Friday, November 24, 2006
You sent him the presentation at 4am, just when you sent it to the printers, who got it done by 6am - just in time to head with the books to your flat, shower and head to the airport. Your eyes begin to twitch as the effect of the third cup of extra strong black coffee of the morning begins to wane. You feel that (too good to be true) feeling as you ease back in the leather chair and begin to drift to sleep. Ah, bliss.
Your slumber is interrupted by Dirk, who leans over to your chair and taps you on the shoulder.
"Zhet ish a wery goot book you have prepared. Very nish chartsh. But you sheem to have a problem witsh your email. I only resheived it early thish morning. You musht get IT to fix it when you get back to the offish."
No shit sherlock. You don't say I've got a problem. Thee reason you got the email at four AM is because you sent it to him at four AM. Schmuck. What planet does this guy live on?
Ok. He means well, but come on. What third tier commercial bank did the firm pick this guy out of? Does he really not know how i-banking works? You look at him trying to spot clues giving away his lower position in the food chain even though he is an MD. You look for the usual giveaways. Shoes - buffed and finely made. No joy there. Hands. Clean, well manicured and never carried anything heavier than a ten page pitchnook. Tie. Perfectly matching his suit. Hermes. No joy here. Shirt. Crisp, tailored, cufflinks and no pocket. He even has the extra taste to not have those ridiculously tacky monograms all the nouveau riche bankers pride themselves on. Also, cufflinks are hand made and tasteful. No luck there. Everything about this hit smells like money. Old money at it. He does not behave like a rodeo from Texas wearing a Hermes tie and good suit. This guy is actually more impressive than Rupert. For one thing, he doesn't wear socks with holes. Granted, he speaks funny, but then again, so does Rupert.
You have a brief moment of panic as you see this non i-banker exhibiting all the attributes of a BSD and then some. Are you in the wrong job? Should you begin speaking with a funny accent and ask to be relocated to Amsterdam? You seem relieved to notice that the panic quickly subsides and is replaced by the peaceful lull of sleep, as you sink into the leather chair.
The CEO walks in his army of cronies. Shit. Shitty shitty shit. Sleep will have to wait. You know that you need to be on standby to bail Rupert out when he inevitably fucks up presenting. You cheer yourself up by the fact that you really see indispensable to the firm, whilst learning from some of the best minds in the business.
Thursday, November 16, 2006
"So what's the big deal with all nighters anyway. Why are you whining all the time. I pulled one once and ok, the next day i was a little tired and had to go to bed at 6PM but then it was fine."
Exactly. Once being the key word here. Who the fuck are they to lecture me on all nighters, you think to yourself.
The reasom why you are afforded the luxury of replaying these frustrating conversations in your head is the 3AM switchoff. What is it? Once you start ritualistically going to bed at 5Am and coming to work at 9 (AM and the same day mate), your body isn't very happy. Your eyes start to see double, your hair starts to fall out and turn gray, and the only part of your anatomy that seems to be having a good time is your stomach, which baloons out of your suit pants (even after you adjust them at the waist for maximum leeway). Anyway. 3AM, and you need powernap. if you're really hardcore, you fuck the nap and go out for a smoke or three. It is on your second cigarette, with Rob and an associate called Frank that you lose it.
"Fuckedy, fuck fuck fuck fuck"
You blurt out as you start swirling around in front of the reception, like a madman trying to do a Singing in the Rain act.
"Why me, why the fuck does it have to always happen to me"
"And my model. A little reff* here, a little reff there a lotta reffetty fucking reff every fucking where"
"Sign the fucking line they said. Sign the fucking dotted fucking line they said. The world is your oyster they said"
"Well I'm fucking alergic to fucking oysters"
"I'm alergic to fucking clients"
"I'm alergic to fucking MDs"
"And i'm particulary alergic to wiseass fucking dipshit associates who cant tell their ass from their fucking elbow and cant count for fucking diddley squat and have the fucking nerve to fucking tell me what the fuck I'm fucking meant to do"
"Fucking thir tier recriuted asshole. What the fuck kind of headhunter did we hire to get a pice of shit like that. One fucking thing is for sure. I'd give good money to get the best headhunter in the city and find him another job."
