Saturday, February 12, 2011

Come Fly With Me

Come fly with me, let's fly, let's fly away
If you can use some exotic booze
There's a bar in far Bombay
Come fly with me, let's fly, let's fly away

Come fly with me, let's float down to Peru
In llama land there's a one-man band
And he'll toot his flute for you
Come fly with me, let's take off in the blue

— Sammy Cahn and Jimmy Van Heusen, "Come Fly With Me"

The life of an investment banker can be a peripatetic one, Dear Readers. That is certainly the case for Yours Truly. While there is no real regularity or predictability to my travels—either in terms of frequency, destination, or duration—it is true that I am often on the road. My jaunts usually take the form of quick in-and-out sorties or multi-day trips to a number of different cities. I am rarely away from the office for more than two or three days at a time, although it is not uncommon for me to land in New York on a weeknight, go home to sleep, and turn right around to the airport for a flight out the next day. Most investment bankers travel like I do, in short, intermittent bursts. We are not the crazed road warriors that management consultants can be, traveling 330 days a year or spending six weeks at a stretch in a Motel 6 in Dubuque, Iowa conducting middle management training sessions. Thank God.

But not all investment bankers travel. A great number, like the salesmen, traders, and structured products weenies on the trading floor almost never leave town. Their ambit of travel usually consists of a well-worn circuit from home to office to bar to mistress to home, with an occasional drunken "client dinner" with trading counterparties thrown in for good measure. Only the client-facing product bankers, who help relationship and advisory bankers like me flog specific capital markets services like equity or debt underwriting to corporate customers, leave the office more than once in a blue moon.

And, depending on their client coverage and responsibilities, some senior bankers almost never leave their home base. Among the luckiest are those who manage the firm's relationships with private equity firms—usually known as financial sponsor coverage—in New York City. These guys and gals usually spend more time going up and down in elevators than they do in cabs or crossing the street. Of course, they are cursed with dealing with private equity professionals, so it's not all peaches and cream.1

* * *

Naturally, we rarely let junior bankers out of the office at all. Junior bankers, like financial analysts and associates, spend most of their time chained to their desks, doing research, creating and updating financial models, and endlessly turning revisions of the 600-page presentation decks we Managing Directors inflict on our clients when we pitch for business.

Part of this is due to cost control: it just makes no sense to bring an analyst or associate to a pitch when you already have a client coverage MD, a senior product banker, a client-facing Vice President, and other assorted hangers-on. But a bigger part of it stems from the fact that most clients usually want to see the most senior investment bankers they can. They want to see some Hermes-clad multimillionaire on his knees in their office, sucking up to them, their pissant company, and their pathetically ill-conceived strategic plans before they give him a new piece of business. If you were in the position of signing a piece of paper that would give the obsequious wretch sniveling across the table from you tens of millions of dollars for six weeks' work, you would too.

Once the engagement letter is signed, however, the client will be lucky if he sees the Managing Director who pitched for his business again before the closing ceremony. After all, we Managing Directors have to move on to the next pitch, and the next new piece of business, if we ever expect to get paid the excessively rich compensation we have promised our wives and mistresses we would earn. Eventually, the client learns that the Vice President or Senior Associate sitting in his office with his Treasury staff or Corporate Development Officer is smarter and harder-working than the Managing Director is anyway. It all usually works out just fine.

* * *

Investment banking, at the end of the day, is a sales-driven business. The higher up you move in the chain of command, the greater your new-business-generation responsibilities become, and therefore the more time you usually spend on the road pressing the client flesh. That is a non-obvious feature of the business, and it caught Your Dedicated Correspondent somewhat by surprise. As a junior weenie banker, I always expected that my workload would decline as I rose in the organization, and certainly the sheer amount of work and hours associated with it have done. But what I didn't realize was that the higher I rose, the closer I got to the client, who is the ultimate authority in our business and the person who decides when, where, and how high you must jump. The bigger you get in my business, the more the client thinks he owns you.

So you get some pretty silly outcomes, especially when you are pitching new business. I think the most egregious example was the time I had to fly 18 hours, on short notice, from a mid-sized European city to Beijing for a two-hour pitch and fly right back to London for business the next day. In terms of cost-effectiveness, best use of senior bankers' time, and sheer expense, this was pretty ludicrous. But it is not the only such example I could share with you.2

Let's just hope Saint Peter doesn't have an up-to-date carbon audit for Yours Truly when I finally roll up to the Pearly Gates. Cause if he does, I am so fucked.

1 I knew one senior banker, wearied out from years of flying all over the world as an M&A banker, who jumped ship to another bank to specifically cover financial sponsors in Manhattan. He was looking forward to having his daily commute to and from Connecticut be the extent of his travel regimen. Naturally, his new employer's promises never panned out, and the poor man spent more time in planes than at home until he finally retired. Never, ever trust an investment bank's employment promises.
2 Also, for the avoidance of doubt, let me correct those of you who are absorbing this story and the description of my frequent travel with relish, and who think, "Gee, how exotic and glamorous that is." Domestic and international travel like this is fun and exciting for about the first year or two you do it. After that, you just turn into a cranky wretch who cares about nothing but snagging an upgrade to first class (unpaid by your employer, by the way) so you can drink yourself into a stupor on your miserable journey. For all the exotic international destinations I have visited for work in the past 20 years, they all look surprisingly the same: an airport, a taxi, a hotel room, a conference room, a taxi, and an airport. Only the view rushing by outside the window changes.

© 2011 The Epicurean Dealmaker. All rights reserved.