Can anyone in Houston provide some insight into what is happening over there right now with the oil prices and volatility? Are any layoffs happening at any level?
Much thanks.
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Are you talking about industry, city, or IB?
Oops, I was asking about ib in particular.
Good question. I was talking with a MD from an EB recently and he was saying that all of the EBs are setting up for a lot of RX, which makes total sense. Rothschild didn't even have a Houston office and now they're opening one up, EVR is going to be sending/maybe hiring RX bankers, and Lazard is adding a few.
I asked him about the BBs and got a vague response but I think you'll see the BBs trim their head count for SAs this year and FT recruiting for Houston in the fall will be even less than this year, and most bank were done by September this year.
From what I gather, deal flow is shifting more than anything else. Everyone is still keeping busy.
Every conversation and email that I've had with (boutique-MM) IBs in Houston has gone along the lines of this:
"Lots of restructuring in the industry" "I wish I could be more encouraging" "Firms are not in the position to add spots"
This is however, about new positions rather than layoffs. But I'm sure it can provide some insight.
With the Iran OPEC ban lifted, Saudi and Iran laughing at OPECs suggestion of production caps, it will be a long time before the bounce.
darn, I am starting in a few months and am worried about being fired. are banks typically quick to let go starting employees or rescind offers?
No, you should be safe. As an analyst, you're cheap labor but a necessity since the senior guys don't do the modeling/decks/bitch work.
If your firm/group is taking on water, then I'd be worried about exit ops/being laid off, but they won't rescind. It will blackball them from OCR at your school, assuming that you got your job through it, and that's a pretty good deterrent. If you didn't get your job through OCR, I imagine that you're still fine for the reasons above. This isn't like 2008 where the financial institutions backing the IBs were the ones in major trouble.
And once again, if head count is trimmed, it'll be through less interns or less FT jobs for for graduates in 2017.
Thanks, good to hear. I am assuming the same reasoning applies at the associate level?
I'd think even more so since that pretty much has to be through OCR and rescinding an MBA offer would be way worse than an undergrad offer, which would be pretty bad.
Cool, associates would be kept on for modeling/deck work as well i am assuming.
anyone else have any insight? much appreciated.
Deals are sparse. Sellers don't want to sell at what they perceive as the trough. Buyers don't want to risk funding losses for the next 3 years, so there's not much incentive to buy yet, given the possibility that things still may get worse. Seeing a few distressed deals, but these are generally terrible companies with bad assets and weak balance sheets. Only deals financial sponsors are willing to do are equity-for-equity deals, which are hard to engineer.
So, to answer your question, not much aside from negotiating with lenders.
Slow. Capital markets are trickling, M&A largely waiting on bid/ask, sharks circling as the market slowly bleeds the weaker / overlevered names.
Just curious, how much restructuring is actually going on in o&g ib? How does deal flow compare to last year for those of you working in the industry?
As an outsider, I can understand the demand for restructuring services given the climate, but I imagine that restructuring alone doesn't make for solid deal flow. My instinct is that banks would be getting crushed without capital markets and M&A activity?
work in marketing for a producer....its tough. I know your question was more focused on IB, but in general I can tell you the energy market is reeling hopelessly hoping for some form of good news.
the most tragic part is as soon as there is a definite positive price signal, production will be brought back online at an astonishing pace and crush prices right back down...
so it should be a great IB market if the pace hasn't picked up already
Just an update to this, equity markets exploded since February CS has been killing this since they opened up the equity markets and have continued to take lion's share of lead left business, BB/EBs in general giving nearly everyone return offers. High yield opening up a bit with parsley pricing quite well, but not major activity. Big M&A deals have been relatively sparse, but some have happened.
In general, outlook is good, especially with the current supply backdrop and market sentiment.
Outlook is better but a few deals definitely fizzled out after the oil price dipped again.
Agreed. I do think a lot of companies are getting more angsty about getting deals done though, especially private sector. Tension is becoming quite palpable.
Bump.
So now that oil prices are looking like they're headed down again, does this typically effect SA return offer rates or would banks simply hire fewer summer interns in the next class?
Depends where you’re going... Evercore / Moelis / Houlihan will be busier than ever with RX.. Wells Fargo, RBC, etc.. may be different.
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