You takle a puff at your cigarette.
"And even that won't fly, cause there aint a headhuntef good enough to get that piece of shit a job even in a fourth tier continental commercial bank"
Final puff, toss the bud, and back to work.
*Reff, in short, is when your excel model gets fucked and takes you with it.
Tuesday, November 14, 2006
Someone offers you an analyst role after a shitty year at a big bank. These so called saviours promise you better hours, better pay, better learning experience and no associates to deal with. Yeay! You think this is great; You are finally getting recognition for your own abilities. You won’t be getting a shitty review from your associate because they suffer from small penis syndrome. You finally get to show the world what a superstar analyst you really are with more sleep AND gain direct financial lessons from the big guns.
1. Better hours = no work to go around. NO WORK
ie no deal… ie CV looks like crap... ie you feel stupid because this is something you cannot bullshit your way out of – i-bankers are the gods of that and you cannot meander your way around this. You are stuck.
2. Learning experience = getting creative on how you should fill in your spare time after you visit lakelandslimited.com for anodised pots and pans, because you have already spent money on other household bullshit you don’t need, but realise you do need after surfing the net for endless hours
3. No associate = You suddenly realise how much you miss them. Because when the shit flies and the sun fails to rise, there is no one between you, the superstar analyst, and the big gun MDs (we will deal with these big guns later on). You get shot. You become the scapegoat when the tiny printing and binding machine doesn’t work in this small place. You get blamed when models don’t run properly or in good time because there is no Datastream to hook you up with proper numbers which saves you time from running to Bloomberg every 5 minutes. You also don’t have the wonderful printing team on the 10th floor to help you put together 50 presentations that are 100 pages long (you work in a one floor building now). You also start to get used to feeling like a small mosquito that everyone is trying to kill. You get used to being bullied and taken apart for not knowing something that an associate should know. Didn’t these big guns (oops they look like the BSDs you used to work with now!) realise that they are hiring an analyst and not a young freaking Rupert McMuppet who went to Excel Summer School in Muppet Land!!! This happens on a daily basis, so after a while you feel that you should re-enrol to kindergarten to justify your position here
Remember I said ‘direct financial lessons’?
First thing, some of these guys can’t work Excel, let alone know how to use a mouse. Second, they can’t count for shit. Third, their ideas are mocked by outsiders anyway, so why risk being Krusty the clown on Wall Street?
3.1 No associate is also good = You see these big guns for the real people that they are. You stop revering the word ‘MD’. You realise quickly what it feels like to be a loser working in a loser environment because you get to go to meetings and learn how to keep a straight face when clients laugh at your BSDs’ ideas and clucks sympathetically because the 100 page presentation isn’t worth the work (Christ, you realise you are stuck with them and don’t have a million other MDs in the bank to work with now). At this very moment, you realise your relationship with any associate is like being in a marriage. Cant live without the other, can live without the other
4. Bonus time comes. You get screwed because the team has done so badly. The main BSD shies away in his corner office because he promised you deals when you joined and several months down the line, fails to deliver. You feel like taking all the presentations you have worked your own ass on, placing stacks of them on his floor and lighting them on fire. Oh yeah, people quit the next day
5. Shit. Your friends are now gone. Your cv is in a mess. You are severely tempted to call your HR rep at your previous place for your old job.
6. Morale? It’s the same shit everywhere.
Monday, November 13, 2006
Its the last measure the firm has introduced to ensure that summer interns are in fact competent individuals rather than buddies and cronies of other sorts. Who better to pick to do the selection than some chappie whose own position isn't secure yet. The cynic in you says that this is the best way to hey your mates into the business, but you want the job. You want it bad. You wanna be that master of the universe.
