It’s been a big year for the smallest firms on Wall Street.
The small firms, sometimes with just a handful of employees, have been chipping away at one of Wall Street’s most high-profile businesses for years. But in 2015, these so-called boutiques made meaningful gains in the business of advising on massive takeovers.
There were small firms involved in each of the year’s five largest takeovers, according to data provider Dealogic.
Leading the group is Centerview Partners. Started in 2006 by a group of Wall Street veterans, Centerview ranked seventh among advisers on large US deals — the bank’s highest position ever, Dealogic said.
Big banks have a traditional edge over small rivals when it comes to massive takeovers, if only because buyers sometimes need a deep-pocketed backer to help finance their new purchase. And they’re still, overall, dominant in the rankings. The top three advisers of large US deals — worth more than $10 billion — were Goldman Sachs, Morgan Stanley, and JP Morgan.
But there are seven small firms in Dealogic’s top 20 advisers — the most on record. The list of boutiques doesn’t include some firms often thought of in the same way like Lazard, Guggenheim Partners, and Allen & Co., Dealogic says, because these firms either have more than 1,000 employees or generate more than 20% of their revenue from sources other than M&A advisory.
The small banks’ growing market share is underpinned by a trend of big deal advisers fleeing large institutions for smaller shops. There they work with smaller teams and fewer clients, avoid the messiness of a large public company, and leverage long-standing relationships to pry prized mandates away from their former employers.
The exodus continues. Earlier this year, Hugh “Skip” McGee, a veteran energy banker, started his own firm after leaving a post that made him Barclays’ highest-paid employee.
Centerview — which was lead bank for Newell Rubbermaid’s Jarden deal announced earlier this week and also worked on Pfizer’s takeover of Allergan, the year’s biggest transaction — reaped an estimated $508 million via 40 transactions globally, according to Dealogic.
Others in the top 20 include Moelis & Co., Evercore Partners, Liontree Advisers, and Klein & Co. which elbowed its way into the Dow-DuPont mega-merger expected to generate $200 million in fees for banks.
Founder Michael Klein launched his own firm after leaving Citigroup in 2008. His firm ranked 18th among advisers on large US deals.