by Brian DeChesare Comments (35)

Investment Banking Fairness Opinions: Profitable and Prestigious, or Glamorless Gruntwork?

Investment Banking Fairness Opinions: Profitable and Prestigious, or Glamorless Gruntwork?

“Morgan Stanley is acting as financial advisor to the buyer and Credit Suisse is acting as financial advisor to the seller, with the fairness opinion provided by Houlihan Lokey.”

So we’ve been over this “financial advisor to the buyer and seller” stuff before, but what about that fairness opinion bit?

You always see sentences like the one above at the bottom of deal announcement press releases – so what is this mysterious “fairness opinion,” why does it matter, and what should you do when your VP calls you at 2 AM and asks you to help out with one?

What are Fairness Opinions and Why Do Banks “Provide” Them?

A “Fairness Opinion” is just a detailed valuation of a company that’s being sold (if you’re representing the seller) or a valuation of the company that your client is buying.

Right before a deal is announced, the bank that prepares the Opinion presents it to the Board of Directors and concludes whether or not the deal is “fair” based on the purchase price and deal structure.

As you might guess, banks never say a deal is “unfair” – the Opinion is just a rubber stamp to justify the deal to investors.

While they’re not technically required by law, Fairness Opinions almost always get issued for deals that involve the sale of public companies due to lawsuits: no matter how much a company sells for, someone is bound to sue them.

Even if the company is worth $100 million and it gets sold for $1 billion, some random shareholder with too much time on his hands will argue that it should have been sold for $10 billion and will start a class-action lawsuit.

The bank’s Fairness Opinion is filed along with all the other documents related to the transaction (the definitive agreement that includes the terms of the acquisition, for example), and serves as evidence when lawsuits start arriving.

Why Should You Care About This Legal Nonsense?

Bankers have no love for lawyers, but you need to know what Fairness Opinions are and how they work because:

  1. The deals you work on determine your exit opportunities, your ranking and bonus, and how much you learn.
  2. You will be asked to work on or help out with Fairness Opinions from time to time, so you need to know whether to say “yes” or to claim you have other urgent deadlines.
  3. Some banks and groups do more Fairness Opinion work than others – you need to understand this upfront because it affects which bank and group you select.

When Do Companies Request Fairness Opinions?

99% of the time they get issued when there’s a public company being sold – you do not do Fairness Opinions for equity or debt deals, so if you’re in an ECM, DCM, or Leveraged Finance group you won’t deal with them.

If you work with mostly private companies, you also won’t see Fairness Opinions because private companies have far fewer shareholders (well, except for Facebook and its clever skirting around the rules) and are often closely held by the founders or VC/PE investors.

Fairness Opinions might also be issued when:

  1. There’s a management buyout or take-private (a PE firm acquires the company via a leveraged buyout and turns it private).
  2. A public company divests one of its divisions.
  3. There’s a bankruptcy, liquidation, restructuring scenario (less common).
  4. There’s a hostile takeover – in this case it would be called an “inadequacy opinion” instead and would be used to defend the target by claiming that the offer is not fair.

In short: whenever there’s a high chance of getting sued, companies request these Opinions and use them to defend themselves in lawsuits.

Outside the US, Fairness Opinions are common in some countries (Western Europe) and not common in other places (emerging markets). Whether or not they’re required depends on the legal system in the country, but you almost always see them for public company transactions in developed markets.

How to Issue a Fairness Opinion, Part 1: Before the Deal Comes Together

M&A deals come together in different ways: sometimes the company itself wants to sell, other times investors are getting impatient and force them to sell (Zappos), and sometimes a buyer jumps in with an attractive offer and starts a bidding war (YouTube).

If it’s the last case, where a buyer swoops in with an offer to buy the company, no one thinks about the Fairness Opinion until that point.

But if it’s one of the other scenarios, then the seller may hire an investment bank to find a buyer. If they do this, in the initial contract they might also give the bank the right to issue a Fairness Opinion in addition to advising on the deal process.

You see that sometimes, but many times the “financial advisor” bank and the “Fairness Opinion” bank are different.

