Thursday, May 31, 2007

Investment Banking is like Pac Man

This goes to prove that the best i-banking training is received not on the job or in organized training prtogrammes, but on the internet.

Wednesday, May 30, 2007

Damn, this kid has got issues

So, today is the day HR assigns mentors to analysts in the starting class of 2007. All the bright, starry eyed graduates are in their best suits, in the lobby of the firm’s headquarters, with bright shiny nametags stating the firm name and a big smiling photo of the fresh from university analyst. Little do they know that these smiling photos will serve them as reminders of the life and enthusiasm they once had, when they compare it to the face they see at 4 am in the elevator mirror.

Their shirts are super starched, their shoes are so shiny, you can see your reflection perfectly in them. Everyone has a fresh haircut and looks sharp. First day as an investment banker is a day to impress.

You make your way to the reception area and look through the numerous nametags until you find your assigned mentee. There’s a huge smile on this guy’s face, that you almost want to run up and put on a pair of shades to protect your eyes from the glare coming off his freshly polished teeth. After an overly enthusiastic handshake, you introduce yourself, and learn that it is such a pleasure to meet you. He has always wanted to rub shoulders with the high and mighty investment bankers like yourself. How exciting. You scratch your head, wondering what this kid is on. You certainly don’t have the same level of enthusiasm each morning when you look yourself in the mirror. Sure, you look like an i-banker, you sound like and i-banker, you dress like an i-banker, but so does every other i-banker! As is that a good thing?

Damn. This kid has got issues.

Being asked about how he sees his career moving forward at the firm, the kid breaks into a monologue about how he’s always wanted to work at this firm, with some of the greatest bankers on the street, learning from the best, working with the best, chilling with the coolest, and serving the richest. This is his dream and he’s finally going to live it. Amazing.

You decide to change tact, and ask him about his spare time and what he likes to do with it, as you desperately struggle to find anything you may have in common with this poor misguided kid. You realize, however, this kid has no hope when he tells you that he likes to practice financial modelling in his spare time so that he can be a better analyst when he starts. Weekends? Catching up on all the articles in the week’s Financial Times that he didn’t have time to read.

Ok, change of track once again. You ask him about networking, fitting in and how he sees himself in the firm’s corporate culture and that’s when a ray of light appears. The big smile is replaced with a serious face, as he intimates that this is something he would very gladly have your advice on. He has heard that declaring oneself as a minority banker in whatever way, adds value to you as an asset of the firm, as investment banks are keen on maintaining diversity in the workplace.

He reckons, though, that a single minority is simply not good enough, so he wants your advice on how to do a double combo, slotting himself into two or three categories. His plan, is to become active in two ethnic minority programmes at the firm from day one, and also join the gay and lesbian group organised by HR. What he wants from you – to give an opinion on how “unfireable” this would make him!

So here you go, this kid who has gotten custom designed stripes on his neckties, so that they slope upwards as it’s “a bull market” does have a sense of humour – albeit not being aware of it himself!

Damn, this kid has got issues

Friday, May 25, 2007

Computer games reinvented for i-bankers


No comment needed. Just walk to the closest HMV or Virgin Megastore and buy your copy. What? Surely you mean, just drop that excel spreadsheet, log onto amazon dot com and order your copy. What a silly thought, going out of the office in broad daylight!


Investment Banking: Competence revisited

Now that you’ve recovered from the shock of Kruelberg Kretin losing the deal of the year, the indignation of losing that job at Blunderstone for that very same reason, you decide to get on with your life, move on, and start crunching a new set of financials for a new dipshit client.

A long term client of the firm, who has grown to be a technology leader in the IT field wants to acquire the industry leader, who is one of the best established firms in the entire sector, a monster of a company, listed on the NYSE with a second listing on the LSE. Oh, and one more thing, this company, call it the target, is ten times larger than the client, call if the acquirer.

Stop.

