Reuters reports that deal advice has become a crowded field, making it harder for investment bankers to move from Wall Street to smaller firms, known as Boutique Boulevard, in 2023.
This is due to the weakened environment for mergers and acquisitions.
Banks are often forced to cut staff or restrict access to balance sheets when times get tough, leading to a possible stretch in the market.
Goldman Sachs analysts forecast a 20% decline in M&A volume over the next 12 months, making it less likely that companies will pay high fees for deal advisory services.
The entrepreneurial spirit often hits investment bankers when their employers cut staff or restrict balance sheet access.
While smaller underwriters may offer better deals to individual clients, analysts say there are already too many competitors out there for them to succeed.
Furthermore, overall M&A activity may suffer as a major market downturn looms, giving bankers looking to start new boutiques few reasons to be optimistic.
To navigate this difficult terrain, some bankers are seeking refuge in specialized areas such as healthcare or energy.
However, others are less optimistic, believing a decline in deal activity is inevitable.
As one anonymous banker notes, "consumers have the power and will realize increasingly in 2023 that high fees are not worth it."