Investment Banking Monkey - The All Nighter

You have been with the bank for almost three whole months when Rupert’s secretary comes over to your desk, asking you whether your diary is for lunch on Wednesday. Rather than replying “you should know – you’re my secretary too”, you check your diary, and notice that your diary is free all day.

Like a lightning bolt, the rules of posturing flash in front of your eyes, and you reply that you don’t but if Rupert requires it, you will reschedule prior commitments to accommodate him.

It’s set. Mr. up-and-coming-on-his-way-to-becoming-a-BSD has not only mastered the art of posturing, but will also be having lunch with Rupert McMuppet on Wednesday.

The childish excitement at the fact that you have officially become Rupert’s boy makes the following two and a half days until Wednesday lunchtime sail by in an instant, and you find yourself sitting across the table from Rupert. He gives you a few minutes of bla bla on the deals you are working for him on, at which point he gets bored and decides to give you an inspiring lecture on the faux and faux pas of investment banking.

Rule No.1 – Never get too attached
You need to show commitment to win the deal. Once it’s yours, move to the next one, and make sure you don’t spend a second more than you have to working for that particular client.

Rule No.2 – The client is always right
The i-banker is not there to get things done – that’s what the lawyer does. The i-banker is not there to negotiate – that’s what management does. The i-banker is not there to think strategy – that’s what the client pays management consultant for. The i-banker is not there to provide financing – that’s what the relationship bank is there for. The i-banker is not there to provide contacts with potential acquisition targets, because the management already knows that they want to do before calling in the i-banker. So what exactly does the i-banker get paid to do? Simple – massage the client’s ego (and back up their ridiculous ideas) with 200 page presentations that only a moron would look beyond the cover page of.

Rule No.3 – Exclusivity
As per rule No.2, the banker adds a lot of value top a client. A good banker will massage so well, that a client will dread the banker being hired by their competition on a deal. As a result, the good banker will often be hired alongside another (competent) adviser, out of shear fear on the client’s part that the i-banker’s services in question may go to the competition. It is this excellence at what a banker does that has led to what is known in the industry as co-advisory (more than one –banking firm advising a single client).

Rule No.4 – Choosing the right horse
I-bankers are very much like the punters at the races. They pick horses (clients) and bet that they will win a particular deal. Just like the races, more than one punter can bet on a single horse. Unlike the races, however, if a horse wins, an i-bankers fees will not be split between the numerous i-banks advising. Each bank will get their full fee and will get league table credit for 100% of the deal value (see rule no.5).

Rule No.5 – League tables
In banking, big is always beautiful. This, however, often breaks down when it comes to fees. I-bankers will often make very little money on big deals for the sheer pleasure of being seen as the sole ass-kisser or joint ass-kisser (aka. ego masseuse). They will often make more in fees on a far smaller deal (where what they chare is much less exposed to public scrutiny, and they will need greater monetary compensation for the fact that they are not kissing ass in the limelight).

Rule No.6 –The magic is in the makeup
As you know, this forms the foundation of posturing. It is also of paramount in the work a banker does. It is a well known trade secret that i-banking is about form rather than substance and that a presentation that looks good will beat one that actually says something any day. I-banks are often asked to present themselves in a “beauty parade” – a common occurrence where a prospective client compares which bank has the best dressed bankers, the sexiest looking books and whose books make the loudest thud (the greatest amount of pages x the thickest paper and covers) when dropped on a table. The winning institution gets an advisory mandate.

Rupert decides that he has had enough of these pearls of wisdom, and asks for the bill. You wonder why people say there is no such thing as a free lunch.