Boutique investment banks Allen & Co and Qatalyst look set to earn tens of millions in fees after advising professional networking platform LinkedIn on its sale to Microsoft.
Computer giant Microsoft was exclusively advised by Morgan Stanley in the US$26.2bn acquisition announced Monday, but LinkedIn turned to the two smaller firms that have been building a strong reputation in the technology and media sectors.
The pair will earn up to US$45m, while Morgan Stanley will earn between US$10m-$20m, according to consultant Freeman & Co.
Allen & Co had the inside track to the mandate, having participated in the company’s IPO in 2011 – and it will surely boost its rankings even more in M&A league tables.
If the acquisition closes, the LinkedIn deal with Microsoft will be the sixth-largest technology deal of all time, according to Thomson Reuters data.
Allen & Co’s M&A rankings have soared of late as it has won roles on some mega-deals.
It rose to 20th from 50th place in global M&A league tables in 2015 after it advised eBay, alongside Goldman Sachs, on its US$47bn PayPal spin-off. It advised on 13 deals in 2015.
The firm also advised Time Warner Cable on its acquisition by Charter Communications – a deal which closed last month – and it advised Facebook on its US$19bn acquisition of WhatsApp in 2014.
Qatalyst, meanwhile, ranked 23rd on the Thomson Reuters list ranking advisers for US targets in 2015 and 2014.
Other smaller boutique firms have been rising up the league tables as M&A hit new highs last year – and their positions have been bolstered by winning mandates on some of the larger deals.
Centerview was ranked number 10 in 2015, up from 15 in 2014, after advising on 49 deals, according to Thomson Reuters data.
In contrast heavyweight advisory firms – Goldman Sachs and Morgan Stanley, ranked first and second respectively – advised on more than 820 deals between them last year, according to Thomson Reuters.
But firms like Allen and Qatalyst have traditionally co-advised on larger deals with Wall Street’s top banks – and going it alone on LinkedIn may be an ominous sign for the bigger competition.
We may definitely see more boutiques as exclusive advisers, said Freeman Vice President Jeffrey Nassof, especially on the sellside.
“The boutiques are building scale and winning talent from the bulge-bracket, and they’re not constrained in what they can execute,” he said.
Announced M&A deal volume is about US$1.4trn year-to date, off 20% compared to same period in 2015, according to Thomson Reuters.