The rattling of the buckle on his Gucci loafers is the trigger. On a good morning, when it’s relatively quiet on the floor, I have ten to twelve seconds. I type “NH” into my web browser—it automatically populates to “NHL.com/devils”—then I tap the Enter key. Recent scores are on the top banner, while highlights and news stories are just a tap of the down-arrow key away.
But it’s jumping today on the forty-fourth floor, and my time is tight—seven seconds max. Two taps on the keyboard by my index finger, followed by one from my pinky, get me to the Devils homepage. “Devils: 5, Flyers: 2” reads the top banner displaying last night’s score. “Hall-Star Performance: Taylor Hall Hat Trick Propels Devils to First Place in Metropolitan Division” reads the headline.
The rattling crescendos as Dick, one of the most senior bankers on the floor, turns the corner and barrels toward me, an ear-to-ear grin on his face. His wispy white hair, what’s left of it, sways above his head like one of those inflatable things you see outside car dealerships. And the hair sprouting from the bridge of his nose is rivaled only by the clusters formed on his ears.
“What’d I tell you?” he says, his bushy eyebrows raised in anticipation of my response, as he posts up in the cube next to mine. He has a face that’s constantly on the verge of laughter, looking for some catalyst to set him off—doesn’t even have to be words. I shake my head and put my hands in the air, to which Dick belts out a howl that grabs the attention of the juniors in neighboring cubes.
“I know, I know,” I say. “But Hall’s gonna cool off eventually. Can’t keep up this pace.”
“Third hat trick already this season,” says Dick with the air of someone who contributed to Hall’s torrid scoring streak. “How ’bout the second one though? I mean, what a goal. How many times have you seen that?”
I tilt my head back, and sort of shake it as if recollecting the goal. Then, turning my head slightly toward my computer, I tap the down-arrow on my keyboard and catch a glimpse of the next headline: “Watch Hall’s Dazzling Penalty Shot.”
“You see a guy like Datsyuk make a move like that on a penalty shot, but honestly didn’t think Hall had those moves. Know he has the speed, but incredible hands,” I say, improvising.
Dick caught wind of my hockey days about a week into my internship. Since starting full-time, I’ve been happy to keep up the charade and do the dance a few times a week, for no other reason than it’s a nice distraction from the monotony of the rest of the day.
“I told you,” says Dick pointing an index finger at me. Behind him appears Xun, a third-year associate who stands five feet in heels. Unnoticed by Dick, who has commandeered her cube, she waits patiently before realizing it’s a fool’s errand. She grabs the mug of green tea on her desk and disappears around the corner.
“Watch the whole game?” asks Dick.
Questions like this make me wonder what on earth senior bankers think happens once they leave the office at 5:00 p.m. Did I watch the whole game that started at 7:00 p.m. the night before? Surprisingly, I didn’t. No, last night from 7:00 p.m. to 2:00 a.m. I was parked in my cube, balls-deep in Excel, tears in my eyes and Bolognese all over my face.
“Caught the last couple periods,” I say.
“I was there—have seats right on the glass behind the Devils goal for first and third periods, think I’ve told you that—and let me tell you, never heard the Prudential Center as loud as it was after that win. Think this could be their year.”
“Not if my Rangers have anything to say about it,” I say, causing Dick to howl once again in a paroxysm of unhinged delight.
“They’re in the cellar of the Eastern conference!” he roars.
“Lots of hockey left,” I say. I don’t give two shits if the Rangers make the playoffs. I can barely name four guys on the team. I’d go as far as saying part of me hopes they don’t make the playoffs, since of the four Rangers whose names I know, one was my teammate in pee-wees and routinely stole my black tape, for which he’ll never find forgiveness.
“Have a big M&A deal coming down the pike and gonna get you on the project. Think it’d be a good experience and chance for you to get exposure to my industry,” he says. Dick works in a niche sector, covering companies that lease assets.
“Terrific,” I says mustering up as much enthusiasm as I can for something that I know will ruin the next few months of my life, conservatively.
“It’ll be a good bullet on your résumé,” says Dick as his eyes drift up and out the window behind me.
“Congrats on that Triton deal, by the way. Saw a big piece in the Times or maybe the Journal,” I say. “Sold it for nine times?”
“Nine-and-a-half, fully synergized, bottom of the cycle,” says Dick.
