Corporate finance dilemma
The corporate finance market is facing one of its biggest shake-ups since the large firms began to muscle in on the investment banks' territory a decade and a half ago. But no one really knows how this will play out.
Undoubtedly there are plenty of Big Four dealmakers twiddling their thumbs at the moment, which goes some way to explaining how they are able to undercut the mid-tier firms – far better they just covered their costs than not do the work at all.
Now we are seeing a growing desire from companies to use firms other than the Big Four to avoid potential conflicts, and staff are jumping ship to the mid-tier too.
Corporate finance was seen by the big firms as a very lucrative alternative to audit work, and bulked up their numbers throughout the 1990s. Now they don’t know which way to turn – take on the mid-tier or stubbornly cling on to their own patch. Something has to give, so could we see the firms spinning off their dealmakers in the same way they jettisoned their consultants?