White shoe diaspora

Morgan Stanley M&A boutique factory keeps cranking

Morgan Stanley's M&A boutique factory just keeps cranking. Paul Taubman, the bank's former joint president, is the latest alumnus to ply his trade independently, helping Verizon on the $130 billion buyout of Verizon Wireless from Vodafone, announced this week. He follows Joe Perella, Bob Greenhill, Frank Quattrone, Michael Tory and others. It's both a curse and a compliment that so many Morgan Stanley bankers hang out their own shingles.

Like nearly all of his predecessors, Taubman may not have left Morgan Stanley quite the way he'd expected. Yet as soon as the shackles in his non-competition agreement fell away, he was back in the mix advising Verizon.
 
Individuals working on live deals are often retained by clients as they leave one employer for another. Taubman, however, had no ongoing working relationship with Verizon boss Lowell McAdam, though he had worked with a predecessor. Verizon called him out of the blue over the summer. That leaves Taubman with one of the biggest M&A deal credits in history under his belt and potentially in a position to open his own shop.

He could follow former European colleagues Michael Zaoui and Simon Robey and advise select clients independently. Or he could go the route of Bob Greenhill, whose eponymous $1.4 billion company is led by Scott Bok, another Morgan Stanley alum. That would also shadow the path of Joe Perella - one of Taubman's mentors - who co-founded Perella Weinberg, London colleague Michael Tory, who started Ondra Partners, and Frank Quattrone, who took a few detours after leaving Morgan Stanley before establishing tech-focused Qatalyst Partners.

In one respect, it's a testament to Morgan Stanley's avowed client focus that so many former rainmakers have gone it alone, and in lucrative fashion. But it also suggests the loss of business that might otherwise have come to Morgan Stanley. Goldman Sachs, in contrast, has managed to limit the exodus of bigshots over the years. The firm's few notable defections include Perella's partner Peter Weinberg or Warren Buffett's banker Byron Trott.

This Morgan Stanley diaspora has worked on about $200 billion of deals this year, according to data from Thomson Reuters. While their former employer nabbed a role in the Verizon deal, Morgan Stanley still trails traditional rival Goldman by some $100 billion in the league tables. Hanging onto its top bankers more tightly might just be the way to narrow that gap.