From the monthly archives:

May 2011

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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Vikram Pandit, CEO of Citigroup, gave the commencement speech at Wharton last week and offered up some nuggets of advice for those seeking an investment banking job and career in finance in general.

Pandit first outlined his own career path. How his important first career decision was determining what he really liked. It wasn’t being a doctor or engineer, like so many other smart, educated Indian students, though he first studied engineering. He switched to finance, earning a master’s then a Ph.D., but also found his passion for finance didn’t translate into teaching.

His second big career decision was to leave the comfort and security of academia and move all the way to Wall Street in 1983, to join Morgan Stanley. The company was small in those days, only 2,500 people, and still a private partnership. Which meant, in Pandit’s words, all the senior bankers still put their own money on the line every day, they had “skin in the game.” Their focus was serving clients as best they could.

“Bankers were hired for the long term—it was not a place to put in two years and move on. Hiring meant making a long-term commitment to an employee. There was an apprenticeship model of training. No one was ever left alone to sink or swim. Every process was collaborative. Yet we were also trusted, and given the freedom and responsibility to succeed without micromanagement,” Pandit said.

A succession of jobs at Morgan led to his next big career decision. Would he remain an individual producer, responsible for his own results, or would he take on the role of “producing the producers?” In other words, could he learn to groom and manage a team, and take pride in others’ achievements?

It’s a big decision for any mid-level banker. Managing people is much more complex than managing projects, says Pandit. But a lot more conducive to personal growth. Once again, he stepped out of his comfort zone and took the challenge.

Other key career decisions involved leaving Morgan Stanley when it was acquired by Dean Witter, because the company culture was changing from the entrepreneurial-based one he preferred. When a new firm he started was bought out by Citi, Pandit joined the bigger firm and eventually rose to the top job.

Pandit’s words of advice for young people seeking an investment banking job include: “Find your passion and follow it … choose the right company and culture … don’t fear leaving your comfort zone … have the courage of your convictions … and stay the course.” You can read the full interview at Business Insider or on the Citi web site.

What have been the catalysts for the momentous decisions in your career? Have you had to step outside your comfort zone to move things forward? Add your comments below.

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Business schools are going to greater lengths to connect their students to mentors and internships that can lead to actual investment banking jobs. It’s an important criterion to look for beyond the “hard” skills learned in finance courses that you might be wise to seek out when applying to a business school.

A recent article in the Independent highlights the latest trends at B schools in Britain. Alumni are no longer just a source of funding, but are being tapped for possible mentors for graduating students and for opening doors to internships at various firms.

Take the Westminster Business School, for example, which has a high proportion of foreign students, who may find landing a job in Europe particularly challenging. Westminster offers a mentoring program for foreign students that links students with volunteers with business experience, and helps students better understand the UK job application process.

At the London campus of the French business school ESCP Europe, students can participate in an intense training program on how to apply for a job. This program includes fine-tuning their resumes, a mock assessment center, and personalized video training of the interview process.

One area that can really give a graduate a leg up on landing an investment banking job is internships. Top employers often prefer grads with job experience, especially when it’s with their firm. Having worked in the industry also gives grads a better idea of what to expect on the job. For this reason, ESCP, for example, has built two separate internship periods into its masters in management degree program.

UK resident Joel Abrahams took a masters degree in European business at ESCP Europe, because he wanted to work in France. Through a connection at the school, he found an internship with the French bank BNP Paribas in Paris. He’s now working there full time in the bank’s corporate and investment banking arm.

The bottom line: in a competitive job market, students should choose a business school not just on its academic reputation, but increasingly on the career services which it provides. Does it offer interview training, access to alumni networks, and mentoring programs?

Did your business school offer an adequate amount of these services? Which B schools in the U.S. lead in this area? Add your comments below.

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Do Investment Banking Traders Make Good Top Executives?

May 9, 2011

It’s been 12 years since the repeal of the Glass-Steagall Act, separating commercial banks from the investment banking business. In a recent article in American Banker, Andrew Kahr looks at whether the shift towards proprietary trading and securities has produced a better crop of senior executives at these banks. The fundamental shift, says Kahr, is […]

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Investment Banking Job Pay Heads Downward

May 2, 2011

It has been two years since the financial crisis put a major crimp in hiring and salaries. But it appears the downward pressure on investment banking job compensation is here to stay, at least for a while, reports the Wall Street Journal. According to the “Wall Street paymaster” interviewed for the article, an executive inside […]

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