What Is The Next Bulge Bracket Bank or Will There Ever Be Another Bulge Bracket Bank?

If anyone joins the bulge bracket, it will be a full-service bank with a massive balance sheet bolstered by a retail arm. Think Wells Fargo. The speed of this will depend on how quickly they're able to develop the brand and reputation of their advisory franchise.

I don't think it will be through acquisition, given how robust their franchise is already. Bank of America acquiring Merrill was basically bolting a top-notch investment bank onto a huge retail platform. Wells already has invested a lot into its investment banking platform and I don't see anyone whose 'prestige' is meaningful enough to be a real boost to Wells' reputation agreeing to an acquisition.

Historically, a bulge had to provide not just advisory and financing services, but sales and research across numerous asset classes. The boutiques aren't really gunning to join the list of full-service firms. The 'EBs' of the world pride themselves on not having conflicts of interest and on winning mandates based on their advisory expertise. This is what Lazard, Blackstone (before spinning off advisory into PJT), Moelis, Greenhill, Evercore, etc. have always been about.

What's interesting is to watch how firms like Evercore, Lazard, and Moelis have added Asset Management functions in recent decades. Lazard's has been around awhile. Evercore added equity research recently too. Moelis has been building out fund-of-funds teams too. The important takeaway is that these are all advisory functions. They aren't financing. Lazard (et al.) isn't syndicating your debt for an LBO. They're advising you on the transaction.

At the end of the day, you go to the firm you have the best relationship with or think can do the best job for you. Those two don't always overlap. If you want financing for a megadeal, you're likely going with one of the balance sheet behemoths like JPM or BAML. If you operate in a niche and are doing a strategic transaction, Qatalyst, Centerview, LionTree, or even an FTPartners may look really attractive.

'Bulge bracket' is such a legacy term anyway. No longer are there publications that literally put the leading firms names in larger typeface on paper. There's just league tables, which add a greater measure of transparency as to who is successful in each product, geography, and industry. That allows a greater level of specialization, which lets clients make the types of decisions I referred to above.