A Walk on the Buy Side

What it looks like from the private equity side of things

 

One of the sexiest (i.e., most lucrative) areas of investment banking is mergers and acquisitions, otherwise known as M&A. Most commonly, an M&A I-banker presents companies that want to be sold to potential buyers, such as private equity groups. Private equity groups are essentially firms that buy companies on the cheap, then resell them later at profit. Junior analysts like the ones in our story do the grunt work on these deals. We asked a potential buyer (who works in private equity and prefers to remain anonymous) to explain what happens when an M&A group tries to sell him on a deal. It all starts with a presentation over lunch:

(Note: The managing director is the big shot for the M&A firm. The management team/CFO are the big shots for the client company that the M&A team is presenting to our writer.)

"As for what bankers do at the official actual lunches: absolutely nothing. Well, not quite. Whoever the big shot is (he has to have 'managing director' in his title. 'Senior managing director' is optional) on the deal gets up and makes some comments. First he tells you how great the company is. Then he goes over the structure of the deal, and even though he feels compelled to speak because it makes him feel self-important, everything is pretty self-explanatory—it's just a slide with a couple bullet points and some boxes on it. Then he introduces the 'fantastic' management team (whose ass he usually is kissing throughout the whole process).

Meanwhile, analyst bankers are sitting down, relieved that they don't have to carry anything anymore (they have been carrying around prospectuses, presentations, and probably a laptop all morning long and get to do the same thing during the afternoon). They are probably exhausted and just want a bite to eat and a cup of coffee for lunch. They sometimes sit in the crowd, or they sit around the table with the management team and kiss some ass and try to stay awake.

Here is how a meeting usually goes: the analyst walks in with presentations and prospectuses (which we should already have) in a bag slung over his shoulder. Throughout the meeting he probably hopes that even though we already have the prospectuses, we don't give them back to him, so he doesn't have to carry as many around to the next place. During the meeting, he diligently writes down any questions we ask the management team. As the meeting is coming to an end, he steps out of the room and calls the car service to make sure they are ready downstairs. Then he comes back in and sits down. Of course, the whole time he pretends to be interested in a presentation that he has already seen about a thousand times before and in fact probably wrote himself (in the case where the 'fantastic' management team is actually a bunch of morons). When the meeting is over, he makes sure he picks up the presentations (you can't keep them—you can only keep the prospectuses for legal reasons), shakes your hand, and, if he is nice, says to call him if you have any further questions (all the while hoping he never has to see you again)."

Categories: Feature