Thursday, June 7, 2007

Shades of Pemberley

It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.

— Jane Austen, Pride and Prejudice

Were I ever to receive a damaging blow to the temporal lobes which compelled me to devise a curriculum for first year MBA students, one of the chief works I would have the eager young beavers in my charge read and comprehend—in addition to the usual dry and dusty tomes on CAPM, merger accounting, and operations research—would be Pride and Prejudice. Like many of Jane Austen's novels, I have long been of the belief that P&P is severely underrated as a how-to manual for success in both my chosen vocation, investment banking, and the broader socioeconomic sphere in which I and many of my brethren move, New York Society.

Like New York Society today, the social sphere which Miss Austen chronicled was riddled through and through by one aim, one topic of conversation, and one obsession: Money, and how to get it. Of course, the props and trappings of money during the Georgian period in England were different from those in 21st century Gotham, as were the specific ways in which men and women pursued it. But I ask you: how much real difference is there between Whites and the University Club; between "covering skreens" and serving on the Spring Benefit Committee at The Spence School? My answer? Not much.

Of course, anyone with a soul in England during Jane Austen's time was as conflicted about this monomaniacal focus on filthy lucre as are the current denizens of New York City who retain a scrap of human decency (all 36 of them). Nevertheless, practicality—then as now—dictated a certain resigned acceptance of the rules of the game. In any event, I defy you to find a more pithy and perceptive analysis of the traumas and tribulations of post-merger integration than Charlotte Lucas' speech to Elizabeth Bennet:

"Well," said Charlotte, "I wish Jane success with all my heart; and if she were married to him to-morrow, I should think she has as good a chance of happiness as if she were to be studying his character for a twelvemonth. Happiness in marriage is entirely a matter of chance. If the dispositions of the parties are ever so well known to each other or ever so similar beforehand, it does not advance their felicity in the least. They always continue to grow sufficiently unlike afterwards to have their share of vexation; and it is better to know as little as possible of the defects of the person with whom you are to pass your life."

And what are investment bankers but middlemen writ large (or not so large, depending on your perspective). We are the moneychangers in the Temple, the indispensable yet despicable greasers of commerce.

For proof of both the contempt in which many market participants hold investment bankers and our undeniable indispensability, I refer you to an early post from my reluctant inamorata at Going Private, Equity Private:

See, [private equity firms] hate investment bankers. Investment bankers sell their services by convincing a firm's owners that their firm is worth "X" and then, right or wrong, blocking even the hint of any deal that makes their wild ass guess of "X" look silly. It is like hiring a real estate agent who promises to sell your $900,000 house for $1,000,000 and then refuses to even inform you about the 6 buyers offering $925,000. Well, ok. That's not really fair. Really we dislike them because Investment bankers mean negotiations and auctions. Negotiations and auctions mean paying fair prices for what we buy. We hate paying fair prices for what we buy. We love free markets. Except auctions. Then we want illiquid markets.

Later, EP admits, grudgingly, that i-bankers can occasionally be useful, as well:

Ok, I know I said we hate investment bankers. Well, sometimes we don't hate investment bankers. "Sometimes" is when they call us trying to avoid sounding desperate because the deal they had thought was all sewn up to sell a company they were trying to dump fell through at the last minute. Their auction broke. Maybe we had bid on it but [came] in second, or third. Or not at all. Suddenly we love investment bankers. Illiquid market again.

Within the current capitalist ecosystem, investment bankers fulfill a critical intermediary role. We grease the skids, we oil the palms, we ease the path of transactions both high and low that make the great Schumpeterian wheel go around. We are the midwives of Creative Destruction, and we are as despicable, as ineluctable, and as indispensable to our current system of financial capitalism as Johnnie Cochran was to criminal defense litigation. We will never be as cute and cuddly as panda bears or meerkats, but try to eliminate us and your teetering edifice will collapse.

You see, at the end of the day, the character in Pride and Prejudice investment bankers most closely resemble is Mrs. Bennet, the mother of the five nubile Bennet daughters, whose chief and apparently sole aim in life is to have each of her impecunious daughters married off advantageously, no matter what arguments may exist for or against any particular matrimonial union. She is not very bright (although quite crafty), and she has absolutely no qualms about making a complete and utter fool of herself and her family in pursuit of a deal.

And, when both Jane and Elizabeth Bennet are married to rich and handsome men whom they happen—by completely and utterly irrelevant chance—to love, Mrs. Bennet takes full and singular credit for the happy matches.

Now there is a woman I would hire for my firm.

© 2007 The Epicurean Dealmaker. All rights reserved.