Ken Moelis believes that small is beautiful when it comes to investment banking

THE first investment bank where Ken Moelis worked—Drexel, Burnham, Lambert—failed spectacularly. Another former employer, Donaldson, Lufkin & Jenrette (DLJ), was bought by a bigger rival. The most recent, UBS, is now on government life-support. During his 25-year career in investment banking, in short, Mr Moelis has seen it all. Over that period investment banks have evolved from staid partnerships into huge, publicly traded conglomerates before stumbling, and in some cases collapsing, last year. But Mr Moelis has survived the upheaval, and come up with some ideas about how investment banking could be improved along the way. He is now trying to put them into practice at the bank he founded in 2007, Moelis & Company.

Mr Moelis started out in the Beverly Hills office of Drexel, where he worked with Michael Milken, the “junk-bond king” who was later jailed for fraud. They raised money for cable-television channels and mega-casinos in Las Vegas—both innovative new businesses at the time—with fabled entrepreneurs such as Ted Turner and Steve Wynn. Mr Milken’s belief that a small bank with great ideas could shake the establishment made an impression on the young Mr Moelis, despite Drexel’s subsequent collapse. Over the course of his career, he says, he concluded that banking conglomerates were too unwieldy to look after clients or employees properly—one reason why he left DLJ in 2000 when it merged with Credit Suisse. Nonetheless, a few months later Mr Moelis agreed to join UBS, another big Swiss bank, to build up its American investment-banking unit. And build he did. It quickly became a leader in almost every branch of the business, from mergers and acquisitions (M&A) to share offerings. …