A pile of CVs was dropped off at your desk by HR in the morning. Your final test (a piece of information you have access to courtesy of Rob) is to screen the applications and select a shortlist of appropriate candidates for first round interviews. You do that to a standard representative of the firm and the job is yours.
You thing hard. You out yourself in the shoes of the firm. How would they approach this. And who better to out yourself in the shoes of than Rupert McMuppet. Thinking long and hard, going over combinations and permutations, realising that you want to go and hit the pub, you have your answer! Just as if Rupert had done it himself. You take the too five CVs and dump the rest in the bin.
"What did you do that for?" Rupert asks, having come up behind you out of the blue.
You are the look of approval in his eyes. You know you have done the right thing. Now all he wants is the right explanation and the job is yours!
"Those that ended up in the bin are unlucky. And I do not believe this is a firm for unlucky people"
Rupert nods in approval. You made it.
Tuesday, November 07, 2006
You remember filing out numerous application forms riddled with cryptic questions like "!What draws you to the investment banking industry?" and "what is the most challenging thing you have ever done?".
What did draw you to i-banking, you ask yourself? Was it the flash suits, fitted and monogrammed shirts and custom made shoes? Was it the prospect of becoming a master of the universe, with a personal net worth to match? Was it the need to fill that gap in your ego because your parents didn't show you enough attention by money and fame in the form of your deal on the front page of the Financial Times? Whatever it was, it definitely was not the "insatiable desire to be at the forefront if the financial worls and your ever inversing desire to excel". I mean come on - does that even mean anything. You remember thinking just that, but writing dowm the cliche answer anyway, hoping you would be enlightened as to its meaning once you were within those majestic golden gates of investment banking nirvana. No such luck buddy.
Why did you rally want to join an i-bank. "yeah, why the fuck?" you ask yourself as the speakephone goes silent. Afte a few seconds of peaceful silence, the yankee on the other end of the line calls your name "you got that London?"
You panic for a few moments. You don't have a clue what he's on about. Shit. Shit shit. You think about what Rob would do right now.
"London here. We couldn't make out what was said. The line is breaking up at our end. Please could you repeat that?"
Quick thinking. You pay yourself on the back, impressed that Rob's ability to fire bullshit left right and center has rubbed off on you.
Maybe that's why you wanted to become an i-banker. To learn how to bullshit. Forget about it. After alll, you got into a business you knew precious little about. You bullshitted your way through Rupert McMuppet! No way. You had it in you all along.
So why did you want to become an i-banker?
Ralising that its about time you paid some attention, you brush away the question of why you wanted to get here, and start focusing on becoming a master of the universe.
Monday, November 06, 2006
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.
Friday, November 03, 2006
From: Moran, Seth (IBD)
Sent: 27 October 2006 16:07
To: Moncrieff, Michael (IBD)
Cc: McDermott, Mary (IBD)
Subject: Presentation for Monday
I just spoke to Mary who said you have some capacity to help me with a short follow-on pesentation on Project Magnificent. I specifically asked for you as I know the type of work you deliver and this is one of those babies where we are so close to a deal that we cannot let it slip away from us.
As you are already familiar with the company and previous work we did for them. I have spent quite some time whilst on holiday thinking about what we need to do for Monday, and below is a list of pages I need you to create.
Table of contents
Introduction – I will draft this.
Selected creds – doctor the league tables so we are No. 1 in equity, debt and M&A. I know this is hard so I don’t care how you do it. We need to be No.1.
Industry Snapshot – update the page we used last time with the benchmarking matrix superimposed on the attractiveness/interest matrix using a bubble chart. Try to also squeeze in there the correlation graph Charlie came up showing the relationship between size and profitability (his answer though is wrong I think) – there should be a much stronger correlation – check this and change it so that correlation is greater than 80% - I don’t care how you do it.
