DAVID CHARTERS:Think before you join a boutique

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David Charters

There comes a point in everyone’s career when the desire to escape from big organisations becomes too strong to resist.  Politics, bureaucracy and the sheer anonymity of industrial scale finance factories become too much and the desire to join the Society of Free Men, getting back to practising core skills with clients you like in a friendly, conflict-free, flexible environment is overwhelming.

Or alternatively maybe you were just fired.  Re-entry is hard for expensive, middle-aged MD’s who need a big support infrastructure and if they are successful end up competing with the people who hire them.

So a boutique, preferably in Mayfair rather than the City, with a small number of like-minded individuals, seems like a very compelling alternative.  Everyone has heard of someone who did well in a boutique.  ‘The beauty of our business is that we have almost no overheads – everything goes to the bottom line.’  ‘When we earn a fee we keep it’.  And of course the best line of all – ‘We have a strict No W*nker Policy – both for clients and colleagues’.

What we hear less about are the ones who fail.  Everyone assumes that clients love them, are even grateful to them for past services, and of course will follow them to a boutique, happily paying the retainers needed to cover the overheads.

Amazingly, some short-sighted, ungrateful clients don’t see it that way.  Of course they acknowledge the experience of the boutique banker, but where is the huge pool of associates and analysts to run endless scenarios and draft reports and presentations?  Where is the financing capability?  And where is the brand name of a big bank?  It is as if they look at the fledgling boutique banker and see a half naked emperor.

And that emperor does have expectations.  He may not have run a spreadsheet in years.  Or booked his own travel.  Jetting around the Gulf is suddenly no longer a pleasant way of collecting Airmiles, but an unpleasant way of dropping ten grand in expenses out of your own pocket.

It is generally not long before a cold wind starts blowing through the office.  As somebody once said, ‘There’s no business like no business.’

Scrappy little deals for second or third tier clients seem more appealing.  The laid back approach to revenue sharing becomes less laid back and more serious.  People develop a lean and hungry look and the conversation in the office about who is contributing what becomes a little edgier.

Boutique investment banking can be hugely rewarding, but like most things in life that can be exhilarating, it can also be terrifying.  It is not for everyone and it requires huge preparation and confidence, not to mention at least a year’s supply of cash.  For most people, especially in hard times, clinging to the comfort blanket of a big firm still makes sense – even if you find it increasingly hard to sing the corporate song at those dreadful town halls.

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