The same bank advising a company on its sale and also saying whether or not the deal they get is “fair” is hardly objective – so executives and regulators believe that having a different bank issue the Opinion is more “impartial.”

If a different bank is providing the Fairness Opinion, they are not notified until the deal is about to be announced – doing so any sooner than that would create unnecessary work because M&A deals often fall apart in the early stages.

How to Issue a Fairness Opinion, Part 2: Just Before the Deal is Announced

Now comes the fun part. A couple factors make the actual construction of the Fairness Opinion especially painful:

  1. You are under extreme time pressure – you get a few days, and sometimes up to a week or a bit longer. This happens because the process is last-minute and occurs only when everyone is 99% sure the deal is going through.
  2. You must be excruciatingly precise – this is where bankers’ reputation for “attention to detail” comes from. This valuation could be used as evidence in lawsuits, so if you’ve added back the incorrect amortization amount when calculating EBITDA, you might be thrown into a snake pit.

Normally when you value a company you don’t have to be super-precise: bankers ask for quick valuations all the time, and if you spent hours going through a company’s SEC filings (or equivalent government organization abroad) you would never get anything done.

So you pull a lot of information automatically using tools like Capital IQ and Factset and rely on their numbers.

But when you’re working on a Fairness Opinion you can’t do that – rather than just pulling the LTM (Last Twelve Months) EBITDA from Capital IQ, for example, you have to look at a company’s income statements and cash flow statements (for the correct non-cash charge numbers) to calculate it.

And then you would have to look through the Notes to the Financial Statements and the MD&A to find all the non-recurring charges and other accounting shenanigans that you need to remove.

Another analyst will also check your numbers, your associate will check them, and even the VP may get involved depending on the deal.

To make things even more fun, this entire process will be a last-minute effort that requires all-nighters over the few days you get to complete it.

Oh yeah, and then the deal announcement itself is often delayed – so you need to monitor the seller and all the other companies you’ve used in your analysis and update the numbers when someone announces earnings, issues debt or equity, or does anything else that affects its numbers.

When you finish the Opinion and everyone has checked it over 52 times, you then present it to the Fairness Opinion Committee at your bank and explain all the numbers to them – if they see something they don’t like, you get to re-do that part.

And then when you finally get their approval, the senior bankers working on the deal will present it to the Board of Directors of the company and sign off on the decision.

Sometimes they actually present it to the company’s Special Committee – if one was formed for the deal – but usually it’s to the Board.

Internationally the entire process may be a little less painful, but it depends on your group and the country you’re in – in London, for example, there’s no difference and you will still spend hours poring over filings and adjusting for capitalized leases, pensions, and other trickery.

Why Do Banks Provide This Service?

Simple: it’s easy money and easy prestige for banks, especially for the senior bankers that don’t have to suffer through ultra-precision.

Fees paid to banks in a sell-side M&A deal are a percentage of the sale price (the equity value of the deal, not the enterprise value), and that percentage scales down as the size of the deal increases.

For a $500 million deal, the bank might negotiate a 1% fee and therefore earn $5 million if the deal closes. For a $5 billion deal, it might be 0.2% or 0.3%, for $10-$15 million. For deals in the $50 billion range – very rare – the fee might be around $50 million (0.1%).

With a Fairness Opinion a bank earns a much lower fee – it might be in the hundreds of thousands for smaller deals up to the low millions for larger deals – but it earns that fee with far less time and effort.

Let’s say that a bank is advising a company on a $50 billion deal – something that large would take years to put together (unless we’re in the late 90’s and it’s happening all the time), and they might earn a $50 million fee on the actual advisory work if the deal closes.

The bank that issues the Fairness Opinion might earn a few million – let’s call it $5 million – but it earns that fee with 1/100th the amount of time and effort that the financial advisor put in.

The other, really important point is that the bank earns that fee even if the deal gets announced but does not close – it’s not like M&A advisory fees where they only get paid out when the deal closes.

So a bank could make tens of millions of dollars by issuing Fairness Opinions for deals that never close.

