Morning Coffee: A 29-year-old Goldman VP saved his bonuses and started his own bank. The bank that wants you even when nobody else does
There are few things in banking that are more frightening to watch than a young man in a hurry. And there aren’t many young men in banking right now who are in more of a hurry than Matt Edgar, recently of Goldman Sachs but as of this month the “founder and CEO” of his own new bank, Edgar Matthews & Co.
It’s not clear who the “Matthews” is, or indeed who might be making up the “& Co” at this point. The company website’s “Who We Are” section only lists Matt and three “strategic advisors”, and it appears that brokerage GT Securities is providing “outsourced compliance and regulatory services”, including the transfer of the CEO’s personal FINRA registration. All of which says that if perhaps not literally a one-man band, it’s currently a very small boutique, albeit one which seems to be hiring and promising junior bankers “an opportunity to progress meritocratically and drive real tangible impact for our clients and our firm”.
Mr Edgar has certainly progressed meritocratically himself. He was at Goldman Sachs for five years – his job title isn’t on his LinkedIn, but according to Bloomberg he was a Vice-President, which would seem about right given his age and experience. Before that, he spent just under two years at Sandler O’Neill (now part of Piper Sandler). And before that, he was most famous for having sent over 300 emails to land a summer internship because investment banking was his passion, demonstrating that it’s possible to do so even you’re at a “non-target” university, as long as you are prepared to go above and beyond in terms of hustle.
Even so, 29 year old founder of an investment bank? The new firm is being financed partly by “seed capital earned from the banking career of its CEO” and partly with “outside funding from high net-worth individuals”, and it’s hard to work out whether this is a sign of how crazily lucrative the bonus years 2018-2022 were for relatively junior staff or a sign of how crazily cheap it can be to start up a bank as a “virtual organisation”, outsourcing your back and mid office and putting together “flexible teams” for deals as and when they come in.
Edgar Matthews & Co apparently aims to fill a gap in the market for middle-sized corporates, with M&A, restructuring and “capital markets solutions” as well as potential principal stakes, “leveraging the team’s deep network of investors and structuring expertise”. It’s something of an open question how wide open this gap really is; ever since 2018, the year Matt Edgar went to Goldman, it’s not really been true that even the bulge bracket firms have been turning their noses up at the middle market. And Edgar is based in midtown Manhattan, while midmarket deals tend to happen outside New York; the team are going to have to hustle pretty hard and rack up the frequent flyer miles.
But hustling is what got Matt Edgar where he is, so who can blame him for carrying on? The reason people set up boutiques is simple; a 5% fee on a $500m transaction is $25m. You only have to make a couple of scores to get very rich, and if it doesn’t happen, he will still have a few great stories to tell and a resume that will get interviews simply because people want to hear them.
Elsewhere, there’s usually at least one second-tier or foreign bank on the Street that’s known to wits at the bulge bracket as “the employer of last resort”. This can be for one of two reasons; in bull markets, it’s the wannabe catch-up player that’s prepared to pay good money for mediocre people. And in bear markets, it’s the deep-pocketed countercyclical investor in market share that is prepared to rescue good people who have become victim to the business cycle.
Clearly, the second sense is much less pejorative than the first. Sumitomo Mitsui Financial Group has recently started looking at becoming a US primary dealer and wants to build up sales and trading market share. Consequently, quite a lot of bankers might be reconsidering some of the uncharitable things they might have said about “employers of last resort” in the recent past and instead emphasising how exciting it would be to join a new franchise with such visionary management.
The trouble for SMFG is that the recessions which shake loose a few good people also shake out a lot of mediocre players, and it can be surprisingly hard to tell the difference unless you’ve got deep local knowledge. They might do better to lean on their existing relationship with Jefferies and get their exposure to US markets that way.
Lim Zi-Kuan has shown up quickly after leaving Credit Suisse – he will be cohead of M&A for Asia alongside at Deutsche Bank. This is something of a blow for the UBS acquirers; Lim’s team were on $3bn of deals in the last twelve months and had strong market share. (Bloomberg)
Apparently season three of “Industry” will see the young bankers pivoting toward ESG and will have an actor who was in Game of Thrones. (Daily Mail)
More unpleasant allegations in the US Virgin Islands lawsuit against JP Morgan; a claim has been added to their complaint that JPM executives were in the habit of joking with each other about Jeffery Epstein. (The Times)
Although one might have thought it odd timing to close down a debt restructuring business, McKinsey’s practice has had quite a few lawsuits and government investigations, and now appears to have been judged more trouble than it was worth. (WSJ)
A former credit trader at NatWest used to bemoan the fact that he couldn’t put his own money into the distressed debt deals he was trading. Now he’s started a fintech platform to allow retail investors access to this market. And hopefully not to allow current traders a means of creating career-destroying compliance scandals for themselves. (Bloomberg)
A university degree is an investment in your own future, but in many cases that turns out to be a bad decision in financial terms. (The Economist)
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