“Is there a case study on it? Would love to dig in, see a little more of the nuts and bolts,” I lie.
“I’ll have the analyst pull something together by COB tomorrow and send it over to you.”
“That’d be great,” I say, wondering which analyst’s night I just ruined.
“Alright, I’ll keep you posted on when we get started on this new trade.” He taps the top of my cube twice with his hand, then turns around. After a couple steps, he pauses, takes a fifty-percent golf swing, checks to see if he’s on plane (he’s not—way inside), then resumes his walk. The rattling of his shoe buckles grows fainter with each step, drowned out by laughter from unheard jokes in the bullpen.
On Joel’s last day at the bank, I handed him the sheet of paper that has the name, title, and picture of all senior bankers in the group and asked him to highlight each banker I should try to avoid. While staffings for juniors are based on available capacity, there are ways to align with certain MDs as time goes on and steer clear of others. Joel considered the list, removed the cap of the highlighter, did a bunch of head tilting and finger tapping on his nose, then delivered essentially a neon green piece of paper to me two minutes later. Not only was Masters’s name highlighted, but so was his phone number (cell and office) and picture. Dick’s name was one of the only names not highlighted. “Pretty reasonable to work with. Rarely throws juniors under the bus,” I remember Joel saying. “Horrific breath, but you learn to acclimate when you’re in his office.”
John Bukowski: you working with the vice chairman who has massive office?
William Keenan: yeah, guy loves me. just talked to him
John Bukowski: what’d he say
William Keenan: said he sees a lot of his younger self in me. told him I saw a lot of my older self in him
William Keenan: and those were the lowlights
John Bukowski: I could hear you over-laugh at his jokes all the way from my desk
Part of Dick’s reputation of being “reasonable” can be attributed to his seniority. As a vice chairman, Dick is one of the more senior bankers in the whole corporate finance division at DB. While younger MDs scramble to impress clients with War and Peace sized pitch books, Dick has been known to show up to client meetings with no deck at all, simply asking his juniors to send him the company’s latest financials.
What’s a vice chairman, you ask? You’re not the only one. Responses I’ve gotten from fellow junior bankers when I inquire range from “big, swinging-dick banker,” to “old guy they’re trying to push out,” to “thought leader who doesn’t bring in any business,” to “show pony.” The truth most likely lies somewhere in between. I remove the list of senior bankers that Joel highlighted, eyeing the small pictures of each MD. There is a sizable contingent who refuse to update their pictures, sporting a conservative comb-over, of which only a horseshoe of hair currently remains. Then there’s the guy whose picture looks like it was taken with a selfie stick in the bathroom, but what do you expect from someone who covers a sector called “Materials?” However, the pictures aren’t the best part.
“Managing Director, Co-Head of Diversified Industrials, Americas” reads the title of one MD. “Managing Director, Head of Aviation, Global” reads another. By categorizing MDs by sub-sectors and geography, every single MD in the group is either the “head” or “co-head” of something—must make the business cards look better. In fifth grade, I was voted treasurer of my class despite not running for the position nor having any clue what a treasurer does. The lone kid who ran for the position threw a fit, after which he was named co-treasurer by our teacher.
The official staffing email arrives the next morning—Project Litmus (M&A). My fingers are crossed as I skip the first few lines in search of what really matters—the analyst.
John Bukowski: so…who is it? I’m prayin it’s the one who sent you the -1,999% paydown
William Keenan: just found out
John Bukowski: tell me now. someone in bullpen or first year?
William Keenan: ‘pen
John Bukowski: S**t, F**k off
William Keenan: yesssssssss
John Bukowski: name?
William Keenan: Ernie
John Bukowski: kid who dresses like Buck Showalter?
William Keenan: that’s the one
It’s my favorite part of winter. Ernie’s gear, from head to toe, gets me up in the morning and motivates me to hustle into the office on those dark, snowy mornings that plague the financial district come December. But I have to earn it by arriving early enough to ensure I get to the office before him.
The oversized, faux-fur trapper hat—complete with earflaps—sits atop his head, often covering his eyes. The massive Turtle Fur mittens remain on his hands until he settles into his cube, though much to my chagrin, they aren’t attached to his jacket. His slacks, which he sports in a variety of gray shades, are pressed and rival the bagginess of the JNCO jeans I wore in middle school. His brown loafers at one point undoubtedly had pennies lodged in them. But the centerpiece of the outfit, the reason I set my alarm ten minutes early in the winter, ensuring I beat him to the forty-fourth floor, is the jacket—vintage New York Yankees bomber, dark blue, satin starter number, dugout version. Last I checked, a used one was retailing for $500-plus on eBay, and it’s not hard to see why.
