Contact: Brenon Daly
Already this month, we’ve tallied deals advised by boutique banks including Revolution Partners, Pagemill Partners, GCA Savvian and others. The firms are all part of an increasingly crowded low end of the tech M&A market, which we covered more fully in a special report on boutique banks. Consider this fact: Each year, more than 100 distinct firms advise on at least one transaction closed. (We track that information in The 451 M&A KnowledgeBase and use it in our annual league table rankings.)
Despite the increasing number of boutiques, their share of the market continues to decline, at least when looked at on the basis of percentage of overall M&A spending. In 2009, spending on transactions advised by boutiques fell to just 6% of overall tech M&A – down from about 10% of advised spending in both 2007 and 2008. That cutthroat competition has left more than a few small advisory shops desperately trying to keep their doors open.
We wouldn’t at all be surprised if some of the boutiques started to wind up their practices later this year, with some partners moving on to other firms while other partners get out of the business altogether. In some ways, a thinning of the ranks is overdue, at least according to the industry itself (bankers can be so cold-blooded). In each of our past two annual surveys of tech investment bankers, by far the more likely change they predicted for the overall banking landscape was the shutdown of boutique banks. In late 2008, roughly four out of five tech bankers told us that a number of boutiques were likely to close their doors in 2009, while last December, more than two out of three bankers said the same thing about this year.
Advisory market share*
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Source: The 451 M&A KnowledgeBase
*Based on disclosed and estimated deal values, as percentage of overall annual M&A spending