This chapter uses the theory developed in the previous chapter to comment upon recent developments in the investment banking world, and to speculate about the likely future development of the market. The major investment banks are getting bigger and bigger. Their work is increasingly codified and, as a result of legislation like the Sarbanes Oxley Act, is increasingly regulated. It is argued that these trends have encouraged the development of smaller boutique investment banks, and the role of these firms in M&A advisory work, private equity investment, and hedge fund management is discussed. Future developments will reflect the tensions between the technological advantages that accrue to large, complex banking organizations, and the relative strengths that small, focused boutique operations have in tacit human capital businesses.
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