The thinking here is that paying banks upon completion of the Opinion rather than when the deal closes makes them “less biased,” but it had the unintended consequence of making FOs extremely lucrative for risk-averse bankers as well.

Got Prestige?

In addition, the bank receives league table credit for issuing a Fairness Opinion – so a bank that issues 50 Fairness Opinions but doesn’t advise on any deals would look as good as a bank that has advised on 50 real deals, at least according to a table that ranks banks by # of deals.

If you look at a table that ranks banks by fees earned instead, the Fairness Opinion-centric bank won’t look as good – but you can bet they won’t be showing that version of the table in their pitch books.

Often Fairness Opinions are given to banks as “favors” for work done in the past.

A company might go with a bulge bracket bank for the M&A advisory work for political reasons, but the CEO might know a senior banker at a boutique and might have worked with them in the past – in this scenario the company might give the Fairness Opinion assignment to that boutique as a favor for their past relationship.

The boutique will still feel as if its toes have been stepped on, but the pain won’t be quite as acute if they can make at least some money off the deal anyway.

What Banks and Groups are Known for Fairness Opinions?

No, I’m still never going to rank the banks, so please go away right now if you’re expecting that.

But some banks and groups – for better or worse – are known for Fairness Opinions.

Houlihan Lokey is consistently ranked #1 in Fairness Opinion market share, beating even the bulge bracket banks and elite boutiques.

At HLHZ, the Financial Advisory Services (FAS) group does all the Fairness Opinion work and the other groups don’t touch them. And yes, the FAS group provides other services like solvency opinions, purchase price allocations, and more technical accounting-esque work as well.

Other banks – from bulge bracket to elite boutique (Perella Weinberg is also well-known for FOs) to middle-market – also do Fairness Opinions but no one else dominates the space as HLHZ does.

Groups such as ECM, DCM, and Leveraged Finance do not work on Fairness Opinions because they’re not required for debt or equity deals – so you only have to worry about them if you’re in an M&A, Restructuring, or industry group.

Of those, industry groups are the most likely to work on Fairness Opinions, although you may get asked to help out even if you’re in another group.

Outside of investment banks, some Big 4 firms also do Fairness Opinion work and dedicated valuation boutiques also issue Opinions from time to time.

Take Me to the Examples

Finding actual Fairness Opinions is not the easiest thing in the world, so here are links to good examples. Some of these are quite old, but corporate valuation barely changes over time so they are equally valid today:

You’ll see the usual valuation analyses there: public company comparables, precedent transactions, premiums, DCF, future share price, and so on.

Even if you have no interest in Fairness Opinions, I strongly recommend looking at those examples because they show you exactly how banks value companies in the real world, common multiples, and other questions you’ll get in interviews.

Sometimes Fairness Opinions also include mergers models and LBO models – merger models are more common on deals where it’s more of a merger as opposed to a behemoth acquiring a much smaller company, while LBO models are more common for LBO deals.

You do not include a detailed 3-statement model for the seller, nor do you show all the supporting work that went into the numbers – only the output matters.

If you want to find more examples yourself, you can search for S-4 or DEF 14A (proxy) forms on the SEC EDGAR site; for countries outside the US you will have to go to the company’s website directly and hope they have it there, or go through whatever online database has securities filings in your country.

So, Should You Work On Fairness Opinions?

I am not a huge fan of Fairness Opinions because they represent the worst parts of bankinglast-minute all-nighters and combing through filings to make small tweaks to numbers that don’t make a difference in the final analysis.

It’s good to get exposed to a Fairness Opinion at least once, but similar to climbing Mt. Fuji or going ice swimming, you don’t want to get exposed repeatedly – especially at the expense of real deals.

Yes, it’s good to learn how to find all the hidden charges and shady tactics a company is using but 99% of the time they don’t make a difference in your final analysis – and on the buy-side you rarely go into such detail unless you’re about to close an investment and you’re in the final stages of due diligence.

So if your VP or staffer waltzes in and asks if you have any “bandwidth” to help out with a Fairness Opinion, cite an urgent deadline and say that you might be able to check some of it, but can’t do it all yourself because of [Important Client-Related Item] that’s due in 2 days.

