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Boutique banks upend Wall Street

Boutique banks are taking more deal flow from the biggest firms on the street.

Another big deal, and another payday most of Wall Street's biggest banks missed.

The Pfizer-Medivation deal announced Monday, worth about $14 billion, is the latest sign that boutique banks are rising on Wall Street. In 2016, the smaller banks have been claiming a bigger portion of the profits that come from large-scale mergers and acquisitions, something they have been able to do after claiming some of the top dealmakers from big Wall Street banks.

When Pfizer negotiated to buy the biopharmaceutical company, it was advised by boutiques Guggenheim Securities and Centerview Partners; its target, Medivation, was advised by JPMorgan Securities and Evercore.

That is expected to generate a payday of up to $50 million for Pfizer's advisors, and nearly $60 million for the banks that advised Medivation, said Jeffrey Nassof, director at M&A consulting firm Freeman & Co.

Small vs. large
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In the first half of 2016, boutique banks saw their wallet share of M&A (that is to say, what portion of revenue from deals that went to banks) rise to 17 percent, just shy of their all-time high on a percentage basis. It's a sign that companies engaging in M&A are less dependent on mega-banks than they once were.

While boutiques — notably, Guggenheim and Centerview — have elbowed top Wall Street firms aside on health-care and pharmaceutical deals, smaller banks have also won the opportunity to work on large technology deals, including Wal-Mart's buy of Jet.com, Microsoft's $26.2 billion buy of LinkedIn and Verizon's deal to acquire Yahoo.

There are still plenty of industries where Wall Street has maintained dominance, however, Nassof points out. They includes businesses like consumer retail and industrials, where boutique banks have done little in the way of taking more M&A business from top banks.