Acquiring Greenhill: an M&A advisory arm, bought whole (2023)

Buying a missing capability — and the time inside it

The worth of this decision lies in the fact that Mizuho bought a missing capability, and the time embodied in it. For a bank that had worked its way into the US debt business through bond underwriting, M&A advisory was the last piece it lacked. Talent, a client base, and a name built up over a quarter-century would, if grown from nothing, take a decade or more. Buying an old firm whose share price and earnings had both thinned, at 121% above the prior week’s close, carried the danger of overpaying; but what Mizuho wanted was less the immediate profit than the state of having an advisory function it could set to work at once.

That said, to declare that the acquisition lifted Mizuho’s investment bank a rung higher will take more time. The independent listed boutique — a business model that grew by selling nimbleness and expertise — had found it hard to keep up its own momentum before ever-larger deals and the weight of regulation. At the end of that ebb, Greenhill passed under the wing of a big Japanese bank, and Mizuho let go of its self-reliance to take in an outside business. How Japanese financial institutions make an overseas advisory capability their own — unlike the crisis-time rescue investment in Morgan Stanley, this peacetime assembling of a product line through acquisition set out one template for it.