What a difference 12 months can make.
Last January, financial sponsor bankers were on the brink of something big. European private equity deals totalled $239bn in 2007, according to Thomson Financial, and the average fees earned by every single banker in the financial sponsor business were 580k, according to the British Venture Capital Association.
This year, with private equity a shadow of its former self and mega-deals dead and gone (according to one senior M&A banker quoted in the Telegraph), financial sponsor coverage professionals are fast in danger of becoming the M&A pariahs.
“There’s always something you can do to remain busy,” says the head of financial sponsor coverage at one European bank, admitting there’s not really all that much going on. “We’re doing quite a bit looking at where the next deal might arise.”
Headhunters say financial sponsor teams are already being trimmed, although one (Jon Axworthy of Akamai Financial Markets), says the emphasis is more on re-assigning talent than eliminating it altogether: “These people came out of M&A and can be moved to other sector teams.”
The diminutive size of teams makes this easier than in other areas: “Even at the biggest banks, financial sponsor teams only employ 15 people,” says the European head.
Private equity, meanwhile, seems to be girding its loins for something nasty of its own.
Earlier this week, DealBook carried an unsettling snippet from Davos, where Joseph L. Rice III, co-founder and chairman of Clayton, Dubilier & Rice, apparently said, “We’ve taken on a big number of bodies that need to be fed,” and if the market continues to be choppy, “we might have to do what investment banks have done [AKA leave them to starve].”
Gail McManus, managing director of Private Equity Recruitment, says the January surge of private equity hiring is down around 30% on last year, but that mid-market and specialist funds are still eager to recruit: “It’s harder to get into private equity than last year, but there are still opportunities for good M&A bankers, leveraged financiers, or transaction services professionals from accountancy firms.”