Born to be an investment banker

You wake up all hyped this fine morning, as a revelation passes in front of your eyes. You don’t need to have Rupert by the cojones in order to make your way up the firm’s structure. We live in efficient markets, as you discovered on your coffee break, and there seems to be little you can (legally) do to go round that fine point. But hey, as with all rules, there are even finer ways of twisting them to get them to work to your advantage.

Remembering the priceless advice on posturing you were given, you decide that it’s time to take the game up by a notch or two. This is something that a Mont Blanc pen and a good suit alone cannot solve. This calls for creativity, out of the box thinking, and the use of your entire investment banking skill set. This will be where your financial modelling skills will come into play. All those hours spent sitting in front of your computer screen, negotiating with your excel spreadsheet in order to make a lemon look like a peach. All those hours are finally about to pay off, as you run through your genus plan.

Much like the fact that selling a company has very little to do with the crap shape it may be in today, but the promise of a wonder once the lucky buyer has acquired it (and gets stuck with it), your progressing up the investment banking ladder has nothing to do with you being a good banker. It actually has more to do with the perception that you are a good banker. And good bankers are in strong demand, so you must demonstrate that you, being the great banker that you are, are fighting offers for employment left, right and centre.

Now this has nothing whatsoever to do with the fact that you have none of these wonderful offers, nor are you close to getting one. However, just like a guy in a good suit is automatically an investment banker, a guy in a good suit coming late to the office on a regular basis, must be interviewing left right and centre. By the same token, if said banker is interviewing left right and centre, there must be people calling him for interviews and thus he must be in demand.

And if said banker is so highly sought after by the competition, well, the firm must do everything in their power to retain him and make him happy. The fact that the firm has not really found the said individual to be of such exceptional superstar fabric is of little relevance, as what is more frightening to any investment bank than making the wrong call, is if their competition makes the right call at their expense.

So, cutting a long story short, pretending to interview, and subtly dropping hints in the right place, at the right time, will get you junior support, an early promotion and the ability to cherry pick the deals you work on. All that, courtesy of the firm’s fear of erroneously having thought that you aren’t really that good.

To make it even better, the fact that you won’t really be interviewing, but still will be showing up late to work as if you had been interviewing, will mean that you will have reduced the amount of hours spent in the office! Bonus.

You smile quietly, amazed at the sheer genius of your plan. You also think yourself rather silly for having entertained the thought that you may not exactly be top tier banker material, for anyone devious enough to concoct a deception of this magnitude, was born to be an investment banker.

Value added in investment banking

Working for a client on the buyside is always fun. You’re in a kickoff meeting you’re your client, for whom the firm is a house bank, and you’ve just been handed a presentation the client received from an investment bank hired to sell the company your client wants to buy. The first thing you can think of, is trying to pick at little bits and bulbs that don’t add up in their numbers, spelling errors, bad formatting, and other high value added remarks.

Having spent some fifteen minutes on the slides, one particular page looked like this halfway through the meeting.

Application to become an investment banker

(Click on the image to enlarge)

This is how a real investment banker applies for a job.

Confident,

Articulate,

Capable,

Useless.

Failsafe Interviewing Techniques for Investment Bankers

Theres a great deal of paranoia when an analyst goes for interviews. This stems from a combination of the fact that ibanks promote a misplaced sense of loyalty to the bank you work for (lets face it, this is not a word that is in an ibankers vocabulary) and the fact that jobs open up and thus interviews happen shortly before bonus time, and no analyst wants to ruin their bonus by being seen as jumping ship (in which case they automatically drop to bottom bucket).

The first interviews are the toughest to deal with. Excuses like dentist, doctor, registered home delivery, plumber, electrician etc are common, and whilst they do arouse some suspicion, they are very plausible things that can happen to everyone.

The difficulty is in coming up with a credible excuse or rather, a set of excuses, when you need to do follow on interviews in a short period of time. Lets face it, three doctors appointments, two visits to the dentist and a broken boiler, fridge and blocked sink in the course of the two week period for you to meet every single member of the team at Goldman who is looking to hire you, is not an option.

