Wednesday, March 28, 2007

The Kruelberg Kretin Saga - Episode VI: The Headhunter Call

You sit comfortably at your desk. Excel is looking you straight in the face. You feel like a concert pianist, performing a masterpiece in front of a concert hall full of appreciating fans, as you format the pie charts on the powerpoint on your screen to absolute perfection. It’s the list of profiles for Frank – who asked for a detailed profile of every single precedent transaction of relevance since 2002. Now a good senior would have picked up on the ‘of relevance’ bit and limited the exercise to three or four profiles. Not Rupert, overjoyed that his mistake landed him an M&A mandate, he asked you to profile every single deal and do a 90 page profiles book for Frank.

You truly don’t know who to curse first – Rupert or Frank, so you decide that both of them are to blame, being the useless muppets that they are. But you are in a good mood today, and there’s no room for bitterness. You are one of five lucky analysts working on the task and you have a week to do it so plenty of time to smile and enjoy the sunshine outside.

You are smiling like a baby at your good fortune, when your mobile phone rings to give you a fright. It’s a withheld number, which is not a good sign – it means business. You pick up the phone, look at it for a second, and answer.


“Hi, is that Mike?” says the female voice on the other end of the line. You are a little puzzled by the fact that you do not know this person, yet they know you. What is more puzzling is the fact that someone who is definitely not from the office is calling you as you are by now well past the stage where friends give you a call, as they’ve forgotten you as a lost cause. Finally, it’s a female voice, and let’s face it, you definitely haven’t got a significant other working the hours you’ve been working lately.

“Yeah, that’s me, who’s this?”

“You don’t know me.” She says. No shit. Would I be asking if I did? “My name is Rebecca Nicholson. I’m a recruitment consultant at Assbury Moron.”

“A what?” you ask, thinking what the fuck is a recruitment consultant. This HR chick has obviously misdialed and has no fucking idea that this is not Assbury Moron, or wherever else she’s looking for.

“A recruitment consultant. A headhunter. Are you free to speak for a few moments”

Shit. A headhunter! Wow. Ok. Sure you have time to speak!

“Um, er… yes” you mumble in a whispery voice as you stand up and walk away to find a little privacy. Like it isn’t suspicious enough that an unknown caller rings and after they introduce themselves you get all secretive and hide, but you obviously don’t realize this as it’s your FIRST HEADHUNTER CALL!!!!!

“Um, er… yes… I can speak now”

“Great” says Rebecca “Mike, I’m calling because you’ve been recommended to me and I would like to see if you’ll be interested in coming in to see a private equity firm for an interview.”

Wow! A private equity firm. That’s the kind of shop filled by assholes like frank fucking Johnson. Why the fuck would you want to do that? You remember a bit of advice Rob gave you on one of your first days: don’t dismiss any opportunity. So you decide to humor Rebecca.

“Sure. Who are they?”

“They’re a firm called Blunderstone. Have you heard of them?”

Wow. Blunderstone are competing with Kruelberg on the deal the firm is advising them on. Anything to pull a fast one on Frank, so you accept the interview and pencil it in your diary. Tuesday. 8am. Blunderstone offices.

You have waited long and hard, but you really will get Frank now!

Mont Blanc and the BPM

You are by now well aware of the fact that i-bankers don’t make much sense. They talk the talk, and rely on their BPM to dazzle their audience into believing that they have something very meaningful, something profound to say. Looking closer at the BPM, it consists of two parameters:

Parameter 1 = bullshit
Parameter 2 = time

Bullshit in its own right is insufficient to daze the audience and the i-banking “magic” does not happen. It is only by manipulating the time element, that a true i-banker can manage to say nothing but at the same time impress their client. Remember, that if the audience has sufficient time to step back and think about what the i-banker is saying, the BPM principal breaks down and the cause is lost. The client will realize that what the banker is saying has no meaning and does not make any sense whatsoever. They will also be able to identify the numerous flaws in the argument and inconsistency in the data used, stemming from the inevitable fact that the investment banking professional will naturally be bullshitting.