On top of dressing like he just won the pennant, Ernie is a dynamite analyst.
* * *
Joel wasn’t kidding about Dick’s breath—it could cause the massive barges in the Hudson River outside his office to call Mayday. Luckily, most of Dick’s yawns and belly laughs are followed by him leaning back in a satisfied manner, thereby increasing the distance he is from me and from Ernie, who sit across the large wooden table in his corner office.
As he celebrates one of his jokes with a howl and a recline, I look behind Dick and spot a helicopter emerging from the cloud cover, scanning the FDR and the Brooklyn Bridge for traffic. In the distance, I spot the Jones Beach Theater, where I watched my first concert, O.A.R. Dick’s office is by far the biggest on the floor. An expansive trove of deal toys in assorted shapes and sizes, spanning deals over the past three decades, line the wall-to-wall glass window behind him and the top shelves of his desk. A few detailed maps of Somewhere, USA, with pushpins in random parts are taped to one wall. On his desk stand two unopened bottles of red wine. Next to them is a fancy-looking corkscrew.
Lining the outside of Dick’s desk are a number of pictures of him posing with other guys who look like him, most of them at golf courses. One is a picture of him and two other guys with matching bellies posing in front of the unmistakable purple and pink azaleas at Augusta’s famous Amen Corner. The trio look like the type who wouldn’t think twice about taking a downhill six-footer gimme for bogey, even if no one gave it to them. The most prominent picture on his desk is of Dick and a hefty man who looks like a politician. The two are shaking hands. A small American flag is pinned to the guy’s lapel, and a large American flag hangs in the background of the photo.
Next to the legal pad in front of Dick is a Hewlett-Packard 12C financial calculator. Ernie bought one his first week on the job. After failing to learn how to operate it in the first month, he resorted to using his TI-82 from high school.
The framed picture that sits directly behind the HP calculator and next to Dick’s computer monitor reminds me of my first encounter with him during my internship, when we were all encouraged to schedule a time to meet with MDs and do our best to ingratiate ourselves with them. The moment I saw the picture, I knew I was in. Dick, with his face painted Devils green and red, has his arms around the shoulder of a young teen sporting a Devils hat and massive Devils jersey. Only thing missing was the big foam #1 hand. “What position does he play?” I remember asking Dick when I spotted the picture. Eli was a goalie, and I felt the full-time job offer slide securely in my back pocket by the time Dick was in tears describing watching his son play on the JV team at the state finals.
Dick recovers from his most recent laugh and slowly returns to an upright position in his chair. Ernie, hunched like many senior analysts due to the amount of time he spends typing at his desk, scribbles furious notes, though for the life of me I can’t figure out what he’s writing now, but I’m glad he’s paying attention. The VP on the deal, predictably, is on sixteen other things, so he isn’t around and sounds like he’ll only be available to provide limited feedback throughout the process.
“Things should ramp up in the next couple weeks. We’ll need to send our preliminary views to the client ahead of that call with him next Tuesday. Did you guys get the email about that?” asks Dick.
“We have the dial-in,” I confirm as Ernie flips the pages in his spiral notebook and continues his copious note taking.
“Good,” says Dick, tapping his desk with an open palm. “Ephraim is the M&A guy—he's the number two guy there—who scheduled the call, so let’s get those pages together, then we can flesh them out when he gives us feedback on the call.”
“Great,” I say.
“If you can get me something by Thursday night, that’d be preferred. I’m shooting down to Florida to play Seminole this weekend…with Jim Nelson.” He looks up, making eye contact with Ernie, then me as he says the name. It’s gotta be the name of some famous investor, though I’ve no clue, and given Ernie’s nose is buried in his trapper keeper, I know he has no idea either. Sure would be helpful to have the VP here.
“The Jim Nelson?” I say with wide eyes.
Dick nods slowly. “Good friend of mine…and helluva player—swings lefty, putts righty…scratch golfer.”
“No kidding?” I say.
“You bet,” he says amidst more nodding. “So like I said, get me what you have by Thursday. Don’t think I should have many comments, and we’ll circle up with Ephraim and his team on Tuesday.”
