If you’re starting out in investment banking currently, it’s important to choose a firm or business area that’s growing. The problem is, as investment banks grapple with – depending on who you speak to – a cyclical or secular decline in revenues across various business divisions, this is no easy task. But Mark Aedy, head of EMEA and Asia at Moelis & Co, has one piece of advice – work for a boutique.
Aedy has over 30 years’ experience in investment banking and has worked in senior positions at Deutsche Bank and Bank of America Merrill Lynch – where he was latterly head of corporate and investment banking for EMEA – until he decided to “retire” from the business aged 50 in 2009. It didn’t take him long to be lured back to the industry, however, and he took the reins of Moelis’ new European operation later that year.
He told the LSE Investment Banking conference this week. “We hit the ground running – advising the ruler of Dubai on the restructuring of Dubai World. It put us on the map, we started interacting with clients and other banks worldwide and it really helped get the business growing.”
As someone who has sat on both sides of the fence, Aedy – rather predictably – thinks that boutiques, or indeed anywhere outside of the bulge brackets, are the place to be.
“We’re growing right now, and that’s incredibly rare,” he said. “Whatever industry you join, make sure it’s growing. Investment banking has got to shrink – it’s grossly overpopulated. It’s been happening already, but there’s a long way to go.”
In the US, boutiques’ star has been rising. In 2013, independent investment banks took 20% of M&A fees in the country, more than double the 8% they achieved in 2008, according to Dealogic data.
Moelis posted a 30% year-on-year uplift in revenues during Q3 to $128.7m. It also increased compensation accrual for the year by 17% to September, averaging at $392k per head for 2014 so far.
Aedy says that there’s a “talent drain” from the bulge bracket banks and independents are benefiting. There are very few parts of large investment banks’ businesses that are heading upwards, he said. “Private wealth management is growing, research is being challenged by the remuneration model, fixed income is definitely shrinking, equities is gravitating towards an electronic platform, which has inevitable implications for headcount. It’s pretty challenging – only the advisory business is continuing to grow.”
So, assuming that you’ve been sold on the Moelis proposition and want to get in, what does it take? Aedy says that they hire the vast majority of their graduates through their internship programme as “we get a really good look at you, and you get a really good look at us”.
“We take a collaborative approach with everyone else in the firm, we’re not a franchise of individuals. If you think being successful means being immodest and the relentless pursuit of self-interest, don’t apply. If you want to build something together with your peers and colleagues, do,” he says. “You have got to be a decent human being with high integrity and honesty, treating other people as you expect to be treated.”