A boutique investment bank is a non-full service investment bank that specializes in at least one aspect of investment banking, generally corporate finance, although some banks are retail in nature, such as Charles Schwab or Allen & Co. Of those involved in corporate finance, capital raising, mergers and acquisitions and restructuring and reorganizations are their primary activities. Due to their smaller size, capital raising engagements are usually done on a best-efforts basis.
Boutique investment banks generally work on smaller deals involving middle-market companies, and usually assist on the sell-side in mergers and acquisitions transactions. In addition, they sometimes specialize in certain industries such as media, health care, industrials, technology or energy. Some banks may specialize in certain types of transactions, such as capital raising or mergers and acquisitions, or restructuring and reorganization. Typically, boutique investment may have a limited number of offices and may specialize in certain geographic regions, thus the moniker, ‘regional investment bank’.
There are many boutique investment banks. Smaller boutiques are commonly not household names, but within their niche may be quite well known.
During 2014, The Financial Times The New York Times, and The Economist all published favorable articles regarding the growing trend of corporations to hire boutique investment banks. Reasons cited included their absence of conflicts, independence, and skill of one or a relative few individuals. The discrediting of traditionally conflicted Wall Street investment banking firms, especially those listed as full-service or conglomerates on the list of investment banks, due to their role in the creation or exacerbation of the Great Financial Crisis is cited as a primary reason for the ascendancy of these boutique firms. However, advances in technology which permit the outsourcing of all non-core aspects of the firm have also been cited as a cause of this David versus Goliath phenomenon.
Working at boutique investment banks generally requires working fewer hours than at larger banks, even though the majority of boutiques are founded and led by former partners at large banks.
As larger investment banks were hit hard by the Great Recession of the 2000s, many senior bankers left to join boutiques, some of which largely resemble the partnerships that ruled Wall Street in the 1970s and 1980s. Boutique investment banks took a greater share of the M&A and advising market at the same time.
Large, prestigious boutique firms include Evercore, Lazard and Moelis & Company. While these may be full-service and international in scale, they are significantly smaller than and do not offer the breadth of products and services of bulge bracket investment banks.
- ^ Jump up to:ab Investment Banking Boutique Firms (PDF), Columbia University Office of Career Services, August 2012, archived from the original (PDF) on 2012-09-13
- ^“Investment Banking, Private Equity and Venture Capital”. Ask Ivy.net. 2012-12-21. Retrieved 2012-12-26.
- ^Brian DeChesare and Daniel Schäfer (Mar 16, 2014). “Small proves beautiful at boutique banks”. The Financial Times.
- ^Michael J. De La Merced (Dec 9, 2014). “Boutique Investment Banks Gain Prestige”. The New York Times.
- ^“Trading Places”. The Economist. Dec 6, 2014.
- ^Martin Hutchinson (Dec 23, 2009). “Bank on little change”. Asia Times. Retrieved 2009-12-23.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.