MM/Boutiques: The New 'BB'?
Given the events of the past week, it seems to me that MM/Boutique firms (say Harris Williams, HLHZ, Lazard, Piper Jaffray, maybe even Jefferies) are becoming more and more attractive from a recruiting perspective. I believe firms that tend to place a bigger focus on just advisory work should fare better in the new reality of Wall Street. Most of these firms have relatively clean balance sheets compared to their larger peers, they just don't have as large of a trading operation. Do others agree with me that these firms will rise in stature?
i agree with you that they are becoming more attractive from a recruiting perspective. There are so many unknowns with the BBs right now.
Some lesser known places are absolutely thriving (e.g., Stifel Nicolas, or Stifel Financial Corp (NYSE:SF), closed today at its all time high and has more than doubled over the past 2 years (to a market cap of $1.21B). I'd say those places are definitely pretty attractive right now...
It seems that the boutiques have surpassed the BB. I think Evercore & Greenhill could be seen as future BBs.
While Evercore and Greenhill will probably continue to grow their M&A practice, I don't think they'll ever become "bulge bracket" banks just because it isn't in their business model to do anything besides advisory work.
Score one for the middle market! I know we have remained extremely active throughout the last year and are running at capacity on live deals (I've got 3 live deals and a pitch right now, ugh!) Deal sizes are creeping back up and deals are still getting done, despite the extra difficulty in securing credit. I'd highly recommend people consider MMs/Boutiques before deciding to go to our more unstable counterparts.
~~~~~~~~~~~ CompBanker
I think this is a strong possibility as well - especially as some of the smaller guys try to lure some of the senior talent away from the BBs.
A friend at HW is staying busy as usual (3 live, no pitches), and sounds like they really aren't having any issues with dealflow.
The boutique I'll be joining next year has also stayed quite busy, but obviously everyone is hurting in some way. That said, they have hired some MDs from a few BBs over the last six months.
You still have JPM, Citi, UBS, Credit Suisse, Deutsche Bank and then of course Goldman and Morgan. And then the newcomer, Bank of America. Sounds like a LOT of competition, just right there, even without Lehman/Bear as independent forms...
I just don't view working for a commercial bank in their IB division to be as attractive as working at a stand-alone IB. In my opinion, you tend to lose a lot of the perks that IB has traditionally provided in the past, because all of a sudden you are a member of a much larger organization. If I recall, right after Glass-Steagall was repealed, there was a wave of commercial banks acquiring smaller investment banks, with some of these investment banks being spun off a few years later back into independent companies (i.e. Piper Jaffray/US Bancorp). Much of this was because the cultures just didn't mix. I just find working for an independent IB to be much more attractive. Do others feel the same?
Do you guys think some of the Top MD's from BB will begin their own practice? do you see this possible?
Moelis.
I think the Top MD's will be shifting banks but you have to realize how hard it is to start your own "powerhouse" boutique...
The only BB that's gone is Bear. Lehman will continue doing business as Barclays and all the other banks are just fine.
And having worked on the street for a year, I can tell you that after this crisis, just having a job on your resume, will look great. Prestige doesn't matter much anymore
I agree that they won't become the size of "bulge bracket" banks, but they will attract the talent that BB firms used to. So in some sense, they will become the new BB. Wall Street as we have known it has changed forever.
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