The Qualifications of an EB

After seeing people complain about what amounts to an EB today, I thought it'd be interesting to see what all of you think belong as an EB, which WSO seems to consider to be CVP, PJT, Evercore, Lazard, Moelis, PWP, and Greenhill. That being said, just some points to ponder...

1) Is the EB qualification based on exit opps? If so, I can definitely see why that list of firm is considered the list of EBs. However, even among the list, there is a very large variance of exit opps from Evercore to Greenhill.

2) If not exit opps, what makes an EB and EB? Just some points of discussion:

  • EBs are all independent investment banks, but not all EBs are pure advisory shops now. Lazard obviously has AM, Evercore has S&T and ER I believe, while other EBs like CVP are still pure advisory shops. EBs are quite different in terms of their business model, and are far from the days of just being pure advisory private partnerships.

  • Does size determine EB? The smallest EB on the list is currently CVP, which has around 400 bankers, while Lazard has well over 3k bankers if I'm not mistaken, so the "consensus" EBs vary wildly in terms of size. If size isn't an object, why aren't top firms that advise on blue-chip transactions that are even smaller like Allen & Co (150ish bankers) or Qatalyst (60-70ish bankers) included? 

  • Does deal size determine EB status? On the list, Evercore/PJT/CVP have consistently over the past 5 years separated themselves from the other EBs in terms of their average deal size. Those 3 firms, especially CVP and PJT, tend to focus on advising fewer deals, but also advising on more of the blue-chip transactions. The other EBs, especially Moelis and Lazard, tend to be volume shops and their transactions skew much more towards the MM end. Considering how different Moelis's and CVP's strategies are, why are they both considered EBs? 

  • while most other EBs on the list are consistently scattered around top 25 in league tables, Greenhill has struggled to crack the top 50 list consistently over the past decade, so why is Greenhill considered to be on the same tier? 

  • Is Guggenheim an EB? Guggenheim's consistently managed to place in the top 25 of league tables throughout the past 5 years, and while most of their deals are MM deals they also get their name on a healthy handful of mid-cap and large-cap deals every year.  

  • Is Jefferies an EB? Jefferies is the largest independent investment bank, and is consistently top 15 in league tables, and in terms of size and headcount Jefferies is roughly at where Lazard is.  The average deal size of Jefferies is just below Moelis's average deal size, and Jefferies also advises on its fair share of mid-cap and mega-cap deals. In terms of size and volume its deal flow is roughly close to Moelis and Lazard.

Interested to hear all of your thoughts.

Comments (41)

  • Intern in IB-M&A
Sep 13, 2021 - 10:58pm

Honestly some pretty good points in the post, but as I understand it the primary qualification of being an EB is whether the prospects on WSO determine the bank to be an EB or not.

  • Intern in IB-M&A
Sep 14, 2021 - 12:00am

I did hear "premier boutique" used a lot throughout the recruiting cycle by the senior folk interviewing me during SDs though.

  • Analyst 1 in IB - Gen
Sep 15, 2021 - 1:35am

This. I always just say "I work at a boutique" if someone asks. If you really say "elite boutique" out loud I'm internally cringing.

  • Analyst 1 in IB - Cov
Sep 15, 2021 - 11:49pm

I wish this was the case. Have started to hear during interviews prospects use the term elite boutique. An absolutely absurd term to use in an interview. 

Sep 14, 2021 - 10:09am
KitKat01, what's your opinion? Comment below:

RBC, as in one of the most aggressive lenders? Not sure that's an EB, on the rise as a BB for sure though

  • Analyst 1 in S&T - Equities
Sep 14, 2021 - 4:38pm

Haven't they fallen off the league tables? Where do you guys get your info from?

Sep 14, 2021 - 5:23pm
Jeff Skilling, what's your opinion? Comment below:

....but both have a balance sheet / can potentially help finance a deal? RBC has a retail banking arm ffs

I thought the whole notion of what makes boutiques "elite" is the fact that they can get auto-mandated on a +$1bn txn without the ability to finance it - e.g. they're hired on big dollar-sized deals for their Big Brain services alone and pride themselves as M&A intellectual purists

Sep 14, 2021 - 1:02am
ledagl8888, what's your opinion? Comment below:

Elite boutique is a term cringe betas use to justify that no one outside of finance has heard of their bank (this is coming from a guy who works at a bank like this too). As you pointed out, it's not based on anything but the sentiment of cucks at the time. The fact Moelis/ Gugg/Lazard try to act like they are holier than places like JEF is laughable

Sep 14, 2021 - 10:47am
ledagl8888, what's your opinion? Comment below:

Person removed their comment, but no I do not work at Gugg, could care less about what people think of them lol

Sep 14, 2021 - 8:44am
squashcast, what's your opinion? Comment below:

The last sentence really killed the whole cool argument you had going there.