Share price graph with volume over the last 12 months, with industry and FTSE100 indexed to the start in the background, and annotated key events on the seidebars.
Equity research views page with price target / research house / analyst / date histogram. Also call equities and get investor sentiment feedback and put it in. Be selective here and only include positives.
Summary capitalization page – from share price to firm value. Also show implied EV:EBITDA multiples for 2006, 2007 and 2008. Use average IBES EBITDA estimates. Also show Implied P:Es for 2006, 2007 and 2008, again using IBES estimates.
Pull a list of precedent transactions and show them in a colourful bubble chart. We need the elected multiple to be about 8x LTM EBITDA, so work your way back from there when selecting which transactions to show.
Do a simple DCF analysis and show the implied DCF valuation. Show a page on key DCF assumptions. Run the DCF on a pre and post synergies basis. Show also the valuation difference if you use a 1% perpetuity growth or exit EBITDA approach. If it is not too much trouble, I would like to see both 5 and 10 year DCFs before deciding how to present this.
Run a simple LBO analysis. One page on the key assumptions. Entry multiple = exit multiple. Debt at 9x LTM EBITDA, recap after 2 years. Try to get debt pricing from capital markets before they leave for the weekend today – you may need to do this quickly as it’s 4PM already. I want to see the LBO on an OpCo:PropCo structure and a standard sale and leaseback structure, as well as the standard leveraged acquisition. It would also be interesting to see whether a REIT structure would fly for this. Don’t spend too much time on this. I don’t want you to be here
Prepare a page outlining which sponsors have invested in the industry before and hold portfolio companies in this industry.
Have a section on Bolton acquisitions. With the following slides:
Accretion / dilution analysis based on 100% cash, 75% cash, 50% cash, 25% cash and 100% stock. Show each analysis on the basis of 2005A 2006, 1007 and 2008 projected financials.
Illustrate the impact on the DCF of the bolt-on acquisition. In a page. Do a sensitivity table for the structure used (100% cash, 75% cash, 50% cash, 25% cash and 100% stock).
Do the same for the (LBO 100% cash, 75% cash, 50% cash, 25% cash and 100% stock)
Next section is our understanding of the business:
Prepare three once page case-studies based on the most appropriate precedent transactions you will find. Each case study should show analysis of strategic rationale, financial impact and iplied multiples and stock market commentary.
Socrecard benchmarking different options: how much debt to use, to do bolt-ons, which LBO structure to use, etc. I want moons/half moons and ticks and crosses alongside the commentary.
Conclusion – I will draft this.
Thanks for your help with this and call me when you have a solid draft.
Have a good weekend.
Thursday, November 02, 2006
Your mellow train of thought is interrupted by the cab driver.
"You boys always stay up so late. How on Earth do you do it?"
Nooo. Just your luck to end up with a talker. "I do it by sleeping in the cab you dumbass, instead of talking to you! How do you think I do it ?!?" You feel like a master of the universe for a second as you picture yourself saying that to the cabbie, only to decide against it. After all, its his cab and you need to hey home. Getting thrown out would be most counterproductive in achieving that goal. You decide to ignore the driver and pretend you are asleep, hoping he will fall for it.
No such luck. He keeps on talking.
"I don't understand why you boys do these crazy hours. See, if you take my job, I work my own hours. I am my own boss. And guess what I make. Just guess. I bet you that I make more than you do and I am my own man, working less than half the hours you do."
You smile politely.
If you get one more freaking cabbie lecture you on how you shold cash in your high flyer miles and upgrade to driving sorry assholes like you around town at the most ungodly hours of the morning, you will seriously not be able to restrain yourself.
You smile politely.