Analysts, being the masters of bullshit that they have been trained by their bank to become, have through time developed more elaborate and effective tactics to avoid detection. So here are a few gems for your next interview. Enjoy.

a) Complain about back pains from sitting in front of a pc all day. Ibanks are paranoid about law suits of this kind and will immediately bring in a guy to replace your chair with a more comfy one and adjust the height of your desk so you feel just fine. Keep complaining and you get HR to pay for chiropractist sessions and not only that, but stress to the staffer that this is something he needs to let you take a few times a week. Bingo, you’ve secured yourself the ibanking equivalent of a hall pass.

b) Take up smoking, and go for regular cigarette breaks. Once you have developed a reputation for being away from your desk for the 20 minutes it takes to go down, light up and come back on a regular basis, when you disappear for 40 minutes to grab a quick meeting with a headhunter or interview, everyone will simply assume you are treating yourself to a ciggie and coffee.

c) Another benefit of taking up smoking is that you can catch bad colds when smoking late at night in the cold. Once said cold is established, you get up to two days to do interviews – yes, maybe with a bit of a runny nose, but it works.

d) In their second and third year, what is known as ‘managing analyst syndrome’ kicks in. This is when an analyst has illusions about being something in the banks and starts wearing a suit to work instead of a shirt and chinos. Whilst laughable, this attitude is a perfect smokescreen for going to interviews undetected – when you show up in a suit day after day, it will be much tougher to spot that youre interviewing (and thus wearing a suit) as this will be blamed on ‘managing analyst syndrome’.

For the less proficient interviewees, unexplained (or badly explained) absences, showing up in your best suit and you don’t have a meeting that day, smiling (ok, smiling on a regular basis) are all very good ways to spot a first time interviewee / leaver, so beware.

Managing Analyst Syndrome

Now that it's bonus time, and every monkey (in many cases quite literally) gets a bonus. From top bucket to the bottom of the pile, a new generation of kids will be a few tens of thousands richer than they were a month ago. Investment banks in a bull market are very much like communist regimes in that sense - they don't really discriminate . Everyone gets a bonus and a pat on the back. The money is coming in, so why not? Sure, the top ranked get a few grand more, but then again, they get taxed more, and work more, so net, net it's all the same for every monkey.

Now here's the problem. When the i-bank does not discriminate between who deserves a bonus and who doesn't, and also, doesn't leave the option of no bonus on the table, every little monkey starts expecting a bonus. It is no longer a bonus, but part of the expected base. Anger, resentment and greed jump in when someone gets a bigger one than you do. Defensiveness or bragging (depending on the extent to which the given analyst lacks cultivation) kick in for the monkey in the top bucket.

In between all this wonderful emotion is born the managing analyst syndrome. It's a rather vile and most primitive manifestation of a junior monkey feeling like they have become a big bad ape by being able to say they're now an analyst 2 and not analyst 1 and can throw £1,000 on a night out. This is very similar to the "MD + Lambo = mid life crisis" syndrome, as the said MD is clearly overcompensating for the fact that when his wife left him (he was still a VP then), she told him he was a lousy father and an even worse lover before slamming the door in his face.

Enough words of wisdom for this beautiful Summer day and back to an i-banker one and only love - the excel spreadsheet.

Bonuses and Resignations

Bankers, for the most part, can be quite articulate people. It is a true shame that this particular one took seven years at a bulge bracket firm before sharing this talent with the world in a farewell email.

"Dear Co-Workers and Managers,

As many of you probably know, today is my last day. But before I leave, I wanted to take this opportunity to let you know what a great and distinct pleasure it has been to type "Today is my last day."

For nearly as long as I've worked here, I've hoped that I might one day leave this company. And now that this dream has become a reality, please know that I could not have reached this goal without your unending lack of support. Words cannot express my gratitude for the words of gratitude you did not express.

I would especially like to thank all of my managers both past and present but with the exception of the wonderful Sanjeev Hairsprayhead: in an age where miscommunication is all too common, you consistently impressed and inspired me with the sheer magnitude of your misinformation, ignorance and intolerance for true talent. It takes a strong man to admit his mistake - it takes a stronger man to attribute his mistake to me.

Over the past seven years, you have taught me more than I could ever ask for and, in most cases, ever did ask for. I have been fortunate enough to work with some absolutely interchangeable supervisors on a wide variety of seemingly identical projects - an invaluable lesson in overcoming daily tedium in overcoming daily tedium in overcoming daily tedium.
Your demands were high and your patience short, but I take great solace knowing that my work was, as stated on my annual review, "meets expectation." That is the type of praise that sends a man home happy after a 10 hour day, smiling his way through half a bottle of meets expectation scotch with a meets expectation cigar. Thanks Tracy!