Ernie and I exit Dick’s office and post up in the bullpen.
“Lookee, lookee,” says Ted, who’s perched in a cube going over a markup with another analyst. “Heard you guys are working with Dick. Should be in a good spot, Keenan—only thing he loves more than golf is hockey.”
“Pretty sure I saw him YouTubing videos on bunker-shot technique when we were in his office,” I say. Ernie nods, confirming my suspicion.
“He’ll stream security footage of a mini-golf range if he has to.” says Ted. “You guys working on a leasing deal?”
“Yep,” I say.
“Good luck.” Ted returns his attention to the markup he’s going through.
Ernie’s BlackBerry buzzes. “Shoot, my Seamless is here,” he says.
“I can grab it. Where’d you order from?”
“Georgio’s Pizza. Thanks,” he says. There’s a lot of work to be done, and I’m more useful in the lobby anyway. While accounting goodwill is defined as an intangible asset that arises when one company purchases another for a premium, the most important goodwill is that which an associate builds with his analyst.
“Why don’t you scan those pages he gave you,” I say to Ernie. “Then, log the deal and see if we need to do KYC. Also, check the old folders to see if the financials are already spread, then try to get the model up and running over next couple days. I’ll work on putting the shell of the deck together…and I’ll also look up who Jim Nelson is so we have stuff to ask Dick about next week.”
“Okie dokie. Sounds like a planski,” says Ernie. As Ernie gets to work, I head to the lobby to retrieve his dinner.
* * *
In business school, they teach you that companies do deals for one specific reason. A month-long section of corporate finance class is spent dispelling the common misconceived reasons why companies buy or sell assets. Now, that single, specific reason slips my mind. However, I can say with unwavering conviction that whatever it is, it’s not the reason any of the deals I’ve worked on are done. Despite what theory says or what’s publicly stated as rationale, real companies with real people managing them do deals for one reason: they feel pressure. That pressure can strike from any angle. The banker’s job is to sniff out its origin and double down with a cast iron clamp to guarantee a transaction closes and a hefty fee follows.
While the sources of pressure vary widely on factors like whether the company is private or public, they are generally one of the following:
1. Internal pressure to optimize performance and keep up with increased competition.
2. External pressure from favorable market conditions to finally get that once-in-a-lifetime bargain buy or premium valuation on a sale.
3. Pressure from shareholders to increase the stock price.
4. Pressure from CEO’s wife/husband to put a down payment on that second or third house.
It’s no surprise that most deals are viewed as failures in retrospect.
Project Litmus is a prime example of pressure coming from so many angles that the company has no fuckin’ clue what it should do but knows it’s gotta do something, so it engages DB “to explore strategic alternatives,” which is the topic of our conference call on Tuesday afternoon.
* * *
“Have you received the materials?” asks Dick once everyone is on the line.
“Not yet. We have a firewall system that sometimes causes a delay when receiving attachments from external email addresses,” says Ephraim, the head of M&A for the client and a former banker himself. And while that may be true, Ephraim doesn’t have the deck, since I haven’t sent it yet and instead am scrambling to make last second edits that Dick emailed me minutes ago.
“Should be coming through any second now,” says Dick. “Bill sent them a few minutes ago.” I double-check the final change on Dick’s email, attach the document to the email I’ve already saved in drafts, and send to the group.
“Yeah, sent a few minutes ago,” I say. “Would assume you should get it any second now.”
A minute later, the email arrives in their inboxes.
“I think the purpose of this call is to walk you through our analysis of strategic options and gather some feedback on a few areas,” says Dick. He then quickly walks everyone through the first five pages of the deck, which consist of high-level, useless information. Slides six through fifteen are number heavy and more in the weeds.
“Just going back to slide six for a second,” says Ephraim. “If we can take a look at the far-right column, where you outline the pricing for the various pieces of debt. I follow the TLB,” then as a side note, Ephraim says, “Interesting you guys think there are three yards of risk in the bank market.”
“That’s based on information from our colleagues in levera—” I begin to say before Ephraim interrupts.
“I got the senior secured piece, and ECA, but can you help me understand how you arrived at the private placement coupon?”
“Bill, you want to talk Ephraim through how we arrived at this? I think we’re trying to be holistic about our approach here. And again, guys, these are purely illustrative, given we don’t have fulsome data. Everything in brackets is preliminary,” says Dick for the fifth time.
