Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

Every now and then, bankers at boutiques such as Moelis & Co. may rue the fact that they're working for a public company.

Mixed Bag
Boutiques have had mixed success as public companies.
Source: Bloomberg

Like Monday: the Ken Moelis-led firm was named as an adviser to Pfizer on its superlative-laden merger with Allergan, alongside Guggenheim Securities, Goldman Sachs and Centerview Partners. The foursome will share an estimated $120 million to $150 million in fees, according to consulting firm Freeman & Co.

For Goldman, it's a drop in the ocean: The bank made $2.6 billion in financial advisory fees in the nine months ended Sept. 30. But for Moelis, which made $377 million in the same period, it's a bit more meaningful.

Moelis has climbed roughly 14 percent since its April 2014 IPO, slightly outpacing the benchmark S&P 500 Index. When it filed to go public, Moelis gave its reasons as follows: 

We believe that becoming a public company is important to the evolution of our business and will allow us to:
  • expand our business, including through the improved ability to attract, hire and retain talented advisory professionals by utilizing a publicly traded security;
  • enhance our ownership culture through continued equity-based compensation; 
  • establish a process for existing owners to realize the value of their equity over time while maintaining our independence; and
  • strengthen our brand and position as a leading global independent advisor.

The firm wasn't mincing its words, as least as far the first three points are concerned. In 2014, Moelis spent $211 million on compensation and benefits, resulting in a payout ratio of 73 percent -- a higher-than-usual number because its senior executives converted equity options as part of the firm's IPO. That ratio declined to 56 percent for the first nine months of 2015 and is now closer to Moelis' targeted ratio of 57 percent to 58 percent. It's  still well ahead of Goldman, which, with a compensation ratio of 40 percent over the same period, has many thousands more employees including a portion in non-fee-generating roles.

But among boutiques, Moelis trails rivals Evercore and PJT Partners, whose compensation ratios are 65.5 percent and 68 percent, respectively, for the year through Sept. 30. 

Paying Up
Boutiques pay better than bulge-bracket banks but less than their closely-held counterparts.
Source: Company filings

It's true, Moelis can use its stock to lure new bankers and ensure that existing managing directors, who were subject to a four-to-six year lockup following the IPO, stick around. But on days like Monday, when peers at closely-held boutiques like Centerview and Guggenheim eye larger, cash-heavy paydays, some Moelis bankers may be wishing for days of old.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Gillian Tan in New York at

To contact the editor responsible for this story:
Beth Williams at