And to most of my peers: even though we barely acknowledged each other within these office walls, I hope that in the future, should we pass on the street, you will regard me the same way as I regard you: sans eye contact.

But to those few souls with whom I've actually interacted, here are my personalized notes of farewell:

To Paul, I will not miss hearing you cry over absolutely nothing while laying blame on me and my coworkers. Your racial comments about Jack Cobain were truly offensive and I hope that one day you might gain the strength to apologize to him.

To Brandy whom is long gone, I hope you find a manager that treats you as poorly as you have treated us. I worked harder for you then any manager in my career and I regret every ounce of it. Watching you take credit for my work was truly demoralizing.

To Sarah, you should learn how to keep your mouth shut sweet heart. Bad mouthing the innocent is a negative thing, especially when your talking about someone who knows your disgusting secrets. ; )

To Bill (Mr. Cronyism Jr), well, I wish you had more of a back bone. You threw me to the wolves with that witch Brandy and I learned all too much from it. I still can't believe that after following your instructions, I ended up getting written up, wow. Thanks for the experience buddy, lesson learned.

Dan (Mr. Cronyism Sr), I'm happy that you were let go in the same manner that you have handed down to my dedicated coworkers. Hearing you on the phone last year brag about how great bonuses were going to be for you fellas in upper management because all of the lay offs made me nearly vomit. I never expected to see management benefit financially from the suffering of scores of people but then again, with this company's rooted history in the slave trade it only makes sense.

To all of the executives of this company, Jimmy Dumbass and such. Despite working through countless managers that practiced unethical behavior, racism, sexism, jealousy and cronyism, I have benefited tremendously by working here and I truly thank you for that. There was once a time where hard work was rewarded and acknowledged, it's a pity that all of our positive output now falls on deaf ears and passes blind eyes. My advice for you is to place yourself closer to the pulse of this company and enjoy the effort and dedication of us "faceless little people" more. There are many great people that are being over worked and mistreated but yet are still loyal not to those who abuse them but to the greater mission of providing excellent customer support. Find them and embrace them as they will help battle the cancerous plague that is ravishing the moral of this company.

So, in parting, if I could pass on any word of advice to the lower salary recipient ("because it's good for the company") in India or Tampa who will soon be filling my position, it would be to cherish this experience because a job opportunity like this comes along only once in a lifetime.
Meaning: if I had to work here again in this lifetime, I would sooner kill myself.

To those who I have held a great relationship with, I will miss being your co-worker and will cherish our history together. Please don't bother responding as at this very moment I am most likely in my car doing 85 with the windows down listening to Biggie.

One!"

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.

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

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.

The devil is in the detail

A fellow monkey is confused by a couple of technical questions, so you decide to enlighten them:

1 - Why shouldn’t two companies merge?

Because one is private and the other is public, so the i-bank will make more fees by IPO ing the private one and THEN advising on a takeover: double whammy.
Alternatively, because both companies use your i-bank as an M&A advisor, so if they merge, you'll only be able to avise one party creating work ang giving league table credit to another ibank, letalone the fact that as far as management at your i-bank is concerned, you have swapped short term M&A fees for all the future cash the bank would have gotten from one of the companies.

2 - Give me an ideal Debt / Equity ratio...

This is a bit of a chicken and egg situation,a nd it all depends on what the client wants to hear. Example: If client believes they have too much debt, you advise them to issue more equity (and make sure that they issue too much equity in an offering / private placement / etc). Before any other bank has a chance to pitch to them, you go and pitch releveraging the balance sheet on the back of all the equity they have. Once they do this, you pitch a mega acquisition to use all the cash they have lying about and doing nothing with. Once deal is done, and markets turn bearish, you come in to restructure the acquisition, spin off the company you advised them to acquire, restructure the debt you raised for them and virtually take them to square one. Square one, well, square one, plus loads of equity + debt + M&A + restructuring fees for the bank.

3 - Can you calculate comps with negative EBITDA?

