EUR 850.00 For Business Accounts Only

Morningstar | Evercore continues to push the bounds of its managing director productivity.

It's difficult to imagine Evercore Partners' industry-leading productivity going significantly higher. Recent advisory revenue per senior managing director has been over $15 million. The high productivity is largely attributable to the company's geographic mix being weighted more to the United States, which has had a healthier merger and acquisition recovery than the rest of the globe. A disciplined hiring and promotion philosophy also plays a key role. As we expected, 2018 is turning out to be a great year for M&A, as political uncertainties, such as tax reform, are resolved, and we believe that there's still a little more juice to this M&A cycle.While peers may have more near-term upside to earnings, given our belief that there is more room for M&A to run outside of the United States than within, the company is much more valuable than several years ago, thanks to its increased size and diversity. Senior managing director head count is over 90 from less than 30 in 2007.The investment management and institutional equities businesses that CEO Ralph Schlosstein began building in 2010 currently account for about 15% of net revenue. The ISI Group acquisition in 2014 materially diversified Evercore’s business and was an accelerant to the equities business attaining a profitable scale; the 2017 institutional equities adjusted operating margin in the teens compared with 3% in 2013. However, we believe Evercore paid a full price for ISI and see much of the deal’s success hinging on whether Evercore can translate ISI’s research strength into equity underwriting deals and an underwriting capability into attracting incremental senior managing directors. While the institutional equities business has been underperforming expectations, a couple of strong underwriting quarters and recent senior managing director headcount growth gives an indication that the expected synergies can eventually be realized.