Boutique bank equity payouts put on hold

Boutique banks may need to postpone planned IPOs. It's bad news for employees who were hanging on for a share of the business.

Earlier this year, Keefe, Bruyette & Woods (KBW), the finance-focused investment bank, announced plans to go public sometime in 2006. Halfway through the year, the IPO hasn't been filed yet. Difficult market conditions mean it may not happen anytime soon.

KBW isn't the only boutique bank dragging its feet. US firms Evercore Partners and Ryan Beck & Co. have also indicated their intention to take the plunge but have yet to put a toe in the water. And who can blame them? When Bridgewell, a UK stockbroker, floated on London's Alternative Investment Market earlier this month, it raised less than a third of what was initially hoped for.

None of this looks too promising for employees at boutique firms who were hoping to get rich on the back of stock allocations. But one boutique-focused headhunter says it's not the end of the world.

"Most of these companies are just putting it off until the autumn," she says.

And although stock is a big carrot when dangled in front of prospective employees, she says its existence does little to retain people already there. Bridgewell, for example, has lost numerous staff post-IPO. "The feeling was that the senior people were looked after but the foot soldiers lost out," says the headhunter.