An almost audible howl of pain roared through Lazard Freres' Manhattan offices last week when the bank realised it had let the biggest deal in history slip through its net. How could its long-time client America Online not have chosen Lazards to handle the Time Warner takeover? That's at least $50m in fees Lazards won't be getting. Morgan Stanley, advising Time Warner, and Salomon Smith Barney will each get at least that much plus maybe the same amount again in future fees.

It's not always easy to say why investment banks get hired – it's a mixture of personal relationships, history and specific capabilities. But the rumours that Salomon was chosen because AOL executive Michael Keely knew Salomon from a previous job at GTE is probably a little unfair. The firm's investment banking operation is not in the trillion-dollar M&A bracket with Goldman Sachs and Morgan Stanley, but its internet business has been pretty strong. Without any particularly bright stars, but the bank has a solid team. Salomon has been assiduously building a relationship with AOL, managing a $1bn convertible bond issue for the company in December. And if AOL wants to cement a relationship with the world's biggest financial services company, Citicorp/Travelers, what better way to do so than hire its investment bank for a blockbuster deal? What's more interesting is the way Morgan Stanley handled its side of the deal for Time Warner. Great care was clearly taken on both sides to prevent news of the negotiations leaking. The only way that is ever achieved is to limit the number of people in the know to an absolute minimum. One wonders whether, for most of the process, anyone knew about it at Morgan other than Joe Perella, the head of investment banking, Jeff Sine, the media specialist, and Paul Taubman, another senior M&A executive. It's somewhat startling to learn that Mary Meeker, the $30m-a-year queen of the internet on Wall Street, first heard of the deal the day before it was signed and sealed by Time Warner's board. She was summoned early on a Saturday morning to Perella's New York apartment for a briefing and showed up on her bike wearing a green track suit. Was bringing her in so late a move to limit the number of those in the know, or does it have something to do with the persistent rumours that Meeker is bored and may soon be moving on from Morgan Stanley? Ironically, although she was one of the last insiders to hear about the merger, the star analyst was among the first to start singing AOL's praises way back in 1993.It's clear that the idea for the merger did not come from any of the bankers. The deal was essentially hammered out between AOL's top management: Steve Case, Bob Pitman and Kenneth Novak, the company's Mr Fixit and their counterparts at Time Warner. The bankers' main role was to suggest how to reconcile the funny-money valuation of an internet stock with the real world valuation of an old-line media company – undoubtedly a useful activity, but not exactly very glamorous. One thing is now certain, though. Every investment bank on Wall Street will be launching a relentless charm offensive at the internet sector, hoping against hope to bag the next mega-deal. If those internet moguls thought they were hearing from a lot of investment bankers before, they ain't seen nothing yet.