And if you’re out of excuses, suck it up and do it – but make sure that you hand it off to the 1st years or interns next time around.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

Break Into Investment Banking

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

We respect your privacy. Please refer to our full privacy policy.
by Brian DeChesare Comments (81)

The 4-Hour Investment Banking Body: How to Keep Off the First Year 15 and Get In Shape While Sitting In a Cubicle Staring at Excel All Day

Fitness Investment BankingIt’s midway through your first year as a banker.

You just got back from the holiday party, and after taking a day off to recover from your hangover, you’re ready to rock and roll.

You pull out your favorite pair of slacks from the closet, fumbling to put them on…

…and as you do so, they split in half – far too small for your waist, which has gained 4 inches (10 cm) in the past 6 months.

You’re fat.

And now you’re naked from the waist down, too, but that’s a smaller issue.

Here’s what went wrong, and how you can lose all that weight you just gained – with only 4 hours of free time (or less) per week.

Got Corpulence?

Back in school, you were an athlete – a powerlifter, a marathon runner, or even Michael Phelps.

Or maybe you weren’t, but at least you were in decent shape and had clothes that fit.

Now, you’re just a sleep-deprived, borderline-alcoholic, overweight banker – though you have gotten better at Excel.

You gained 25 pounds (~11 kg) in the past 6 months, but it’s not your fault – the universe has been conspiring against you to make it near-impossible to stay in shape as a banker.

The Demons of Fat Gain

You have a lot going against you and very little working for you as a banker:

  • You sit motionless for extended periods – and might even have bad posture when doing so.
  • You’re addicted to SeamlessWeb and eat horrible takeout food all the time.
  • Too many bottles, not enough models.
  • You never do any exercise because you’re busy fixing pitch books when you should be going to the gym.
  • Your co-workers will ridicule you if you don’t drink every single day.

Taken alone, any of these would make you fatter – but altogether they create a deadly cocktail of fat gain and will result in multiple trips to the “plus size” store.

Oh, and remember: no amount of money or fame will save you from health problems. Bill Clinton, former leader of the free world, earned over $100 million USD since he left office and that didn’t save him from quadruple bypass surgery.

How to Vanquish the Demons and Lose Fat

You need to combine diet and exercise and modify habits like drinking and how long you sit in your chair.

That seems simple, and if you’re not an investment banker, it is – but as a banker, you have a lot of problems that the average dieter never faces.

Most fitness advice online assumes that you can work out whenever you want for as long as you want, and that you have infinite time to cook food for yourself.

Rather than repeating those unrealistic suggestions, we’re going to focus on specifically what you must do to stay in shape as a banker.

The most common problem is fat gain, so that will be the main goal – but the advice here goes beyond that and will address issues like lower back pain, high blood pressure, diabetes, and your overall energy level.

Assumptions and Sources & Uses

I’m assuming that you:

  • Have very little free time (< 4 hours per week) and no flexibility in your schedule.
  • Cannot cook because of this lack of free time.
  • Are often in social situations where you’re pressured to eat junk food and drink alcohol.
  • Care more about losing fat or not gaining fat in the first place than you do about gaining muscle or building endurance (there’s nothing wrong with those, but they’re much harder to pull off as a banker).
  • Have an inkling of common sense. If you think that donuts are better for you than vegetables, please press Alt + F4 right now.

We’re not going to get into a debate over different diet plans, like Atkins vs. South Beach vs. Paleo vs. Slow-Carb – the specific details matter far less than following the high-level ideas, which are similar in different plans.

I’m also not going to turn this into science class and get into a technical explanation of everything, because that’s off-topic and you can read all about the science elsewhere.

The focus here will be how to avoid getting fat as a banker – through diet, reduction of social pressure, exercise, Starbucks (the lifeblood of any banker), the right kind of bottles, and some secret ingredients.

Diet

As a banker, the usual habit is to skip breakfast altogether, get takeout for lunch, and then eat a huge dinner with 2 desserts from SeamlessWeb.

When you first start, this seems great: you’ve gone from being a starving student to eating steak and tiramisu every day.

