M&A Boutiques Benefit From Big Bank Woes

NEW YORK (TheStreet) -- Goldman Sachs (GS) has three rather surprising competitors whose shares have outperformed it over the past two years: Greenhill & Co. (GHL), Evercore Partners (EVR) and Lazard (LAZ).

These three companies are the best publicly listed examples of what are generally known as M&A boutiques, although they take issue with this designation, and they have a point. All three have offices all around the world and Lazard has more than 2,000 employees, hardly indicative of a "boutique."

What's more, these firms stress that providing restructuring and other types of "strategic" advice to companies is a big part of their business, particularly as M&A activity has dropped sharply since the financial crisis kicked in this time last year.

Whatever you call them, these smaller firms seem to be gaining ground against many bigger competitors, including Goldman (see chart below). The publicly listed boutiques and some of their privately held peers like Centerview Partners, Moelis & Co., Perella Weinberg Partners and Rothschild have come out of the financial crisis with some distinct advantages over giant banks like Citigroup (C) , Bank of America (BAC) and JPMorgan Chase (JPM), whose troubled balance sheets, dependence upon government bailouts and multifarious business interests have become more of a headache than a help to veteran advisers who have already made a name for themselves.

Smaller Firms Grab Bigger Bite of M&A Fees Interactive Chart

"Large firms [are not] such a fun place to work anymore, and top M&A rainmakers/bankers would rather work at a boutique where they can practice their 'craft' in a pureplay sort of way, and not have to cross-sell a bunch of other banking products like the big firms do," wrote Michael Hecht, analyst at JMP Securities, in an e-mail to TheStreet.com.

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