Yes. A / B = C. If B is negative, so will C. Can you calculate it? Sure. Does it mean anything? Of course not. The bigger question here is whather calculating Enterprise Value / EBITDA or any other bullshit metric means anything. At the end of the day, why does it matter if you're advising a client on buying a company that all the comparable companies trade at 6.0x EV / EBITDA when you know there's some crazy private equity cowboy out there who's going to pay 7.0x? What do you do? Do you really foresake the fees and say they shouldn't pay 7.1x and win the deal and fees for you? Of course not. You madssage the numbers, add synnergies to the EBITDA, make deductions from the EV, do whatever you need to to make it look like you are paying 5.9x when you're really paying 7.1x and them tell the client they are gettign a great deal. You get your fees. Cleint management gets a big bonus from for securing a good price from sharesholders. Everyone wins, ahem, apart from shareholders, but why do they count?

4 - If you sell a PPE for 100, BV of 50 and you had a note payable of 50, how do you make entries into the balance sheet?

This is an irrelevant question. If you masagged your numbers well enough to get the client to pay 7.1x (see 3) whilst making it look like they are paying 5.9x, nobody will care what your balance sheet looks like. So, hard plug whatever you want, make sure your multiple shows 5.9x and go for a beer.

I-banking is like Barbie

Blunderstone aside, your focus being on a meaningless meeting you have gotten roped into because, frankly, noone else in the firm could be bothered to go, so Gianluca, a smelly director from the media team has roped you into coming in.

The client, a major UK plc has its offices in the centre of town, so you take a black cab only to find that the heavy traffic will get you nowhere. You pay the friver, get out and decide to walk the remaining stretch.

As you pass Selfridges, you gaze at the barbie and Ken displays they have in one of their windows and it all starts to make sense. You see yourself, as the firm sees you. You look something like this.

Your perfectly fitted custom made suit, crisp white shirt, light blue tie, black laceups, leather carrier bag, which ahs recently replaced the scruffy firm standard gym bag you received when you joined, which by now is well worn and the colours have faded from washing.

You are an investment banker, just like little ken here. Clean shaven, sharply dressed, able and young, and another off-the-shelf resource of the firm.

The firm, then, you reslise is much like a spoiled little girl, collecting her barbie dolls ad infini until one day (in a bear market), she decides she's got too many i-banker analyst Kens. She'll decide to give some a of them a haircut, buy them a new outfit and promote them to associate Kens. And some, sadly will end up in Oxfam.

So what's all that hoo ha about an i-banks most valuable resources walkign out of its doors each eveing. You're tempted to dispute this universal truth, when you realise, that it still, very much holds firm. You and the other monkeys stay in the office each evening, well into the wee hours, later than most of the staff have left for the day, which leads you to the inevitable conculsion that you must not be the bank's most valuable resources. The thought of plankton at the bottom of the ocean fills your head as you head to the client meeting.

Bullshit Bingo

Getting ready for the conference call:

Step one:
Prepare a four by four square, randomly filling each cell with one of the below phrases / words.

synergy
accretive
pitch
bottom line
revisit
double check
margin expansion
24/7
scrubbed
benchmarking
value-added
aggressive
premium
impressive growth
market
leverage

Step two:
Tick off each block when one of the phrases is mentioned

Step three:
When you have ticked off four boxes in a row, column or diagonally, stand up, bang your fist on the table and shout "BULLSHIT!"

Christmas Time in the City

Ho! Ho! Ho! It’s Christmas time in the city and the admin staff is busy trying to find a venue for the department’s Christmas dinner. The dinner is a big event where Rupert shelves out a load of cash (carves out a portion of the department’s entertainment budget provided by the firm) and invites everyone in the department to a boozy dinner followed by a bar and club night.

You relish the fact that you will be privy to rub shoulders with the top brass in a social context, whilst not having to shelf out a penny! What a deal! The admin staff have been spending half their time on the phone and surfing the web to come up with shortlists of restaurants, clubs and bars for the various legs of the evening. Whilst focussing on this very important goal (important owing to Rupert’s role as its patron), they have conveniently neglected filing your expense claims and as you will surely find out later, you will be financing the firm’s corporate entertainment expenditure out of your own pocket because they won’t be able to reimburse your flight and hotel claims until late February, but that’s in the new year and not for now to worry about.

You decide it is a good idea to participate in this “team building” exercise, so you walk over to Melinda’s desk. Melinda is a rather typical i-banking secretary. Although she has been with the firm for over five years, she still gives people the impression that they have dialled incorrectly and have been connected to an industrial state in Essex – there have been cases where clients from overseas have a apologised and redialled, thinking that they were really put through to Melinda in Essex by mistake. Mental note – be sure to pick up your own phone at all times. Ah, but bless, Melinda is a nice girl, means well when she wants to. The only problem is that doesn’t happen to be very often.