The only problem is that you’re also getting fatter every day.

Modify this routine by:

  • Eating smaller meals at least 4 times per day – and more if possible. It helps your metabolism.
  • Avoiding SeamlessWeb and similar takeout and going for healthier options.
  • Always eating immediately after you wake up.

What do you eat, and how can you possibly have time for 4 meals per day?

First, each meal should have protein, fat, carbohydrates (optional – keep reading), and vegetables, with about half as much fat as the others (since it has twice the calories).

Examples that you can easily get at restaurants or from stores like Trader Joe’s or Whole Foods, with minimal prep time:

  • Sashimi with salad
  • Chicken salad with olive oil and vinegar
  • Tofu, beans, and vegetables (the vegetarian option)
  • Egg whites with avocado, cheese, whole wheat bread, and spinach
  • Low-fat cottage cheese with nuts and fruit
  • Sardines and whole wheat crackers

The last 2 are missing vegetables, so you can just add in a mixed salad there.

In keeping with the “no science class” rule above, I’m not going to spell out the mix of protein/fat/carbohydrates in each of these but feel free to look up the facts yourself if you’re curious.

Use your $20-30 dinner allowance to buy these, and try to get pre-made meals as much as possible – otherwise you’ll be pressed for time.

To take care of breakfast and your snack in between lunch and dinner, you can order extra the night before and save it for the next day, you can run to a store close to your building during a break, or you can use one of my ninja tricks below.

If you do it properly, eating 4x per day takes no more time than eating just 2x because you’re at your desk anyway, and you’re eating food you already have.

Wait, Aren’t Carbs Bad? / What Should I Avoid?

Ever since the Atkins diet became popular there has been a crusade against carbohydrates: “Don’t eat them,” critics say, “or you’ll turn into the Pillsbury Dough Boy.”

There is some truth to that, and cutting out foods with a lot of carbohydrates – especially simple ones like white rice – will help you. But as a banker, it’s probably not viable to completely cut out carbs because you need the energy for all those all-nighters.

So if you can do so, reduce carbs, especially when it’s late at night. But rather than obsessing over that, make sure you avoid anything with sugar – that’s the absolute worst thing you can eat if you want to stay slim.

You’ll be pressured into ordering dessert all the time, going to Starbucks constantly, and harvesting as much junk food as possible from your office’s kitchen, so avoiding sugar is easier said than done.

The easiest solution is to use artificial sweeteners, such as stevia, if you need your fix of sweets. These are not great to have in huge quantities either, but in small doses they are much better than real sugar.

Social Pressure

As a banker, your co-workers will pressure you into ordering more food than you can possibly eat just to use up your entire dinner allowance.

There are 2 ways to deal with this: avoidance and limited acceptance.

Avoidance

You could tell them you’re slammed and have no time to take a break and eat – but you don’t want to do that all the time or you’ll end up with no friends.

Maybe try this one 2-3x per week, but don’t rely on it every day or you’ll be excluded from group outings.

Limited Acceptance

For the times when you do have to go eat together, just follow the guidelines above: make sure your meal has a mix of protein, fat, carbs (optional), and vegetables.

So if you go out and they say you have to order a steak or they’ll laugh at you, go ahead and do it – just make sure it’s not massive (because you’re eating 3 other times throughout the day) and that it has vegetables on the side.

When it comes time for dessert and drinks, say you need to finish a few more things at work so you can’t drink much, and that you’re too full for dessert because you ate a few hours ago.

Exercise

Just like the controversy over carbs and whether or not they’ll turn you into the Pillsbury Dough Boy, another debate rages between cardio (running, swimming, etc.) and strength-training exercises.

We’re going to ignore that completely for one simple reason: you do not have time for extended cardio workouts as an investment banker.

You might be called back to the office at any time, on any day of the week, for any reason, so you need to think in 15-minute increments rather than hour-long or multi-hour-long sessions.

