With the economy generally improving and the M&A markets showing increasing signs of life, we thought is was a good time to review how technology boutique investment banks have performed since the Global Financial Crisis. During 2009, everyone knew it was really bad, but now we have more context (and data) for just how bad things got. The good news is that a recovery is underway for technology boutique investment banks.
We reviewed the financials of ~40 technology boutique investment banks and created an index to measure relative revenue performance over time. The results can be seen in the chart below plotting Y/Y revenue growth for the indexed companies.
In 2009, the index shows revenue was down 33 percent. This dramatic drop in revenue led to significant disruption in these boutiques since most of these firms maintain limited amounts of cash on the balance sheet. Post-financial crisis many firms were shut down (ThinkEquity, Montgomery & Co.) or acquired (Pagemill Partners and Morgan Keegan etc). One other byproduct of the dislocation has been massive turnover of Managing Directors at these firms which has significant impacts on client relationships and future ability to sign new deals.
Since 2009, technology boutique investment banks have recovered significantly. In our analysis, we did not include firms that were either shut down or sold. We will cover the rebound in more detail in a later post.