Boutiques Continue to Lure Investment Banking Jobs

The top 25 boutique investment banks advised on 17 percent of announced transactions in the first quarter of 2011. That’s up from just 6 percent 2001. As a result, they are attracting more veteran investment bankers who prefer the entrepreneurial nature of a more advisory role, notes Institutional Investor Magazine.

Smaller firms are also winning advisory roles on some of the largest and most high-profile deals. These include Evercore Partners, which advised AT&T on its recent $39 billion offering for T-Mobile USA; Perella Weinberg Partners, one of four banks advising NYSE Euronext on its $11 billion offer with Deutsche Borse; Moelis & Co., a boutique founded by former UBS executive Kenneth Moelis, which advised Australia’s Centro Properties Group on a $9.4 billion sale of its strip mall properties, and others.

The financial crisis has given new life to smaller boutique banks, as bailouts tarnished the reputation of the big, integrated investment banks and shed light on the big banks’ potential conflicts of interest between their advisory operations, lending, and trading activities.  In contrast, smaller boutiques are perceived as offering independent, objective advice more aligned with the goals of their clients.

The financial crisis has also hastened the exodus of senior-level talent from the big banks. One example is François Maisonrouge, who led the pharmaceutical and biotech advisory team at Credit Suisse before jumping to Evercore Partners in 2007. “At a big bank a lot of the time you become a salesman of securities and other financial products. I really missed spending time with clients,” Maisonrouge said.

Another attractive factor is that regulators are not imposing the same limits, clawback provisions or transparency requirements on the compensation for executives at boutique banks, as they are on the bulge-bracket firms.

In addition to their advisory practice, many boutiques, such as Perella Weinberg, have diversified into asset management for institutional investors and wealthy individuals, to balance their business. “The advisory business is basically not scalable and has a low fixed cost, while the asset management business has a high fixed cost but is very scalable,” says founder Joseph Weinberg. “The combination of those two businesses is very attractive.” 

Have you pursued boutique investment banks as part of your investment banking job search? Add your comments below.

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