Paul Taubman's 30-year head start at PJT Partners

Paul Taubman

So asked a member of an online forum for young finance professionals back in early 2014, struck by how the former Morgan Stanley investment banking boss had won roles on “so many marquee deals” since leaving the Wall Street bank.

Taubman had ended his three decades at Morgan Stanley a little over a year earlier. He had since advised Verizon on a $ 130 billion deal to buy out a joint venture with Vodafone and, the day the question above was posed, had been named as an adviser to Comcast on a $ 45 billion offer for Time Warner Cable.

“Such a baller!” gushed another forum visitor in the Taubman thread.

Taubman has been balling – perhaps not the word he would use – ever since. He has convinced experienced dealmakers from Morgan Stanley and other big banks to join him at his own PJT Partners, which he set up in 2013, and in October 2015 merged that business with Blackstone‘s spun-off strategic advisory and restructuring divisions and placement agent Park Hill. The enlarged PJT Partners has been listed on the New York Stock Exchange since.

Taubman describes PJT Partners as “a wonderful melding of the old and the new”. He wants a business reminiscent of where the industry was 30 years ago, he said, when “relationships were everything”. But he also likes the fact that he and his colleagues can take decisions about how to build the business and “make our firm a more vibrant, fun place” without worrying about “baggage from the past”.

The irony that it was Taubman’s tie-up with Blackstone’s advisory business, established in 1985, that gave him this opportunity is not lost on the CEO: “What Blackstone gave us is a 30-year head start in building a brand new firm.”

It hasn’t all been a smooth ride. In March this year came the news that PJT Partners had fired Park Hill partner Andrew Caspersen, who has since pleaded guilty to stealing millions from investors.

The Blackstone deal itself has also made for a hectic past year, bedding down the divisions, moving the teams into new offices around the world, overhauling the strategic advisory unit with new hires and winning business. Not to mention there are still a few financial hangovers from the Blackstone deal that are affecting PJT Partners’ results today, most linked to compensation.

Taubman expected nothing less when he struck the Blackstone transaction in 2014. Speaking to FN in early November as the firm announced its financial results for the third quarter of 2016, the chief executive said: “We recognised that change is messy.”

Nonetheless, revenues over the first nine months of 2016 were 8% ahead of where they stood in the constituent businesses during the same period of 2015, with a 4% rise in placement revenues and a 9% rise in advisory revenues.

Taubman said: “We set out with what we thought was a somewhat ambitious goal. Could we deliver revenue growth in 2016, notwithstanding the fact that we were engaged in a dramatic restructuring of one of the three legs of the stool? When you look at the nine months numbers and see that revenues are up 8% [year-on-year], I think we feel ‘mission accomplished’ in that regard.”

Back to the old school

Some weeks earlier, in PJT Partners’ London offices in Mayfair, senior team members from across the firm’s M&A, restructuring and Park Hill divisions reflected on their first year in business following the acquisition of the Blackstone spin-off and stock market listing.

PJT Partners has worked on 33 M&A deals in 2016, according to Dealogic. The largest saw it advise Yum! Brands’ board of directors on the US restaurant group’s $ 9.3 billion spin-off of Yum China.

The firm has also advised Lions Gate Entertainment on its $ 4.4 billion acquisition of cable channel Starz and, in Europe, worked with Verizon Communications on its $ 2.4 billion takeover of Irish-headquartered GPS vehicle-tracking company Fleetmatics.

As of early November, deals like those put PJT Partners in 39th place on Dealogic’s ranking of global announced M&A advisers. That leaves it behind many well-known independent advisory firms including Robey Warshaw, Moelis, Centerview Partners and Evercore Partners – but ahead of well-established firms such as Greenhill and Houlihan Lokey.

The firm’s restructuring team has worked with clients including iron ore company Ferrexpo, British healthcare group Four Seasons and a subsidiary of office company Algeco Scotsman.

Park Hill in June acted as financial and structuring adviser to Temasek subsidiary Azalea Asset Management when it issued $ 510 million in a securitised issuance backed by a portfolio of private equity funds, the first such deal in Singapore.

Team members across these divisions are enthused by the fresh start that life at PJT Partners has offered them. Pablo Calo, a Park Hill managing director, said: “I’ve done more work with my fellow colleagues in different groups here than I did in the past.”

Indeed, several clients’ needs span different parts of the business. A mandate in February from Kenya Airways, for example, included not only restructuring work for the troubled African airline but also called for the advisory team to work with the company on strategic options around building the business.

For Basil Geoghegan, a partner in the strategic advisory team, such mandates are proof that PJT Partners is right to focus on “the interplay between advisory, restructuring and Park Hill”. And that interplay of the businesses shapes the way the teams interact. “This isn’t a business run by emails and conference calls,” Geoghegan said. “We walk into each others’ offices and talk, which is surprisingly old school.”

A year of transition

That old school approach is attracting new school talent. Taubman said that the PJT Partners brand is winning attention on campuses, with more than 4,300 applications from business schools during recruitment season – more than 100 for every available position.

He said these applicants and young bankers in the early years of their careers are grasping the chance to work with top M&A advisers who have, as he did, opted to work outside of the big banks.

Peter Mayer, a London-based partner in the Park Hill business, said: “If these students are excited about coming here to do an internship, either here or in the States – ‘I don’t want to go to a large investment bank, I want to go to PJT Partners’ – that speaks volumes.”

Those younger bankers should also find they can progress more quickly in their careers at an independent advisory firm than in a big bank, the PJT Partners bankers say. Tom Campbell, a partner in the restructuring business, said: “With the size of this platform you just can’t have large, inefficient teams. So the junior guys play a relatively senior role versus their peers in large banks. And that’s why they become so useful so quickly.”

The firm has also been making more senior hires. In London, recent additions to the advisory team have included Simon Dowker, who joined from Jefferies as a managing director; Tarek Aguizy, a former Morgan Stanley banker who joined the advisory team as an MD; and Adam Gold, who came from JP Morgan to add to PJT Partners’ healthcare expertise.

They join partners including Geoghegan, who was an MD at Goldman Sachs, Deutsche Bank and Citigroup; Johannes Groeller, a partner in the advisory group and a former co-head of M&A for Europe, the Middle East and Africa at Morgan Stanley; Rakesh Patel, who was co-head of European healthcare advisory at JP Morgan; and Simon Lyons, who led UK M&A for UBS.

Groeller told FN: “We’re a much better organisation today than the sum of the parts in the past. We have supplemented what spun out of Blackstone with a lot of very senior people who have added value.”

The team now needs to ensure that PJT Partners makes its presence felt at a time when it seems every big-ticket M&A deal has at least one independent boutique in the advisory line-up. In London, Geoghegan said 2016 is a “year of transition”, adding: “Next year is more a year of executing what we’ve started.”

Taubman said the firm is “looking to 2017 and beyond to begin to show the financial fruits of the hard work of the past two years”.

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