M&A activity may be way down, but the fortunes of boutique advisory firms are way up. While Wall Street's banks have had to deal with the drying up of investment banking fees in addition to all their other problems, small shops like Moelis & Co. and Perella Weinberg Partners have been rapidly moving up in the rankings in spite of the slowest period for dealmaking since 2003.
Continue reading below
According to
data from Bloomberg,
the top three M&A advisers in 2008 were Goldman Sachs Group Inc.,
J.P. Morgan Chase & Co. and Citigroup Inc., but breaking into the top
20 rankings for the first time were Kenneth Moelis' 18-month-old Moelis
& Co. and Joseph Perella's two-year-old Perella Weinberg Partners.
Although young, both firms have benefited from having the name of a
seasoned dealmaker on the nameplate as well as from their ability to
devote their full resources to a deal.
As both firms have seen their reputations enhanced over the past two
years, Perella and Moelis have been outspoken as to why they think
small highly focused shops have an advantage.
Perella has said that boutique advisory firms are best positioned to
gain from the slowdown caused by the credit crunch because
they haven't relied on the volume of dealmaking or providing of
financing to make profits. And in an interview with The Deal last year
Moelis said:
"There's a backlash against the large banks, and the boutique firms are seeing more business. Financially and reputationally, people are being hurt. If you think your adviser is more interested in making a bonus pool than in a long-term relationship, then there are going to be consequences.
"Was there ever really a relationship between investment banks and
private equity firms [in this cycle]? A relationship based on a half
turn of leverage is not really a relationship; it's a counter-party
agreement. When I started in this business 20 years ago, I could name
the top 20 investment bankers; they were people with personalities. ...
Relationships now have become kind of fake and superficial."
-
George White
See Bloomberg story
See Dealscape post on Ken Moelis
