As bulge-bracket investment banks continue consolidating, restructuring and/or imploding, investor relations professionals should be paying attention to present – and future – relationships.
One approach to the sell side, familiar to small caps that never could attract the Merrill Lynches and JPMorgans of the world, is to seek out specialized sell-side firms known as boutiques. Some observers already are completely writing off big Wall Street firms in favor of smaller, more entrepreneurial i-banks:
The supermarket model of investment banking died a very quick death this past fall. The future of the industry, many believe, will be fashioned after the boutiques – firms that focus on just a few key areas, but do so exceptionally well.
Joshua Hamerman, “A Tree Grows on Wall Street,”
Mergers & Acquisitions, December 2008
I personally think it’s premature to write obituaries on broad-based financial institutions as a business model. As the financial crisis works through the system and recovery eventually takes hold, no doubt the structure of Wall Street will continue to evolve. I expect the big players that emerge from the wreckage in the capital markets to operate under more scrutiny in the future – but to remain, well, the big players.
Certainly, IR people should be paying attention to these structural changes. That includes cultivating specialized boutique firms. Regional investment houses, independent research shops and direct relationships with buy-side investors are other options that should figure into the strategy.