You lean on her cubicle, smile (when faced by a such a formidable enemy, one must do one’s best to avoid conflict at all costs) and ask if you can give her a hand.

“Aw kay, posh boy. I’m trying taw get us a tayble at Annabell’s but they say they’re fully booked. That’s a load of shite, innit. Gawon, call them in your hoity toity voice and help us out.”

You agree to put your voice to good use, and jump at the opportunity to become the team hero by securing Bouji’s for after the dinner. You dial, politely ask for a table, smile and hang up. You quickly wipe the smile away, lest Melinda gets the idea that she aught to lecture you on how the class system in British society is still not eradicated and that this is a true disgrace.

Luckily for you, it worked.

“Saw, did yaw ge’ it?”

You relish the fact that the positive response you give Melinda will spread across the floor in a matter of seconds, and you will be the hero who got the team into Annabel’s. Wee done man, you can hear Rupert mumbling at you, after the tenth shot of tequila he will surely have downed by the time you reach the club. And you will modestly respond that it was your pleasure to secure a decent venue for some after dinner entertainment. You can also picture Melinda’s voice in the background as you bask in your glory in front of Rupert, screeching “Aw my, this playce is saaaw posh innit. Oh ya, saw posh indayd”.

You can also picture Henry, one of the VP’s in the team and a sheer disgrace to the world’s ever increasing population of muppets, complaining that the night would have been much more fun at his club of Choice, Bouji’s (which refused to make a booking when he called – well done mate). He will be sure to try to overcompensate for his inability to deliver by leaving his card behind the bar to order everyone a round of drinks. Hammered as he surely will be at that stage, little will he know that you will order the entire club numerous rounds of drinks before he remembers to close the tab. But surely, it’s all in the seasonal flavour of giving. Ho! Ho! Ho!

How lucky are you?

Ok rock star. So you've been around the block. You've pulled your own Rob Tucker. You've done more all nighters than you thought were possible. You've become Rupert's buy and yes, you're back from the dead to tell the tale. You have added so much value to clients - if your value added were to be piled up, the mountain of shit would be taller than the Canary Wharf Tower. You are one important test away from clinching that offer, and that is to select a hire for the next analyst intake.

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.

Why do you want to be an i-banker (3 months down the line)?

As you sit in the 9th floor corner conference, gazing blankly at the people leaving their offices at 5PM in the streets below, with the speaker phone blasting out the sharp, jargon loaded bankerspeak, of an MD from the New York office, you think back at the days when you were still applying for a slice of the action you are so deeply plugged into now (or is it plugged into you - you can't ever tell which way it is for sure).

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.

Pearls of wisdom

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.

Posturing - the magic is in the makeup

You know what posturing is all about. You see everyone around you do it. Rupert is an example in case, with his wide pinstripe suits, Hermes ties that scream “In your face!”, braces that he probably only wears because he saw Gordon Gecko wear them in Wall Street. The know-it-all tone and the over-chewed piping-hot-potato-in-your-mouth English accent are all part of the show. Male i-bankers can’t get away with lipstick and mascara (at least at work, anyway), but they sure can posture their way to peak of investment banking showbusiness.

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.

In short:
Rupert is not really a BSD.
Rupert postures as a BSD.
Rupert becomes a BSD.

Valuation: more art than science, more bullshit than art

You’re manically tapping away at your keyboard, working on a valuation for Terence Chang, an MD in M&A from the New York office (alarm bells should be ringing when you hear MD, double hard when you hear M&A and off the scale when New York goes on top of that). You’re scared shitless coz everyone says that New York is the shit. They know everything and then some. They are ruthless, and they don’t give a flying fuck about the fact that you’re five hours ahead of them on this side of the pond. To make things worse, the fact that your old man is a Yank doesn’t earn you any brownie points there, unlike your English accent did with Rupert. So all you can do is tap away and give Changie the best fucking valuation he has seen in his life. No pressure!

Rob Tucker, an analyst 3 and well knows superstar of his class walks casually by your desk, stops in front of your screen, takes a quick peek and says:

“Modelling, eh? How’s it going?”