“WHO THE FUCK CAME UP WITH THIS FUCKING PIPE DREAM?”

You think to yourself quietly as you stare at the blank excel spreadsheet on your screen. The project has just started, so you have been asked to draft a checklist of tasks that will be required to get the work off the ground. According to the staffer, this is part of your development and you are being given the opportunity to “step up”. This translates, of course, into, “as I, the staffer, am meant to be doing this, and really can’t be bothered to, I will ask you to do it by stepping up and doing my work for me”. Reflecting on this deeper meaning for a moment, you come to the conclusion that if you ever had a doubt as to whether the word staffer was synonymous with a piece of shit, there is clearly no doubt any more.

So, you begin to go through what would be necessary to make this project happen. Ok.

You will need comparable companies and precedent transaction analysis for the sector. You will doubtless be required to prepare these. You will then format them nicely. You will then look at what the mean, median, top and bottom quartiles are, until you come up with the number that makes the target’s multiple lower and the acquirer’s higher. You then take this number to your associate and claim success.

You will also need to build DCF (discounted cashflow) models for both the target company and the acquirer. Ok. That’s easy. Both are public companies and have equity research available. You will look at the equity research reports for both companies and find what the consensus valuations that research is predicting are. You will then work back from these valuations and build the models accordingly, from end to beginning, until you have backsolved to the tiniest and most painstaking detail every assumption to magically get to the desired numbers. Once you have done this, you will go to your associate and claim victory once again.

Then, you will use the valuation you have for the target and that for the acquirer to figure out an exchange ratio. This is the number of shares of the acquirer (at the valuation you have “calculated”) that the acquirer will give in exchange for each share in the target (again, at your “valuation”). Simply put, the acquirer will ask the shareholders of the target to now hols its shares instead of the target’s shares they have been holding until now.

Ok. Next step, the shareholders will likely refuse, realizing how much bullshit has gone into the valuation and will ask for hard cash instead of some worthless shares. There will be a crisis moment, and the valuation will “magically” improve. As the shareholders of the target will still only accept cash, rather than throwing in the towel, Rupert will come up with the idea of raising the money needed to buy the target through debt. Why, because that way he gets a percentage of both the full value of the whole deal (hence the inflated valuations) as well as an even bigger percentage of the amount of debt raised. One slight problem. The acquirer will need to raise debt to the tune of ten times its actual size, which is…well…impossible. So, you will spend a few weeks running numbers on how divisions can be sold to raise cash, calling hedge funds to provide money and so on, until Rupert, who will have come back from holiday, will finally focus on the matter at hand, and officially recognise that this is not doable, and thus will tell the client that this idea will never work.

Minor correction actually. This wasn’t the client’s idea in the first place, so Rupert will not call the client to pitch the brilliant idea.

Now isn’t i-banking the beautiful game or what.

Thursday, May 24, 2007

Another Investment Opportunity!

From :
ibrahim munsa
Reply-To :

Sent :
Wednesday, May 23, 2007 11:12 PM

Subject :
Reply me immediately.

From: Dr. IBRAHIM MUSA,

Attention please,

I am Dr. IBRAHIM MUSA,The bank manager of BANK OF AFRICA (BOA) BURKINA FASO WEST AFRICA BRANCH. MY CONTACT CALL 0022676283191. I am contacting you based on Trust and confidentiality that you will keep this as top secret.don't be scared or surprised, i am the manager of BANK OF AFRICA and i have an opportunity to transfer sum of US$152.MILLION (ONE HUNDRED AND FIFTY TWO MILLION UNITED STATE DOLLARS) I have the courage to look for a reliable and Honest Person who will be capable for this important business. Transaction,believing that you will never let me down either now or in Future. The owner of this account is JOSEPH F. GRILLO, foreigner and he is the Manager of petrolchemical service, a chemical engineer by Proffession.He died in world trade center as a victim of the September 11,2001 Incident that befall the United State of America, the bank has made series of efforts to contact any of the relatives to claim this money but without success, you can confirm through this website:

