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How much money can a really good dealmaker bring in?

Morning Coffee: The world’s most valuable investment bankers. Are successful women in finance being “taken off the market” by marriage?

How much money can a really good dealmaker bring in? Using data from Thomson Reuters, Freeman Consulting has estimated the five most lucrative bank/corporate relationships of the last decade. A few things stand out when you look at the data. First, that the most profitable dealmakers of the post-crisis period weren’t investment bankers at all; they were compliance officers. The biggest single fee earning relationship of the period since the crisis was that between Lazard and AB Inbev, which has generated $234m of fees in the last ten years, including $126m in 2016. But looking at the LIBOR cartel judgement alone, we can see that Barclays avoided a fine of €690m and UBS avoided a full €2.5bn, by maintaining good relationships with the regulators and making a deal to secure whistleblower status. If only they could get proportionate bonuses …

The second thing which jumps out is that a significant proportion of the blue-whale advisory relationships still seem to be personal franchises of the old-fashioned investment banking kind. While the Lazard/ AB Inbev franchise is a real team effort, going back to the days of Interbrew and including the CEO Ken Jacobs as well as the co-head of consumer and retail sector, Alexander Hecker, many of the rest of the top five are one man shows. The relationship between Goldman Sachs and Novartis, for example, generated $200m in fees, but these are mainly attributable to Gordon Dyal – since his retirement from GS in 2015, Novartis has Dyal & Co for a lot of its M&A business. Similarly, while UBS / Vodafone makes the top three relationships with $127m of fees, since Simon Warshaw left UBS in 2013 the business has been going to Robey Warshaw.

And the final point that can’t be escaped is that looking at the top five relationships really does underline that the last ten years have been anything but a vintage era for hard-charging deal makers. The UBS / VW Porsche corporate relationship makes it into the top five, for a single deal in 2008, plus the fees from the corporate struggle between VW and Porsche. The majority of the work that put the Goldman Sachs / E.on relationship into fourth place was done in 2009. Although activity is turning up, it’s hard to be optimistic for the near future.

So, will it be possible in ten years’ time to identify single individuals who are capable of claiming credit for nine-figure sums of deal revenue? Maybe not, even if activity does return. The world of corporate finance continues to be institutionalised, and governance arrangements more structured – every year there are fewer and fewer CEOs who are genuinely capable of agreeing deals all by themselves, and so less opportunity for the person-to-person relationships which have driven the mega individual franchises. It’s noticeable, for example, that major players like Asu Okyay are moving away from corporate relationships and in the direction of wealth management, still originating and executing, but doing deals for wealthy families and individuals. Family offices might not do deals in the same billion-dollar size as multinational companies, but it’s more credible for an individual banker to claim to “own” the relationship with a family than with the amorphous set of committees and structures that make the decisions at modern corporations.

Last week we noticed that comic author Gary Shteyngart was coming out with the most surprising insights into the world of hedge funds in the promotional interviews for his book, Lake Success. He’s still on the interview trail and still coming out with some absolute gems. As well as a YouTube trailer for the book in the form of a promotional video for a fictitious hedge fund to be launched with Ben Stiller, he has this to say about the marital habits of the very successful:

“It almost became a cliché to meet hedge funders who were married to women of great intellect and promise. What happened to them? When did the ambition leave them? How could they allow their husband’s career to become the only one in the family? What would that mean for their daughters and their view of themselves? These questions continued to haunt me. In the old days, you married your secretary. Now you married an MD-MBA-JD VP at Goldman Sachs and took her “off the market.”

Not sure about the nostalgia for days when “you married your secretary”, but the phenomenon whereby Wall Street professionals marry each other is well established enough to have a name (“assortative mating”) and the rest of the interview is filled with the kind of comments which make you think the author could have fitted in a little bit to well at the top end of the buy side.


Strange tales from ICO land, where EQUI (the investment vehicle promoted by Baroness Michelle Mone and by Doug Barrowman) appears to have changed its token issue, recruited Apple co-founder Steve Wozniak as an investor and started to make legal threats to journalists. (FT Alphaville)

Fintech IPO of the year to date is Funding Circle, the UK-based peer to peer lender. But with the economic cycle beginning to look less benign, there is a danger that the P2P sector might find funding is exactly what becomes scarce if bad debts start to rise and lending volumes to slow. (Bloomberg)

Although jobs appear to be relocating to Frankfurt, German bankers still see Brexit as more of a threat than an opportunity. Joerg Asmussen, head of Europe at Lazard, sees New York as the main beneficiary. (Handelsblatt)

The clock is running down for former rogue trader Kweku Adoboli, who has now been detained ahead of deportation, and could be forced to return to Ghana by this time next week. (Financial News)

Moody’s have lost an important appeal in the case brought against them by the Hong Kong SFC over a research report that was critical of corporate governance and accounting policies. (WSJ)

SocGen, having already set aside €1.2bn for its sanctions-busting case in the USA, is close to finding out what the final bill will be. (Bloomberg)

Wary of the “key man risk” posed by the possibility of a money manager becoming “the Harvey Weinstein of finance”, investors are increasingly adding questions relating to sexual harassment policies to their due diligence. (PIOnline)

Bridgeton Research Group suggest that market volatility may be caused by clusters of stop orders and similar behaviour by algorithmic trading programs. (WSJ)

In a perhaps disproportionately detailed longread, the Wall Street Journal investigates the social meaning and office politics of what kind of candy people bring back as office presents from their summer vacations. (WSJ)

The retail group Lidl have banned work emails from being sent after 6pm, so that staff can enjoy stress-free time at home. At time of writing, no major investment bank has yet copied this policy. (Daily Mirror)

Smile on the line! A commuter has launched a grass roots campaign to persuade Londoners to be less grumpy on public transport. (Evening Standard)

Image credit:  venuestock, Getty

AUTHORDaniel Davies Insider Comment

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