of the Private Partnership

So far this year "boutique" banks have about 30% market share in M&A, almost twice the 17% that they posted last year, and last year was a marked gain on the year before. It seems that a significant amount of deal flow is moving away from the traditional bulge bracket model, and this might be a long term trend. It seems that the Wall Street Journal got it wrong in today's article "Music Stops for Wall Street Bankers"; the music is not stopping, bankers are simply moving to shops where they can actually get paid.

The rise of Perella Weinberg, Dean Bradley Osborne, Qatalyst Partners, Tudor Pickering Holt, Centerview, and others may mark a return to the old decentralized structure of Wall Street. Before the consolidation of the 1980s, private partnership like Brown Brothers, Morgan Stanley, Dillon Read, and others provided their partners with a career that did not require serial moving or guaranteed pay packages. There were no layoffs and no stockholders to grovel to, bankers groomed associates to take over the firm rather than as cheap labor to be disposed of after a few years.

Is this return to the past an improvement that will create a more stable Wall Street, or will it have limited impact? Are bulge bracket banks going to simply become loan fee houses that can syndicate debt, entities that "attach" themselves to M&A deals for table credit while the private shops do the real strategy and collect the majority of the advisory fee? Does the shift in deal volume indicate that the market has changed?

I think so.