\u201cYou don\u2019t work with many of those companies multiple times unless you\u2019re doing something good,\u201d says Jones, who cofounded CastleOak in 2006 and is its president and CEO. In 2017, Black Enterprise<\/a> <\/em>magazine named CastleOak<\/a> its Financial Company of the Year, calling it \u201ca magnet for leading corporate, government, and institutional clients as well as the Street\u2019s most talented traders and investment bankers.\u201d Jones says the company has assisted clients on public offerings totaling over $2 trillion since its founding.<\/p>\n Wallet shares for boutique advisors of M&A fees. Source: Dealogic<\/p>\n <\/p>\n In the past decade, small firms like David R. Jones\u2019 CastleOak have taken a bigger percentage of the investment banking action, especially when it comes to mergers and acquisitions.<\/p>\n<\/div>\n For those big-name corporations, CastleOak and small firms like it bring a more diversified investment base than the companies would get working solely with big banks. When you\u2019re selling securities, says Jones, \u201cyou don\u2019t want to be beholden to one or two or three buyers. Corporations look to us to bring in smaller money managers that might typically get shut out in a bond deal or an equity deal.\u201d Bringing in more buyers, he says, reduces any one buyer\u2019s power to drive down the price of his client\u2019s stocks and bonds.<\/p>\n It can be challenging, however, to convince corporations that a 12-year-old firm deserves a place alongside banks that have been household names for a hundred years, Jones says. \u201cThe saying is,\u00a0\u2018You can\u2019t lose your job for hiring Goldman Sachs.\u2019\u201d To compete, he says, his staff has to offer more responsive, high-touch service than more established peers.<\/p>\n Perhaps surprisingly, Jones says, it\u2019s never really been a tough sell convincing traders and bankers to leave those larger firms and work for his boutique bank. Most of CastleOak\u2019s employees are experienced professionals who were ready to trade the pressures of a big-bank job for a relatively less stressful role at a small firm.<\/p>\n \u201cWe believe in work-life balance,\u201d says Jones, a father of four. \u201cWhen I go to my trading floor at 4:30 and it\u2019s empty, I don\u2019t freak out.\u201d If employees have met their numbers for the day, he says, they don\u2019t have to stick around just to impress the boss.<\/p>\n \u201cIn today\u2019s world, especially on Wall Street,\u201d he adds, \u201cthe pyramid gets really narrow at the top. Guys are always looking over their shoulder, wondering, \u2018Am I getting laid off?\u2019\u201d Most of his employees work on commission, he says, giving them more control over their own job security. As long as they\u2019re performing well, they know their jobs will be there.<\/p>\n And while big-bank employees can feel like anonymous cogs in a giant wheel, Jones says, those who work at a smaller organization can see the value they\u2019re adding to the company every day.<\/p>\n At CastleOak, they\u2019re also welcome to take their ideas right to the CEO.<\/p>\n \u201cI\u2019m very visible and walk around the firm all the time to create that inviting environment,\u201d The son of the first black certified public accountant in Ohio, Jones has business degrees from BU and the University of Pennsylvania\u2019s Wharton School<\/a> and years of banking experience\u2014including time at Fifth Third Bank, Wachovia, and Merrill Lynch. By 2005, he was head of investment banking and capital markets at the New York bank Blaylock & Company. When the firm\u2019s future started to look uncertain, he and two other colleagues left, formed a strategic partnership with global financial services firm Cantor Fitzgerald, and opened CastleOak in 2006.<\/p>\n Their timing was right. Just two years later, the failure of US banking giant Lehman Brothers triggered a global financial crisis and dramatic changes in the investment banking landscape. According to Mark Williams<\/a> (MBA\u201993), a master lecturer in finance and author of a book about Lehman\u2019s collapse, the double-dealing that led to the 2008 financial crisis resulted in a loss of trust in big investment banks, which opened the door for boutique banks that could demonstrate their higher ethical standards and commitment to putting clients first.<\/p>\n Small banks have since made considerable inroads, particularly in the business of advising on mergers and acquisitions. According to Dealogic, boutique banks\u2019 share of US M&A revenue increased from 8 percent in 2008 to 18 percent in 2017.