How Bad Is This News for Morgan Stanley?


"How ya gonna keep 'em down on the farm, after they've seen Paris?"

So goes the famous song by Judy Garland, which applies in a kind of reverse manner to the current goings-on at many of Wall Street's biggest firms: top dealmakers leaving life on The Street for life in a boutique deal-making firm, thus robbing banks of the talent and years of expertise they've come to count on to bring in the mergers-and-acquisitions dollars.

Green acres is the place to be
Specifically, Financial Times is reporting today that Morgan Stanley (NYS: MS) is losing one of its top dealmakers to a small firm. Simon Robey, the firm's top maker and shaker in London, will be leaving the bank after 25 years in January to open his own boutique M&A firm. According to The Times, Robey helped close more than $1 trillion in deals in his long career at the bank.

Goldman Sachs (NYS: GS) lost one of its longest-serving M&A men, Yoel Zaoui, just this past April, though to retirement, not to a smaller firm. But that case highlights yet another problem in the M&A world: Business just ain't what it used to be. With the world economy as it is, that should come as no surprise. There just aren't as many big deals being done.

Morgan Stanley will survive
Either way, Wall Street is losing some of its top talent, but that time is probably overdue to some extent. Investment banking isn't the same since the crash, and all the big banks are reorganizing and trying to find new ways to make money:

  • Citigroup (NYS: C) just offloaded the remains of Morgan Stanley Smith Barney to Morgan Stanley, in an effort to streamline its offerings and return to its core competencies.

  • Bank of America (NYS: BAC) just shed another 16,000 jobs: part of a plan similar to Citi's to slim down and get back to a more traditional, less volatile banking model.

With M&A activity universally down, Morgan Stanley's loss of Robey likely won't be catastrophic. Goldman apparently isn't even replacing Zaoui, which speaks volumes in itself for the near future of M&A.

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Fool contributorJohn Grgurichis a glutton for punishment, but owns no shares of any of the companies mentioned in this column. Follow John's dispatches from the bleeding edge of capitalism on Twitter@TMFGrgurich.The Motley Fool owns shares of Citigroup and Bank of America. Motley Fool newsletter services have recommended buying shares of Goldman Sachs Group.The Motley Fool has a delightful disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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