A second year analyst left our MM bank and started a LMM M&A boutique. Somehow he’s managed to actually get deals done. He was pretty sharp, but I didn’t realize this was possible. He didn’t really seem to know anyone & just hustled.
Anyone ever seen anything like this? I guess it’s more feasible to actually learn the deal process and acquire clients nowadays vs. the pre-internet era.. but wonder why more associate level bankers don’t try if that’s actually the case?
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Because at LMM you’re getting paid the same amount as an EB/Associate.
Assume you do $20mm transaction at 2-3% economics, then take out rental expenses and other misc expenses that pretty much nets the same. Also you’re underestimating how hard it is to source deals.
Also even if its LMM deals he’s still going to need to hire analysts/other personnel to do deals
I see. So you’re saying if he can close 2 deals a year @20M w/ 3% economics (which is what he said he’s gotten in smaller deals), you can make $1.2MM in revenue?
Assuming he has an analyst and Associate ($300k cost) + CapIQ/misc software, an office, and has to pay for some sort of compliance cost, that’s still probably like $150k in overhead after salaries?
so $1.2MM - $300k Salaries - $150k overhead = $750k in profit to him/his firm? That’s like more than 3x what an associate at my MM makes in total comp.
I asked him how he sources, and he told me he just connects with executives at SMB conferences and through different sorts of professional orgs. He also just ‘hits them up’ on LinkedIn to discuss exit planning and prepares a valuation/sale process example deck.
Sounds like he is more than likely doing sub $10mm deals.
First off I don’t think he’s actually doing $40mm dollar transactions (total a year)
Second there are more costs, you need an accountant, lawyer etc and even if its on retainer that adds up. Second assuming its a corporation even say $600k leftover after tax (corporate) thats ~$450k and then if you pay yourself thats going to be taxed (individual) as well.
And also theres “risk adjusted income” being a LMM unless highly experienced its subject to more risk year to year whereas an associate can expect to go to VP and then by then they’ll be raking in $300-400k (UMM shops)
I think you are missing the point by a mile. It does not matter what his net profit is compared to the risk adjusted earnings of a VP or whatever. The guy with just two years experience of IB and no connections has set up his own shop and is doing deals. With that kind of trajectory where will he be in 10 years time. He is a finance entrepreneur on a completely different track from 99.9% of us. He will probably make, lose then remake a few fortunes along the way but that isn't the half of it, he is settling his own path and building his own little empire. It's something I could never do but I admire this guy.
I've personally met a former banker that worked at a boutique, then moved to Lazard, and eventually ended up in the "entertainment industry" wink wink (google it if you don't believe me) SO yes, anything is possible.
Girl or guy?
I was like wtf then saw Paige A Jennings, a girl who worked in marketing in NYC at Lazard Asset management.
ya... not a banker ?
She was in banking in a boutique, thought she moved to banking within Lazard.
Is this in Minneapolis by chance?
are you thinking Loon?
Couldn't remember the name, but I think that is right
Lol I thought the same thing.
Aren't they just MN guys but based in NY now though?
Archetype
A little intrigued. Not trying to say I am in the same boat at all but I work in LMM now and a former boss was trying to recruit me earlier to join forces at his new firm. He's basically a one man band now, decent success but no support staff or anything so I would be pretty close to the action/get more involved with sourcing / other aspects that junior bankers normally would not be exposed to.
Amax Partners?
Do any of you realize how hard this probably is? And not to mention risky? Takes a lot of guts to start something like this...
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