Why then, does every banker have a Mont Blanc pen? You look around you, and every monkey on the floor has one. The little plain black pen with a blob on the cap. That’s it. Rob has two tucked away in his desk. Rupert carries one in his jacket at all times. Frank used one in the meeting at Kruelberg. EVERY banker has one of these babies. Why?

It’s a complete contradiction to the BPM theory of investment banking existence. BPM, as described above, is underpinned by minimizing the timeframe within which a specific quantity of bullshitt is uttered by an i-banker. While in its on right, the use of a Mont Blanc pen is not in contradiction to this theory, its use substantially reduces an i-banker’s BPM through increasing the time over which the target audience may absorb the bullshit. One may say that it creates the effect of the available time approaching infinity, and as your excel spreadsheet can tell you, even the biggest bullshit, when divided by infinity is zero. Ergo, using a Mont Blanc pen reduces an i-banker’s BPM to zero! Why? Because once bullshit is put on paper, the audience can take their time to try and understand it, and in not being able to do so, figure out how useless it all is. Even worse, the client may choose to give up on the bullshit altogether and simply bin it!

So why, you ask yourself, do i-bankers still swear by their Mont Blancs? Simple. Because a Mont Blanc with the unmistakeable whit blob on the cap is one of the easiest ways of telling someone that you can afford to pay £200 for a pen, without even opening your mouth.

Tuesday, March 27, 2007

Reading the Morning Paper

You’re in the tube on your way to work, and you open your copy of the New York Times. Not because you want to know what is going on in the US market, not because you are interested in what the Fed is going to do next week, not because you are working on a US deal so you need to be up to speed. You want to appear more American. The firm has brought in a new executive director from New York and he is 110% by the book. Comps need to be superscrubbed, books need to be crisp clean, formatting needs to be 100% - sorry, 110% - firm standard …

There is no better way to be liked by these champions of the establishment who constantly whine that the standard of work delivered here is below that of an analyst in new York, and the coffee is not as good as that in New York, and the Italian Restaurants are not quite as Italian as those in New York… So, why not just give him a little bit of New York right in his front yard. Solution: you read the New York Times every morning (£2.10 each morning is a small price to pay), and leave it conveniently visibly on your desk so he can spot the Yank as he passes each morning.

You page through your copy of the paper and hey presto, right in the middle of the hottest i-banking market since the late 1990s, you read a shocking headline about an
i-bank planning to shed jobs.

The usual story: Commercial bank buys investment bank. Commercial bank is jealous of investment bankers BSDness. Commercial bank messes up bigtime on a number of occasions and is penalized by regulator. Commercial bankers exercise frustration by firing investment bankers.

Step one: commercial bank likes fat margins of investment bank.
Step two: commercial bank buys investment bank at very, very, very high valuation.
Step three: market turns.
Step four: commercial bank gets jealous that it has to pay expensive i-bankers also in a downturn.
Step five: commercial bank fires i-bankers, and is happy to reduce costs.
Step six: market conditions improve.
Step seven: commercial bank has no i-bankers left to take advantage of upturn and goes back to being the commercial bank it was in the first place, but billions of dollars poorer for the acquisition of the i-bank that no longer exists.

Image courtesy of

Monday, March 26, 2007

The Kruelberg Kretin Saga - Episode V: Fireworks (Frank vs. Rupert)

Bankers are very much used to talking to an uninterested audience and all of Franks questions are beginning to get Rupert suspicious.

“Why is he actually interested in what I’m saying?”

He asks himself again and again. He cannot understand how this one little meaningless company can be so interesting. He was only trying to sound smart and fill the long meeting with some smart sounding comments and look what happens. As Frank keeps amusedly shooting off more questions, Rupert looks at you with this look on his face that almost says:

“I know why he’s so keen. You’ve messed up Mr. analyst man, and now I’m on the spot. I’ll get you for this. I don’t know how, but I just know it’s your fault (probably because it can’t be mine – of course – so it must be your fault Mr. analyst man!)”

