Wall Street banks lose out as more com­pa­nies do deals in-house

The Pak Banker - - Front Page -

NEW YORK

When PPR SA, the French owner of Gucci, sold a stake in its African dis­trib­u­tor CFAO in Au­gust, it didn’t use an in­vest­ment bank to han­dle the trans­ac­tion. In­stead, the com­pany turned to an in-house merg­ers and ac­qui­si­tions team led by Charles de Fleurieu, 39, a former France Tele­com SA M&A ex­ec­u­tive. “When we can, we do it on our own,” said group man­ag­ing di­rec­tor Jean-Fran­cois Palus, 51.

Banks have had a tough past few years. Fi­nan­cial com­pa­nies in­clud­ing Gold­man Sachs Group Inc. (GS) and Deutsche Bank AG (DBK) have cut about 88,000 jobs in 2012 alone and global deal vol­ume has plunged 53 per­cent from 2007, a vic­tim of the re­ces­sion and Euro­pean debt cri­sis, Bloomberg Busi­ness­week re­ports in its Nov. 26 is­sue. Now, with the av­er­age size of deals shrink­ing, more Euro­pean com­pa­nies such as BP Plc and Siemens AG (SIE) are es­chew­ing bul­ge­bracket banks for M&A ad­vice in fa­vor of us­ing their own em­ploy­ees for smaller deals, fur­ther hurt­ing bank rev­enue.

“More than ever, com­pa­nies are so­phis­ti­cated about M&A and want ob­jec­tiv­ity and an in­de­pen­dent per­spec­tive around trans­ac­tions, which they feel more con­fi­dent they can get them­selves,” said Richard Jack­son, 43, head of the Europe, Mid­dle East and Africa M&A prac­tice for con­sult­ing firm Bain & Co. Al­most a third of com­pleted Euro­pean and U.S. M&A trans­ac­tions this year were done in­house, ac­cord­ing to data pro­vided by Free­man Con­sult­ing, a New York-based re­search firm. For the U.S., that rep­re­sents the largest ad­viser-free pro­por­tion of deals since 2003; for Europe, it’s the most since 2004.

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