So the only option is strength training, for 3 reasons:

  1. As mentioned above, you need to get intense exercise in a very short amount of time.
  2. Unlike the equivalent amount of cardio, even a short and intense weight lifting workout will help you burn more calories for over a day if you do it properly.
  3. Doing resistance training will help your body absorb more calories and carbs immediately afterward, so you can loosen your dietary restrictions a bit.

If you have extra time, sure, go for a run, a bike ride, or go swimming whenever you can.

But if you’re a banker with an unpredictable schedule and almost no free time, you need to do quick but high-intensity strength-training workouts each week for the highest ROI.

What to Do At the Gym

Ideally, you will go to the gym 3 times per week for very quick workouts: I suggest Friday night, early in the day Sunday, and then once more whenever you have time during the week.

You are more likely to have free time on Friday night because senior bankers leave earlier – and you’re less likely to be called into the office early on Sunday.

A simple plan would be chest and triceps on one day, back and biceps on the next day, and then lower body on your final workout day.

Before the powerlifters reading pick apart this plan, remember that I’m assuming no knowledge or previous experience and extremely limited time – so please resist the temptation to argue for something more complicated.

If you’re pressed for time, you can condense this to 2 workouts instead and do upper body all on one day and lower body all on the other day – but if you do that, you should leave at least a few rest days in between workouts.

Finding Time to Go to the Gym

This can be tricky, and it depends on how your group operates: you’re best off asking if it’s OK to leave for 30 minutes in the early evening, and then getting in the habit of always going at that time.

Don’t ask for permission when you first start workingyou should use the first month or two to prove yourself as reliable, and then “make the ask” once the senior bankers know you’re good.

If your group is not open enough to discuss non-work issues, then you’ll have to follow my suggestion above and go on Friday and Sunday, and then whenever else you have time in between.

That might be 2 AM on a Tuesday – not an ideal time to work out, but far better than doing nothing at all.

Oh, and if you’re a female banker you still need to do everything above and focus on strength training: you’re not going to turn into the Incredible Hulk, since male and female bodies react much differently to working out.

In fact, arguably females need strength-training more than males due to the threat of osteoporosis.

Trips to Starbucks

This is yet another problem if you’re a banker who wants to stay in shape – you’ll be called to Starbucks and pressured into ordering that grande chocolate frappuccino all the time.

Fortunately, there’s an easy solution: avoid anything with sugar or milk in it. That means you have only 2 options at Starbucks: americano or espresso.

But you could turn this restriction into your advantage by ordering triple espressos all the time to make yourself look hardcore and then say that you need the caffeine for yet another all-nighter.

Critics will say that this results in too much caffeine, but that’s far better than having too much sugar: as a banker you must pick the lesser of two evils.

Outside of coffee, you should only drink water (ideally liters per day), tea, and yerba mate (the loose-leaf variety, anything else is too weak).

Sugar-free Red Bull and other drinks with artificial sweeteners are fine in small quantities, but try to shift over to tea for your caffeine fix as much as possible.

What about alcohol? I’m glad you asked…

Bottles and Bottles

Most hardcore fitness buffs will tell you that alcohol, like sugar and carbs, will instantly turn you into the Pillsbury Dough Boy.

That’s not far from the truth: alcohol (especially beer) has a lot of calories and even if it doesn’t, it prevents your body from burning off calories until the alcohol is processed.

As a banker, though, you can’t completely cut out alcohol because you’ll be pressured into drinking with your co-workers, with clients, and at events like holiday parties.

So follow these guidelines instead:

  1. Avoid beer and anything with a lot of sugar, like soju or sugary cocktails, at all costs.
  2. Stick to whiskey shots and other hard alcohol when you must drink – it’s not ideal, but it’s “less bad” for you than beer because the calorie count is lower.
  3. Red wine in limited quantities (1-2 glasses per day) is arguably OK as well, or at least “less bad” than beer.
  4. Try to drink no more than once a week if you can help it – just say you’re busy the rest of the time.

I can’t help much with the models, but that’s how to handle the bottles side of the equation.

The Cherry On Top

Those are the key principles, and if you follow everything above you’ll be better off than 99% of incoming bankers who haven’t even thought about how they’ll stay in shape as cubicle monkeys.