After firing questions for some fifteen minutes, Frank stops, stands up, and begins pacing around the conference room. He thanks Rupert for his much appreciated contribution on Seven Seas, and mentions that he is most grateful for the insight provided.

“Rarely have I seen an investment banker exhibit such enthusiasm in identifying what is wrong with a company. Of course, in my experience on the buyside, and of course my previous experience in your shoes at Goldmen, never have I also seen an investment banker come so ill prepared to a meeting. It’s your lucky day, however, that the management board of Kruelberg has been concerned for a while about the performance of Seven Seas, which we own. I sit on the board, having helped Kruelberg buy it in my previous incarnation as a banker. It’s just your luck that your BPM (bullshit per minute) is so fast that you have actually convinced me that all your ramblings over the last five minutes can result in us extracting all this value from the company. Thank you for contributing and damn are you lucky or what.”

A calm silence feels the room. Feelings of anger and relief as on the one hand, Rupert must surely be relieved that the 100 questions are over, at the same time, he needs to find a way to get himself out of this most embarrassing situation. Luckily for him, his incompetence is more than mirrored by that of Frank, the muppet who put the shitty deal together, altogether resulting in a surprising final note from Frank.

“Rupert, I am grateful that you have brought all this to our attention, and I will nonetheless be sure to pass these recommendations to the board on the next meeting. Meanwhile, rest assured, that through your intimate knowledge and understanding of this business, you have positioned your firm exceptionally for the sale of Seven Seas down the line.”

A perfect example of the fact that there is no need for intelligence in this business. Long live the banker muppets, and the dumbasses that pay their fees!

Friday, March 23, 2007

The tombstone

The Kruelberg Kretin Saga - Episode IV: The Mexican Standoff (Frank vs. Rupert)

Within seconds of sitting down, frank opens up the presentation in front of him and pages through the table of contents. He hovers over the pages, as Rupert talks to them, like a hawk, keenly on the lookout for any errors and omissions. His years of investment banking training have given him the ability to spot errors from miles away. You tremble as he flips the pages with his red pen, circling numbers, letters, words, thinking it might be some major omission, like forgetting to update the table of content, or the page numbers, or not putting two spaces after a full stop.

Frank is altogether uninterested in anything Rupert has to say until he reaches the relevant precedent transactions section. Kruelberg has a good track record of investing in the sector, and it is always difficult to pick the right precedents or to really tell them something they don’t already know.

Frank seems fine with all of the numbers, even commenting on the accuracy of the analysis and how consistent it is with their internal views. Rupert gives you an approving glance that either says “well done mate” or “lucky you, you didn’t mess up”. There’s a big smile of Frank’s face when he sees a very obscure transaction on the list of precedents – July 2004, Seven Seas Associates acquired by a consortium of private equity buyers. He asks Rupert to give him some more details and he does the usual blah around why they paid how much they paid, what a good asset it was and how it is nearing the holding period for the current owners and that it may even be available for Kruelberg to buy.

Frank chuckles and asks some more questions about how the business is performing, to which Rupert comes up with even more blah about how the sponsors who bought it have done ok, but there is so much more value to be extracted, how the management is great but the sponsors are limiting their ability to grow, how they overleveraged the business and now its starved for cash, and the list goes on.

Rupert begins to look a little out of his depth as frank keeps probing his knowledge of the Seven Seas deal and business and looks to you for help. You quickly open your backups book and page through to the precedent transactions full case studies for each deal. You find Seven Seas, and freeze. You cannot believe your eyes. You look up to Rupert, who is busy talking about how the current owners of Seven Seas are really a little bit of a group of muppets, and how what this business really needs is proper private equity ownership, not the mickey mouse excuse for financial sponsors who make up its current board.

