"Every time in recent decades when the British economy has started to grow, Governments of both parties have taken short-term decisions which too often have created unsustainable consumer booms, let the economy get out of control and sacrificed monetary and fiscal prudence. And everyone here will remember how quickly and easily boom turned to bust in the early nineties.” – Gordon Brown, former British Prime Minister, 2001.
It's been a bit of a runaway eight months so far this year, with barely a pause for breath to take stock. M&A activity has picked up pace, most recently seen in the Vodafone/ Verizon spin-off and Microsoft/ Nokia tie-up. ECM continues to gather momentum as we see the mooted return of the firm that symbolised the property bubble, Foxtons, and some giddy valuations for Zoopla. Are we experiencing a 2010-esque blip or the start of a new trend?
Whilst we're really enjoying the pick-up and we've seen activity increase across all areas of our business, what gives me comfort is that there still seems to be some prudence in decision-making. No unfettered, bullish hiring, but thoughtful, considered additions to headcount.
The swagger of over-confidence is thankfully absent. The analyst bonus numbers are perhaps not reflective of this more confident mood. Total compensation is broadly flat or up a very little on last year – enough to buy you a nicer watch but not a nicer car, or indeed enough to leverage up a little more on the housing ladder. Either way, what's most telling is that analysts seem unusually happy with their numbers this year. Anecdotally, this is probably more to do with their staffing levels and the change in focus from pitching to actually working on live mandates.
As a result, we’ve found recruitment activity across all verticals increasingly robust. It's all good news for those looking to hire out of M&A. More execution work means better trained and more widely experienced analysts for the private equity and hedge fund houses we deal with – where demand continues to pick up. However, it's not one way traffic into those firms. We're still seeing significant demand out of service industries into corporates (large and small) as candidates look to get their hands “dirty”.
All in, it's positive momentum that feels less fragile but I'm far from calling it a one-way bet. Not when you’ve got comments like this: “If you had to invent a single policy that had a good chance of making the situation worse it would be the one he has chosen – subsidising high loan-to-value mortgages to risky households. They are building a sub-prime mortgage sector just as they did in the US. We all know how that plays out.” – Erik Britton, Fathom Consulting, March 2013.
Logan Naidu, CEO Dartmouth Partners
Source: Dartmouth Partners