M&A: Boom for boutiques

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Smaller independent advisory firms are winning more business from corporate clients and draining talent from the global investment banks.


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When the proposed $35 billion merger between advertising agencies Omnicom and Publicis fell apart this May, there were a few quiet celebrations around the big global investment banks.

While the rest of the world remembered the day last August that the deal was announced for the toe-curling pictures of Omnicom’s chief executive John Wren and his Publicis counterpart Maurice Lévy embracing in front of the Arc de Triomphe and shook their heads when the deal foundered amid disagreements over who was taking over who and the allocation of senior roles, investment bankers recalled something different.

This was the $35 billion M&A deal first announced with just boutique advisers: Moelis & Co working for New York based Omnicom and Rothschild for Publicis and the one where the two principals said they didn’t need global investment banks’ help because they had negotiated all the fine details.

Cue much chuckling in Wall Street executive suites when it collapsed, then, even though the big firms had been pulled in and now had to forego their fees.

Look down the list of top 20 advisers in the US
M&A market and nine come from outside the ranks
of global systemically important banks

Look down the list of top 20 advisers in the US M&A market and nine come from outside the ranks of global systemically important banks. Led by Lazard, Euromoney’s best independent investment bank of the year, with a 4.3% share of revenue, together these independent and boutique firms account for a 20.5% share of US M&A fees. That’s more than double what they took before the crisis.

Corporations remember that in the crisis, the big banks acted as counterparties more than as trusted advisers and now increasingly they are seeking advice separately from finance. It’s fascinating that these firms pursue many different business models and come in widely differing sizes.

There are the large, long-established firms such as Lazard and Rothschild and the so-called kiosks founded by veteran M&A advisers such as Paul Taubmann, ex head of M&A at Morgan Stanley, whose PJT Capital, adviser to Verizon and Time Warner Cable, ranks 14th in the US adviser rankings on the basis of just three mega deals worth a combined $77 billion. The new kiosk of brothers and former M&A heads at Goldman Sachs and Morgan Stanley, Yoel and Michael Zaoui similarly ranks 14th in European M&A rankings after advising Lafarge on its deal with Holcim.

In between, are boutique firms that aim to be much more than a means for experienced bankers to cash in on their contact books but to outlast their founders. Euromoney profiles two in this edition with very different business models. Ken Moelis IPO’d his eponymous firm this year to ease transfer of ownership in the company and gain a currency to recruit talented bankers. Benoit d’Angelin and Michael Tory, founders of Ondra Partners, have vowed never to IPO or sell the firm, but rather bequeath it to its junior partners.

Whatever the different models, the emergence and success of these firms suggests that the regulatory onslaught against the big banks is wearing down the patience of talented bankers to remain in their employ.