You look back at the page and cringe as Rupert continues bashing the deal, as the first bullet point on the deal description reads:

“A consortium of private equity investors led by Kruelberg Kretin acquired Seven Seas…”

Wednesday, March 21, 2007

The Kruelberg Kretin Saga - Episode III: Meeting Frank

Christmas usually comes once a year, but this is your lucky year, and Christmas came early – you’re going to be taken to a meeting with Frank, at Kruelberg’s Mayfair offices. Your attendance has already been confirmed. You naturally feel excited to be given the honour of meeting the great Frank Johnson, who although is really a nobody at Kruelberg, is a nobody at KRUELBERG. The fully staffed team the firm is sending for a meeting with one nobody, Frank, is headed by Al Sikowsky, an executive director in the private equity group who is desperately trying to make a move to the buyside. Al wants to kiss Frank’s ass as much as possible in the hope of frank putting in a good word about him at Kruelberg. He was the first to agree to the firm’s resources being used to cur frank’s account6ants’ and lawyers’ fees as much as possible, and he’s the crackpot banker who’s never been in at the junior level, so he has no idea where the fuckups come from, what happens in the office after 8pm and how absolutely evident it is to everyone else that he’s a muppet beyond any figment of one’s imagination. Rupert beware, you have some serious competition in this space. Come to think about it, he actually has a great chance with frank and Kruelberg – they have a hell of a lot in common.

The meeting is on Monday morning at 9am sharp at Kruelberg’s sixth floor office in the heart of Mayfair. You’ve got all your ducks lined up in a row. You had your best suit pressed on Friday, crisp white shirt, extra starched cuffs and collars so it feels like you are wearing cardboard, you got your shoes buffed, crisp and clean and you are looking 110% i-banker my man. You know your shit, you know the answer to anything frank can possibly ask, you’re confident, you’re ready and you’re 100% there to back the team and help Kruelberg clinch the deal.

Man o man, believe it or not, you’re going to be there in the same room with Frank Johnson. This is the man. The Kruelberg man. You’re going to be shooting the shit with the Kruelbarg man, the client, in their offices, on their own turf. Yeah! This is the kind of master of the universe that doors swing open before he even thinks he wants to go through them. He picks up the phone to an investment bank and bankers jump at his every word. He says jump, the firm asks how high. The firm’s team is sitting in the conference room, waiting for frank to arrive. A secretary comes in, offers tea and coffee and sweet smelling pastries for breakfast and announces that frank is on his way in to the office and will join them directly. The tension builds. Anticipation. Excitement. You feel like a kid on Christmas eve, who can’t wait the next few hours until its morning and you can open your presents. You hear footsteps in the corridor. They get closer. And closer. It must be Frank. Surely, it must be the man. Coming to shoot the shit with you. They get closer. You focus and tune your ears in the direction of the sound. You pause, as you can’t believe your ears. As the footsteps approach, you hear at first a faint, and then louder and louder sound. It’s as if alongside his approach, there is a tune playing in the background, getting closer with his footsteps. You focus more, and recognise the tune. It’s eye of the tiger. You tremble in excitement and anticipation as you expect the doors to burst open and the grand figure of Frank Johnson to appear behind the blasting sound of eye of the tiger. As the doors open, you are breathless as the contour of Frank begins to appear out of the shadows of the corridor. And…yes. Frank does come out of the shadows. Your colleagues smile as they exchange amused glances at the look on your face. It’s been a few moments since he walked in and you still cannot imagine how this BSD, master of the universe, Kruelberg Kravis principal is much more of a Danny DeVito than a Silvester Stallone. He’s short, not fat but has the strong signs of a beerbelly, strategically positioned behind his shirt and creeping over his belt. He’s got a bald patch developing and is wearing an expensive but crumpled shirt.

You are at ease as you finally manage to smile at Frank thinking, oh, I will get you back Frank Johnson.

The Kruelberg Kretin Saga - Episode II: Carrot and Stick

You drift away in a flash from the warm cozy images of the warm tropical water splashing your face as you sit on the beautiful sandy shores of your private island, surrounded by crystal clear water and palm trees to give you that perfect shade - splash on the face and welcome back to reality – you realize you are in the men’s room again, trying to keep awake, banging your head against the brick wall that is Frank’s idiotic request.

