Evercore Partners Q4 beats; sees uptick in M&A volumes

BANGALORE (Reuters) - U.S. merger advisory boutique Evercore Partners Inc (EVR.N) reported quarterly profit above Wall Street view, boosted by higher advisory revenue, and said deal activity will go up in 2010 but restructuring may soften.

The company is seeing the early stages of a classic five-to-seven year M&A (mergers and acquisitions) up-cycle, Chairman Roger Altman said on a conference call with analysts.

"This year is not expected to be like the space shuttle as far as global or U.S. M&A volume is concerned, but it will be better than last year," Altman said.

The company had advised Wyeth in its $22.5 billion sale to Pfizer Inc (PFE.N) among other M&A transactions, and is advising CIT Group Inc (CIT.N) in its restructuring efforts.

However, with restructuring activity expected to slow down in 2010 as equity and debt markets continue to open up, it remains to be seen how M&A revenue is going to offset the drop.

"That's the great big question for 2010," Altman said.

The company -- which most recently was the financial adviser to Burlington Northern Santa Fe Corp in the BNSF-Berkshire Hathaway (BRKa.N) (BRKb.N) deal -- has been looking for deals to grow its investment management business as it tries to reduce its reliance on merger advisory.

Last month, Evercore's wealth management unit entered into an agreement to purchase Morse, Williams and Co Inc as it builds toward $5 billion assets under management in five years.

Founded in 2008, Evercore Wealth had about $1.5 billion under management as of December 31, 2009.

The company has also focused its attention on building up its cash equities and wealth management businesses.

Launched in December, the equities business will focus on equity research, distribution and new issue originations and may benefit from First Horizon National Corp's (FHN.N) closure of its institutional equity research business.

"First of all, we cannot make a nickel in the cash equities business until we have our license, which is going to be early in the second quarter," Altman said.

The company expects non-compensation expenses to go up in the first quarter due to entry into new businesses.

EUROPE IN FOCUS

Evercore said M&A revenue was down more than 40 percent in Europe but that it was trying to turn around its European operations in 2010 and is on hiring mode to prop up the business.

"(Europe) had a tepid year and it has to get better and it will get better or somebody else will be on this call, not me," Altman commented.

The company also plans to expand its operations in Mexico and Brazil and increase its sectoral coverage from the current 21 industry verticals.

The company, which advises on large mergers and acquisitions, posted a fourth-quarter net income available to common shareholders of $16.5 million, or 41 cents a share, compared with a loss of $8.5 million, or 25 cents a share, a year ago.

Evercore said advisory revenue more than tripled, boosting its net revenue to $109.1 million.

Analysts had expected a profit of 38 cents a share, before special items, on revenue of $101.4 million, according to Thomson Reuters I/B/E/S.

Shares of the New York-based company were trading down 2 percent at $29.63 in late morning trade Tuesday on the New York Stock Exchange.

(Reporting by Supantha Mukherjee; Editing by Anil D'Silva and Unnikrishnan Nair)