Such considerations are likely to have come into play for Evercore, for example, when it landed a role in several big transactions in the last three weeks: OptionsXpress Holdings (acquired by Charles Schwab for $1 billion); AT&T on the $39 billion T-Mobile USA acquisition; and Lubrizol on its $9 billion sale to Berkshire Hathaway . Longstanding relationships were at work in scoring the AT&T deal for Evercore, but a heightened need for confidentiality between client and advisor also came into play.
“A company might be seeking a bank with fewer touch points, especially when they need security that the information can be controlled,” a source familiar with the transaction said.
Yet another boon for boutiques was a recent ruling by the Delaware Court of Chancery on Barclays Capital’s role in Del Monte’s leveraged buyout. Vice Chancellor J. Travis Laster slammed the bank for acting in self-interest to manipulate the auction and obtain both sell-side advisory and buy-side financing roles.
One lawyer who works in mergers told CNBC that a client approached him to begin a strategic review of the company but insisted the financial advisor be independent—without a balance sheet.
Boutique bankers are feeling the sea change. “It feels like there’s been a bit of a shift out there,” said one senior banker who recently defected from a big, full-service firm. “People are becoming more cognizant of potential conflicts.”
The top-ranked boutique in the U.S. is Lazard. It has participated as an advisor in 19.5 percent of all U.S. deals announced so far this year. Evercore Partners, one of the elder modern-day boutiques, or " independent" banks, has the next best showing, with Greenhill & Co. just behind. More recent entrants are UBS defectors Blair Effron and Ken Moelis, whose Centerview Partners and Moelis,respectively, are inching their way up the league tables.
Deal Participation Percentage
- JPMorgan 48.5 percent
- Morgan Stanley 30 percent
- Goldman Sachs 23.7 percent
- Lazard 19.5 percent
- Barclays 19.1 percent
- BofA Merrill Lynch 18.8 percent
- Evercore 14 percent
- Citigroup 12.5 percent
- Greenhill 10.6 percent
- Perella Weinberg 9.5 percent
Source: Dealogic
Boutiques are often started by bankers who made their names elsewhere. Joe Perella was already a legend from his work at First Boston when he started Wasserstein Perella with another M&A hero, Bruce Wasserstein, in 1988. Perella moved to Morgan Stanley in the 1990s and then left to start Perella Weinberg in 2005. His firm just made news for advising the $10 billion takeover of NYSE Euronext.
Eric Gleacher, chairman of Gleacher & Company, made his name starting Lehman Brothers' M&A department in 1978. He also did a stint at Morgan Stanley in the latter half of the 1980s.
No matter how good the bankers, however, any firm whose bread and butter is advice is vulnerable to a deal downturn, as happened in 2009 and the first half of 2010. That's why they’re hedging, adding restructuring and asset management arms. But they're trying to manage carefully the conflicts that arise with full service. Most, like Lazard, are building out capital markets capabilities that are strictly advisory in nature. Maintaining their client base will depend on their ability to stay independent.
As one boutique banker put it, “Financial supermarkets might no longer be en vogue.”
