If nothing else, hopefully the recaps of my various unfulfilling occupations will prove that if you work hard, apply yourself, get into good schools (after failing out of other ones) and catch a few breaks, you too can get a dream job you will fucking hate. When I was applying to business schools in 1999, I had no idea the array of career opportunities that would be available to me. I’m from the south; the most lucrative occupations I had ever been exposed to were pro athletes or the wealthy protagonists on TV programs such as doctors, lawyers, architects and taxi drivers.
I knew nothing about the world of finance. Sure, I’d been day trading internet stocks with limited (okay, extremely negative) results, but I had no idea what an “investment bank” was. I was, however, becoming a tad more aware of the somewhat dire financial straits I’d be facing after two years of high-powered MBA learning (final tally was $108k in student loans). I was told at one of my personal interviews that I should consider investment banking, but that it was grueling work and that I should read a book called Monkey Business to get a sense for what really went on in the industry.
So I read Monkey Business; where most people were turned off by the banker’s horrible behavior, ridiculous hours and awful working conditions, I was staggered only by the tales of their first bonus checks. $175k bonus??? That sounded impossible, could that even be real?
Snippet of my internal monologue: I would happily blow donkeys 24/7 for a year for $250k. No problem. Who cares about the long hours, I worked the fucking midnight shift every night on a submarine for Christ’s sake!
So once I got into business school, I set off to be an investment banker, figuring (correctly) that this was the quickest way to eradicate my stacks and stacks of student loan obligations. How exactly did I get into banking? I will save details of that bizarre mating ritual for another post; the interview process is cruel and outlandish on its own merits.
What the hell is investment banking, anyway?
I worked in this field for six-plus years and I’m absolutely certain that no one in my family had any idea what i did for a living. In a world where personal bankruptcy was as frequent as the Summer Olympics, my newfound financial security was somewhat shocking to my family. I’m pretty sure many family members suspected that “investment banking” was code for “snake oil marketing” but it was definitely nice to be able to order freely from the Chili’s menu with little regard for price.
Anyway, what is it? I’ve often described investment banking as “a bank for companies” – providing equity and debt underwriting, merger advice and other sundry services. But I noticed that most people started the glazing over/tuning out process at “equity,” so that wasn’t really working. Once, while in Europe, my boss (in banking parlance, a Managing Director, or MD) told me that he was having a similar conversation with an acquaintance and he’d told him his job was to “identify undervalued assets.” I suppose there is a kernel of truth to that oversimplified and optimistic statement, but also an overwhelming amount of dignification and justification with a hint of overstated importance/relevance.
I countered (somewhat cynically, but I hadn’t slept in about 34 hours) that I felt a more accurate description of our job was “making rich guys richer.” Capturing private/public valuation arbitrage, levering up, merging companies – invariably these transactions resulted in someone who was already impossibly wealthy getting at least a tad bit wealthier. Our job was to make sure we were in the mix with the important players in our sector, and that we would get a piece of the action on any deals that went down.
Hopefully that clears things up.
Crappy Jobs I’ve Had
# 7. Investment Banker (Part I of II)
Description: I started my investment banking career as an “Associate” at a bank – let’s call it TARP Bank I for anonymity’s sake – after a wildly unsuccesful stint as a “Summer Associate” at another bank. (I will also save that shitshow for another post). You start out in banking as an Associate – almost the exact same thing as being a Junior Officer in the Navy. You don’t know shit, you depend on the junior people (“Analysts” in this case, invariably focused, super-dedicated uber-nerds from Penn, Columbia or Duke) to teach you the ropes even as they hate your guts because you are technically senior to them, and the senior folks (MDS and VPS, in this case) see you as more a resource than a human being. (I have actually seen two MDs draw up a schedule for when they could have access to a particular associate for a one week period. They omitted a “sleep” category in this schedule. Seriously)
I managed to land this jet-setting investment banking job offer in the robust social/economic enviroment the month after 9/11. (My confidence in my donkey-blowing skills was not unwarranted). Was TARP Bank I the best place to work on Wall Street? No, but it at least provided a quasi-professional environment to learn what the hell i was supposed to do. I had botched my summer gig so bad I didn’t really know what was what – I had learned just enough lingo to get myself through the interview process.
As an Associate, you are responsible for checking the analyst’s work on the quantitative metrics, working with the VP/MD on the strategic message and generally making sure the day-to-day tasks are being handled correctly. What tasks, you ask? In the absence of actual transactions, bankers spend their time imagining various scenarios in which their services could potentially benefit their clients – then they go pitch said ideas to their (largely disinterested) clients. In 2002-2003, investment banks were largely in this “pitch” mode – and to pitch someone you of course need a pitch book.