“I’m so stressed” you reply. “I’ve got to do like all the comps, precedent transactions and a full blown DCF analysis for this MD in New York M&A and then he wants me to use the valuation I get to figure out what is the lowest price his private equity client can pay and still get the deal. Shit, I’m fuckin’ stressed. I’m on my second redbull and damn. I can’t talk now. Gotta work man!”

“Chill little dude. When’s your deadline?”

“Like, tomorrow morning New York time! There is no way I can make it if I don’t work straight through the night and into tomorrow morning! Aaaargh!!!”

Rob motions for you to stand up, which you reluctantly but obediently do, and sits on your machine. He asks you to run to Starbucks and get him a black coffee and a packet of cigarettes and call him on his mobile when you’re standing outside the main entrance. Reluctantly, you go to Starbucks.

Having called Rob once in front of the entrance, you see him coming out. You give him the coffee as he motions for you to give his a cigarette. He lights up and begins walking casually. You follow, annoyed at the way this asshole is wasting your precious modelling time and making you buy him coffee and smokes, and then wastes your time while he has his coffee and smokes, when the clock is ticking on Changie’s valuation!

“Chill little dude. You’ll be fine, you’ll see.”

The smoke coming out of the corners of his mouth makes him look like a Chinese dragon as he says.

“We really shouldn’t be smoking this shit. If you knew the kind of crap they stuff into these smokes, you would never smoke again.”

Rob worked on a tobacco deal, and knew all there was to know about tobacco. He also took no shame in demonstrating this knowledge. Come to think of it, he took no shame in anything. You first got to know Rob as you were leaving the office at 3AM one morning, and a voice behind a mountain of smoke hollered.

“We don’t pay interns to sleep. It’s only thee buddy – whatever happened to face time?”

Your fellow intern buddy explained that that was Rob, the analyst he was staffed with, who let him go home early that night and offered to wrap up his share of the work. Wow! “What a nice guy – let me leave at 3!”.

Rob proceeds to give you advice on how to play office politics, with each sentence being interrupted by him saying hi to someone coming out of the building. How many people does this guy know!?!

You are torn between a sad admiration for how plugged in this kid is and the increasingly uncontrollable desire to strangle him for wasting your precious modelling time.

He finally puts out his cigarette and motions for you to follow him up.

Once you guys make it back upstairs, he sits back down on your machine, checks your email, where a you have an email from a dude in leveraged finance. You glance at the email traffic and here’s how it reads:



From: Cartwright, James (FIN)
To: Moncrieff, Michael (IBD)

Terry and Michael,

We've done the best we could at such short notice. I've had three of my guys running around like headless chickens trying to get this done, but the result is still a little rough and readfy. Still, it should be correct give or take US$5m. We think your sponsor should be able to raise US$150m for Bollocks Industries

Hope this is ok.

James


James Cartwright
Managing Director
Leveraged Finance
T: +44 20 7641 2791
F: +44 20 7641 2777


>>From: Moncrieff, Michael (IBD)
>>Sent: 31 October 2006 15:49
>>To: Cartwright, James (FIN)
>>Subject:
>>Jim,
>>
>>Chang here. My analyst needs the debt capacity for Bollocks Industries for a meeting with a >>sponsor ASAP. I'm waiting on you by his machine. I expect a number in 15.
>>
>>Terry Chang


The bastard emailed the co-head of LevFin pretending to be Terry Chang from YOUR MACHINE! Shit! You panic, wanting to beat the crap out of this arrogant shit sitting on your machine, only to realise that he’s just saved you six hours of benchmarking analysis that will anyhow be ripped to shreds in a day’s time. So what if his methods are a little unconventional, right? Shit! He can get you fired! Arrrrrgh! You don’t wanna be the dude that got fired before actually getting hired. As you continue freaking out, Rob looks back at you and calls.

“Your analysis is done little buddy. All you need to do is send this to graphics to make a few nice slides and pack your shit, coz we’re going for a few beers to celebrate.”

You look at Rob in amazement. He has finally gone mad! Pulling a prank on the LevFin co-head is one thing, but you still have midnight oil to burn on the rest of the valuation. As if he just read your thoughts, rob points to the screen and says.

“Don’t worry little buddy. It’s all done, and I’ve even made little comments for you in the spreadsheet, so you can freshen up on how we cheated Changy tomorrow morning. And now, it’s beer time.”