http://www.september11victims.com/september11Victims/VictimInfo.asp?ID=1260

And my investigation proved to me as well that his company does not know anything about this account.I want to transfer this money into a safe foreign account abroad but I Don't know any foreigner,I know that this message will come to you as a surprise as we don't know ourselves before, but be sure that it is real And A Genuine business.Hope that you will never let me down in this transaction, at the conclusion of this business, you will be giving 30% of the total amount, 70% will be for me. I look forward to your earlier reply byemail for more details

Thanks.

Dr. IBRAHIM MUSA
BILL AND EXCHANGE MANAGER,
BANK OF AFRICA-(BOA)

Wednesday, May 23, 2007

The lighter side of Rupert

Rob gets a piece of "work" from the new intern and gives him this markup. That night, Rob finds the second markup sitting on his chair - "from Rupert!" Damn. Interns. They don't make them like they used to!


When in Rome…

You’re sitting in Rupert’s office, chewing the fat with this BSD that you almost feel like you can call a colleague! Nothing has been said yet, but you know it and everyone else knows it – you’ve got a job with the firm. You feel like a million fucking dollars (worth of bling handing off your neck) as you sit across the desk from Rupert, who after spending the first half hour of your meeting in his office with his feet outstretched on his desk, has now decided to take off his shoes, and throws them in the left hand corner of his enormous desk. Amazing. You’re so trusted by this BSD of BSDs that he does not feel the need to exhibit even the most basic of courtesies with you any more (which is to refrain from sharing with you the stench that fills the room as his freaking feet come into contact with the crisp air conditioned air). He’s wearing £80 a pop cashmere socks that were sparkling new, clean and not embarrassingly thinning at the heels (to the extent commonly known as a hole) at some date. You can’t make out if the colour is really grey or whether they have absorbed bits and pieces of the surroundings and metamorphosized into that form at some point. You just can’t get it. No matter how important they are. No matter how much of a BSD they are. No matter how much money the make and how much more they have, i-bankers of the Ruppert McMuppet breed are the stingiest fuckers in town when it comes to personal hygiene and items of clothing that they think nobody notices.

“Give me a fucking break Rupert” you think to yourself. As you sit there awestruck by the conflicting thoughts of admiration and disgust, the telephone rings on Rupert’s desk begins to ring. He gives the number on the little screen a glance and grumbles.


“It’s those fuckers from Goldmen. Let’s make them feel welcome – I want to get a piece of that underwriting they’re doing for FuckedCo next week”


Rupert looks you directly in the eyes as he says this and captures your glance, holding you hooked to every movement of his body as he picks up the receiver. He winks as his mouth opens, almost telling you “this is how its done”.


“Shalom!” he hollers as he gives you another wink.


Now that’s how it's done - and incidentally, you are now sure beyond a doubt that Rupert has no shame.

Monday, May 21, 2007

Responding to an Investment Opportunity

This is how an i-banker negotiates...


Sent :
Monday, May 21, 2007 11:29 AM
To :
usmanmusa777@hotmail.com
Subject :
RE: TREAT AS URGENT







Dear Mr. Musa,

Thank you most kindly for the email you have relayed, which is attached hereunder. It is with much joy that I read your email. It is truly amazing that you have found my contact details and I am most grateful that you have decided to contact me. Engineer Steve Moore (Snr.) is my uncle. He was working in Africa for some years, and we have lost contact from him.

Whilst it is unfortunate that you have not been able to find relatives, is today not a great day, as you have found a relative - and the US$30 million will not need to go into the ammunition fund! Please email me your contact details so i can give you my banka ccount number, to which you can transfer the full US$30 million.

What a fantastic day for everyone!

All the best!

