108 Bells

I have grown tired of the moon, tired of its look of astonish-
ment, the blue ice of its gaze, its arrivals and departures, of
the way it gathers lovers and loners under its invisible wings,
failing to distinguish between them. I have grown tired of
so much that used to entrance me, tired of watching cloud
shadows pass over sunlit grass, of seeing swans glide back and
forth across the lake, of peering into the dark, hoping to find
an image of a self as yet unborn. Let plainness enter the eye,
plainness like the table on which nothing is set, like a table that
is not yet even a table.

— Mark Strand, “Nocturne of the Poet Who Loved the Moon”

At midnight tonight, as they do on December 31st every year, Buddhist temples around Japan will ring out the old year with 108 chimes of the temple bell, in a ceremony called Joya no Kane. Each chime is supposed to symbolize the purification of one of 108 sins, defilements, errors, and worldly desires that stand in the way of a believer’s passage to Nirvana.

I am no Buddhist, but I am a firm believer in the psychological and, dare I say it, spiritual benefit of ritual. No matter what ritual you follow tonight, may you cleanse the errors and confusions from your past life and replace them with the clarity of a clean and hopeful future.

It is time to say goodbye to the last, tired moon of 2012. Say hello to the sunrise of a brand new year.


© 2012 The Epicurean Dealmaker. All rights reserved.

TED’s Greatest Hits of 2012

Yes, O Dearly Beloved, it is time. That season of the year has arrived in which Your Humble and Ever-Attentive Opinioneer attempts to survey which among his meager works has earned the attention, approbation, and/or opprobrium of the masses in Anno Domini Two Thousand and Twelve. My tools, as usual, consist simply of the page view rankings of posts authored this year as they have been recorded in Google Analytics. This data is necessarily incomplete and potentially unreliable, as it misses the actual eyeballs harvested by each respective post from the far greater numbers of people who simply visited the home page of this humble opinion emporium. But hey, it’s good enough for government work.

My feelings do not enter into this ranking, as I defer, as is my wont, to my Beloved Audience’s merest whim. Three hundred and sixty-four point two five days of the year, I convey my own opinions here. Today is your day.

Listed in order of popularity, as determined by you, here are this year’s greatest hits. Enjoy.

THE CANON, 2012 Edition

1) The Rules (November) — An excessively popular semi-tongue-in-cheek list of the rules for proper behavior in corporate finance and M&A. I will let you clever readers figure out which bits are tongue-in-cheek and which are only semi. No peeking.

2) Can’t Buy Me Love (April) — In which I explain why the great unwashed should not envy the reportedly stratospheric pay of investment bankers, nor should the eager young flock to my industry in search of endless wealth. I realize that few of the latter will listen, but perhaps I will save one or two as they come barreling through the rye.

3) Goodwill Hunting (November) — A prominent financial journalist uses the incident of Hewlett Packard’s writedown of its investment in Autonomy to embarrass himself publicly with the depth and breadth of his ignorance concerning firm valuation and the rules of public accounting. I, being of sound mind and generous heart, take mild exception and attempt to convey what are quaintly known in journalism as “the facts” to any and all individuals who might actually like to know them. Illustrated with one of Your Dedicated Bloggist’s favorite Frank Cotham cartoons.

4) The Root of Some Evil (January) — A respected academic named after a Harry Potter character attempts to tie senior financial executive pay to performance and, ultimately, link excess pay to the onset of the financial crisis. After engaging in deep breathing exercises and ingesting copious quantities of legal mood stabilization substances to reduce his skyrocketing blood pressure, your Tireless Servant and Guide to All Things Financial patiently explains why said academic is full of stinky goose shit. In summary, like most academics observing my industry from the outside, this scribbler would have been far better served actually learning how my industry works, rather than trotting out tired old shibboleths from the leafy groves of lazydeme.

5) The Rape of Persephone (January) — A rather lengthy disquisition on the practice of private equity investment, spurred by the extensive media attention triggered by the Presidential candidacy of a certain ex-Bain Capital poohbah, long since forgotten. I counter various pundits’ facile misrepresentations and misunderstandings of the financial sponsor business, and roast a few canards to boot. Short summary: private equity is not Evil Personified. It’s okay; I understand your shock.

6) All’s Fair (January) — Ex-investment banker William Cohan launches a scurrilous political attack against ex-private equity boss Mitt Romney. I respond by detailing the process of buying and selling companies and the nature of the negotiations involved. As you might suspect, the M&A arena is characterized by sharp elbows and sharp practices, pragmatically employed in the service of larger goals. Just like politics. Unsurprisingly, Mr. Cohan does not come off well.

