from Breakingviews:

Upstart M&A boutiques earn place at fee table

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Upstart M&A boutiques are eating from Wall Street's table. Two newish shops -- Blair Effron's Centerview and Frank Quattrone's Qatalyst -- helped Motorola Mobility strike a deal to sell itself to Google for $12.5 billion earlier this week. Along with two other firms opened over the last five years by Ken Moelis and Joseph Perella, this quartet is gnawing at the fee pool of big investment banks.

It wasn't always clear there would be enough work to go around. In the aftermath of the crisis, flocks of bankers either went solo or joined veterans like Bob Greenhill and Roger Altman, who had done so years before. Effron, Perella and Moelis -- who started their boutiques in 2006 and 2007 -- had a head start on the 2008 crunch, enabling them to woo disenfranchised colleagues with the promise of independence and equity stakes. Meanwhile, Quattrone's return to the industry in 2008 neatly coincided with resurgent demand for his Silicon Valley M&A expertise.

Global merger activity plunged from over $4 trillion in 2007 to about $2 trillion two years later. But the four relative newcomers are claiming their share. According to Thomson Reuters data, which double-counts deals involving more than one firm, they have advised on nearly $900 billion-worth of transactions since 2006. That's about 5 percent of the worldwide volume over that span. Based on estimates by Freeman & Co using publicly disclosed figures, Centerview, Perella Weinberg, Moelis & Co and Qatalyst have pocketed a combined $1.3 billion of merger-related fees over five years.

The likes of Lazard, Evercore and Greenhill have picked up market share, too. It couldn't be happening at a worse time for Wall Street's giants, either. Their trading and lending arms are struggling, so even a modest loss of business on the advisory side stings.

Deals wrap: Novell deal a Microsoft maneuver?

MICROSOFT/Attachmate, a privately held provider of technology services, said it’s buying software provider Novell in a $2.2 billion deal. The deal marks the end of a drawn-out auction process the Novell board began back in March after rejecting an unsolicited proposal from Elliott Associates.

A chunk of the deal’s value also includes the concurrent sale of some Novell intellectual property assets for $450 million to a consortium led by Microsoft. Novell and Microsoft have crossed each others’ paths before when they struck a copyright deal over certain Novell assets in 2006. One theory is that this could be Microsoft’s way of maintaining control over the details of that agreement and out of the hands of rivals.

Bailed-out insurer AIG is still shopping around some of its larger assets, restarting its earlier campaign to sell its Taiwan unit Nan Shan Life.  A source close to the process told Reuters on Monday that first-round bids for the unit are likely in early December, shortly after due diligence ends. In August, Taiwan regulators rejected AIG’s plan to sell the unit for $2.15 billion to a Hong Kong-based buyer group. The insurance giant is still struggling to repay its bailout debts to the U.S. government.

from Breakingviews:

Pulled insurance IPO adds jobs risk on Wall Street

Wall Street just lost some insurance in more ways than one. At the eleventh hour, Liberty Mutual Group yanked the initial public offering of its property and casualty arm. The $1.2 billion deal would have been the biggest U.S. flotation so far this year. It was also being closely watched as a barometer of investor appetite for the swollen backlog of new share sales meant to keep bankers busy. Weaker trading volumes already had many of them nervous about their fates. If IPOs flag too, more jobs could be on the line.

Liberty Mutual fell back on an old chestnut to explain the indefinite postponement: an "unfavorable environment." Of course, the environment was less unfavorable for Country Style Cooking Restaurant Chain, the Chinese eatery whose new issue a day earlier closed 47 percent above the offer price. The specifics of the insurance industry and Liberty Mutual Agency undoubtedly made this particular deal hard to get away. Policy sales expectations, comparative valuations, a dual share structure and use of the proceeds all conspired to keep prospective buyers at bay.

But pickier investors could spell trouble for already edgy Wall Street underwriters. The summer months have been painful, leading to a cascade of downward earnings revisions ahead of third-quarter results. Choppy markets and a bumpy M&A patch have led to a hiring freeze at Morgan Stanley and some culling at Bank of America Merrill Lynch. It was hoped that equity issuance would provide some insurance across the industry. The pipeline for equity offerings was bulging at more than $300 billion, including IPOs -- where the fees are highest for securities firms -- of around $75 billion.

Spitzer: S.E.C. still asleep at the switch

Former New York Governor at a September 2009 conference

Former New York Governor Eliot Spitzer at a September 2009 conference

Seems like old times. 

Eliot Spitzer, who rose to national prominence in 2002 when he forced a sleepy S.E.C. to crack down on conflicted analyst research,  is none too pleased to hear that his old rivals recently joined 12 Wall Street banks in seeking to knock big holes in that wall.

Asked for his thoughts on this Wall Street Journal article that broke the news, this is what he had to tell Reuters in an exclusive interview:

“For the S.E.C. to join with the banks to diminish consumer protections with respect to the quality of advice and research is absolutely and fundamentally violative of their duty to the public.  This one more example of the S.E.C. being in in the tank.”