You wonder, and with good reason, why the fuck are you taking this shit from Frank fucking Johnson. Just tell him he’s a moron. Just do it. Yeah!

Why? Because you want Frank to be happy, not to raise too much fuss, compliment your modelling skills in front of Rupert so you get top bonus this year, which will ultimately bring you one top bonus closer to that magical tropical island you have been dreaming about all this time. Ah, that magical tropical island with crystal clear waters will be all yours by the time you make… lets do the maths:

Three years as analyst wont get you anywhere because rather than investing the fucking crazy money you earn, you’ll be spending it on a swish flat in the heart of SW3 and you’ll blow the bonuses on a combination of overprices overluxurious holidays where you’ll be so tired and sleeping most of the time that you won’t be able to enjoy, a Porsche Boxter the first year, which will be upgraded to a 911 (as no i-banker that takes himself seriously can be seen driving a Boxter really), which will then turn into the dream of a 911 turbo. In short, there’ll be nothing left.

Not to worry, associate here you come, where you’ll get a pay rise, sign on bonus and better pay, which will go into safekeeping for that 911 turbo upgrade.

Executive director here you come, you’ll get a moderate pay rise that will probably be enough to cover the increased congestion charge now that you have no choice but driving through the C zone from home on your way to work. Oh yeah, you drive to work. The tube is for analysts and lowly associates who don’t have the common sense to drive to work. And don’t forget the £10 a day parking charge as you’re still not quite senior enough to get your own parking space onsite.

Not to worry though, because all this is peanuts compared to the big payday, when you start being paid in stock. Equity sweet equity. Yeah! Director here you come. Fat paychecks in company stock that is increasing daily with the good fortune of the markets. You accumulate the dough and hey presto, after three years as you make managing director, you’ll be sitting on the equivalent of a downpayment for that sweet island in shares.

Yes! Wait till Frank fucking Johnson sees you then. You’ll be a BSD MD of the firm while he’ll still be lingering as a fucking principal of Kruelberg, hoping to make partner one sweet day. Eat my shorts Frank fucking Johnson are the thoughts you take with you to your desk, as you begin tapping into your excel spreadsheet, trying to figure out how his accounts reconcile, only with a big smile on your face.

Tuesday, March 20, 2007

The Kruelberg Kretin Saga - Episode I: The Kickoff

You’re on a conference call (on mute) with Frank from Kruelberg on the other line, as you catch yourself wondering how does smugness transfer over the phone wires? It’s amazing. You would have thought that putting frank on mute would have put some sort of protective bubble, blocking the smugness before it reaches you, but no, no, no. The smug bastard is coming across loud and clear, as he dictates how Kruelberg wants to run this transaction.

Frank starts off with an apology for not being able to hold this kickoff meeting in person, but doe to his busy schedule, he has to be on a plane in half an hour so he’s doing it from the overpriced chauffeured car taking him to the airport. Like he really gives a shit about “meeting the team who will be working for Kruelberg on this very important deal”. Ha. I mean let’s face it, if it were an important deal, he wouldn’t be on his way to fly somewhere on another deal instead of focussing on this one.

He highlights that he wants to call this Project Parasol, because the target is an insurance broker. He thinks this is quite smart. It is. Actually, the name he’s picked is perfect, but only because if spoken quickly, it bears a strong resemblance to Project Asshole, which is what Frank really is.

Frank wants the firm to conduct a thorough valuation exercise, co-ordinate the other advisers like lawyers, accountants, tax consultants and so on, deal with the seller, deal with the banks… and five minutes later, it all makes sense. Frank has (smugly) agreed what the firm thought is a very nice flat fee on the deal. In exchange for his generosity, he’s offloading every single bit of work that the other advisers and he should be doing to the firm. Why? Because, given’s he’s paying us the flat five million, everything we do is for free, whereas he has to pay everyone else by the hour. Smugass pice of Kruelberg Kretin shit! You then wonder why you’re the poor fucker trying to reconcile the target’s latest management accounts to the last quarterly report they filed. You think to yourself that this is a piece of piss work that an accountant could do in no time. Indeed, but you’re the lucky dumbass sitting in the office at 4am trying to figure out accountancy 101 so you can feed Frank a response first thing tomorrow morning.

