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  • There was a time for bankers who work on mergers and acquisitions where big was beautiful.

  • At Bulge Bracket banks, such as Citigroup, Deutsche Bank, JPMorgan Chase, and Lehman Brothers, the name of the game was size.

  • Armed with a big balance sheet, the top advisory bankers in London and New York hunted deals with their boardroom relationships, while also having the ability to offer their clients financing packages.

  • But this all changed after the financial crisis.

  • Post-crisis regulations that were designed to prevent risky trading and lending made life a lot more bureaucratic and a lot less fun.

  • Pay packages and perks were also more tightly controlled.

  • That is when the exodus began.

  • Bankers who would spend a lifetime at places like Morgan Stanley, UBS, and Goldman Sachs, quick to start their own boutique firms.

  • This new generation of boutique banks is nostalgic for the old ways of banking - small partnerships, where a select group of senior bankers mostly own and operate the firm.

  • Critics of the big banks say this is a superior model.

  • Risk-taking is likely to be more prudent when partners have more skin in the game.

  • Free from the shackles of the big banks, where even your every email is monitored by compliance, those succeeding in boutiques say they're having more fun.

  • And they're once again making tens of millions of dollars.

  • At the turn of the century, the top five mega banks made about 50% of M&A fees, while boutiques accounted for 15%.

  • Today, they control anywhere from 30% to 35% of M&A fees.

  • The likes of Goldman, JPMorgan, and Morgan Stanley have survived the rise of the boutiques.

  • But for many other famed names in the world of banking, such as the European houses, the M&A game has become more difficult as the boutiques have risen.

There was a time for bankers who work on mergers and acquisitions where big was beautiful.

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B1 US FinancialTimes cent boutique goldman morgan stanley

Rise of the Boutique Banks

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    Liang Chen posted on 2022/11/12
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