Want to work for a boutique investment banking firm? Now’s the time. Boutiques are thriving according to Bernstein Research. Last week, Bernstein held its ‘Annual Strategic Decisions Conference’ and every attendee was reportedly super-bullish about the M&A cycle. Boutiques are “uniquely positioned” to benefit, says Bernstein. They are also, ‘benefiting from a secular shift towards independent advice.’
But not all boutiques are equal. If you want to work for two of the biggest (Moelis & Co and Greenhill & Co), this is the invaluable information Bernstein imparts.
1. Greenhill is focusing on corporate clients and doesn’t work much with private equity clients
If you want to work with private equity (PE) clients, Greenhill isn’t the place to do it. The firm has decided to market its services to corporate clients instead of the PE market. PE funds’ purchases are often highly levered, meaning that boutique firms, which don’t offer financing services, are at a competitive disadvantage to bulge bracket banks (which do). Greenhill reportedly thinks that the market for selling M&A advice to PE clients is volatile, driven by credit markets, and highly competitive. It’s avoiding it for that reason.
2. Moelis is marketing itself to PE clients
While Greenhill is steering clear of the PE market, Moelis is steering directly into it. Bernstein reports that Ken Moelis likes working with PE clients: he thinks they want differentiated ideas and will pay for ‘consistent, creative ideas flow.’
3. Greenhill is working with firms that are targeted by activist investors
M&A deals involving activist investors who want to restructure a business and its balance sheet are increasing. Greenhill is riding that wave. The firm told Bernstein that it usually works on the defence side, in situations where, for example, ‘a company with many unrelated lines of business may come to them to do a breakup analysis in anticipation of an activist.’ As activist driven M&A becomes a bigger thing in Europe, this is expected to be a growth area.
4. Moelis is expanding internationally through joint ventures and strategic alliances. Greenhill isn’t
If you work for Moelis, it may be difficult to get a transfer overseas. Rather than opening his own offices in smaller markets, Ken Moelis has gone for alliances and JVs. This is in contrast to Greenhill, whose international expansion is driven by organic growth and overseas acquisitions.
5. Moelis and Greenhill both want to open offices in Brazil
Brazil is the promised land for boutique M&A houses. Both Moelis and Greenhill want to expand there. This is despite Goldman’s decision to shelve aggressive expansion plans in the country.
6. Moelis and Greenhill both think Asian M&A is a nightmare
If you work in M&A, you probably don’t want to work in Asia. Both Moelis and Greenhill are disenamoured of the continent according to Bernstein. This is because companies in Asia expect M&A advice for free and will reward banks toting free M&A bankers with underwriting work. Nonetheless, Moelis would like to expand in South East Asia but can’t find any good quality staff there.
7. It’s become less easy to negotiate an improved package if you’re leaving a bulge bracket U.S. bank for Moelis
In the past, Ken Moelis said it was necessary to lure these bulge bracket bankers with premium pay. Now, however, he says they’re willing to join Moelis even if the firm doesn’t buy out 100% of their stock – ‘people are making the choice to leave anyway as the desire to work at the large firms declines.’
8. If you leave Moelis within two years of joining, your cash bonus will be clawed back
‘Moelis even goes as far as putting a clawback provision on cash bonuses if the employee goes to a competitor within two years,’ reports Bernstein.
9. There’s a sweet spot for becoming an MD at Greenhill and it occurs when you have 20 years’ experience and are aged between 40 and 55