Boutique Investment Banks
Bulge Bracket Firms vs. Boutiques
Bulge bracket investment banks are essentially the demigods of Wall Street and the entire investment banking industry. When one thinks of investment banks the most common names that surface are J.P. Morgan, Goldman Sachs, Morgan Stanley, Citigroup, Barclays, Credit Suisse, UBS, Deutsche Bank, and Bank of America. Rightfully so, these banks generate colossal revenues and advise on multi-billion dollar acquisitions whereas smaller banks do not. But, aside from the biggest banks, there are many boutique investment banks that also generate high revenues and lots of deal flow. The main difference between boutiques and bulge bracket banks is the size of the transactions. Typically, a boutique will advise transactions up to $1 billion, but usually much less. Regarding the work experience and one’s individual role in the firm, there are some common differences between bulge bracket banks and boutiques. For an analyst at one of the bigger firms, a lot of time is often devoted to doing administrative work, creating pitch books, and completing other various projects whereas at a smaller bank, analysts can be more hands on with deals and learn about the actual process a lot faster. The bigger banks, however, see a lot more deals than boutiques so the actual level of involvement at the analyst position is subjective.
While the size of boutiques varies greatly, only the biggest ones can rival the aforementioned demigods. Three boutiques in particular, Lazard, Greenhill & Co., and Evercore are highly active in M&A deals and are some of the top performing boutique firms among others. These banks only recruit on select campuses but you can apply on their website Careers pages. What follows is an overview of each firm, but there is much more to be discovered and learned about them.
Lazard is a very prominent boutique investment bank that has advised over 1,000 mergers and acquisitions in its history. The company’s M&A division is a master at restructuring and sequentially gets a lot of high quality deal flow. Since the 1850s Lazard has advised some of the most well-known and complicated mergers including the sale of Barclays Global Investors to BlackRock for $13.5 billion, the merger of Pentair and Tyco Flow Control for $10 billion, the merger between the United Parcel Service and TNT Express, and the $52 billion acquisition of Anheuser-Busch by InBev. Clearly these deal sizes are some of Lazard’s biggest, even rivaling the biggest banks, but most deals hover closer to $1 billion. Since 1999, the firm has managed more than 250 restructuring deals totaling over $1 trillion in assets. The impressive track record of Lazard’s Financial Advisory division is responsible for a little more than half of the company’s revenue. The rest is attributable to the Asset Management Division which offers mostly securities. The company is very large for a boutique firm with over 2,500 employees in 42 cities worldwide. Employees, for the most part, say they enjoy the deal flow and fast paced work environment at Lazard, but are discouraged by the extremely long hours and heavy corporate feel . Boutiques will range from feeling very quaint and personal to a corporate powerhouse. On this scale, Lazard fits more toward being a corporate powerhouse. The company is a good fit for first year Analysts or internship applicants who are looking to be more hands on in deals and want to be at a boutique.
Greenhill & Co.
Also focused primarily on mergers and acquisitions is Greenhill & Co. Despite being on the NYSE, most shares of Greenhill & Co. are controlled by its Managing Directors, a distinguishing characteristic from other investment banks that are usually owned by a larger conglomerate. Greenhill & Co. advocates its independence and thus avoids conflicts of interest. Also unique to the firm is its sole focus on advisory services such as mergers, acquisitions, financings, restructurings, and capital raisings. With this business model, the firm is able to allocate its most senior associates to suit client needs without getting distracted by other research or trading divisions. The 16 year old company has a track record of successful deals attributable to its supreme staff of bankers. If you are looking for an internship or position at this firm, there is a very positive corporate culture that gives newcomers decent exposure to deals, clients, and senior professionals. Employees are extremely passionate and intelligent, but are warming at the same time. The environment is stimulating, but not necessarily as stressful as some of the other firms out there. If you know you want to do M&A, Greenhill & Co. is a renowned firm that is worth considering.
Evercore was founded by Blackstone in 1996 and went public in 2006 with incredible success. The company increased net income by 80 percent and revenue by 47 percent and has continued to display market success ever since. In 2011 the firm saw several large deals come to fruition. In August of that year Evercore acquired an United Kingdom based investment banking advisory firm, Lexicon Partners, a deal that added about 100 employees to the firm and positioned it for continued growth in the future. In October of 2011, Evercore entered a strategic alliance with Kotak Investment Banking to provide joint M&A advisory services to clients in the U.S., Mexico, the United Kingdom, and India. In November, ABS Investment Management sold 45% equity stake to Evercore. ABS Investment Management is a hedge fund of funds that specializes in long/short equity deals. This purchase by Evercore is yet another attempt to expand operations by the already large boutique firm. As a whole, Evercore gets a lot of deal flow and it is a very rewarding environment to work in. While it is a rigorous and demanding culture, the firm is filled with extremely bright bankers and helpful employees. The company only recruits at the best universities and business schools, but you can apply on the Careers page of its website.
By Ryan Erfer ryan(at)mergers.com