You’re supposed to avoid dessert, but just this once as a cherry on the top of the rest of this advice, here are a few tips and tricks to take it to the next level:

Think Thin Bars

As you can tell, I’m borderline obsessive-compulsive about fitness and nutrition – and I’ve searched far and wide for the best way to eat decently with no free time.

The best solution I’ve found is the Think Thin bar: each one is 240 calories and has a mix of protein, fat, and “limited” carbs (the sugar alcohols in the bar are not fully absorbed by your body), and you can easily pack them for consumption whenever you want.

The one flaw is that they have relatively high saturated fat, so you shouldn’t go overboard: use them as a backup plan when you need to eat but don’t have anything else.

You can easily sneak these in and avoid drawing suspicion to yourself while you’re at your desk since they’re so quick to eat.

NEPA

NEPA stands for Non-Exercise Physical Activity, and it’s one of the most important – and easiest – things you can do as a banker to stay in shape.

If you’re staring at the monitor without moving all day, you’ll quickly develop lower back problems, carpal tunnel syndrome, and slow down your metabolism.

But if you take quick breaks to walk around for a few minutes every hour, you can avoid much of that, or at least reduce its impact.

Unless you walk for hours and hours a day you won’t lose much weight doing this, but taking these breaks is more about preventing back problems, eye strain, and carpal tunnel syndrome than burning fat.

So use all those trips to Starbucks with other analysts/associates as a way to get NEPA, socialize, and get your caffeine fix.

It’s easier to take breaks late at night when senior bankers are not around to watch everything you do, but even during the day you can take breaks during your downtime and do something as simple as walking to the bathroom or pretending that you have to go talk to someone else.

Does Any of This Actually Work?

Like most bankers, I got out of shape in my first year and then lost around 40 pounds (~18 kg) in the last 6 months of my second year by following the plan above.

Other friends in banking have followed this plan to similar success.

I’m not a doctor and this tutorial does not represent a scientifically controlled experiment – like everything else on the site, it is advice that has worked well for others.

This plan is admittedly more difficult to follow in countries outside the US and even in cities outside NY/SF/LA because there are not as many options for food, and many places don’t have 24-hour gyms.

So you may not be able to follow everything precisely, but as long as you avoid the most common mistakes you’ll still be in better shape than most bankers.

What Now?

First, find a 24-hour gym close to your office, and then locate several restaurants and grocery stores nearby that have the food you need.

When you first start working, go to the gym whenever you have a chance. After 1-2 months, ask the senior banker you work most closely with if it’s OK to go for 30 minutes 3x per week around dinner time.

Rather than ordering takeout on SeamlessWeb all the time, use your dinner allowance to get the proper food at places like Trader Joe’s and Whole Foods, and save some so that you can eat immediately when you wake up the next day – and if you run out, keep Think Thin bars on hand as your backup plan.

Do all that, and hopefully when you reach the midway point of your first year all those Brooks Brothers clothes you bought before training started will still fit you.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

Break Into Investment Banking

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

We respect your privacy. Please refer to our full privacy policy.
by Brian DeChesare Comments (33)

Stuff Investment Bankers Like, Round 3

It’s been awhile, so let’s jump right back into it.

Parts 1 and 2 are here – essential reading if you ever plan to go to Buenos Aires or hit “Reply All” in your email client.

15) Unsolicited Advice

Stuff Investment Bankers Like, Round 3Working in investment banking, you will age more rapidly than the average person.

That’s just what happens when you go to Starbucks 10 times a day, eat junk food all the time, and then work 100 hours a week to boot.

So many bankers start to feel that their true age is higher than the number of years they’ve been on the planet – which is what inspires them to give unsolicited advice.

It happens when senior bankers “advise” the juniors and when junior bankers tell interns exactly what they should be doing at all times:

“You know, you should strive for a long and celebrated career in investment banking. All hedge funds collapse anyway, so don’t even think about going jumping ship and going to one.”

Thanks, but did I ask you or even mention my future plans?

“Check your work very carefully before showing it to anyone.”

Thanks – I was planning to add in a lot of errors just to make it more interesting.

