Banking

Inside a wild year for Wall Street’s ‘deal toy’ makers: Business is rebounding as M&A jumps but raw materials like crystal are tough to find

  • Business is booming for deal toy makers, who create awards for Wall Street transactions. 
  • After M&A activity slowed last year, it picked back up and has been record-breaking in 2021.
  • Deal toy makers also said they’ve adjusted to dropshipping and material shortages.
  • See more stories on Insider’s business page.

Alligators with sapphire collars, statues with moving pieces, and pythons made from precious metals: dealmaking is back on Wall Street, and with it has returned the demand for so-called deal toys to commemorate blockbuster transactions. 

M&A activity hit some speed bumps in 2020 but came surging back towards the end of the year. That momentum has carried into 2021, and the first half of the year hit an all-time high with more than $2.8 trillion in announced deals, according to Refinitiv. Activity for U.S. targets was $1.3 billion, and the strong M&A market was driven by the technology, financial, and energy sectors. There were more than 29,000 deals announced in the first half of 2021, and megadeals — those totaling between $5 and $10 billion — also increased.

It’s good news for deal toy makers, who make the customized mementos such as plaques or statues that financial advisors and law firms present to clients when big deals close. Deal toys have been Wall Street staples for decades, but suppliers left in the lurch last year have only recently started to see firms once again budgeting for tchotchkes.

A deal toy in the shape of a champagne bottle that has a green body and yellow stopper

Deal toys are custom statuettes that investment banks gift to clients when big transactions close.

GoLucites


“We’ve managed the pandemic pretty well, but just to give you an idea of what we’ve seen over the last year, we inevitably had a dip in sales but are now almost back to where we were pre-pandemic,” David Parry, the director of digital strategy at Prestige Custom Awards, told Insider in an interview.

Deals in equity capital and debt capital markets are often also commemorated with deal toys, creating even more opportunities.

At GoLucites, global orders crashed nearly 50% last year, president Jimmy Izquierdo said in an email, but in recent months, the company has seen a spike of new orders from Credit Suisse, Scotiabank and other banks like JPMorgan, Citi, and Bank of America.

The deal toy business changed overnight and companies had to adapt to new logistics like dropshipping, explained Jeannie Hauser, the vice president of design, sales, and marketing at Flexi Promotional Marketing, which counts Goldman Sachs, JPMorgan, Morgan Stanley, and other bulge-bracket banks among its clients.

While pre-pandemic, her company would fulfill orders by delivering deal toys in bulk to an office or conference center, with many dealmakers at home they readjusted by dropshipping and having their supplier deliver individual orders directly to home addresses.

Greg Smith, president of US Acrylic Awards, estimates that 40% of the company’s orders are now dropshipped. 

The deal-toy industry has also been impacted by worldwide shipping delays and material shortages. During the last 15 months, Hauser said, her company has had a hard time getting its hands on crystal, and Smith said it’s been difficult to find clear acrylic, thanks to the high demand for personal protective equipment like desk shields.

In the interim, deal-toy suppliers say they’re using more Lucite — another word for poured acrylic that can be molded into any shape and is thankfully already the standard in the financial industry.

A deal toy for Ford and Spin that features a working replica of a scooter

Some deal toys are simple plaques, while others feature intricate details like moveable parts or precious materials.

Flexi Promotional Marketing


While the financial industry has pulled back on extravagant mementos since the “swashbuckling” 1990s where bankers would place orders without a budget, Parry said, the demand for deal toys has persistent through multiple financial crises and will likely remain. 

“From a superficial perspective, they look indulgent and frivolous, but they serve the important need of solidifying clients relationships,” he said, adding that while a custom statuette won’t have much value to an outsider, clients will hold onto it forever. They also serve as “visual resumes” for the investment bankers who display them in their offices.

“These things are important, and they’ve stood the test of time because banks are pragmatic enough that they wouldn’t keep doing this if they weren’t serving a purpose,” he said. 

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button