Why are EB's seen as having less conflict of interest than BB's
It seems a lot of EB's now have various service lines like ER, S&T, a long with IB. One of the big EB selling points in the market is that they have less of a conflict of interest, is this still true?
It seems like the EB model is getting closer and closer to the BB model, with the only difference being they don't have balance sheets to deploy their own capital into deals.
I get that BB's want to get the additional financing fees etc so might be a bit more pushy than an EB, but with S&T and ER arms now, isn't there a conflict of interest at EB's as well?
The conflict of interest, as you alluded to, is pushing companies to do a deal to cross sell all of the bank’s financing products. Of course EBs want deals to happen too, but there aren’t a bunch of other embedded incentives for the bank. In the restructuring space this is even more important because banks are very often creditors so they couldn’t also be advising the debtor.
Also EBs don’t have trading and research in the same way (ISI is an outlier) and most (PJT, Centerview, Lazard, Moelis, PWP) don’t have it at all.
Thanks for the response, I get the first part, but what do you mean EBs dont have trading and research in the same way? I didn't mention this before, but as you said EVR has ISI, PJT has Park Hill PE group, Lazard has an AM arm, etc.
Would these arms not be perceived as conflicts of interest? It's hard to imagine they are completely separate. Not attacking you, am just genuinely curious.
EVR like you mentioned in particular has preached they are free from conflicts of interest, but it looks like their ISI group has continually expanded and seems to be a bigger part of their business now.
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