Mixed Messages on Q3 IB Surge, Bonus Talk Tempered, Jefferies’ Big Bet

It's the little details that are vital. Little things make big things happen. - John Wooden

Good Morning,

If you are looking to hire, please contact me [email protected] .

• Investment banking seems to have staged a significant recovery after a two-year downturn. Q3 2024 saw major financial institutions, including Goldman Sachs, JPMorgan, Bank of America, Citigroup, and Morgan Stanley, report an average 30% increase in dealmaking fees. Notably, Morgan Stanley's investment banking revenue surged 56% year-over-year to $1.46 billion, exceeding analyst expectations.
• This resurgence is attributed to multiple factors: moderating inflation, accumulated demand, and growing confidence in the Fed's economic management. The uptick spans various sectors, with debt underwriting particularly active as corporations leverage anticipated interest rate reductions. High-value transactions, such as Mars' $36 billion acquisition in the consumer goods sector and Paramount's $8 billion media merger, exemplify the renewed appetite for substantial deals.
• Yet, recent conference calls with CEOs revealed mixed messages about the near future and potential bonus outlooks in the banking industry. While both advisory and trading revenues exceeded expectations, particularly due to a strong September, these gains are difficult to project into future quarters. Trading saw weakness in fixed income, currencies, and commodities, offset by strength in equities, particularly in derivatives. However, this equities performance was largely attributed to favorable market movements in August and September, which may not repeat. (FN )
• On the banking side, debt capital markets showed strength, but this was partly attributed to clients rushing to secure financing before the upcoming Presidential election, suggesting a potential pull forward of revenue rather than sustainable growth. M&A volumes, while improving, remain below average, indicating that the industry is still overstaffed relative to current business levels. This mismatch between staffing and business volume suggests that bonuses may be lower than usual across much of the sector.
• Jefferies, currently the seventh-largest investment bank by revenue, is embarking on an ambitious expansion strategy to secure the fifth spot globally, investing hundreds of millions of dollars to hire top talent from competitors and increasing its managing director count by 70% since 2020. This aggressive approach, backed by a 15% stake from Sumitomo Mitsui Banking Corp., contrasts sharply with the downsizing trends of larger rivals and has already shown promise with key deals and a 60% stock price increase this year, though it faces skepticism from competitors and challenges in unseating established giants in the industry. (WSJ )

Resource Center

How to Showcase Your Hung Deals Experience in Investment Banking

“Hung deals” refer to?investment banking ?transactions that couldn’t be closed for various reasons. Despite not being successfully completed, these transactions can still provide valuable experience, as they often involve complex negotiations, financial modeling, and due diligence, amongst other skills.?

Read More

Recruiting Update

• If you are looking to hire, I can be reached at [email protected] . Please consider following PRP on linkedin . I am hoping to grow connections on our business page since I am bumping up against my limit of 30,000 personal connections.
• I have multiple roles in healthcare M&A and FIG (asset mngmt and spec fin) M&A for elite boutiques that must be filled ASAP. These firms will buy out bonuses if necessary. Please review the detailed job listings and desired qualifications by clicking HERE .
• Hiring managers - be prepared to lose some top junior talent after bonus payouts. Most banks are interviewing candidates with 2+ years top-tier banking experience or MM A2As. Banks are demanding strong technical skills with CLOSED M&A deal experience. No one wants to hear about hung deals. You might as well take them off your resume, especially those older than 6-months. RIFs, H1Bs and STEM-OPTs are still not in favor.
• The bonus outlook in the banking industry for the upcoming year appears mixed, with CEOs sending cautious signals during recent conference calls. While both advisory and trading revenues exceeded expectations, particularly due to a strong September, the sustainability of these gains remains uncertain. This uncertainty is reflected in the compensation trends at major banks. For instance, Goldman Sachs reported lower Q3 2024 compensation spending compared to the same quarter last year, though year-to-date spending is up 9% despite only a 1% increase in headcount. This suggests potential variability in bonuses across different divisions within the firm.
• The impact of M&A volumes on bonuses is significant, with current levels at 13% below the decade average - an improvement from being 25% below average last year, but still not enough to drive substantial bonus increases in investment banking. Sector-specific bonus predictions vary.
• Some banks are taking strategic approaches that could influence bonus structures. Bank of America is investing more in its tech stack and equity derivatives talent, potentially impacting bonus allocation in these areas. Meanwhile, Deutsche Bank's aggressive hiring in North American M&A suggests they might offer competitive bonuses to attract and retain talent, potentially creating upward pressure on M&A professional compensation across the industry.
• Despite these pockets of opportunity, the overall industry trend suggests that bankers might need to temper their bonus expectations for 2024 and focus on setting up for a stronger 2025. This implies that while bonuses may not see significant growth in the immediate future, there's cautious optimism for improvement in the medium term.

