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- Hundreds of senior bankers have shuffled seats in the most active year for moves since the financial crisis.
- Tech bankers are the most coveted, and they're still getting poached - which is atypical this late in the year.
- Investment banks are paying millions to lure senior tech bankers, who commonly make 1.5 times as much as bankers in other sectors.
- Tech was the most active M&A sector this year, producing $670 billion worth of deals.
Wall Street investment banks are still shopping this December, and tech bankers - the most coveted and expensive specialists in the dealmaking universe - continue to fly off the shelves.
Earlier this week, Deutsche Bank hired software banker Greg Thorne from Stifel - the bank's second software hire in as many months. Last week it was Evercore, which opened up its checkbook to sign Citigroup internet and digital media head Zaheed Kajani, a senior MD who reportedly has over 100 transactions under his belt.
Such hiring activity this late in the year is atypical, since the hiring firm will usually have to cover the bonus the banker would've earned at their previous shop - a pricey proposition that amounts to paying an employee for a year of work they did for a rival.
But this hasn't been a typical year on many fronts.
2018 has been the most active year since the financial crisis for hires and departures among senior investment bankers, with firms of all sizes poaching talent from rivals to capture a bigger slice of the year's massive dealmaking frenzy. This year has seen $27 billion in M&A fees - the most since 2007, according to Dealogic.
Hundreds of managing directors have shuffled seats, but tech bankers have been the hottest commodity, with nearly 50 MD-level hires in the US, up 41% from 2017, according to data from executive recruiting firm Egon Zehnder.
"And the pace seems to be accelerating. Especially in software, but really across the board," Albert Laverge, head of the corporate and investment banking practice for Egon Zehnder, told Business Insider.
Other top tech bankers who switched firms this year include Kurt Simon, who left JPMorgan Chase for Goldman Sachs; Tammy Kiely, who agreed to join Morgan Stanley only to rejoin Goldman; Sam Powers, who left UBS to run US TMT banking at Bank of America Merrill Lynch; Mathieu Salas, who left Citi to run fintech banking at Credit Suisse; and Adam Nordin, an education-technology specialist who left Barclays for Goldman.
It's no surprise the market for tech bankers is booming, given the bounty of fees the sector is producing. With two weeks left in the year, tech was the most active M&A sector, producing $670 billion worth of deals, according to Dealogic. Among the largest were IBM's $34 buyout of Red Hat, Broadcom's $18.9 billion acquisition of chip-maker CA Technologies, and Microsoft's $7.5 billion deal for GitHub.
The next closest sector is healthcare at just over $500 billion, which happens to be the second-hottest hiring sector for MDs, especially in biotech. There's also been a barrage of biotech initial public offerings this year - 58 deals that have raise a collective $6.3 billion.
"Everyone's trying to recruit someone who is supernaturally successful," Julian Bell, head of investment bank recruiting at Sheffield Haworth in New York, told Business Insider. "If you do successfully do that, you can add a lot of revenue on top."
These bankers don't come cheap
But great tech talent is scarce, and these bankers don't come cheap.
According to industry sources, it's common for senior tech bankers to make 1.5 times as much as similarly situated bankers with a different industry expertise, such as consumer goods, business services, or real estate, for instance.
"You have to be consistently good to get into the $2 million range in most sectors. As in very good," Bell said.
By comparison, sources said, compensation for experienced tech bankers in the $3 million to $5 million range is commonplace.
In part, tech and biotech bankers command a higher premium because of the revenue they bring in working in the hottest sector for deals.
But they're also more scarce because their talents are coveted beyond the confines of Wall Street, Bell points out.
Big tech giants, as well as maturing unicorns, desire seasoned bankers for CFO and corporate development roles, and the payouts, often laden with company stock and options, are potentially far greater than anything a top tech bank like Goldman Sachs, Morgan Stanley, or JPMorgan can offer.
"If they get it right, they've just earned $30 million," Bell said.
And maybe much more.
Anthony Noto, a long-time Goldman Sachs banker, joined Twitter in 2014 as its CFO, and later as its COO, before leaving earlier this year to take the top job at SoFi. He was compensated primarily in stock and options at Twitter, which are currently worth about $67 million, not including any of the shares he's already sold, according to regulatory filings and current market prices.
Imran Khan, who left Credit Suisse to become Snapchat's chief strategy officer in 2014, had accumulated a $150 million fortune by the time went public in 2017 - mostly in stock that has diminished in value since. Khan left in September to start his own company.
Ajay Shah, who was appointed head of technology investment banking at Deutsche Bank this fall and was involved in the bank's recent MD hires, said this dynamic has made finding the right talent more difficult.
"The talent there is a little sparse in terms of people who want to move, and people we really like," Shah said. "The hiring pool had gotten a little skinny because of all those bankers moving to different parts of the ecosystem."
But, with the deal market roaring and expected to continue well into 2018, banks want to have a team in place to capitalize on it as much as possible before the music stops.
Given the customary garden leave, waiting till the new year to hire talent means a bounty of potential deal fees left on the table.
That helps explain why Deutsche Bank, and others, are still poaching tech MDs well into the fourth quarter.
"Overall, the tech space is going to be extremely active, and we want to hire ahead of that and have the right team focused on clients," Shah recently told Business Insider.
- Read more:
- 2018 has been one of the wildest years in M&A since the financial crisis - here are the 40 biggest investment-banker moves
- Investment banks are waging a war for star talent in 2018. Here are the banks that won - and the banks that lost.
- Deutsche Bank has hired another senior software banker as it tries to cash in on the tech-dealmaking bonanza