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.