Lazard is just better than Jefferies in almost every way. Even their name is way more prestigious (Lizard vs. A kid's toy manufacturer)

Sep 16, 2021 - 7:54pm
TheBuellerBanker, what's your opinion? Comment below:

Yeah this. No one really talks about rankings and stuff the second you start working full-time. I suppose there's always those analysts who like flexing where they work now and then when they're in a group but those ones are usually generally miserable anyway.

But to be clear, the only place people really act like x bank is holier than thou than y bank is here and ib clubs on campus lol

  • 2
  • Analyst 1 in IB - Gen
Sep 19, 2021 - 5:40am

The truth is the good shops also usually work longer (eg GS or Moelis work more than BNPP and Nomura, at least I would hope), so people there are kind of desilusioned, thinking "yeah I'm making deals but I'm also sleeping 6h a night, and that sucks". 

Anyone with a non inflated ego would be realistic that this is a lifestyle choice and there is no need to flex unless you're insecure 

Sep 14, 2021 - 10:31am
Legion42, what's your opinion? Comment below:

What is stopping a big bank, say Wells Fargo (a $200 bn company), from just purchasing an EB (say for $5,10,15 bn). Why don't we see more consolidation in the space. Thanks for the write up.  

  • Intern in IB-M&A
Sep 14, 2021 - 11:05am

It's actually quite common for large banks to purchase other investment banks (some examples that come to mind are Stifel/KBW, Jefferies/Quarterdeck, Piper/Edgeview, Stifel/TWP, Credit Suisse/DLJ, and obviously the big GFC distressed acquisitions of JPM/Bear Stearns, Barclays/Lehman, Wells/Wachovia, BofA/Merrill). The thing is these smaller banks aren't built by their name, and it's the people that make the smaller bank. During acquisitions, more often than not there will be a degree of turnover among seniors and rainmakers due to issues with integration, different strategy, compensation, and culture. A good example is that many of the rainmakers at DLJ (including Ken Moelis and his lieutenants) left just months after CS acquired DLJ for UBS due to disagreements with autonomy and strategy, and as a result, CS's acquisition of DLJ became a lot less valuable towards boosting their IB practice.

Also, from the POV of a reputable and well-established boutique bank, often it makes little sense to be acquired by a larger bank. Most of the seniors at reputable boutiques built their carers at BBs and left for the boutique life for higher compensation, increased autonomy, and less bureaucracy. It makes zero sense to go back to being at a BB unless the BB is giving them a ridiculous buyout package. For example, as I understand, a big reason why JEF has been able to so aggressively poach seniors from EBs and BBs despite its size as the largest independent bank is because Jefferies has an eat-what-you-kill comp structure much closer to EBs than BBs that's very appealing to top rainmakers and Jefferies also provides a considerable level of autonomy for seniors, which combined with the firm's strategic partnerships with balance sheets offers rainmakers at BBs and EBs a very appealing combination of EB-level comp and culture with BB-level resources and B/S.

  • Summer Associate in IB-M&A
Sep 14, 2021 - 11:30am

True, hence why I think it's generally a lot more efficient (and hence a lot more common) for banks to just directly poach individual MDs, Also, I think talks of banks acquiring other banks is pretty common, it's just the vast majority of talks don't go far and fall through (ex. I heard rumours that GS approached William Blair last year to make William Blair effectively GS's MM arm, but Blair turned down the offer pretty early in talks).

Sep 15, 2021 - 1:16pm
PeRmAnEnTiNtErN, what's your opinion? Comment below:

You really only see BB buying boutiques when the founders are ready for an exit or when the core management has fundamentally changed (usually after the original founder retire).  I can name another half dozen examples in smaller regional markets of this happening.  

  • Intern in IB - Gen
Sep 14, 2021 - 9:41pm

interesting that no one in the industry considers Greenhill a peer of the other EBs considering that Moelis uses GHL as part of its peer set for deal sizes

deal sizes

  • Analyst 2 in IB - Cov
Sep 14, 2021 - 10:25pm

It's because of Greenhill's legacy name. Greenhill really pioneered the small private independent advisory model and was really the original CVP (lower volume than Evercore and Lazard, but was selective with what they took on and focused on headliner blue-chip transactions). However, Greenhill's fallen off quite a bit over the past decade and has both failed to capitalize on the explosion of the popularity of the independent advisory model after 2008 as well as lost out a lot of its market share and traditional blue-chip clients to the new guard of boutiques (CVP/Moelis/PJT). Robert Greenhill was a pioneer in the industry, and the Greenhill name is still a legendary name, but the firm has been a shell of its former self for quite a while now. Even during this year, with advisory activity at record highs, Greenhill was one of the few (if not the only) public firms that recorded a decrease in YTD Q2-21 advisory revenue compared to YTD Q2-20.

