Investment banks prepare for crunch year in 2025

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Boutiques counting on M&A rebound to support elevated valuations and star hires

Investment banks are bracing for a crunch year in which they must deliver a step change in deal fees to justify record share prices and expensive hires made during a two-year downturn. The six listed independent investment banks — Evercore, Lazard, PJT, Moelis, Perella Weinberg and Houlihan Lokey — reached record highs in recent weeks as investors anticipate a long-awaited recovery in mergers and acquisitions activity under Donald Trump’s second presidency.

After the pandemic-era boom investment banks guaranteed packages worth upwards of $9mn a year for two years to persuade high-profile personnel to move, according to senior investment bankers, although packages of $4mn were more common. “The compensation numbers are staggering in some instances,” said Julian Bell, global head of the banking and markets group at headhunter Sheffield Haworth.

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