Wednesday, February 01, 2012

Being An Investment Banker - Part 3

Just a follow up post on being an investment banker. More life experiences on the fast lane:
I soon discovered that I did not land myself a job but a 24/7 personality referred to as the investment banker. I was like a doctor on call. 
My day would typically start by waking up early morning to chat with a client in Hong Kong. And I ended the day staying up really late to chat with the one from US.
In between, my life was interspersed with mundane tasks of presentations and photocopying, with miniscule doses of financial engineering and power games.
Let me explain. 
Investment bankers are experts at calculating what a business is worth.
To arrive at this figure, they use something known as the Discounted Cash Flow method. 
For the uninitiated, this is a valuation method used to estimate the attractiveness of an investment opportunity. It is such a sensitive tool that, by just changing a variable or assumption, you would be able to get a completely different figure. You could value a company at Rs 100 crore or Rs 1,000 crore. 
It actually was up to me!

This made me feel supremely important, despite the fact that I had to pore over coma-inducing spread sheets.
And, of course, when you discuss mergers and acquisitions, you only meet with the big brass. Getting a handshake from these guys and having them listen to my every word and detailed analysis would set my adrenaline soaring. 
Our job also entailed raising capital (money) for companies. This was not much fun. I had to dress up a company and then present it to private equity investors or venture capitalists and even the public, if we were floating Initial Public Offerings. 
Basically, we had to sell a company, whether we truly believed in it or not. Often, I found myself pushing deals with clients that I knew would not work. I became a salesman to the core.
Investment bankers also excel in paperwork. Whether it was a prospectus for an IPO or whatever deal, we had to ensure that the figures were accurate and the language legally perfect. We had to scrutinise every word and then make hundreds of photocopies (alright, I am exaggerating, but only slightly). 
And, if it was merger or acquisition that we were working on, the paperwork assumed such gigantic proportions that a room had to be hired -- called the data room -- whose sole purpose was to store the photocopies.

There were periods when I managed to catch just four hours of sleep daily.
Whoever said that investment banking is not about money but about the game of acquiring it (a popular saying among investment bankers) was lying through his teeth.
It makes you wonder how you sleep at night. Well, if you are an investment banker, you don't have time to worry about such things. You are basically too tired to think about moral hazard. Whenever you leave work, you can only think about sleep. And the year-end bonus.
What I loved about the job was the money. 
The salaries and bonuses were obscenely luring. (A fresh MBA, with absolutely no job experience, could earn between Rs 3,00,000-Rs 6,00,000 per annum (the latter if you are from a top-notch business school like the IIMs).) 
The salaries gave purpose to my life and the bonuses (which could go up to three to five times the annual salary) made up for the crap I had to put up with. And, yes, believe me, there was lots of crap. 
Let me tell you something about the bonuses. 
Like I mentioned earlier, it can be breathtakingly inflated figure. To get it, you have to do two things. 
The first: Work like a dog to contribute to the profits. 
If you are passionate about teamwork, investment banking is certainly not the place for you. It is more of a dog-eat-dog culture. You are on your own. Since you are paid according to the deals you cut, it works out to be a very individualistic environment with everyone jockeying for a large slice of the bonus cake. 
The second: Suck up to your boss. 
That's right. Be a sycophant, even if he is insufferable. 
Smile at him. 
Say the right things. 
Nod when he makes a good point. 
Don't disagree too much when he does not. 
Grovel at his feet. 
Your bonus is not going to be calculated according to some predetermined formula. It is solely dependent on your boss' whims and fancies.
Seriously, go read the whole article.

HT: Melvin Ang

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