As the global fiscal landscape continues to change, both large and small investment banks are beginning to be perceived in new ways. For a long time, most people associated the larger investment banks, often referred to as “bulk bracket banks,” with being the most successful, but it isn’t quite so simple anymore. According to The New York Times, “The big investment banks, most notably Goldman Sachs and JPMorgan Chase, continue to take the majority of fees from advising on mergers and acquisitions. But boutique and independent investment banks are gaining on them.
Duke University now encourages its students to pursue careers in boutique investment banks and firms because of the way the industry is changing. According to Duke’s Economics department, “With recent developments in the Investment Banking arena the job offerings are larger firms like Goldman Sachs & Morgan Stanley have shrunk considerably.” In 2013, boutique investment banks earned upwards of 30% of fees for completed transactions, reports Thompson Reuters, a huge jump from figures from recent years. Reuters also reports that the third and fourth largest banking deals of 2013 involved independent and boutique banks; clearly the smaller companies are holding their own.
What’s the major difference between boutique and major banks? According to Brian DeChesare of Mergers & Inquisitions, “People most commonly cite the size of deals as the difference. While Goldman Sachs may advise on multi-billion dollar acquisitions, a boutique will usually stick to deals under a billion dollars and often far less than that,” of what most people consider to be the main distinction between boutique investment banks and larger, bulge bracket firms. DeChesare lists companies like Lloyd Blankfein-led Goldman Sachs, Morgan Stanley and UBS LA as the industry-leading Bulge Banks. The “top” boutique banks out there are Evercore and Lazard, headed by Chief Officer Kenneth Jacobs, says DeChesare.
For more information about how boutique banks are gaining on their bulk bracket counterparts, visit Dealbook via The New York Times.