<\/p>\n As Jones told Bloomberg Television<\/a> in 2011, the financial crisis helped his young firm in another way: layoffs at big Wall Street firms allowed him to pick up seasoned bankers from Goldman, Morgan Stanley, and Barclays.<\/p>\n \u201cInitially, it was on my own personal credibility that we were getting a lot of our opportunities\u2026. You definitely don\u2019t want to burn bridges.<\/span> You\u2019ve got to learn to deal with all kinds of people, to be respectful, as you go through your career.\u201d<\/em><\/p><\/blockquote>\n The biggest challenge in launching a new bank, says Jones, was convincing potential clients to hire a firm that had no track record. \u201cInitially,\u201d he says, \u201cit was on my own personal credibility that we were getting a lot of our opportunities.\u201d That\u2019s why he always advises interns and other young businesspeople to manage their reputations carefully.<\/p>\n \u201cYou definitely don\u2019t want to burn bridges,\u201d he says. \u201cYou\u2019ve got to learn to deal with all kinds of people, to be respectful, as you go through your career.\u201d That\u2019s especially true, he says, in a business like investment banking, which is as much about relationships as dollars and cents.<\/p>\n CastleOak secured its first deal\u2014helping General Electric raise $300 million through the sale of floating-rate bonds\u2014based primarily on business relationships Jones had established earlier in his career with GE executives. \u201cThat was basically the snowball that started it,\u201d he says.<\/p>\n Because companies can include several banks in their capital markets transactions, CastleOak doesn\u2019t need to compete head-to-head with big investment banks\u2014it can participate in a deal alongside them. When GM Financial issued $1.25 billion in bonds earlier this year, for example, CastleOak was one of 10 banks comanaging the sale. \u201cOur goal is not to replace the larger banks,\u201d says Jones, \u201cit\u2019s just to take some of their economics.\u201d<\/p>\n Today, his company has offices in six major US cities.<\/p>\n \u201cIf you know how the economy works, it\u2019s really smaller businesses that drive it,\u201d he says, expressing pride in the livelihoods his firm provides for its employees and their families.<\/p>\n CastleOak also gives generously to charity. It sometimes gets business opportunities\u2014such as its participation in Facebook\u2019s $5 billion initial public offering in 2012\u2014because it\u2019s a minority-owned company. For that reason, Jones says, he feels a special obligation to back minority-focused causes.<\/p>\n CastleOak has funded scholarships for underrepresented students at BU and the University of Pennsylvania, sponsored the PGA Minority Collegiate Championship, and supported groups like the All Stars Project<\/a>, which provides after-school programs for underprivileged kids. Jones also sits on a number of boards, including BU\u2019s board of overseers, the board of the Council of Urban Professionals<\/a>, and the presidential advisory council for Hampton University<\/a>, a historically black university in Virginia.<\/p>\n Jones is proud to have built a company that\u2019s a good corporate citizen and that stands alongside the titans of his industry, he says. \u201cWe work with every major firm on Wall Street in some area of our business, and I really am proud that if someone\u2019s going to write a story on the history of Wall Street, we\u2019ll be part of it.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" JP Morgan. Goldman Sachs. Bank of America Merrill Lynch. Morgan Stanley. A handful of well-known Wall Street firms dominate the investment banking industry. But in recent years, smaller boutique banks have begun taking a piece of the investment banking action, offering more attentive service to clients and better lifestyles for employees. One of them is […]<\/p>\n","protected":false},"author":14430,"featured_media":0,"parent":4426,"menu_order":10,"comment_status":"closed","ping_status":"closed","template":"story.php","meta":[],"yoast_head":"\nThe Rise of Boutique Banks<\/h2>\n
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Jones says. \u201cUp until last year, I interviewed every person that was starting here. I wanted to meet them. I didn\u2019t want to be riding in the elevators with people who work for me and not even know who they were.\u201d<\/p>\n