That graph also excludes two important things: transactions with no transaction value disclosed, which means that Greenhill and Houlihan's %s are wildly inflated towards the top as most (but not all) of transactions with no transaction value disclosed tend to be MM transactions, and Greenhill and Houlihan do far more transactions with undisclosed values than PJT/Lazard/Evercore. The second thing the graph excludes is transaction volume, where Greenhill lags far behind the other firms.

Sep 15, 2021 - 6:53pm
robert139, what's your opinion? Comment below:

I mean HL is on their comp set as well and no one here would call them on an EB…

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  • Works at Student
Sep 14, 2021 - 3:04pm

You raise some good questions. I'll try and tackle most of them.

Going through each bullet point under 2):

 - You are correct that these firms have other divisions but everyone knows those divisions are not considered investment banking (also "Chinese wall" they don't communicate). Doesn't have any implications for how people refer to the IB divisions at those firms. 

 - First you looked up Lazard headcount but didn't back out the AM division. The headcount is probably around 1500 - 2000. Second, firms like Allen & Co and Qatalyst are regional boutiques. "EB" is used to refer to national/international independent advisory shops. Obviously those are great firms and meet every other "EB" qualification but the inclusion of regional boutiques in the term "EB" makes it too broad to be useful.

 - This is the best question you raised, there is no right answer. Can be dependent on group. Fees are more important.

 - Greenhill should probably be swapped for Guggenheim as far as "EB" status. In my opinion. 

 - Jefferies isn't considered an "EB" because they do a lot of capital markets work. Also in the past they built there business on capital markets work, founder Boyd Jefferies + lot of Drexel guys.

Senior bankers in the industry (within the states) really considered Lazard the only "reputable" national independent advisory shop until other prominent bankers started splitting off and starting their own non industry specific groups. Steve Schwarzman in the mid 80's, Robert Greenhill in the 90's, Roger Altman (EVR) in the early 2000's, Wasserstein Perella around that time and then Ken Moelis in 2005/6. 

I think the term "Elite Boutique" is mostly just a term specific to this forum but it is useful to identify a specific set of firms that have similar comp, exits and experience. 

These are some qualities I was thinking: 

 - Firm needs to be national/international

 - Comp needs to be better than (on average) BB counterparts. I understand we are waiting to see how new comp structures will shake out.

 - Exits need to be on par or better than (on average) BB counterparts

 - Average deal size probably needs to be "above MM" threshold to the average senior banker. I understand this is very vague but I would say Moelis is fine (I'm obviously not a senior banker).

Overall the term is useless outside of this forum but is helpful for identifying a group of firms. For the purposes of this forum, the term "regional EB" or "regional boutique" should be more frequently used.

Full disclosure I will be returning full time to one of CVP, PJT, EVR, LAZ, MOE, PWP next summer. I think this list is an "undisputed" list of EBs

Sep 14, 2021 - 4:37pm
NewIndustryHorizon, what's your opinion? Comment below:

Agree with everything here but one thing. Qatalyst would be an industry-specific boutique. Regional boutiques are often smaller firms that focus on one region (underrated too, know quite a few MDs who pull a comfortable ~$500K+ sometimes 1-2 mil/year running a 10 person shop).

  • Summer Associate in IB-M&A
Sep 14, 2021 - 5:41pm

To be Devil's advocate, don't most of the EBs to capital Markets work and some of the EBs with the capabilities also do financing deals now? Also, Gugg seems to do a significant amount of financing work as well.

  • Analyst 1 in IB - Gen
Sep 15, 2021 - 1:43pm

Thank you for confirming that the deal value threshold is reached by Moelis and they should be considered an EB 🤣

  • Analyst 1 in IB - Gen
Sep 14, 2021 - 3:28pm

However once you actually work nobody cares if you're at Lazard or Evercore or CS or BAML

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Sep 15, 2021 - 11:01pm
Anonymous Monkey, what's your opinion? Comment below:

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  • Analyst 1 in IB - Gen
Dec 7, 2021 - 8:20am

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