The rise of spin-outs

I think we definitely are seeing some big changes in the current dynamics of banks.

Advisory focused firms, like all banks, are only as strong as their rainmakers. When they leave, firms are severely damaged. This is especially so at boutiques, as there are few employees that generate most deals. (See: Moelis pretty much stealing the one good thing about SVB securities, or PWP after Kramer until they started kicking again)

We’re seeing a lot of up and coming players for full service banks (Wells, RBC, Jeff) kind of taking on the powerhouses of yesteryear, as many of the CS MDs were poached, many firms step away from IB(UBS), and new capital alliances are formed. (Wells just took on that powerhouse from CS, Jeff using balance sheet of SMBC, and RBC’s transaction size increasing). It would make sense that the institutional EBs would follow a similar trend (especially when Lazard fires 10% of their bankers)

The industry is highly competitive. Bankers feeling like growth has stopped or a ceiling has been reached will move around. Peakframe works had a post on IG that was pretty solid about the old “Bulge Brackets”. Pretty fascinating how most of them don’t exist anymore.

These boutiques created by ex-EB MD’s MIGHT very well be the next PJT or Centerview, but they can also be the next nothing. I’m interested to see if the saying “No one has ever been fired for choosing Goldman” has weight here.