US
In the wake of the new post-TARP realities on Wall Street — including severe restrictions on compensation for bankers and traders and a new, heavy dose of government regulation — it’s not surprising that there’s been a stampede of people who still call themselves “investment bankers” sending resumes to the smaller boutiques that have pretty much avoided the fallout from the financial crisis.
These boutiques — such as Lazard, Greenhill, Rothschild and Banco Leonardo, to name a few — never made the fatal mistake of larding up their balance sheets with a plethora of risky securities. Instead, they continued to stick to the tried-and-true business lines of providing M&A advice and managing people’s nest eggs for a fee.
They haven’t taken a dime of government money and thus are not subject to the newfangled and still-evolving government restrictions. As a result, they retain the freedom to pay their bankers whatever they like, albeit reflective of the new, more sober economic environment.
Does this mean you should go and work for a boutique? Maybe, but for anyone considering a flight to safety, there are a few sobering things to bear in mind.
Firstly, there really is a deluge of resumes flooding these firms. Given that a modest compensation package is far preferable to none at all, they can therefore be hyper-selective and increasingly stingy with pay – Bruce Wasserstein, the CEO of Lazard, doesn’t have to be a rocket-scientist to figure that one out.
Secondly, boutiques have also intelligently taken to upgrading their staffs by culling the poor performers and replacing them with the crème de la crème of the thousands of laid-off bankers. So, to compete seriously for any potential job opening, you will need to have world-class skills.
Thirdly, the boutiques aren’t immune from the economic downturn, which has resulted in a huge decline in the number and size of M&A deals. Their restructuring businesses may be growing, but they are unlikely to be able to pick up the shortfall left by the drop-off in deals.
Finally, what used to be known as Wall Street banks aren’t going away.
You need only look to the recent $60bn deal by pharmaceutical giant Pfizer for Wyeth. Even though Lazard had been a longtime advisor to Pfizer, Wall Street muscled the firm out of a lucrative advisory role in the deal because Pfizer decided to offer Wyeth shareholders $22.5bn in cash as part of the consideration. In return for that $22.5bn, much of which came from banks in receipt of TARP funds, Pfizer agreed to keep Lazard out.
Welcome to the new world of investment banking.
William Cohan is a former senior-level Wall Street M&A banker. He’s also author of The Last Tycoons: The Secret History of Lazard Freres & Co. His new book, House of Cards: A Tale of Hubris and Wretched Excess on Wall Street, will be published by Doubleday in 2009.
William, I am a bit sceptical about Lazard getting muscled out of fees. If Pfizer decided to offer Wyeth shareholders $22.5bn in cash, Pfizer would not have come to this decision without due diligence. I bet you either Lazard proposed it or was consulted regarding the decision. As an independent advisory boutique they are best placed to offer impartial advice. I am pretty sure Lazard didn’t miss out on lucrative fees regarding that deal.
5. When you tell a girl at a club you work for ‘Evercore’, ‘Gleacher Shacklock’ or ‘Leonardo’, they’ve never heard of them so assume its no big deal, assume you work for some unknown firm that was easy to get into. The US bulge bracket are best for universal prestige, and thats what’s of paramount importance.
The US bulge bracket are best for universal prestige, and thats what’s of paramount importance.
I’d argue thats a superficial line to take – but folloing it through…here’s to you civil-servants.
Try impressing the girl with your government risk-weighted bonus next year.
That’s pretty sad if you have to name drop in a club to get a girl
Hey baby, I work for Citi…
I can confidently say that saying you work at Lazard or Rothschild carries as much prestige as saying you used to work at Lehmans, or any of the other ailing BB firms. Random boutiques I agree lack the prestige (by random I mean ones that noone has heard of, so I would NOT include Evercore or Greenhill in this list either)
Really depends on what you are looking for e.g. if you work at certain boutiques, irrespective of their prestige, you will be stuck doing Rule 3 advisory. If you are looking to move to the buyside, varied transaction experience is required e.g. you need to have done an LBO, IPO, strategic divestment, pure strategic advisory, refin/recap (if you have not done these within the first two years of you career, it gets more difficult to move over to the buyside…which is still the key driver for people moving into M&A). Not bashing boutiques, but the key ones are really insufferable (oooh, I went to Rugby and Oxford, my daddy is Lord lookdownonotherpeople, etc).
you’d be still able to impress girls from other boutiques
this is so sadddddd.