Pitch books are colorful, professionally produced documents which offer clients incredibly thoughtful and thorough evaluations of a variety of unlikely financial occurences, such as the client being acquired, acquiring someone else or adding to/reducing its debt load (depending on the “liquidity” flavor of the day). By law, these books are required to include pages and pages of (unwanted) analyses, supported by informative (and unrequested) graphs and charts. Completing the analyses and preparing the colorful pitch documents (invariably of a length that would make Proust embarassed by his conciseness) generally takes around 1500 man-hours. (The bulk of the “men” in those man-hours is 2-3 unlucky junior souls)
As on a submarine, where a good deal of each day is spent pretending that a catastrophe has occured, in banking you spend a preponderance of your time working on hypotheticals. What if Company X bought Company Y for $Z? What would the Pro Forma look like? Pro forma is finance talk for best case scenario. Like, pro forma for me being a better writer, this column would be shorter, have fewer parentheses and be less crappy. You can pro forma anything, just be unabashedly optimistic.
A pitchbook will also always include “qualifications” pages, which show why that bank is better than all its competitors at everything. To add legitimacy, these claims are always substantiated by “league tables” that show the ranks of all the banks across categories such as “U.S. Equity Issuance.” Never in recorded history has a bank been lower than #2 in any league table chart that it provides, despite the fact that there are hundreds of such banks. Liberties are frequently undertaken with the “raw data” underlying the league tables. If NFL teams operated like investment banks, every team would have showed up to the 2007/8 playoffs claiming to be 16-0, lest they be proved less an “industry leader” than the Patriots.
I stayed at TARP I for almost 2 years before I moved to TARP II, a much more formidable competitor with a much less sweat-shop like environment (it was standard practice at TARP I for the “Staffer” to walk the floors late on Friday night; anyone who left before 10:00 PM was certain to get a new assignment for first thing Saturday morning). Thankfully, the market started shifting in 2004, moving away from pitching and more toward executing actual transactions. Deal execution is actually less stressful than the pitch process, you actually get to create (or in mergers, destroy) something, and there might even be a flicker of – gasp! – job satisfaction. Getting this execution experience ties together the myriad concepts that get thrown around in the pitching process, and one eventually starts to understand what the hell is going on.
My excellent execution work was rewarded with a promotion (either that or three years had passed and I had a pulse). I was then a Vice President – I have business cards to this effect and everything – it sounds pretty powerful and prestigious. Unfortunately it doesn’t mean much – you really just have an additional person (the Associate) that you can blame when things start going awry. A VP is a bit more removed from the day-to-day fray and (supposedly) more integrated into the strategic thought process. In reality, you are more likely to be the unfortunate gimp lugging 60 pounds of pitchbooks to a meeting, doing final signoff on client documents at 2:30 AM or boozing with out-of-town clients until 4:00 AM.
Actually, to be balanced and fair, the client entertainment aspect was pretty solid. Given that at TARP II most every senior banker was a dedicated family man, a young (well, middle-aged) degenerate such as myself was considered an attractive asset when dealing with visiting yokels who wanted to stay out all night at the coolest (coolest that we could get into, that is) NYC clubs. That is the area where I really shined (as a bonus I was always greeted like a conquering hero when I rolled into the office at 3:30 PM the next day). Learning how to navigate the expense report channel was especially tricky, but I got $2k bills to Marquee through on more than one occasion (either that or my Associate is still paying that shit off). My strong moral code prevented me from ever accompanying a client to a strip club. The moral code and the more than outside chance that one of those deviants would try and stick me with a $7k tab.
My Greatest Contribution to the Industry: There will undoubtedly by many posts on my illustrious banking career on WPz, but there is only one stone-cold absolute highlight. Unlike most other occupations, bankers are insecure enough to require an actual physical trophy following the successful execution of a transaction (the trophy from the pitch process is lifelong back problems for whichever junior bastard had to carry the 150 pages of nonsense numbers to the client). The form of this trophy was the “deal toy” – a small lucite figurine that reflected something about the company that did the deal, with a “tombstone” inscription describing details of the deal and of course highlighting the investment banks that executed said landmark transaction. So if you did a deal for John Deere, there was a good chance that six months later you would find a small tractor with your banks name on it on your desk.
As mundane as this sounds, there are actually at least two companies that produce these deal toys – and they fight to the death to win the assignment to produce them for the banks. Every deal is its own bloody battle and the most junior investment bankers are the ones who ultimately decide which firm will produce the lucites (and they generally don’t play fair; when I was at TARP I one of the sales reps for the deal toy company was a cross between Megan Fox and Brooklyn Decker – work in the 30 story building would literally come to a screeching halt when she stopped by). Both firms will generally send a mock-up of their vision of the lucite to someone on the banking team whenever they see a deal announced, hoping to win the assignment. They generally start with a version of the firm’s logo with the deal terms inscribed on it.
My greatest contributrion to the financial community will always be the deal toy mock-up sent to us following the completion of a bond offering for a tape company (marketing campaign – Tape: it’s sticky on one side, not sticky on the other). I present without further comment the serious mock-up provided to us by one of the deal toy companies trying to win our business:
…wait for it…