You pretend to be thinking about the words he has just spoken with a newfound sobriety in an attempt to shake him off. You try as hard as you can to appear to be rejoycing in the image of your i-banker mates when you break the news to them that after three months at the firm you have chosen to leave to pursue other opportunities. Whilst you are most grateful to the exceptional individuals you have had the honour to work with, it is time for you to say adieu for you have decided to grab the bull by its horns and take your future into your own hands. The markets are booming, and it is not difficult to see that fromk the armies of bankers leaving their offices at crazy hours of the morning. You have thus decided to set up your own business and capitalise on the current market environment. Having identified a lucrative and underexploited business opportunity, you have decided to join the ranks of black cab drivers (who are far less numerous than i-bankers and thus must be far more exclusive a club). Also, judging from the crazy waiting times in the taxi ranks at the office of late, one cannot help but remark that waiting times have gotten longer and longer, and following the rules of posturing, which you have learnt so much about, it he who is more important that is waited on, so you will be taking a step up on the ladder of corporate success.
Your daydream (or nightdream - no pun intended) is interrupted by a sharp turn into Beauchamp Place. You look at the cab driver, and realise that what started as a mockery of this presumptuous chap, has turned into a real option in a matter of seconds. The fact that he can drive like a complte arse and you cannot do anything about it goes to show your respective places in the food chain. You ask him how old he is out of curiosity.
"48, going on 49 in October" he replies.
You take a look at him and he does not look a day older than 31. You then realize that the only 30-something year olds are bankers, and banker years are just like men bragging about their conquests - to get to the truth, take whatever they say and divide by 2. You do the maths in your head, taking his age 49, divide by 2 and get 24.5, and it all makes sense finally. This 49 year old cabbie is only about 24.5 i-banker years old, and he looks it!
Mental note. Add leaving email on to do list when you get back to the office.
Wednesday, November 01, 2006
10% of being a BSD (Big Swinging Dick) is knowing what you are doing. This is by no means an absolute requisite, as even if you have no clue as to what you are doing (like many BSD’s), the remaining 90% of your skill-set will kick in to overcompensate. The other 90% of being a BSD is posturing. It’s simple: if you present yourself as a BSD and keep up the show, you will be perceived to be a BSD. A simple example.
Rupert interviews you and acts like a BSD. You conclude he is a BSD. You tell your intern buddies that he’s a BSD. They tell their analysts that this Rupert guy is a major BSD (interns like to exaggerate). The analysts start telling their associates about this BSD in M&A called Rupert. The associates are always keen to get on the good side of important people (the “ass” in associate in not there by chance – it’s in fact part of the job description – kissing ass is what they do) so they go out of their way to treat Rupert (should they ever meet him) like the BSD he is rumoured to be. The VPs see everyone crawling around Rupert, and here’s where it gets interesting. Most VPs are promoted associates, and whilst you can take the ass out of the associate, you can never separate someone who’s been an associate from the ass. The rare few who question the “Rupert is a BSD” rumours and try to test this for themselves are in for a surprise. The Ruperts of the world are very well aware of the existence of these dangerous independent thinking VPs, who will usually try to come up with a smartass challenge to a point Rupert is making (usually via email, copying half the bank in an attempt to uncover the fact that Rupert is a dumbass). This will usually be done at around 6PM a day before the meeting, in an attempt to give Rupert as little time as possible to manoeuvre himself out of the situation.
This VPs, my friends, has sown the seeds for a group all-nighter, also known in the business as a clusterfuck. Rupert will have every associate, analyst and intern work through the night ion every possible combination and permutation of the pieces making up the matter at hand, to be able to see every possible scenario in the morning, before the meeting. If what the smartass VP mentioned does crop up (Scenario 1), he will staff his army of followers on finding ways of discrediting the VPs assumptions (i-bankers are very good at discrediting assumptions). If the scenario doesn’t crop up (Scenario 2), Rupert can comfortable claim that the VP does not know what he’s talking about. In either case, Rupert will reply to the VPs comment (reply to all) after the meeting and regardless of whether it’s Scenario 1 or Scenario 2 that takes place, will make the VP look like a complete muppet.
Rupert is not really a BSD.
Rupert postures as a BSD.
Rupert becomes a BSD.