London M&A banker hiring struck by a dearth of juniors who know what they're doing
The UK is not the US. While Dealogic says North American M&A revenues hit $15bn and were up 37% year-on-year in the first half, M&A revenues across the whole of Europe were only $5.4bn and up 2% over the same period. However, the UK has some of the same problems as America: in the words of Goldman Sachs' COO John Waldron, it's a "winner-takes-most environment" governed by a few big deals. And if you're not working on them, you're out in the cold.
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In the first six months of this year, the UK's 10 biggest M&A deals by value accounted for 52% of the market. They included McCormick's $44bn purchase of Unilever's food brands, Engie's $14.2bn purchase of UK Power Networks and Nuveen's $13.5bn purchase of Schroders. Banks working on the mega deals included Goldman Sachs, Morgan Stanley and Rothschild but the concentration of revenues in a few big deals meant others missed out.
With this year's lumpiness coming after three bad years for UK M&A (2022, 2023, 2024), recruiters say a new problem is emerging: as hiring picks up, there aren't enough junior bankers who know what they're doing.
Writing in its M&A update for the first half, UK-headquartered banking recruitment firm Dartmouth Partners, bemoaned the lack of junior bankers with "live execution experience, the ability to take a deal from mandate to close." Entire areas of the mid-ranking banker population have "less execution experience than their seniority would traditionally suggest," says Dartmouth. Unfortunately, this isn't always clear at the outset and superficial experience only tends to become clear "once a live recruitment process is underway."
Dartmouth says the problem is particularly visible at associate level and particularly in the "independent advisory market" (boutiques) where deals are most "narrow."
Andy Pringle at search firm Circle Square, says the problem also extends to vice president (VP) level, where the market has been slow for the past few years but is now picking up again. "You only recruit at VP level when you want to grow a business," says Pringle. "Otherwise, you will always recruit more junior people at analyst and associate level to grow into a role."
The market is now picking up again. Financial News notes that Bank of America, Barclays, Citi, Deutsche Bank and UBS are all in the market, along with various boutiques. One US banker said the talent pool had "shrunk" and complained that: “I hate mediocrity and only want the best people who can add value, but so does everyone else."
Even bankers at Goldman Sachs may not have the experience you'd think. The Financial Times reported in July that Goldman has been settling for junior roles on deals like Prologis' attempted takeover of Segro and ITV's sale of its broadcasting business to Sky.
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