How Wall Street’s Dealing With a Shortage of Rainmakers

Two of Wall Street’s fastest-growing takeover advisers are perched in towers almost directly across Manhattan’s Park Avenue — and they’re glowering at each other.

On one side, Evercore Partners Inc. has been gobbling up market share advising companies on mergers and acquisitions with a time-tested formula: Hire star bankers and reward them. Chief Executive Officer Ralph Schlosstein, 66, told analysts Thursday that he’d rather leave posts empty than accept someone who isn’t in the top tier.

On the other side, Moelis & Co. is stocking desks with younger go-getters. “What we don’t want to do is hire what I call ‘peak talent,”’ who are too pricey and past their prime, founder Ken Moelis, 59, told analysts this week. His firm also has been climbing league tables, while pouring proceeds into dividends.

Guess which model is helping to generate a bigger stock rally.

While shares of both companies are strong performers this year, Moelis has edged ahead in recent months as investors embrace its strategy. Including dividends, the firm has produced a 76 percent return for shareholders over the past 12 months through Thursday — compared with 61 percent at Evercore. Moelis has done so, in part, by keeping a lid on personnel costs amid stiff competition for rainmakers. Bidding for those people has intensified in recent years as more executives leave big banks to set up boutiques.

There’s just not as much talent being created in the firms that people are used to recruiting from, as was the case in the past,” said Ken Jacobs, the CEO of Lazard Ltd., a rival investment bank. “For the firms that are spending tons on hiring from the outside to grow, it’s been a bit more challenging.”

Source: Bloomberg Markets

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