Morning Coffee: End of egotistical 35-year old bankers’ best exit option. Top Goldman Sachs trader leaves the industry entirely
Once upon a time, there were M&A bankers who were big enough stars to be well-known to ordinary readers of the business pages. People like “Bid-Em-Up Bruce” Wasserstein, Frank Quattrone, The Great Jimmy Lee. They often had higher profiles than their own CEOs, they could talk deals into happening. And very often, they started up boutiques to monetise their fame.
Are those days gone? Liz Hoffman at Semafor notes that it’s almost ten years since the last classic big-name boutique was founded, when Paul Taubman left Morgan Stanley to form PJT Partners. And although boutiques still pay very well at both junior and partner levels, they don’t light up the league tables; the top five banks have spent the last decade passing market share around between each other.
Part of the reason might be that the industry has changed. Hoffman notes that the modern equivalent of Frank Quattrone would most likely be Morgan Stanley’s head of tech banking, Michael “The Founder Whisperer” Grimes. But the kinds of deals that Grimes does are very different from those that could be handled by a boutique – for better or worse, you need to have a big balance sheet if you’re going to underwrite billions of dollars of lending to Elon Musk. In general, the rainmakers of the last ten years have been doing private equity deals, where the ability to provide finance is part of the price of entry.
But it might be a bit simpler than that – just a normal matter of ego. The life cycle of the investment banking superstar always used to be that you would emerge at the age of about 35 as a hotshot Managing Director, then build up your track record and contact book, then launch the boutique at the age of about fifty, with thirty years’ experience behind you and hopefully a couple of decades to reap the profits.
In this year of 2023, then, the bankers who might be launching boutiques now would have been the ones that emerged in … 2008. Which was, of course, the beginning of a long period during which the concept of a “greatly admired investment banker” was not one in public currency, and one in which ambitious young MDs who wanted to prosper quickly learned that they would need to find other ways to feed the ego.
So what’s really happened is that there’s a generation of stars who aren’t so committed to having their names on offices and their faces in newspapers. Rather than set up boutiques, they’ve gone to the buy side to the extremely lucrative world of private equity. And the buy side has facilitated them in doing that; just as a star trader has the option of joining a “pod shop” rather than setting up their own fund, a banking rainmaker can get similar economics to a boutique without ever having to worry about printing notepaper or hiring a compliance officer.
This doesn’t mean the superstars have gone forever. Forming a named boutique was never the only way to be one – Jimmy Lee worked at the bulge bracket all his life, as did Tom Montag. Centerview’s Matthieu Pigasse will always be of interest to the newspapers because he owns one, and DJ D-Sol is still an idol. The industry hasn’t fundamentally changed; we’ve just gone through a few years of top bankers who are, for entirely understandable reasons, a bit dull.
Of course, another way to become a star is to leave banking entirely and do something that normal people care about. Adam Berry, until recently the Head of US Loan Trading and an MD at Goldman Sachs, is doing just that, leaving to take an undisclosed executive position with the Philadelphia Eagles in May, after they have either won or lost the Superbowl.
This isn’t so much a case of “banker chases dream in pro sports”, it seems, as much as “pro football guy gets diverted into banking”. Andrew Berry played wide receiver for Princeton and apparently said “I have learned more on the athletic field, the weight room, and the track than I have in any classroom”. His twin brother is currently the general manager of the Cleveland Browns.
JPMorgan has the consultants in to help with their compliance, but it doesn’t seem to be the usual kind of thing. They’ve hired KPMG to “benchmark our capabilities”, but sources suggest that the problem they’re addressing is the fact that the trading systems generate too many alerts; a watchdog that barks all the time is just as useless (and more annoying) than one that never barks at all. (Reuters)
The banker who was put on leave after the raid on Perella Weinberg’s office last Wednesday has taken his own life; no foul play is suspected and the firm says it is being investigated, but one arrest has been made in Munich and three other German citizens may be charged. (FT)
Although the tech winter has now got so bad that the person who set up layoffs.fyi is feeling overworked, it doesn’t appear to have affected London fintech too badly, with Revolut, Wise and Starling still hiring. (Evening Standard)
If you weren’t concentrating it’s easy to read this as “Stanford”, but Salford Business School, near Manchester, also has Morgan Stanley Managing Directors among its alumni. Jeanette Gamble, the head of Data Analytics Infrastructure Technology, is going to be her alma mater’s first Honorary International Fellow, providing coaching to students and helping educate them on what a banking career might look like. (FE News)
It's easy to be smug about “nepo babies”, but a lot of people could stand being a lot more honest with themselves about how much they’ve benefited from their upbringing. (FT)
“The Peacock”, a German black comedy about an investment bank team building offsite that goes badly wrong, has been picked up by international distributors and so will probably be available on streaming services soon. (Variety)
There’s a potentially excellent sweepstake game that could be invented here; On Sunday, Chris Tyrer was on a “Twenty Most Influential In Crypto” list, as head of institutional and European business at Fidelity Digital Assets. Two days later he posted on LinkedIn that he’s leaving behind incredibly strong teams, that it’s bittersweet leaving Fidelity and he’s excited about the next chapter. Nineteen to go. (Financial News)
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