If a week is a long time in politics, a year is an eternity in investment banking. Last year M&A bankers were the sexiest candidates at the recruitment ball, and none were more amorously pursued than media telecoms and technology specialists. This year, however, wealthy suitors are few and far between, and of all the hopefuls lining the walls, the media, telecoms and technology types are least likely to make it onto the dance floor.
Calculating the number of M&A wallflowers is an imprecise science. Some redundancies have been publicly announced, but many have been quiet affairs. CSFB and JP Morgan have been ruthlessly cutting staff since last year's mergers. Goldman Sachs, Morgan Stanley, ABN Amro, Citigroup and UBS Warburg have also been reducing numbers. As a result, the Centre for Economics and Public Affairs forecasts that job losses in the City of London as a whole will total more than 20,000 by the end of the year, and up to 25% could be M&A staff.
William D'Arcy, of niche investment banking search firm D'Arcy and Co, already estimates that there are now between 2,000 and 3,000 M&A bankers out of work.
Faced with a glut of candidates, headhunters are revising their tactics. 'Lobbing' people at recruiters on the off-chance that they will have a vacancy, a practice both commonplace and successful last year, is no longer meeting with success. 'In this market it is only possible to talk to clients that one has a good relationship with, otherwise they won't speak to you,' says a corporate finance director at Odgers Ray & Berndtson. Other headhunters are finding vacancies outside financial services. Jeremy Cooper at mid-level search specialist the Charterhouse Partnership says that he has placed associates and senior associates in M&A in corporate hospitality positions.
M&A associates may now be found organising canapés, but at managing director level traditional dancing partners have not been entirely absent. Sally Rowely Williams, head of the UK Financial Services practice at Korn/ Ferry, says: 'European banks have seen this as an opportunity to hire key individuals.' Rowely Williams and others agree that names such as Cazenove, Citigroup, Deutsche Bank, ABN Amro, and to a lesser extent Bear Stearns, have been among those engaging the spurned belles of the M&A boom.
Boutiques have also been soliciting M&A talent. Brown Shipley, LongAcre, Gleacher, Greenhill, Bridgewell Corporate Finance and Puttnam Lovell are among the boutiques perusing what is on offer. Moreover, the defection of top deal-makers from first-tier banks has increased their allure. Justin Dowley, former co-head of investment banking at Merrill Lynch, moved to Gleacher in August. Puttnam Lovell hired insurance specialist Ian Brimecome, also from Merrill Lynch, in the same month. Lena Baillie of headhunters Longbridge says: 'A lot of people are looking at the job security offered by smaller houses.'
However, boutiques are not open to everyone. Unsurprisingly, the M&A wallflowers that succeed in finding work at specialist houses are likely to be specialists themselves. According to Spencer Stuart, there is considerable interest in people with a niche focus on areas such as energy and pharmaceuticals. Spencer Stuart also reports increased appetite for specialist M&A talent in private equity firms and hedge funds. Generalists may be better suited to private banks, although private banking headhunter Christian Sulger Buel says that private banks' willingness to engage investment bankers has diminished.
Other M&A bankers have found, and may yet find, a home in the middle market. Korn/Ferry recently placed John Franklin at Ernst and Young. Franklin came straight out of JP Morgan Chase and is looking to hire up to 10 others, possibly with a first-tier background: 'We're looking both for people with a middle market M&A focus and for people previously focused on larger companies and larger transactions,' he explains. Franklin is confident that attracting M&A talent will not prove difficult: 'The middle market is the bread and butter of M&A. For people that love the industry and want to remain active, this is the place to be right now.'
However, the numbers absorbed by boutiques and the middle market are small. Franklin's 10 hires are unlikely to have much of an impact. Brown Shipley plans to hire a total of two corporate financiers in the next two years.
It is unsurprising, therefore, that many spurned M&A professionals leave the dance hall altogether. The Penna Group's Michael Moran, who straddles outplacement providers Meridian and headhunters BBM, is uniquely positioned to comment on redundant deal makers' less well publicised destinations.
Moran says: 'One of my well networked clients has set up his own boutique. Some have crossed the floor and are now working for the corporates that were once their clients.' Spencer Stuart confirms the corporates' interest in M&A stars and says it has undertaken a number of searches in this area.
Moran also says that executive directorships are popular among former M&A stars that want to work part time. So, too, are positions on charity boards. Both, however, are increasingly hard to come by.
Moran says: 'Redundancy is not a passport to executive directorship. If at the age of 55 you want to be an executive director, you will have to spend time making that known before you leave the City of London.' Charities also expect a strong degree of commitment, and Moran says that many like board members to be female or from a minority group.
If charities and executive directorships are out of the question, renovating vintage cars, buying racehorses and sponsoring the arts, are popular too, according to Moran. Remuneration in these areas is poor, however, making them ill-suited to ex-M&A bankers still dogged by the onerous task of making a living. Until recently, headhunting was a viable alternative for former M&A stars in search of an income. Not any more. Redundancies at Korn/Ferry and Heidrick and Struggles mean that headhunters are among the wallflowers themselves.