Moelis & Co: Why bankers won't lose their jobs, will get paid
If you're looking for some good news about investment banking jobs as we go into the fourth quarter and next year, Moelis & Co. appears to be the place to go for it.
Not the actual Moelis & Co. results, which yesterday revealed a 55% year-on-year decline in revenues in the third quarter, but the transcript to the call that accompanied them. Here, the boutique firm's executives very clearly enunciated why it is that they won't be cutting jobs or pay and will still be hiring despite the disaster that’s seemingly befallen their business.
The pipeline is full, the trigger is cocked
While there might not be many deals happening now, this doesn’t mean this will be the case forever.
“Our pipe is about where it was in the third quarter last year. Our pipe is high,” said Ken Moelis, founder and CEO.
Current conditions generate deals. “Volatility, as I've said before, leads business leaders to reevaluate their competitive position in the world and make decisions,” declared Moelis. “Many of these decisions will lead to transactions.”
It’s just financing that’s the issue. The full pipe is “fragile” said Moelis. “Short term deal execution is difficult in today's market, client engagement is very strong.” Restructuring work is picking up.
You can’t cut bankers and underpay the rest in a down market and hope you’ll be there when things recover
“The asset is the culture, the people and the relationships,” Ken elaborated. “I can't call up company XYZ, and tell them, look, I know we spent six years getting this relationship, we just can't do your work for a couple of months here, while we hold the comp ratio down. We'll be back to you when in a better time. And I'm sure you'll love to hear from us after we fire your team and we'll hire them back. That's not going to work.”
You've got to lean-in. You've got invest. You've got to hire
In the circumstances, Moelis & Co is 'leaning-in' to hiring. It's added 25 MDs this year, "16 through internal promotion and nine through external hiring." It's focusing on technology, healthcare, industrials, and private funds advisory.
Moelis & Co will be hiring next year too. It's going to be "aggressive", declared Moelis. It's going to "spend."
"This is a long-term business. Your clients expect you to cover them, and do good work for them through good times and bad. And then when you come out of it, you have an irreplaceable asset, you have great bankers, great clients and relationships that are hard to recreate from scratch ever," he reiterated.
No one else is cutting pay anyway
And if Moelis & Co. did cut pay? It's mid-ranking and junior bankers would go elsewhere. Inflation on non-MD pay is "pretty sticky." There's "a bid out there" for these guys. If Moelis & Co. doesn't keep them happy, someone else apparently will.
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