You take a quick look at the magic solution to your all-nighter problems that seems to have materialized on your screen, before you send it to graphics as instructed. Tomorrow morning, you’ll have the slides Changy wants way before he gets up in New York and you will rock.

You pick up your stuff and head to the pub with Rob. You begin to understand why he’s a superstar. Not because he is so much better than anyone else alive. Far from it, it’s just that he’s a tad less stupid than the rest of the crowd, and smart enough to have learnt that in i-banking, form beats substance. Every time.

Review time (you scratch my back, I’ll scratch yours)

You’ve been around for long enough to participate in the firm’s 360 degree review process. This is where people you have worked with get to review you, saying what you’re good at and what you need to improve on. The beauty of the game is that you also get to review them. HR thought up this sophisticated review system that should make sure that reviews are objective and that juniors are able to voice their opinions on the performance of their seniors. However, unlike the art of gift giving, in banking, it is not only the “thought that counts”. The 360 review process is really a large-scale exercise in the age old strategy of “you scratch my back and I’ll scratch yours”.

You have been asked to review Gianfranco, an associate you have been working with very extensively on a merger the past few weeks, who is also the most incompetent and lazy individual you have met in your life. You sit looking puzzled at the assessment form, scratching your head as to how you can come up with anything even remotely warranting a positive comment from your experience of working with Gianfranco.

“What are his key strengths (name five)? Note any areas for development:”

Key strengths? Like finding any strengths wasn’t enough of a challenge, you want me to find the key ones?!? Areas for development – p-leeeeease! You can list everything under the sun and then some and you wouldn’t even be close. Start from the fact that he cannot write (and to a large extent speak in) English if his life depended on it. He can’t do numbers (which can be a strength because he wouldn’t be able to spot a fuckup in your models ever), he dresses like a Sicilian mafioso and uses more cooking oil to slick back his greasy long hair that all the kebab shops in London do in a year. What more can you say than this individual simply sucks?!?

You look up to your screen, and hey presto, not even five minutes since HR has informed you that you and Gianfranco will be reviewing each other, you have an email from Gianfranco in your inbox.

“Ciao buddy. You wanna go an have a coffee? I buy, ok”

You reply saying sure and five minutes later, the two of you are sitting in Azzurro, the Italian café round the corner with two espressos in front of you. After no more than the bare minimum needed to vaguely resemble a polite conversation opener from Gianfranco (not that he’s being rude on purpose, but the dumb shit can’t speak any damn English), he cuts to the chase.

“So, e, I ‘a see ‘a dat ‘a you an me are ‘a gonna’ do’a the 360 degree, no?”

For a moment, you aren’t sure if he’s referring to the 360 review process or trying to proposition you! Admittedly, the greasy hair, half unbuttoned shirt, and sleazy look he constantly has about him don’t help here, but you decide to give him the benefit of the doubt on the back of the fact that he is consistently sleazy (this decision being reached with a rather hefty amount of hope that you are right on this one).

“Yeah, so, eh, ‘a I ‘a explain ‘a ‘ow ‘a this ‘a thing ‘a work, ok?”

“You ‘a want an offer, no? Ok, so, I a’ ‘elp you and ‘a write ’a you a good review, ok. So, an ‘a you, ‘a you ‘a ‘elp ‘a me too, no?”

Before you have time to catch your breath at this highly inappropriate proposition, he pre-empts an answer.

“Ok. Super – duper, e’. Allora, now ‘a we ‘a enjoy ‘de espresso. No more ‘a talk ‘a da work.”

Back at your desk, you get back to work. In no less than half an hour, you complete Gianfranco’s review and submit the following to HR.

“What are his key strengths (name five)? Note any areas for development:”

Gianfranco is an excellent banker, and an individual I have learnt a great deal from over the past few weeks. I have had the pleasure to learn from him and observe how the work he does wins the respect and confidence of clients and senior bankers alike. He is diligent and knowledgeable in the fundamentals of valuation. He strives for perfection and is an excellent communicator. His ability to clearly and concisely make complicated points understood is unrivalled and I am certain that this characteristic will make his an even better banker in the future. Whilst an individual could always be said to have an opportunity to develop, it would be most unfair to point out any areas for development in Gianfranco’s case, as he exceeds the expects in every aspect of investment banking. In everything he does, he takes on the responsibility (and delivers the results) that would be expected for a banker at VP level or above. He is a truly exemplary individual and I am proud to have the pleasure to learn from and work with him.