It took a while, but Evercore Inc. has finally made several investment banking hires in the retail and consumer space.
The company in April announced that Wilco Faessen, the former co-head of Barclays PLC's global consumer retail group, will join Evercore in June to lead its global consumer and retail group. He will work alongside another former Barclays investment banker, Adam Taetle, who joined the company in April. The hires are the culmination of a search that has lasted for about as long as Ralph Schlosstein has led Evercore.
Schlosstein became CEO and president in 2009; during an investor conference in December 2017, he said finding talent to cover the consumer space had been a top priority for eight years. He added that the company wanted to add coverage in the sector because Evercore had been historically underweight in consumer when it comes to advisory revenue. But it has not always been easy to find adequate hires because Evercore wants its senior managing directors to bring in $15 million to $20 million a year.
"If we can't hire an 'A+' or an 'A,' we wait," Schlosstein said according to a transcript.
Hiring the right personnel is critical due to the significance of compensation expenses for advisory-focused investment banks. Evercore reported that employee compensation and benefits accounted for nearly 79% of its $339.7 million in total investment banking expenses during the first quarter. Compensation costs associated with new hires is often a drag on earnings because it can take nine months to a year before investment bankers are fully acclimated on a new platform and ready to bring in revenue.
"[Hiring] is maybe the hardest single thing we do at least in terms of our strategic development," Evercore Senior Chairman Roger Altman said in 2014, according to a transcript of an earnings conference call. "Gigantic efforts go into hiring."
In Faessen, Evercore has added an investment banker with some big deal experience.
In a news release, Evercore noted that Faessen has advised on several beverage-focused transactions, including Asahi Group Holdings Ltd.'s 2017 purchase of Anheuser-Busch Inbev SA/NV's beer operations in Central and Eastern Europe for $7.77 billion and Refresco Group NV's January acquisition of Cott Corp.'s legacy drink business for $1.25 billion. He has also worked on Coca-Cola Co.'s partnership with Monster Beverage Corp. and H.J. Heinz Co.'s balance sheet restructuring ahead of the 2015 merger with Kraft Foods Inc. that created Kraft Heinz Co.
For Evercore, Faessen's relationship with Kraft Heinz could prove beneficial because the company has signaled that it is open to making deals in the current environment. In February, CEO Bernardo Hees told analysts during a conference call that the company "want[s] to be a force" behind consolidation in the food industry.
Evercore has not been completely shut out of consumer deals. The investment bank advised Whole Foods Market Inc. on both its defense against activist group JANA Partners LLC and its roughly $13.7 billion sale to Amazon.com Inc., a transaction that closed in August 2017. Evercore also advised on the Mondelez International Inc. spinoff from Kraft Foods Inc., which was completed in 2012.
Evercore executives said they believe Faessen and Taetle can add to the company's consumer and retail deal flow.
"As we have said for many years, we have been committed to recruiting the right team in this important sector, and we are confident that we have done just that," Schlosstein said April 25, according to a transcript of the earnings conference call.