16) Stacks of Unread Newspapers

Stuff Investment Bankers Like, Round 3Almost as much of a badge of honor as how many holidays you’ve worked (see below) is the number of unread newspapers on your desk.

Not realizing that they can check the news by looking online for 2 seconds, any senior banker worth his salt instead gets a daily subscription to the WSJ.

And then they let newspapers pile up on their desks while they’re off traveling 24/7.

When they come back to the office, of course, they immediately ask their assistant to “clean up” or “get rid of all this garbage.”

And you wonder why the rain forest is disappearing…

17) Assistants

Stuff Investment Bankers Like, Round 3While I’ve not been kind to the back office and support teams in the past, I can’t lie: a good assistant will save you time and time again.

A lot of incoming bankers and interns get this one wrong and treat assistants like crap, never acknowledging them or taking 5 minutes to have a friendly chat.

These newbies are surprised later when they suddenly don’t know their VP’s cell # or they can’t figure out what their MD’s schedule is next week when they’re up at 2 AM sending out an email to set up meeting times with a client.

Treat your assistant – or any support person – right, or you’ll suffer the consequences later.

And no, no matter how much you like your assistant you still can’t hook up with her (or him) – only MDs get to do that.

18) Working on Christmas

Stuff Investment Bankers Like, Round 3Aside from how many consecutive all-nighters you’ve pulled, there’s no greater badge of honor among bankers than how many holidays you’ve had ruined by work.

No one considers occasions like Halloween or Valentine’s Day to be real “holidays,” so forget about those – the 2 untouchable ones are Thanksgiving and Christmas (at least in the US – elsewhere it varies by country).

Being a masochistic bunch, at some level bankers enjoy this kind of abuse.

There’s no higher glory than looking at your Blackberry constantly and responding to emails while everyone else at the table is staring at you in disbelief.

And then you get to complain to all your friends about how you had to pull an all-nighter on Christmas Eve – all the while secretly enjoying that you can now complain about it.

19) Models and Models

Stuff Investment Bankers Like, Round 3Everyone gets into finance for different reasons, but there are just 2 core motivators: 1) Money and 2) Prestige.

No one could be interested in talking about bonds or interest rates or EBITDA just for fun, right?

You’d think that, but as soon as you start working you realize that a lot of the job involves administrative work, picking up dry cleaning, and fixing printers.

By comparison, financial modeling seems like the most intellectually engaging activity ever, even though it’s really not rocket science.

So as a banker, you relish opportunities to crunch numbers and do more than just collect data and send emails.

And if you’re looking for other types of models, head to Buenos Aires.

20) Lucites

Stuff Investment Bankers Like, Round 3Whenever you close a deal, along with the Closing Dinner you get to design a “lucite” – a trophy of sorts to commemorate all the man-hours spent on that IPO or that acquisition and all your blood, sweat, and tears.

If you worked on a casino acquisition, your lucite might be in the shape of a roulette wheel or poker table; for a pharmaceutical deal maybe you’ll get to design something in the shape of a vial or pill bottle.

Much like how you’ve lined your walls with all those meaningless awards from high school and college, bankers line their shelves with these lucites to impress visitors.

For the analyst who has gone Patrick Bateman, lucites have another use as well: weapons.

So make sure you design something sharp – you’ll never know when you might need it one night after you’ve pulled one too many all-nighters and they discover the bodies in your apartment.

21) Forecasting the Apocalypse

Stuff Investment Bankers Like, Round 3“Wall Street is over! New regulations will doom the industry! Pay will never recover, time to find a new profession!”

Question: Are those quotes from 1893, 1929, 1987, 1997, or 2007-2010?

The correct answer is “all of the above” because bankers have been forecasting apocalypse as long as the industry itself has been around.

Back in September 2008 everyone really thought it was all over – but it looks like we survived that one as well.

As long as capital markets exist and companies need to raise money, they’ll need bankers.

Just make sure you keep telling everyone the end is nigh, though – you don’t want to seem overconfident.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

Break Into Investment Banking

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

We respect your privacy. Please refer to our full privacy policy.