The investment banking industry consists of global bulge bracket banks, regional banks, and boutique banks. In 2020, the top investment banking groups are still dominated by the bulge bracket banks like Goldman Sachs, Morgan Stanley, JPMorgan, among others. These global banks have the strongest brand recognition, provide full investment banking services, and lead most high-profile IPOs and M&A deals. Regional banks like Robert W. Baird and boutique banks like Centerview Partners fill specific niches in M&A advisory and equity capital markets. The top performers attract top talents with lucrative compensation packages. Although facing fierce competition, they continue leading the industry with established client relationships, extensive global networks, superior execution capabilities, and abundant financial resources.
Bulge bracket banks remain industry leaders
The bulge bracket refers to the world’s largest and most profitable multinational investment banks that lead markets in high-profile IPOs, FICC trading, mergers and acquisitions advisory, etc. Bulge bracket banks include Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, UBS, and Barclays. Despite challenges like regulatory pressure and digital disruption, they continue dominating global investment banking league tables in 2020. Their strong brand recognition, global footprint, and comprehensive product portfolio make them the top choice for large corporate clients and institutional investors. Bulge bracket banks can provide huge sums of capital and seamless execution for billion-dollar M&A deals. They also boast the most extensive analyst coverage on public companies that institutional investors rely on.
Boutique banks thrive in niches
While bulge brackets focus on large cap clients and billion-dollar deals, boutique investment banks target middle-market companies and small/mid-cap public companies. Boutiques like Centerview Partners, Evercore Partners, and Lazard have carved out solid M&A advisory niches and strong expertise in specific industries like TMT, healthcare, energy, etc. Moelis & Company built leading franchises in M&A as well as restructuring advisory. While they lack the scale and global footprint of bulge brackets, boutiques pride themselves in providing objective, conflict-free advice to clients. They have flexibility in fee structures and great partnership cultures that attract top bankers. Many senior bankers at bulge brackets moved to boutiques for higher pay, more influence, and better work-life balance.
Regional banks expand advisory capabilities
Below the bulge brackets are regional banks like Robert W. Baird, William Blair, and Piper Sandler that focus on middle-market clients in their geographic territories. While bulge brackets retracted during the 2008 financial crisis, strong regionals seized the chance to expand market share by hiring star bankers and beefing up practices like M&A, equity capital markets, etc. For instance, Baird built a top healthcare practice via recruitment and acquisitions. Regionals cannot compete head-on with bulge brackets in blockbuster IPOs or billion-dollar M&A deals. However, they develop deep ties with local executives and entrepreneurs, providing top-notch services in niche sectors and smaller transactions. Clients value their industry expertise, hands-on attention, and independence from conflicts of interest.
League tables measure market share
Investment banking league tables like those from Dealogic and Refinitiv track market share using deal volume and value metrics for M&A, equity/debt issuance, etc. Based on Refinitiv, the top 10 investment banks in global announced M&A for 2020 are: JP Morgan, Goldman Sachs, Morgan Stanley, Bank of America, Citi, Credit Suisse, Barclays, Deutsche Bank, Lazard, and Evercore. For IPOs, the top underwriters are: Goldman Sachs, JP Morgan, Morgan Stanley, Citi, BofA, Credit Suisse, CICC, UBS, Deutsche Bank, BNP Paribas. The league tables change annually with market fluctuations, but the top spots are dominated by the same bulge bracket banks year after year. League tables influence client perceptions and make it hard for boutiques and regionals to break in.
Top banks attract top talent with high pay
Bulge bracket banks and top boutiques attract the best investment banking talents with lucrative compensation packages. First-year analysts straight out of college can make over $100k at Goldman Sachs and Morgan Stanley. Bonuses account for a significant part of total compensation, reaching millions of dollars a year for managing directors. Top performers get rewarded with quick promotions. However, the intense workload and up-or-out culture also lead to high turnover. Many analysts leave after 2-3 years for private equity, hedge funds, or tech companies. The high turnover allows banks toregularly refresh talent.
In 2020, bulge bracket banks like Goldman Sachs, JPMorgan, and Morgan Stanley continue to dominate the investment banking industry, leading high-profile IPOs, mergers and acquisitions, as well as FICC and equities trading. Although facing competition from boutiques and regionals, they leverage brand equity, global networks, superior execution, and abundant capital to maintain leadership positions. Boutiques like Centerview thrive by providing objective advice in M&A deals while regionals like Robert W. Baird expand in niche sectors. Bulge brackets and top boutiques offer lucrative compensation to attract top talents out of college.