7) Three’s a Crowd (March) — Wherein I use the very public J’accuse by Goldman Sachs apostate Greg Smith and a fellow traveler to delve into the structural and cultural workings of the investment banking industry. I describe the core conflict of interest or tension at the heart of my business and explain its origin as the ineluctable outgrowth of our attempts to serve the conflicting interests of different sets of clients. I also explain how the introduction of public shareholders permanently upset this tenuous balance for the worse. Yes, you heard me correctly: it’s the shareholders’ goddamn fault.

8) A Good Offense (April) — Was the famous beaching of J.P. Morgan’s “London Whale” an example of hedging gone awry or rank speculation undone? I examine the rotting carcass from several points of view and draw a few measured conclusions. Gratuitous World War II tank destroyer analogy included gratis.

9) Chesterton’s Fence (March) — Wherein I resurrect a hoary old chestnut from professional curmudgeon and Dead White Male G.K. Chesterton to remind us that professed reformers are wise to examine the history and reasoning behind objectionable human institutions before they decide to tear them down. While this was perhaps interpreted by most readers (and intended by Mr. Chesterton) as a defense against change, the rule offers a clearly defensible roadmap to reform: if upon examination we determine an institution was established for bad reasons, or reasons which no longer apply, then we are entirely justified in removing it or replacing it with something better. When the stakes are high, tradition should not survive simply because it is tradition. Neither should change happen simply for a change. Corollary: Do not look for simple answers at this site. I do not supply them.

10) Too Much Is Never Enough (October) — And, finally, a piece in which I explain the dirty little secret of the private equity industry: that, when they have incentives to overinvest or invest poorly—say, for example, when they risk losing money, prestige, and potential future earnings if they don’t invest the excess cash currently burning a hole in their industry’s pocket—these purported paragons of fiduciary probity can be just as self-serving as any venal schmoe. This conundrum neatly illustrates two general points worth remembering: 1) economic rationality or not, almost every human endeavor is riddled with conflicts of interest, and 2)

the primary mission of any institution, once it becomes large enough, is the perpetuation and survival of the institution itself.

The private equity industry, as an aside, has become very, very large.

* * *

Well, here’s hoping 2013 will be a marked improvement over 2012, in every dimension. This year has been a total bust.

Cheerio, children.<sup>1


1</sup> Sorry, no clever footnotes this year. I’m fresh out. But hey, you get what you pay for, you know.

© 2012 The Epicurean Dealmaker. All rights reserved.

Santa Baby

Santa Cutie,
and fill my stocking with a duplex and checks;
Sign your ‘X’ on the line,
Santa Cutie,
and hurry down the chimney tonight.

Come and trim my Christmas tree
with some decorations bought at Tiffany;
I really do believe in you;
Let’s see if you believe in me...

— Eartha Kitt, “Santa Baby”

Here’s wishing Santa brings you everything you want this year.

For me, I’d just like a little more peace and joy.

Hurry down the chimney, Santa.

Happy Holidays.


© 2012 The Epicurean Dealmaker. All rights reserved.

The Rules

Certain friends and acquaintances of mine have informed me on occasion of the existence of a website dedicated to codifying and promoting the rules of a secret society of bicyclists known as the Velominati. The Rules, as they describe them, are an interesting attempt to lay down a code of behavior for its members based upon honor, discipline, and a slightly suspect penchant for tight black riding shorts.

It occurred to me recently that a few of you among my regular readers might appreciate a similar codification of the rules of behavior for corporate finance and M&A investment bankers, minus the Spandex fetish.¹ Accordingly, here they are. Use them wisely, and with moderation.

* * *

Rule #1 — Obey The Rules.
Duh.

Rule #2 — Lead by example.
It is forbidden for someone familiar with The Rules to knowingly breach The Rules or assist another person to breach them.

Rule #3 — Guide the uninitiated.
Investment banking is an apprenticeship business. Whether your charge is McKinley C. Higginbotham IV, scion of a long line of hoary investment bankers stretching back to the founding of Dillon Read at the dawn of the Pleistocene, or Mahindra P. Parametheswamenameran, fresh off the Tuesday boat from Mumbai with an I.Q. of 215, rest assured he or she knows absolutely jack shit about what to do with a client, a deal, or even a spreadsheet. Teach them, or consign your sorry, underleveraged ass to an early “retirement.”

Rule #4 — It’s all about the money.
It is absolutely, without question, unequivocally about the money. Anyone who says otherwise is a liar, a regulator, an MBA career counselor, or Matt Taibbi.²

Rule #5 — Harden The Fuck Up.
If you forget every other rule, remember this one.

Rule #6 — Free your mind, and your career will follow.
You are not paid to think. You are not that fucking smart. You are paid to do what the client wants you to do. Go do it. The time to add real insight, to offer careful, considered judgment, is before you get hired. Then, and only then, can you tell the client what you think they should do.³ After they hire you, they own your sorry ass. Apply your overwhelming intellect to how and when to achieve their objectives, not why.

