HITC has been polling employees at commercial and investment banks, asset management and private equity firms and hedge funds globally for the past decade to determine who they think is the best firm to work for.
Remarkably, over several million people have voted through the course of the decade with each employee getting one vote for each round.
The voting criteria has included everything from culture, career potential, wealth creation, organizational strategy, to quality of management and leadership.
One firm has won HITC's annual poll an unprecedented 6 times, cementing its status as the best firm to work in the global financial markets over the past decade……..
Founded in 1962 by Boyd Jefferies (1930-2001), Jefferies started life as an equity trading firm with one employee and a booth on the floor of the Pacific Coast Stock Exchange. Headquartered in New York with significant operations in London and Hong Kong, today Jefferies is a full-service global investment banking firm operating from 35 offices around the world.
The firm was an innovator in 24-hour trading and literally created the "third market." Jefferies went public in 1983. By 1990, the firm had $140mm of revenues and $7mm of net income and focused primarily on cash equity sales and trading execution. It started Investment Technology Group (ITG), a research and trade execution broker in 1991 and spun it off to Jefferies shareholders in 1999. Jefferies had a $500mm market capitalization post spinoff in 2000.
The firm has only had 3 senior management teams in its 50 year history. Richard Handler, who first joined Jefferies in 1990, has been CEO for the last 14 years, the longest running CEO tenure in the industry. He and his business partner Brian Friedman, have both been leading Jefferies for the last decade. Handler added the title of CEO of Leucadia and Friedman became President when Jefferies merged with Leucadia early last year.
For the 23 year period starting when Handler joined in 1990 until the time of the merger with Leucadia, Jefferies shares had a total annual return of 17.1% versus 8.8% for the S&P 500 index.
Jefferies has grown significantly over the last decade, and currently has nearly 4,000 employees globally, including 1000 in Europe and over 250 in Asia. The growth has come both organically and by acquisition - starting in 2001, Jefferies made 11 acquisitions, including FX, commodities and options trading firm Bache in 2011, and corporate broker Hoare Govett in 2012.
In an industry that has seen firms disappear and contract, over the last decade Jefferies revenues nearly quadrupled from $830m to $3.0bn, net income more than tripled from $84m to $274m and tangible common equity has increased nearly 5x since 2003, rising from $738m to $3.4bn.
On top of the firm’s strong historical equity franchise, the two key drivers of the firm’s momentum since 2003 have been investment banking, with revenues growing over 6x from $230m to $1.4bn, and fixed income revenues, which have grown nearly twelve-fold from $69m to $790m.
During this time, the firm’s investment banking products have developed significant scale. For example, today Jefferies global advisory revenues (LTM) are approximately 78%, 66%, and 63% those of Deutsche Bank, Credit Suisse, and Citigroup, respectively, and its global high yield bond revenues are approximately 70% those of Morgan Stanley.
The firm now counts some of the most prestigious companies as its investment banking clients, including:
American Airlines Group Inc.
Anadarko Petroleum Corporation
Bristol-Myers Squibb Co.
Chesapeake Energy Corp.
Deutsche Telekom AG
Thomson Reuters Corp.
Since 2010, Jefferies has executed 562 M&A deals with a combined value of $385.8bn, 455 equity capital markets transactions ($80.9bn), and 562 leveraged finance deals ($230.1bn).
In March 2013, Jefferies completed its merger with Leucadia National Corporation creating the largest independent global investment/merchant bank. Jefferies is not a bank holding company as it is one of the very few companies that navigated the financial crises without taking a penny of TARP bailout money from the U.S. government or taxpayers. Leucadia is now a $10 Billion market cap company with Jefferies serving as its largest operating business. Over 30,000 employees work at Leucadia, Jefferies, and all of the investee companies within the merchant bank.
Clients relationships are what drive Jefferies, but its strong employee-partner culture is equally important. Here is what Rich Handler said in a quarterly letter sent to clients last year:
'We believe our foundation rests primarily in our people, who are the ones who get the job done every day. Don’t get us wrong, we have tons of capabilities. Our parent company, Leucadia, is a $10bn-market-value enterprise with less than $1bn of parent-level long-term debt. Leucadia’s brand of 35 years of smart investing and remarkable shareholder results is wonderful to be associated with. Jefferies has a $44bn balance sheet aimed at serving our clients. We are a full-service investment banking firm with every product and service one needs to meet your needs.
'All that said, our only secret weapon is our people. We will remain a strong firm so long as our culture maintains its foundation of being honest, hardworking, transparent, client focused, devoid of politics, humble, aggressive and creative. The day we rest on our enhanced balance sheet, our brand or a belief that our clients cannot do without us, that will be the day we begin our decline - and it might not be a slow one'.
When asked to comment about being named HITC firm of the decade, Handler and Friedman said: 'Our results, success, and culture are entirely due to our people. They are talented, dedicated, and passionate about doing the right thing for our clients every day. We are proud to be with them as they continue to build our firm'.