How the mighty are fallen

What do Goldman Sachs, CSFB, and Salomon Smith Barney all have in common? They all came in somewhere below Rothschild's in the European M&A advisory league tables for the first quarter of 2001. The Guardian knows where the story is: the really quite satisfying schadenfreude of Goldie's falling from first to eleventh place. (You've gotta love the ordinal, don't you: it's the league-table equivalent of the Vauxhall Conference.) Reuters leads with Morgan Stanley taking the number one spot, but still gets Goldman in its headline.

But for me (and this may only be because my Dad used to work for them) the Rothschild's story is in a way even more interesting. (Caveat: This league table is based on one quarter's figures, and a quarter which was exceptionally weird in the M&A world at that.It's certain that Goldman will go up and Rothschild's will go down the league table over the next few quarters. Even so, it's worth examining.)

Thompson Financial, who generate the league tables, and who I'm not going to link to 'cos their site makes my browser crash, have simply put Rothschild, not ABN Amro Rothschild, in the Number 6 position. Seeing as how they carefully credit the bizarre entitiy known as Dresdner Kleinwort Wasserstein, I think we can chalk this one up to the Last Remaining UK Investment Bank, without even giving the Dutch so much as a look-in. (Besides, ABN Amro is hardly a major player in European M&A advisory.)

Now the received wisdom in recent years has been that you're either big or you're nothing; that balance sheets are everything. There's always been room for "boutiques," but room only in the sense of making lots of money for their founders, not room in the sense of overtaking SSB and Goldman Sachs in league tables. Dresdner Kleinwort Wasserstein (or should it be Allianz Dresdner Kleinwort... oh, never mind) might have made number four, but Wasserstein Perella certainly never did.

And hell, Rothschild's is English! Everybody knows that English banks are little more than takeover fodder. All the important investment banks these days are American, Swiss, or German. There are big and important Dutch, Swiss and Japanese banks, but they're all basically lenders at heart.There are important Italian boutiques, but you know, that's Italy for you. The English banks all got bought (Morgan Grenfell, Kleinwort Benson, Flemings) or died horrible deaths (BZW, NatWest Markets). And don't even think about mentioning HSBC.

So what on earth is Rothschild's doing on this league table? Total volumes might be pretty low so far this year, but $38.5 billion is nothing to be sneezed at in anybody's book. Could it be that large corporations are finally getting sick of arrogant, overpaid American whizzkids and are finally seeking a bit more maturity and a bit less smoke-and-mirrors? Could it be that without the implied promise of lots of positive research reports from the bank's analysts, the American M&A teams seem rather diminished? Could it be that corporations are now deciding to pay for the best advice, rather than the biggest name? Could it be among the cacophony of bursting bubbles in recent months, few people have been alert to the collapse of the myth of the bulge-bracket M&A titan?

Probably not. But it's good to hope.

Posted by Felix at 1:58 EST