Talent Exodus From Banks Continues as Healthcare M&A Thrives
April 14, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Bankers are leaving their jobs at large investment firms for smaller, boutique outfits in a bid to get a piece of the $92.5 billion of U.S. healthcare merger activity already in 2015, as healthcare and biotech have boomed over the last 13 months, Reuters reported Tuesday.
That’s meant an exodus from marquee-name banks like Bank of America (BAC) and JPMorgan Chase & Co, which both had top talent poached by Guggenheim Partners, and who have scrambled to keep up with the 73 percent more M&A activity this year, which has already seen 242 deals.
“The volume of transactions across healthcare is extreme and so the banker merry-go-round begins,” Paul Heller, the leader of executive recruiting firm Caldwell Partners‘ financial services practice, told the news service.
Jeffrey Hoffman, JPMorgan Chase & Co‘s former West Coast healthcare head, and Joseph Kohls, a former Bank of America Corp global healthcare co-head, jumped ship to Guggenheim last March. Hoffman is best known for advising AbbVie (ABBV)’s $55 billion bid for Shire Pharmaceuticals (which was ultimately unsuccessful), and Kohls was BofA’s point man on Biomet’s $13.4 buyout of Zimmer Holdings Inc in 2014.
Other major departures have been Credit Suisse investment banker Mark Page, who became CSO at Macrocure (MCUR) in February; Goldman Sachs Group Inc banker Lorence Kim, who set up shop with life science company Moderna Therapeutics last March; and Steve Harr, a well-known healthcare player at Morgan Stanley, who became an exec at white-hot, freshly IPO’d Juno Therapeutics (JUNO) last spring. Goldman also lost healthcare banker David Woodhouse, who will join NGM Biopharmaceuticals, Inc. in March.
The money at stake for setting up shop elsewhere is significant: Bankers can usually find a 30 to 50 percent bump in pay for their first-year compensation, a steep increase from the traditional $1.5 million to $2 million paid by large investment banks and which hasn’t changed even as healthcare M&A caught fire.
That’s been difficult for banker to stomach as they advised on deals in a sector that saw healthcare investment banking fees balloon 37 percent year-over-year to $1.9 billion since January. To add insult to injury, the NASDAQ Biotechnology index skyrocketed 66 percent in the last 12 months, money which didn’t necessarily find its way to top bankers’ pockets.
“The potential equity upside on the corporate side is as attractive today than it ever has been compared to Wall Street compensation,” said Burke St. John, vice chairman and head of the global financial services practice at executive search firm CTPartners. “It might take you two or three times as long on a more traditional Wall Street career path to earn what you could make working for the right client.”
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