Moelis & Co: splashing out on new people, dumping old ones
“No risk, no reward” is always a relevant idiom, but at investment boutique Moelis, it’s a way of life.
The bank’s first quarter results were announced yesterday – and CEO (and founder) Ken Moelis hosted investors for its earnings call. He was naturally optimistic about the future of the firm and was especially praiseful of its brand new teams from SVB and Credit Suisse.
“These types of teams don’t come up often, Moelis said. They’re high-quality bankers, too – “top quartile.” A lot of them are in tech, a long-term target of Moelis’, and the addition of MDs (11 in total) just in that field nearly doubles the bank’s reach (to 25).
They also come with no strings attached. “One of the very unique things about it is they even have access to existing information and client access, which a lot of times when you cross-hire somebody, you have a lot of issues around that,” Moelis said.
But expansion doesn’t mean everyone is welcome. Ken Moelis noted too that the bank is adjusting headcount. In a normal year, he said the bank has “managed attrition” of 2 to 4%. This year, it's close to double that.
Moelis & Co. expects to keep the compensation ratio above 80% for at least the rest of the year (the “normal” target being around 60%), and perhaps for up to 18 months- but the cost of bringing in new faces will be covered in that time. “I would say most of the compensation, given how quickly we have got them on the field, should be covered by the production of the hires by the first quarter of next year,” Moelis added.
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