Hot Jobs

HIGH PRIORITY ROLES

Investment Banking FIG M&A Associate 1/2, Elite Boutique?

New York, New York

Investment Banking Healthcare M&A VP 1/2 (Elite Boutique)

New York, New York

Investment Banking Analyst 2/3 Healthcare M&A (Elite Boutique)

New York, New York

Investment Banking Healthcare Associate 2/3 M&A Elite Boutique

New York, New York

OPEN ROLES

Investment Banking Sr. Analyst/Jr. Associate Software M&A

Washington D.C.

Investment Banking Analyst 2/3 M&A (Elite Boutique)?

San Francisco, California,

Investment Banking Vice President M&A (Elite Boutique)

San Francisco, California

Investment Banking Vice President M&A (Elite Boutique)

New York, New York

Investment Banking Sr. Associate M&A (Elite Boutique)

New York, New York

Investment Banking Analyst 2/3 M&A (Elite Boutique)

New York, New York

Investment Banking Sr. Associate M&A (Elite Boutique)

San Francisco, California,

Investment Banking Associate 1/2 Technology M&A

San Francisco, California

Investment Banking Associate 2 Software M&A

New York, New York

Investment Banking Restructuring Advisory Associate 1/2 (Elite Boutique)

New York, NY

Prospect Rock Academy

One-on-One Coaching

I am currently offering customized one-on-one coaching sessions focused on targeted support, including:

• Resume & Narrative Support
• Company Targeting and Advanced Networking Strategies
• Interview Preparation
• Financial Modeling and Technical Interview Support
• Breaking into Investment Banking/Private Equity
• Securing a Summer?Internship
• Negotiating a Raise/Offer
• Customized Tailored Sessions - Tell me your needs and we’ll design a session to match, whether it’s case prep, industry research, or other topics.

Schedule a 15-minute consult or Click HERE to LEARN MORE .

Investment Banking Lateral and Global Campus Recruiters List

We have curated a list of 67 key recruiting contacts specializing in investment banking lateral hires and global campus recruitment. Each contact includes their name, title, the firm they represent, and their LinkedIn profile, making it easier for you to directly connect and foster meaningful professional relationships in the investment banking sector.

BUY TODAY ($49)

How to Land a Summer Internship in Investment Banking

Prospect Rock Academy introduces a cutting-edge course tailored for the next generation of investment banking leaders. This program equips ambitious undergraduates and MBA students with the strategic acumen necessary to secure a summer internship in investment banking.

ENROLL TODAY ($199)

The Ultimate Guide to Bouncing Back from No-Return Offer

Meridith Dennes, Managing Partner of Prospect Rock Partners, and Andrea Benson, Managing Director at the firm, discuss critical strategies for investment banking interns who did not receive a full-time offer post-internship. Andrea shares insights from her 15 years on Wall Street, including 11 years in campus recruiting, on how to professionally handle the disappointment, utilize reflection and feedback, and develop a plan to reenter the industry.

ENROLL TODAY ($149)

?

?

?