Veteran dealmaker Ken Moelis said that investment bankers could spend half the amount of time travelling in the wake of the Covid-19 pandemic, as his boutique posted its best ever quarter while bankers were grounded.
Moelis said that investment bankers could “end up somewhere with a third to half our previous travel” in the wake of the crisis as more elements of complex M&A transactions shift to Zoom or phone calls.
“But the real relationship-building travel, I think, will be pretty intense and might even be elevated when — maybe in the back half of next year when everybody tries to catch up and go see somebody they haven’t seen in two years,” he said during Moelis & Co’s first quarter earnings call.
The comments contrast with the bank’s previous results, when Moelis said that dealmakers “need to be back out there” and that its revenues could have been even better if investment bankers were meeting with clients in person.
Moelis & Co made a net profit of $75.8m during the first three months of the year, up by 152% on the previous year and its best ever quarter. The bank joins rival boutiques PJT Partners and Evercore in posting huge increases in profits as investment banking fees have hit all-time highs amid a boom in M&A, IPOs and so-called blank cheque companies.
The bank has been on a hiring spree of senior bankers, bringing in 10 managing director level recruits so far this year and is maintaining a “strong pipeline” of new hires. Moelis also hiked compensation costs by 65% to $156.5m as it put more money aside for bonus payments.
Ken Moelis said on a call with analysts that it was the “busiest time I’ve ever seen in my life” as companies are growing at a rapid rate. He said that companies would have previously taken “10 to 15 years” to reach a size where the bank would work with them, but now it could be “weeks, I mean, or months”.
“When you say how deep is the M&A market, I would suspect there’s like 30 to 50 companies or more that didn’t exist 18 months ago that are in the range of something we’d want to talk about. I’m sure light on that, by the way,” he said.
He also pointed to an intensifying battle for juniors as investment banks have rolled out pay rises and perks for analysts and associates as well as rolling out ambitious hiring plans. Moelis introduced a $10,000 payment for younger bankers in a bid to tackle stress.
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