Boutiques offer bargain basement pay

Given skyrocketing M&A deals it might seem fair to presume that employees at M&A boutiques are set to be paid handsomely this year. Not necessarily, say recruiters.

"The most senior people at boutiques will be paid up this year," predicts the head of corporate finance at one boutique-focused search firm. "But at director level you can still typically earn around 50% more working in corporate finance for an investment bank."

Boutiques' alleged frugality flies in the face of a healthy deal flow and solid profits from advisory businesses. Braveheart, a London-based boutique has just won a role advising on the €4.4bn acquisition of UCB, a Belgian drugmaker. Profits from Close Brothers' advisory business rose 41% in the year to 31st July 2006. And pre-tax profits at Arbuthnot Securities, a UK stockbroking and advisory business, quintupled in the past six months.

Why then are boutiques so stingy? The consultant points the finger at hefty overheads: "Revenues are typically small in comparison with the cost base - boutiques are often supporting a lot of senior people."

However, Jim Nairn, a consultant at recruitment firm Cornell Partnership, says this doesn't apply across the board. "The fact that you're not subsidising other underperforming parts of the bank means that the more successful boutiques will often pay juniors a premium of 20% over investment banks."

Top performing mega-boutiques such as Greenhill, which has offices in London and Frankfurt, are said to be among the best payers.

Other generous remunerators are said to include London-based Lexicon Partners and Arma Partners, a technology-focused corporate finance specialist which has been adding to its team in London and New York.

By comparison, Bridgewell, the London-based broker and corporate financier is said to fall within the ranks of poor payers when it comes to junior and mid-ranking staff.

A spokesperson for the company challenged this however, saying they are having no problems attracting corporate finance talent and that all employees are offered an equity element in their remuneration packages.