PJT Partners Inc founder Paul Taubman. — Bloomberg
NEW YORK: The flow of top dealmakers from traditional bulge-bracket firms to boutique investment banks is likely to continue as smaller shops grow and large clients look beyond the largest banks, according to PJT Partners Inc founder Paul Taubman.
More sophisticated clients are increasingly looking first to smaller firms for specialised advice, rather than larger Wall Street banks, Taubman said at the Bloomberg Invest summit in New York this week.
That has been particularly true since 2008, when larger players took a reputational hit, he said.
“That door was kicked wide open as a result of the financial crisis, and I don’t think there’s anything that can close that door,” he said.
“The brand value of the big firms was de-emphasised.”
Taubman, 63, founded PJT in 2014 after three decades at Morgan Stanley and has almost tripled the firm’s personnel since 2015 to more than 1,000.
Last month, Taubman’s PJT surpassed Wall Street expectations for first-quarter profit, fuelled by strong activity in its restructuring arm.
“We’re at an inflection point where big firms and small firms will co-exist,” Taubman said.
“There’s always going to be different horses for courses, but what has changed is that, increasingly, sophisticated clients are looking first to smaller, advisory-focused firms, whereas 10 or 20 years ago, it was the reverse.”
Taubman also said the US election in November will help bring more certainty to the economy, leading to more mergers and acquisitions.
“Until there’s either a change of administration, or this administration gets to a second term, I think a lot of deals that are being considered won’t get to the market,” he said.
He predicted that restructuring activity will continue to rise – not to extreme levels but up from a low base seen during a period of low interest rates.
“We’ve had a near-zero interest rate environment for a while,” the former Morgan Stanley executive said.
“That’s the bubble.” — Bloomberg