Hello Everyone.
Can we please get back on thread? Babul made a comment…and you want to discuss the merits of prestige now? Can somebody please give an insightful comment on what William Cohan is saying?
I’d like to know cos i don’t know what to make of it.
M&A bankers ar so 2006…The way to impress women now is to claim you work for the Salvation Army…And if your going all out then claim you also play in their brass band as a trombonist.
This argument makes no sense whatsoever
Boutiques are generally very selective about who they hire and they are selective for a reason – there is no room for dead weight. You seem to be saying that because boutiques are flooded with CVs and can be highly selective you should avoid working for one. Quite the contrary, if you consider yourself to be a star performer you should be looking to join a boutique for a chance to work with the best
In response to your third point, everyone is affected by the economic down turn. In this environment the good boutiques should pick up market share from the integrated banks as corporates look for impartial advice. Who would take advice from an organisation that couldn’t keep its own house in order?
Finally, you cite Lazard being shelved by Pfizer as an example of boutiques being muscled out by the BBs on the larger deals but fail to point out that Evercore (another boutique) were appointed to advise Wyeth, demonstrating that there is a role for boutiques on these mega transactions
There are many advantages to working in a boutique, not least of which are better pay, the emphasis on quality over quantity and more sociable working hours
William, you may want to edit your article a bit. Rothschild does not have a balance sheet so no question of them taking risk…pls do not mislead the public.
what is a bank without a balance sheet? A management consultancy.
Maybe it’s time to set up a boutique and call it Goldman Sucks or something similar. Sufficiently recognizable to girls in clubs suffering from alcohol consumption while seemingly the best place to win the battle for fees in the new world of M&A advisory…
What’s with all the negativity? Why do you all feel the need to slag each other off all the time? Can’t we all just try to get along?
I have an MBA from stanford and I work for Bernard Maddoff Securities LLC… will you please marry me?
Well….. Here’s to just getting along.
If we try to get along with our competitors, the government would call us in for running a cartel!!
Much better to go to the club, listen to the girls and be attentive..
And just drop in the fact that you have an independent source of funds………
And Bob’s you aunt Mary.
No one really gives a flying pancake what you do any more, its whether you have to do anything that counts..
yo yo yo wagwan blud…i workz at a booteek doing big time deelz. Da laydies luv me up tho for real…peace out home boys
What a fantastic way to get girls back to your million pound man stables. Feed them so much drivel about being a prestigious investment banker that you put them into a mind-numbing trance of ultimate boredom and then just pick them up and whisk them off in your Ferrari. I’m feeling a bit sleepy at the thought.
Come on chaps, surely our City’s finest financial brains can come up with more than, “I’m an exotics trader at Goldmans, glass of champers?”
Z z z z z z z z z z z, maybe not……….
after reading the responses to this article, I’m seriously glad I have left the city….
i guess ppl are really going crazy..advice to just hold on does not work anymore…and why is mr cohan criticizing the boutiques..(just coz criticism for the big banks is going on for so long)….
i suggest u give some respect to ppl who are working real hard..
Babul you must know so classy girls…
And you wonder why the world hates Investment Bankers…?
Rothschild, the merchant bank that’s been around for over 200 years and was one of the great powers of Europe, a “boutique”.? Lazard, a “boutique”? You really need to get your definitions straight. A boutique is a firm with about half a dozen employees, or it’s a shop that sells clothes.
Americans…*said with a groan while slapping self on forehead*
Dude-Looks like you have not managed to make enough from your book and still envy Bruce. Its time to get over that. Go work at McDonald or someplace. Words from folks like you and Taleb(who could not make it on wall st) should be taken with a grain of salt. All you are looking for is some cheap publicity and you are peddling half-baked ideas.