Rule #7 — Dress like a professional, not like a clown.
Wear a suit. Buy good shoes. Own more than six ties. I don’t care what your clients wear, they expect you to look the part of a slick, overeducated, hyperaggressive, insanely successful mercenary. Bulletin: the clients who wear blue jeans and sneakers expect their bankers to be dressed to the nines, too, not like themselves, because they instinctively know the difference between an entrepreneur and a professional servant. You are a servant. Dress like one. Oh, and one thing more: no two-tone shirts, banker collars, suspenders, or bowties, unless you are God, a bajillionaire, or Felix Rohatyn. Or all of the above. Nobody wants to hire a fop.

Rule #8 — Investment banking travel is for badasses. Period.
Unless you are a management consultant or a senior petroleum engineer for a global integrated oil company,⁴ you have no idea what high stakes business travel really is. It’s getting up at 4:30 in the morning to catch a flight across three time zones to meet with some asshole client who’d as soon as piss on you as take a meeting. It’s getting a call at your Milan hotel in the middle of a weeklong business trip to catch the next flight to Beijing for a two hour meeting with a bunch of government officials you’ve never even met. It’s traveling to some of the most famous and exotic destinations on the planet, only to have them all look the same: airport—>taxi—>hotel room—>taxi—>conference room—> taxi—>airport. It’s learning to become a connoisseur of hotel room service, a Jedi Master of airport Starbucks. Forget about private planes. Those are for clients and the senior executives at the top of your firm. Forget about first class. The only time you’ll get to the front of the plane is when you pay for it with your own money or the umpty billion upgrades you’ve earned by traveling to Hell and back a bajillion times this month alone. So travel like you mean it. Don’t fuck around: Rollerboards are for pussies. Checking luggage is for young families on vacation and old ladies. Neck pillows are for moral degenerates. When in doubt, see Rule #5.

Rule #9 — It never gets easier, you just make more money.
Investment banking is hard. It stays hard. The more success you have, the higher your clients’, managers’, and shareholders’ expectations rise. You’re only as good as your last trade or your last deal. Last year was last year, asshole: what have you done for me lately? Furthermore, the higher you rise in the pyramid, the closer you come to the clients, managers, and shareholders and their unrelenting, unreasonable, unjustifiable demands. Sur la Plaque, fucktards. See Rule #5.

Rule #10 — Don’t be a scumbag.
The pressure, the money, and the prestige will tempt you to cut corners. To steal credit. To stab colleagues and subordinates in the back. To gutlessly steamroll brighteyed young acolytes in the name of shareholder returns or your own personal compensation. Resist this. Don’t be a fucktard. Don’t be a gutless pussy. The life of an investment banker is nasty, brutish, and short. But if you can manage to avoid succumbing to the myriad base temptations to screw people over the profession offers you, you will earn a reputation as a... as a...

Oh, screw it. You won’t earn any reputation at all, except maybe among a few hundred of your professional colleagues. The general public won’t ever know or care about you at all.

But since when did you care what the general public thinks? Matt Taibbi sure doesn’t think you do.


¹ There are only two rules for my colleagues on the other side of the house, in Sales and Trading: 1) Don’t get caught; and 2) Don’t eat more than two onion cheeseburgers before 8:30 am every morning.
² Regardless of what Matt Taibbi says, of course, it’s not all about the money. But let’s level set, shall we? Matt Taibbi’s not as stupid as he sounds.
³ If you have the balls. And senior management’s support.
⁴ And if you are, why the fuck do you travel like me while getting paid a fraction of what I do? You’re smarter than that.

© 2012 The Epicurean Dealmaker. All rights reserved.

Thanksgiving Day

When in disgrace with fortune and men’s eyes
I all alone beweep my outcast state,
And trouble deaf heaven with my bootless cries,
And look upon myself, and curse my fate,
Wishing me like to one more rich in hope,
Featur’d like him, like him with friends possess’d,
Desiring this man’s art, and that man’s scope,
With what I most enjoy contented least;
Yet in these thoughts my self almost despising,
Haply I think on thee,—and then my state,
Like to the lark at break of day arising
From sullen earth, sings hymns at heaven’s gate;

For thy sweet love remember’d such wealth brings
That then I scorn to change my state with kings.

— William Shakespeare, Sonnet 29

Lay aside your discontent, your envy, and your unhappiness today. Think not on your wealth, your possessions, your station in life, or the lack thereof. Think instead on the love which makes your brief journey here worthwhile: family, friends, life itself.

And smile.

Happy Thanksgiving.


© 2012 The Epicurean Dealmaker. All rights reserved.