Mike

Friday, May 18, 2007

Investment Opportunity

An an investment banker, one is constantly offered fantastic opportunities to make money. You are overjoyed to find the gem below in your inbox:

From :
us musa
Reply-To :
usmanmusa777@hotmail.com
Sent :
Friday, May 18, 2007 12:43 PM
Subject :
TREAT AS URGENT







TREAT AS URGENT PROFITABLE TRANSACTION MR.USMAN MUSA {MANAGER}

DEAR FRIEND,

FIRST I MUST SOLICIT YOUR CONFIDENCE IN THIS TRANSACTION, THIS IS BY VIRTUE OF ITS NATURE AS BEING UTTERLY CONFIDENTIAL AND TOP SECRET. THOUGH I KNOW THAT A TRANSACTION OF THIS MAGNITUDE WILL MAKE ANY ONE APPREHENSIVE AND WORRIED, BUT I AM ASSURING YOU THAT ALL WILL BE WELL AT THE END OF THE DAY. WE HAVE DECIDED TO CONTACT YOU DUE TO THE URGENCY OF THIS TRANSACTION, AS WE HAVE BEEN RELIABLY INFORMED OF YOUR DISCREETNESS AND ABILITY IN TRANSACTION OF THIS NATURE. LET ME START BY INTRODUCING MYSELF PROPERLY TO YOU. I AM MR.USMAN MUSA THE MANAGER WITH THE BANK OF AFRICA , OUAGA.I CAME TO KNOW YOU IN MY PRIVATE SEARCH FOR A RELIABLE AND REPUTABLE PERSON TO HANDLE THIS CONFIDENTIAL TRANSACTION, WHICH INVOLVES THE TRANSFER OF HUGE SUM OF MONEY TO A FOREIGN ACCOUNT REQUIRING MAXIMUM CONFIDENCE. THE PROPOSITION: A FOREIGNER AN AUSTRALIA, LATE ENGR. STEVE MOORE (SNR.) AN BUSINESS MERCHANT WITH THE FEDERAL GOVERNMENT OF BURKINA, UNTIL HIS DEATH YEARS AGO IN KENYA AIR BUS (A310-! 301) FLIGHT KQ431, BANKED WITH US AT BANK OF BURKINA , OUAGA AND HAD A CLOSING BALANCE AS AT THE END OF SEPTEMBER, 2000 WORTH US$30,000,000.00 (THIRTY MILLION UNITED STATE DOLLARS), THE BANK NOW EXPECTS A NEXT OF KIN AS BENEFICIARY. VALUABLE EFFORTS ARE BEING MADE BY THE BANK OF AFRICAN TO GET IN TOUCH WITH ANY OF THE MOORE'S FAMILY OR RELATIVES BUT TO NO SUCCESS. IT IS BECAUSE OF THE PERCEIVED POSSIBILITY OF NOT BEING ABLE TO LOCATE ANY OF LATE ENGR. STEVE MOORE (SNR.)' S NEXT KIN (HE HAD NO WIFE OR CHILDREN THAT IS KNOW TO US). THE MANAGEMENT UNDER THE INFLUENCE OF OUR CHAIRMAN AND MEMBERS OF THE BOARD OF DIRECTORS, THAT ARRANGE HAS BEEN MADE FOR THE FUND TO BE DECLARED "UNCLAIMED" AND SUBSEQUENTLY BE DONATED TO THE TRUST FUND FOR ARMS AND AMMUNITION TO FURTHER ENHANCE THE COURSE OF WAR IN AFRICA AND THE WORLD IN GENERAL. IN ORDER TO AVERT THIS NEGATIVE DEVELOPMENT SOME OF MY TRUSTED COLLEAGUES AND I NOW SEEK YOUR PERMISSION TO HAVE YOU STAND AS NEXT OF KIN TO! LATE ENGR. STEVE MOORE (SNR.) SO THAT THE FUND US$30 MILLION WILL BE RELEASED AND PAID INTO YOUR ACCOUNT AS THE BENEFICIARY'S NEXT OF KIN. ALL DOCUMENTS AND PROVES TO ENABLE YOU GET HIS FUND WILL BE CAREFULLY WORKED OUT. WE HAVE SECURE FROM THE PROBATE AN ORDER OF MADAMUS TO LOCATE ANY OF DECEASED BENEFICIARIES, AND MORE SO WE ARE ASSURING YOU THAT THIS BUSINESS IS 100% RISK FREE INVOLVEMENT. YOUR SHARE STAYS WHILE THE REST BE FOR MYSELF AND MY COLLEAGUES FOR INVESTMENT PURPOSE. ACCORDING TO AGREEMENT WITHIN BOTH PARTIES. AS SOON AS WE RECEIVE AN ACKNOWLEDGEMENT OF RECEIPT OF THIS MESSAGE IN ACCEPTANCE OF OUR MUTUAL BUSINESS PROPOSAL, WE WOULD FURNISH YOU WITH THE NECESSARY MODALITIES AND DISBURSEMENT RATIO TO SUITE BOTH PARTIES WITH OUT ANY CONFLICT. WHILE REPLYING FURNISH ME WITH YOUR PRIVATE FAX AND PHONE NUMBERS FOR EASY COMMUNICATION,BANK NAME,COMPANIES NAME AND ADDRESS. THE SHARING OF THE FUND ARE THUS: 20% FOR YOU THE ACCOUNT OWNER,70% FOR I AND MY ! TRUSTED COLLEAGUES AND THE REMAINNING 10% FOR EXPENSES FOR BOTH PARTIES. IF THIS PROPOSAL IS ACCEPTABLE BY YOU, DO NOT MAKE UNDUE ADVANTAGE OF THE TRUST WE HAVE BESTOWED IN YOU.

