Released in mid-May, the 2021 financial results for Milwaukee-based Baird showed $3.41 billion in revenue, a nearly $1.1 billion increase from the previous year. While Baird saw gains across its businesses, its investment banking teams in particular had a strong year. BizTimes managing editor Arthur Thomas talked with Baird’s Steve Booth recently about how market conditions were favorable in 2021 and how they’ve changed this year with inflation, rising interest rates, a volatile stock market and much more.
The strengths of 2021
“All the markets were somewhat extraordinary, but clearly the story for us last year, there were great stories throughout the firm, but what happened in investment banking and our M&A business was, candidly, just beyond our wildest expectations. That M&A business more than tripled from a revenue standpoint, and that was something we would have said was virtually impossible. …
“Keep in mind the fundamentals of these businesses were extremely strong and in the M&A business you do need underlying fundamentals to be very strong, on top of overlying market conditions. … All of those things, literally everything was aligned and that resulted in us completing more than 200 M&A transactions, which is a lot. I didn’t think we could physically do that many from a people standpoint.”
Managing the challenges of 2022
“There’s more to navigate, navigating change, and this is why we’re in business. It’s great, all those things, when you have the wind at your back, but this is where we can really shine for our clients, and our clients need our advice; they need our perspective on what’s going to happen, what might happen and how can we best position them for what might happen.
“While our crystal ball is as good as anyone else’s, it just requires really a fundamentally different mindset than last year, but again, for us that’s an opportunity because it brings us closer to our clients and then, frankly, that opens up new opportunities with potential new clients. It’s times like this that do create new client opportunities. It’s harder to do that in a year like last year where everything is flying.”
Changes in investment banking business
“That’s the big question for the firm. We knew, as I said before, physically, we weren’t going to be able to do what we did last year, but interestingly, right now we actually have over 100 sell-side mandates in the market, which is more than we had at this time last year. ... But what will change, … last year, our close rate was extraordinarily high – literally, everything we took on we were able to close and close successfully at great valuations and achieve great results. This year, our close rate will be lower. How much lower, we don’t know, … but as I also remind people, just because those transactions may not get done this year, they probably will get done in 2023 or 2024.
