There have been mixed messages on the health of banks' M&A businesses in Europe this year. On one hand, EMEA M&A revenues were down 27% year-on-year in the first quarter according to Dealogic. On the other domestic UK M&A is at its highest level for nine years and Europe-targeted M&A is at its highest level for six years. This might be why UBS and Deutsche are in the market for senior M&A staff, but there are also signs that banks are pinching each other's M&A juniors.
In the past week, James Folger, a former analyst at Jefferies, just quit for a similar position at Rothschild. And Oliver Varhol, a former M&A analyst at ING just joined Citi's CEEMEA M&A team.
This was just the tip of the iceberg. Logan Naidu, chief executive of Dartmouth Partners, a recruitment firm which focused on junior and mid-ranking staff in investment banking divisions (IBD) says this is the "busiest we've ever seen it." Dartmouth's M&A hiring index suggests junior banking jobs were up 115% year-on-year in London during the first quarter.
The surge in demand for juniors is problematic due to the finite number of trained-up twenty three year-olds. - Hence banks' tendency to poach from one another. Shortages are worsened by the ongoing outflow of experienced staff to private equity, with funds like ZZ Capital and General Atlantic hiring from banks in London, and by the perpetual allure of technology firms.
Whereas IBD analysts tend to wait at least two years before quitting for private equity, M&A juniors skip from bank to bank earlier in their careers. Varhol left ING after only seven months. Folger left Jefferies after sixteen months,
What's the point of moving? Different banks offer different deal flow and exposure, but they're also structured differently. - Some banks operate generalist IBD teams which cover every industry as required whereas others are tightly focused on particular sectors. As Dartmouth Partners recent analyst and associate salary and bonus survey highlighted, there's also the potential for pay arbitrage. If you want to get paid as an M&A junior at a bank in London, BAML is the place to work.