The investment banker moves on: out with private equity, in with the strategics

Wednesday, October 24, 2007

The investment banker moves on: out with private equity, in with the strategics

So what if the Kruelbergs and Blunderstones of this world are finding it hard to get the kind of cash from their investment banks that they did just a few months ago. It’s an investment banker’s duty to try and then to try harder. Prepare pitches, present profiles, think in the box, out of the box, around the box – whatever it takes to get that damn tombstone. It has to be said,\however, that sometimes, a deal simply doesn’t work. It may be because the client is a dumbass who cannot tell their ass from their elbow, and can’t se a good deal when its staring them in the face. Sometimes, it’s because the deal or idea the investment banker has cooked up is so poor that even a three year old chipmunk wouldn’t look at it twice.

Nonetheless, it’s not an investment banker’s duty to question how or why. When a deal does not work, the investment banker takes rejection with dignity and honour (by telling everyone that the client is a muppet, for example) and goes to pitch the same idea to the next potential client that is willing to take the time to hear him out (it is very important to make sure that the client’s logo at the front of the presentation is changed in the pitchbook, as for some strange reason, clients tend to get rather upset when for example someone at Kruelberg opens the exclusive and unique opportunity that the firm has set aside for him and just him, only to find Blunderstone’s logo on the front page).

So we do live in times when the next client to pitch to isn’t going to be a private equity house. This is most unfortunate for the analyst involved, as it significantly reduces their ability to get headhunted into the buyside by impressing the clients with their knowledge of the art of bullshit. Big deal. Look on the bright side. No need to impress snotty nosed, full of themselves, smug ex-investment bankers who feel the need to overcompensate for all the shit they had to take in their junior days by making the investment bankers who work for them feel even worse. No way. Now that the Kruelbergs, Blunderstones and Crapaxes of this world are no longer in the market to but overpriced assets, in come the corporates, with their warchests of cash, sitting on their balance sheets. Their boards are no longer afraid of being pushed out by a crazy private equity fund (not that those guys have become less crazy, but they simply don’t have the cash nowadays), so there’s no need to worry about returning value through share buybacks. And with no buybacks, all the cash they make just sits idly on their balance sheet. It is in times like these that the investment banker hears his calling.

“Pitch to them!” says the deep voice of investment banking wisdom.

“Make them acquire!” roars the voice of investment banking passion.

“Help them expand their footprint in new markets!” whispers the voice of investment banking sincerity.

“Create the leaders of tomorrow” hollers the voice of investment banking vision.

The investment banker is drawn to the voices, dancing majestically like ballerinas in his head. Their words creating visions of synergies, multiple expansion, consolidation and premia. And as this spectacle of investment banking vision crystallizes before his eyes, the investment banker hears the deep, clear voice that overrides them all. It is chanting, loud and clear, the raison d’etre of every senior investment banker – “fees” sweet, glorious, upwards scaled, beautiful fees.

And for fees to materialize, deals need to happen, so the universe of the investment banking managing director eclipses with that of the humble analyst. They look together into the sunset over the City of London and march on to the next pitch – that next pitch that just might turn into a deal, that just might close. And if it does, oh how sweet those fees will be, and how wonderful the creation of yet another set of lucite tombstones will feel.

8 comments:

Greg said...

And the monkey lives to taunt another client!!

Anonymous said...

awesome

Italian Analyst said...

simply amazing!
Welcome back!

Investment Banking Monkey said...

The monkey is happy to please!

Anonymous said...

Good to have you back Monkey! Awesome prose. What about trying to write a post in verse? :-)

Investment Banking Monkey said...

pint taken anonymous monkey ... verse coming through shortly!

Anonymous said...

3-year old chipmunk?

Dancing majestically like ballerinas?

How do you come up with these?

- Big fan

Anonymous said...

“Pitch to them!” says the deep voice of investment banking wisdom.
+
“Make them acquire!” roars the voice of investment banking passion.
+
“Help them expand their footprint in new markets!” whispers the voice of investment banking sincerity.
+
“Create the leaders of tomorrow” hollers the voice of investment banking vision.

= Awesome Talented Monkey

If the monkey ever wants to release poems in print, he can drop in at the MarketFrog