BEST REGARDS,

MR.USMAN MUSA (MANAGER)

Reich Bank Equity Research

Click on image to enlarge.


The Kruelberg Kretin Saga XV - Frank

The nerve of the guy. He's set up his own blog!!!

http://frankjohnson.blogspot.com/

The Kruelberg Kretin Saga XIV – Blunderstone calls back

Your mobile phone rings. Withheld number. You cautiously pick it up.

“Hello”

There is a brief silence, before you hear the unmistakeable voice of Pete Anderson from Blunderstone.

“Hi, it’s Pete from Blunderstone. Can you talk?”

Wow! Blunderstone. Not calling through a headhunter. Calling you direct. This is it. They want to give you an offer. They’re gonna do it on the spot. You know it. You can feel it. There’s a good reason Frank fucking Johnson lost that deal. It was so that Blunderstone can get it and on that high note, hire you to look after the company for them. What a day! Pete Anderson!

“Sure”

You fire back with the enthusiasm of a five year old who’s about to unwrap its birthday present.

“I’m afraid I don’t have any positive news for you. I wanted to call you in person because you really made a good impression, but we’ve decided to fill in the position with someone with more experience in private equity. We’ve hired a guy from Kruelberg Kretin, who worked on the transaction we announced today. He was so disgruntled working for some prick called Frank Johnson who led the deal at Kruelberg, that he was willing to accept much less favourable employment terms than you. You’re a good guy, and I like you, but this poor guy was willing to do anything to get out of Kruelberg.”

Frank fucking Johnson. You’ve done it again you #@%!*$$£~#.

Thursday, May 17, 2007

The Kruelberg Kretin Saga XIII – Frank Johnson, you suck!

2:00 pm - Bid deadline (9:00 am NY time)

Bid letter:
Done, drafted and sent to Kruelberg Kretin to put in the final number (Frank doesn’t trust his bankers with shit like this), which he has done, and it has been faxed to the seller.

Bank letters:
Done. All done, credit approved and ready to go.

Frank’s dummy proof database:
Done. Even Frank can’t be caught off guard with this one.

