The three months ended in June is unofficially the quarter of the boutiques. Following strong earnings reports from Evercore and Houlihan Lokey (and with Moelis to come later today), Paul Taubman’s PJT Partners just posted a massive second quarter in which revenues increased 28% year-on-year to more than $166m.
What’s more, PJT saw revenues within its hallmark advisory business grow by 35% compared to Q2 of 2018. Not one big U.S. bank was anywhere close. In fact, none of the five big U.S. investment banks saw their advisory revenues increase at all during Q2. Led by former Morgan Stanley rainmaker Paul Taubman, PJT attributed most its success within its advisory business to traditional services like M&A, and less so its restructuring and special situations businesses, where it saw modest gains.
While PJT has yet to catch rival boutiques when it comes to sheer revenue, the more diminutive firm founded just five years ago is likely to be the best payer on the street for the second quarter. Compensation and benefits costs totaled north of $119m for the quarter, up nearly 27% year-on-year. With roughly 600 employees, average pay-per-head almost eclipsed $200k for Q2 alone. That compares favorably to Evercore ($180k) and Houlihan Lokey ($120k).
While there is surely a cyclical component that led to the success of boutiques compared to similar divisions within large banks, elite boutiques like PJT Partners and Evercore continue to make MD-level net additions quarter after quarter. Big banks simply don’t have that kind of latitude. Boutiques may have also been aided by the fact that the volatile M&A landscape has dissuaded bigger deals that often involve at least one full-service bank that can provide supplementary funding.
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