How Citi Reached the Top of the M&A League Tables

How did Citigroup, which has historically been a second-tier bank when it comes

to M&A advisory, manage to leapfrog the likes of Morgan Stanley and even

Goldman Sachs in the M&A league tables? Obviously, Citi’s sheer size had

something to do with it, as Citi’s M&A head Frank Yeary

is happy to admit to BusinessWeek’s Steve


As deal sizes soared, banking clients needed access to many markets around

the world, since no single market — even one as large as the U.S. —

can absorb all the debt generated by a $30 billion or $40 billion deal. Moreover,

multinationals doing cross-border deals required local expertise on issues

such as currency, taxation, and regulation. “We saw an opportunity to

be positioned as an adviser to the world’s largest and most important

companies on their largest and most important deals,” Yeary said.

Interestingly, Yeary himself seems to run a pretty slim team of just 150 M&A

bankers – although of course they leverage the expertise of many times

that number of professionals working in debt, equity, syndication, research,

compliance, etcetera.

Herding that many cats is far from trivial, so Yeary deserves one cheer for

managing to do his job well enough to be considered an automatic candidate for

any M&A deal.

But I suspect that the real reason Citi finds itself included in so many big

deals is that big deals nearly always involve big bank loans. And Citi has long

been the world leader in syndicated loans. If you want Citi to take a large

chunk of your debt – and it will be harder to get your loan away if you

don’t – then the least you can do is throw Yeary a nominal advisory fee

on the M&A part of the deal. It doesn’t cost much, and it makes him very


A lot of the biggest M&A deals these days are coming from the likes of

Blackstone, which is in many respects an investment bank itself. Blackstone

would never need or want strategic advice from Citigroup. But the fact is that

it neither needs nor wants strategic advice from anyone. The world

of M&A advisory is shrinking, and is being replaced by the world of debt

wrangling. Which is why a shop like Perella Weinberg is having a hard time getting

off the ground, and why would be investment banks like Blackstone didn’t take

long before transmogrifying into hedge funds or private-equity shops.

So maybe it’s not so surprising that Citi is now atop the M&A league tables:

the league tables simply aren’t measuring advisory services any more.

(Via DealBook)

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