Oh, and by the way, that means it needs to reach him by first thing in the morning. He will, of course, only manage to look at it in the late afternoon, once he’s been to the gym, had coffee, gone for lunch and twiddled his fucking thumbs for long enough to realise he asked for this work in the first place. Nice guy, eh?

When he finally gets back to you, which will probably be at 6pm before he leaves the office for the day, it will be along the lines of saying that its an excellent effort but all wrong, and that you need to spend another night trying to get it right, before he sends your work to the accountants to make sure its fine. You are inclined to think “its their fucking job in the first fucking place you fucking twat so no fucking wonder you think its fucking wrong having read it whilst sipping your fucking espresso and reading the paper”, but you naturally do not, as you well know, frank works for Kruelberg which is the financial services community’s equivalent of royalty. He might be a useless, incompetent dubs shit, but he is a useless, incompetent dumb shit working for Kruelberg Kretin.

So yes sir it is, as you vow to one day come up with a trick that will catch frank fucking Johnson off his guard.

Friday, March 16, 2007

Kruelberg Kretin Capital Partners

You’re in the bathroom splashing water on your face and you look at yourself in the mirror and cannot believe what you see. You’re looking at this strange, tired creature that looks five years older, five kilos fatter and way more than five hairs greyer than what you remember from the holiday photo of you and your buddies from your beach holiday before you joined the firm that you constantly look at as the background shot on your computer.

You can’t believe how this transformation happened overnight. You are puzzled by how your perception of how good you looked could have been so off the mark. What happened?

You splash another handful of water on your face and try to reconstruct the sequence of events that led to this. You scratch your head and think through what you’ve been doing lately that led to this. Sure, it all starts coming back, the late hours, the work, the pitches, the meetings, the presentation, the models, all of it! But no! It can’t be all that! That’s the run of the mill – “I eat shit like this for breakfast” – stuff that a master of the universe does eat for breakfast. It cannot be just that.

You splash yourself with some more water, attempting to jig your memory once more and as if by magic, it works. It all starts coming back to you. The answer is Frank Johnson. What an asshole. Frank fucking Johnson. Frank fucking principal at a private equity shop Johnson. Frank fucking principal at the fucking private equity house that is your client fucking Johnson. Frank fucking “these numbers don’t make sense” and “I know because I used to be a banker” wiseass fucking asshole private equity fucking principal Johnson. Yes, that’s the right Frank Johnson.

Frank is a principal at Kruelberg Kretin Capital Partners. Frank thinks he’s some kind of uberhot shit, working for kruelberg, one of the hottest private equity shops on the street. They do the biggest, baddest, sexiest LBOs on the street and are probable the only form of financial life form that is more BSD that the i-banker BSDs. They are truly the hot shit. The problem is, that even hot shit stinks, and as far as stinking goes, Frank is truly the hottest piece of shit on the street.

He thinks he’s some kind of hot shot, just because he made it into private equity. He used to be an associate at Goldmen, before making the move. He used to be just like you. He used to change decimal places on comps, and say that he updated them. He used to back-solve for the valuation he knew the client wanted to achieve and then put his fantastic modelling skills to make the model come up to that valuation (or just ever so slightly below so that the client would not be suspicious). He used to pull all nighters working on models, and when the balance sheet wouldn’t balance 5 minutes before the book needed to be printed, he manually plugged numbers he knew nobody would check to make it balance. You can say, he’d been there, done that, and gotten a whole load of fucking T-shirts. The problem was, now every time you tried to pull a fast one on him, he’s look at each of these T-shirts on his wall and remember the same trick that he used to pull on his clients, and you didn’t have a chance.

Asshole. Smartass Frank fucking Johnson. Fucking Frank Kruelberg Kretin fucking capital fucking Partners Johnson. I will pull a fast one on you. Don’t know how, don’t know when, but I’ll come up with a trick you haven’t seen before you freaking asshole.