BOUTIQUES INCREASINGLY REPLACING BIG BANKS IN THE BANKING 50
Centerview Partners and Greenhill & Company continued last year’s momentum, where three boutique banks held Top 5 spots in the Banking 50. The former held onto the #3 spot, increasing its distance over Morgan Stanley to .272 of a point. By the same token, the latter knocked fellow boutique Moelis & Company out of the Top 5. In fact, boutiques now represent 7 of the 10 firms in the Banking 50, a select group that also includes Guggenheim Securities, Lazard, and Perella Weinberg Partners. This recent ascension of boutique firms is hardly an anomaly, says Loosvelt.
“They’re now landing the type of large and high-profile deals that once only the bulge bracket banks landed, and smaller firms are typically able to be more nimble and forgiving when it comes to workplace culture; it’s much harder for larger firms to change workplace policies and the way things have historically been done.”
At 300 employees, Centerview Partners could comprise less than 1% of Morgan Stanley’s 58,000 employees. Despite this, the firm has emerged as a juggernaut, advising on pending deals like Sprint-T-Mobile and 21st Century Fox-Disney – not to mention running point on deals involving Cisco, Conagra, and Avaya. It has also emerged as a beloved firm, ranking atop the Banking 50 for Compensation, Firm Leadership and Hiring Process – along with finishing in the Top 3 for Promotion Policies, Ability to Challenge, Business Outlook, Culture, and Relationship with Managers. Despite this, the firm’s overall score dipped by .022 of a point. With that came greater separation between Evercore and Centerview, with the difference growing from .003 to .086 of a point.
CENTERVIEW DESCRIBED AS THE “TALENT FACTORY FOR THE NEXT DECADE”
A harbinger of things to come? You won’t hear Centerview staffers complaining. One M&A executive tags the firm as “the talent factory for the next decade.” Another New York staffer commends the “high-profile, complex, and diverse deal experience” at the firm, while another takes direct aim at a competitor. “At Centerview, you work on the same quality of deals you see at Goldman Sachs,” writes one Palo Alto exec, “except with significantly better client exposure and comp.”
It hasn’t been difficult for the firm to recruit talent. Aside from high pay and opportunity, Centerview Partners differentiates itself with a mentorship culture geared towards developing junior bankers. “Centerview takes a long term perspective in what it does,” adds one employee from the 2018 survey, “and prefers candidates who are open to the possibilities of a long term career with the firm.”
Centerview respondents also described the firm as “collegial” and “fun,” a place where management respects personal lives and root for each other’s success. Those same terms were also bandied about by survey respondents for another upstart: Greenhill & Company. Despite being a public firm with 340 employees and 16 locations worldwide, the firm has maintained a consistent culture grounded in teamwork and humility.
GREENHILL EARNS HIGHEST MARKS IN WORKPLACE SATISFACTION
How well does the firm follow its principles? Among Vault’s 19 quality of life survey measures, the firm ranked #1 as the best company to work for in 10 of them: Ability to Challenge, Client Interaction, Culture, Hours, Internal Mobility, International Opportunities, Promotion Policies, Relationships with Managers, Satisfaction, and Work-Life Balance. And Greenhill ranked among the Top 5 in four other categories. So why wasn’t the firm a shoo-in for the top spot? Simple: Greenhill’s Achilles heel is prestige, the most heavily weighed factor in the Banking 50.
Here, the firm scores a 5.748, good for 12th overall but a .406 of a point drop over the previous year – a score that could stem from an unexpected $26.65 million dollar loss in the 2017 fiscal year (though Greenhill’s bullish first quarter should boost its prestige for the 2020 ranking). Still, survey respondents remained relatively upbeat, with 93.7% of respondents giving the firm four stars or more on a five star scale. While below Centerview’s 96.1% pacesetter, Greenhill’s satisfaction rate still beats out fellow boutiques like Evercore (92.8%), Perella Weinberg (85.4%), Moelis (81.8%), and Lazard (56.6%) – not to mention Goldman Sachs (77.6%) and Morgan Stanley (74.3%).
“The business outlook [at Greenhill] is very positive,” writes one mid-level M&A staffer there. “Great place for someone who is a solid team player, doesn’t want to get burned out, and is keen and ready to take responsibility early.”
HOW DO YOU SPELL DIVERSITY: BofA
Overall, Guggenheim Securities made the biggest jump in the 2019 Banking 50, climbing from 20th to 8th, an improvement driven by Top 5 finishes in 11 workplace categories, including ranking 2nd in Benefits, Compensation, CSR Initiatives, and Employee Satisfaction. In contrast, PJT Partners, the spinoff of Blackstone’s banking unit, tumbled from 10th to 21st – the result of declining to participate in Vault’s employee survey.
PJT Partners wasn’t alone in that regard. Among major banking players, JP Morgan and Credit Suisse also opted out, adding an asterisk to Top 10 finishes for several so-called “elite boutiques.”
Along with prestige and workplace categories, Vault also queried banking professionals on their diversity efforts. In this area, Bank of America shined, ranking 1st overall, including top diversity scores for women and LGBT, along with placing for 2nd with minorities. The reason was simple, says Loosvelt. The firm gave far more than lip service to diversity initiatives.
BOUTIQUES EXPECTED TO GROW EVEN MORE
“Bank of America truly focuses on diversity and inclusion, and insiders tell us as much,” Loosvelt observes. “The firm has internal groups and affinity networks for LGBTQ employees, women, minorities, disabled individuals, and veterans. It has a global diversity council that’s chaired by the firm’s CEO. Among other things, it supports Pride month and was the first financial services firm to offer domestic partner benefits (dating back 20 years now, I believe). A lot of firms say they support diversity and inclusion, but it’s all window dressing. BofA seems to really follow-through.”
What should banking professionals look for in the year ahead? Loosvelt, for one, expects boutique banks to rise in prestige. Translation: the status quo could be upended soon enough in areas far beyond industry perception.
Keep an eye on Evercore, Centerview, and Moelis,” he advises. “Evercore and Moelis rose in our Prestige Rankings, and Centerview is a solid top 6 firm in Prestige. If you look at the 2017 M&A league tables, you’ll see that these three firms made pretty big leaps vs. 2016, meaning they’re landing more deals and bigger deals. Thus, they’re offering great deal experience for young bankers, maybe just as good as the bulge bracket banks. If this trend continues, which seems likely, they should rise in prestige and rise in the Banking 50 rankings.”
Click on the following links for detailed ranking and satisfaction data on the Vault Banking 50.