You sit reflecting on what you need to catch up on since the last time you had a few moments to yourself, and as you stop to think, you are immediately frustrated by the time it actually takes you to get that rusty machinery in your head going again. The core skills of investment banking have become innate to you, and as you have perfected these arts of slyness, manipulation, misrepresentation and disguising self-interest, you haven’t had the need to switch off the auto pilot and do some actual thinking.
Damn. That’s hard.
So what’s happened in last few months? Ah, nothing much. Kruelberg came, Kruelberg went, came again, went again, finally quenched a megadeal. Another investment bank advised on it. You worked on the financing. Bigass financing. One of the biggest financings of all time. Ok. It was underwritten by the same guys who advised Kruelberg on the deal, but you at least got a glimpse of the action. You’ll get a tombstone on your desk, and in ten years from now, nobody will even remember who did what. All that the little analysts will se when they enter their MD’s (your!) office will be the triumphant testimony that you were involved in one of the most amazing deals ever. That’s pretty good. Pretty damn good. And it’s all about the tombstone.
Oh. Yeah. One tiny detail being that, there was some more shit that happened in the meantime, and that tombstone is looking very unlikely. Why did the markets have to go sour on your big deal watch. Liquidity gone, spreads widening, the firm decided to pull out of the syndicate for the financing. They might have saved their asses but they sure screwed that tombstone for you. Why? Why? Since when have dividends to investment bank shareholders been more important than investment banking glory?!?
Oh well, Kruelberg and their other adviser, in the meantime, finished the deal. Those other analysts got a tombstone. So the market crashed. Their leveraged finance analysts also got a financing tombstone. So the whole ridiculous amount of debt is on the bank’s books. So what, they’ve got a tombstone. And to top it all, now that the debt market is distressed, Kruelberg looks like it will team up with said bank to create a special purpose entity to scoop up all the debt that it actually borrowed and the bank could not shift on to suckers like the firm. Ok, so Kruelberg not only gets its financing, but also makes a whammy by buying it off the bank at below the nominal value because it’s ‘distressed’! Genius. Kruelberg: 1, the investment bank: nil points. But hey, some little fucker in structuring will get a tombstone out of it for sure. Bottom line – screwing your shareholders over and making Kruelberg richer is a great deal for the bank – the tombstones are well worth the plummeting share price.
Sadly, that bank was not the firm. The firm’s shareholders and partners are richer, and you don’t have a single tombstone to show for it.