Sleep:
None. It’s for fucking wimps when the biggest private equity deal is in question. Running 36 hours and ready to run some more for that sweet fucking tombstone.

3:00 pm (10:00 am NY time) – no news from Frank

4:00 pm (11:00 am NY time) – no news from Frank

5:00 pm (12:00 am NY time) – no news from Frank

6:00 pm (13:00 pm NY time) – no news from Frank

6:23 pm (13:23 pm NY time) – no news from Frank – Reuters newsfeed hits the wire:

“Blunderstone does largest private equity deal – NY: Blunderstone, the leading private equity house, advised by Shitty Corporate and investment Bungling and Reich Bank has announced that it has been selected as the winner in the highly contested tender that has been making headlines for weeks. Reportedly, Kruelberg Kretin, the favourite contender in the process, reportedly presented an offer that fell well short of the seller’s expectations”

Frank fucking Johnson you’ve fucking done it fucking again! You’ve fucked it up and stolen the sweet, sweet tombstone. You suck!

Wednesday, May 16, 2007

The Kruelberg Kretin Saga XII – It's All Worth It

There are many things that bug you as an i-banker. The fact that HR leaves at five and you have to crunch useless numbers for Frank fucking Johnson in the wee. The fact that your client is a moronic self important moron who got a lucky break despite the fact that he can’t tell his arse from his elbow. The fact that he wants you to run countless iterations on countless financial models, using structures that have been proven not to work countless times before, despite being told all this countless time. The fact that your boss is so spineless and focussed on the big picture, that he doesn’t care if you do one more useless all nighter as in the grand scheme of things, what’s just one more night of useless modelling in the span of an analyst’s career? It’s all for the greater good, he says. Just think of that shiny tombstone you’ll get when this deal closes, he says. Just think of the money the firm will make, he says.

You ponder on the glory of the tombstone sitting on your desk, which would magnificently state that the firm advised Kruelberg Kretin on the acquisition, paying billions for the company and setting a landmark in being the largest private equity deal ever in the sector. And this will be on your desk. You will be the superhero analyst who worked on the deal. The deal? You must mean THE deal.

You breathe in the fresh air (it’s so much better after 2 AM) and as you close your eyes, you can see the envy in the faces of your class as they pass your desk. They will see the tombstone and stare at it, wanting to have that tombstone. Wanting to share the glory. Wanting to have been part of this groundbreaking deal. Well, wanting to be in your shoes, right here, right now, freezing your ass off in front of the entrance, chainsmoking three Marlboro reds before you head back to the office. Wanting to be the ones doing that useless bit of work for Frank tonight.

You pause for a moment and think again. Really? Wow! These guys are envying me as we speak. You are filled with energy as you feel their envy all around you. You wave to one of your buddies who is heading home for the night, feeling sorry for the poor loser, going home only at 2AM, whereas you will still have the pleasure of spending a few more hours at least, making this landmark deal happen!

You take a final drag out of cigarette number three, stub it out, rub your hands and put your war face on, ready to finish the job for frank. Tomorrow’s bid day and all the work is done. Frank has, however, asked the firm to provide him an easily accessible database for all the deal docs, models and analyses in excel - in case he gets a call with questions about Kruelberg’s bid tomorrow, he wants to be able to punch in the keyword like in a google search engine, and the spreadsheet to pop open the right analysis. Now most of those unlucky colleagues would just call him an asshole, but you know better than that, given that he will be your path to glory. He will be your stairway to fame, with a tombstone for the biggest private equity deal in this sector, ever, on your desk!

It’s all worth it. It is all so worth it! Forget the fact that all those other guys are getting paid the same as you. Forget the fact that they are all working far less than you. Forget the fact that the work they are doing is far more interesting than the shit you have to do for Frank fucking Johnson. Forget the fact that they don’t give a shit.

It’s simply just worth it!