When will Wells Fargo be considered Bulge Bracket?

Sandhurst][quote=triplectz]The FT graph sums it up: WF is a big player in bonds/levered loans/, but not in M&A. Since most WSO guys are interested in M&A first and foremost, not surprising they don't think of WF very quickly.

Side note: WF is doing pretty well in the league tables for LevFin: http://about.bloomberg.com/pdf/gslc.pdf[/quote

This is a good point. That said, I don't see a good reason why the bulge banks should dominate M&A. You don't need balance sheet to advise on a deal - M&A is in a sense very specialized consulting. The basic function of a broker/dealer is to underwrite capital markets issuance, and this is where the money is actually at from the BBs' perspective. The Rothschild/Lazard independent M&A advisor model makes a lot of sense for actually running transactions.

The only force I can think of keeping M&A advisory with broker/dealers is their ability to discount capital markets services to build relationships and land M&A mandates. But even so, companies go over to the independent elites for the bigger or more complex deals.

You're right in that it's not necessary to run a balance sheet to advise on a deal, but in many cases it is a necessary pre-requisite. Having commercial relationships already in place goes a long way in building trust with an institution (the kind of trust needed to garner IBD business).

Furthermore, not all BB's (namely, the pure form ibanks like GS and MS) actively use their balance sheets as a business model (i.e. to make money in the commercial banking sense), but all of them, including GS and MS, are willing to participate in supporting bank loan activity because otherwise a potential client would just go to a universal bank like JPM or Citi or BAML to advise on a deal. What GS does then is that it participates in underwriting the loan, but then immediately offloads it to banks with a more traditional commercial banking business, usually taking a loss along the way, in the hopes such participation shows a willingness to help out a potential client when that mulibillion dollar merger comes along.

In other words, if I'm a F500 company and i need a loan today, and you decline to participate, then why would I hire you over any bank that did participate when I need a deal adviser at some time in the future?

Of course, independence does have its advantages, which is why you also see elite M&A boutiques.