M&A Competitive Positioning

Much has been written (some of it by us) about the rise of advisory boutiques at the expense of the traditional bulge-bracket firms. This analysis generally tends to focus on trends in market share. A different – but maybe even more interesting – angle with which to address the trend is to measure advisors’ median M&A fee earned per deal. Historically, bulge-bracket banks won mandates for the most lucrative, large-cap transformational mergers. However, in just the last year, the bulge-bracket’s leading competitive position has become less clear-cut. The European bulge-bracket’s median deal fee fell from $5m to $4m Y/Y, and now stands equal with the North American Universal Banks (firms like Wells Fargo, BMO, and SunTrust). The U.S. bulge-bracket still collects the largest fees, but their median has also fallen – from $7m to $6m in the last year. On the other hand, “Mega-Boutiques” like Lazard, Evercore, and Centerview have continued ascending upmarket, and now collect fees almost as large as the U.S. bulge-bracket. Winning steadily larger deals and larger fees has been a critical source of revenue growth for the mega-boutiques in. As they reach the top of the market though, they may – like the bulge-bracket – find growth harder to come by.

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