“Understood,” says Ephraim. “Bill, could you opine please?”
This is the issue with being in an industry-banking group. You inevitably “hold the pen” on all documents, whether it be a model or a presentation. You’re responsible for every goddamn word and number, even if you had nothing to do with it. The page they’re looking at outlines the various debt markets they can tap into to finance an acquisition, and given the nuances of each market, DB has specific teams that cover each market, but no one from those teams is on the call.
“We consulted our structured credit team, who advised us on the pricing here—” I say.
“But is that private placement tranche priced off treasuries or LIBOR?” says Ephraim.
“Good catch,” chimes in an unidentified voice of someone who works for Ephraim.
“Well, we show it based off LIBOR for consistency sake, given the other tranches of debt on this page are priced off LIBOR,” I say. “We actually footnoted—”
“Right, but am I correct in stating that the private placement debt should be priced off treasuries and not LIBOR?” says Ephraim.
“As I understand it, yes that’s how it’s generally done. But again, just to make it consistent, we showed pricing off LIBOR for all tranches. And the spread we show reflects that discrepancy, so the all-in cost is the same. The footnote—”
“Got it, got it. Not quite apples to apples here, but fine. We can move on,” says Ephraim.
Wasting five minutes every three pages to let the client feel smart is worth the eventual fee, I guess.
“Looks like you’re showing LTV of seventy-five percent with blended costs of five percent, is that right?” continues Ephraim.
“Correct,” I say. “And we think that’s the most aggressive leverage, given the capacities of each market. With more detailed fleet information, we can be more precise, but that’s as aggressive as we think we can go.”
“I like eighty percent LTV and four percent blended cost,” says Ephraim instructively.
“Let us circle up with our ABS and bank-debt colleagues and come back to you on that,” says Dick. “I think we can be creative around this and get you what you’re looking for.” It’s this type of bullying from the client that brings banks down.
“Can you also provide an analysis on two other scenarios—if we issue ten years versus five years for those notes?” It’s like the grown-up version of those SAT questions: “Two trains leave the station at the same time. One is traveling at eighty miles per hour heading due south, and the other is traveling at 105 kilometers per hour heading due north.” I always wished the trains would just collide.
“We’ll do that,” says Dick—of course “we” means “Bill.”
“Page seven,” says Ephraim. “Fifteen percent? SG&A…fifteen percent? Is that right?” He’s looking at the 14.6 percent that has a green circle around it and is the SG&A cost as a percent of its sales of one acquisition target we proposed.
“What’s management doing? Dreadful,” says Ephraim.
“Not if you work there,” chimes in Dick to a chorus of laughter.
“I really like that number,” says Ephraim. “Very interesting,” he says slowly, drawing out the word “very.”
What gets Ephraim wet is the potential to vastly reduce costs if they buy this company—realizing synergies, in banker vernacular.
“Can definitely rationalize headcount,” says Dick, indicating that the easiest way to reduce costs is to fire employees. It’s a douchey euphemism, like when people who attended Harvard say they went to “a small liberal-arts school in Cambridge.” Incidentally, I went to a small liberal-arts school in Cambridge.
“Absolutely,” says Ephraim. “We could definitely optimize that cost structure.”
“It’s a one-plus-one-equals-three deal in my eyes,” says Dick.
After outlining the various acquisition opportunities, we dive into the considerations of a sale. There are North American buyers, Asian buyers, European buyers, strategic buyers, and financial buyers—you name it, we show ’em a buyer salivating at the thought of buying their company, though the (lack of) bids may tell a different story.
I can feel the call wrapping up.
“Look, guys, I think you’re thinking about things the right way and asking the right questions. This was really helpful,” says Ephraim. “Appreciate the work on this.”
Now, the moment of truth.
“What would be great is if you could flesh out—” continues Ephraim. I slam the table. I know Ernie is in his cube and will copy our marching orders verbatim. And what I also know is that asks from the client are far more painful than those from an MD.
“…so my guys will make sure the data room is up by COB today, so would be great to see all those scenarios by end of the week,” concludes Ephraim.
“Shouldn’t be a problem,” says Dick. And it won’t be for him, since he won’t be spending the next three days in the office grinding on the analysis.
“Appreciate the quick turnaround. Enjoy the rest of the week,” says Ephraim.