by Brian DeChesare Comments (31)

Becoming Frank Quattrone: Investment Banking Lingo 2.0

“Hahah, oh snap! That is hot. Get this though, the other day, this MD accidentally spills coffee on this analyst’s shirt. MD doesn’t really say anything, just goes on working. The analyst is moping around all day whining about his shirt. So finally, the MD drops $100 bill on the analyst’s desk and goes ‘Quit whining and just go buy yourself a new shirt if it’s that big a deal.’ So the analyst is all happy because he got the POS at Marshalls for like $15. But then, the MD says ‘But I own that shirt now, give it to me’ and makes the analyst give him the shirt go the rest of the day with no shirt!”

MD’s, The Leveraged Sellout

Continuing our series in Investment Banking Lingo this week, we resume today with more essential vocabulary that any good banker must know to get ahead in today’s tough market.

Even Frank Quattrone had to learn the meaning of “Alt Tab” at one point or another (ok, maybe he was born knowing that one…).

Downtime

pillows.jpgTypical usage: “I had some downtime today so I was catching up on American Idol.”

What it means for the Analyst: You get a break from staring at Excel and instead get to stare at your web browser.  Just make sure not to do anything too naughty, or your IT department may catch on and alert the authorities.

What it really means: There’s never a constant flow of work in investment banking. Some days are nightmares and other days you don’t really do much, get to go home early and even watch low-quality made-for-TV movies.  Since your workload is dependent on whenever the senior bankers get around to reviewing what you produced (general rule of thumb: “I need it by tomorrow” = “Will look at it in 2 weeks”), a lot of time is spent sitting around waiting.  And waiting.  And waiting…

Tips and tricks: The key to using downtime effectively is simple: don’t get caught. Whether it’s using Facebook 4 hours every day like a certain trader at Goldman Sachs, looking at uh, inappropriate sites, installing games or watching that episode of American Idol you missed, you must have a fast way to exit whatever it is you’re doing.  Be alert – don’t listen to blaring music – and avoid suspicion by browsing sites with mostly text.

Alt Tab

Typical usage: “I had some downtime today so I was catching up on House…  VP almost saw me but luckily I Alt Tabbed out of it really quickly!”alttab-key.jpg

What it means for the Analyst: Alt Tab is your lifeline.  Bankers are pretty good at Excel, but we’re actually much better at hitting Alt Tab just before someone notices that we’ve been watching Grey’s Anatomy for the last hour.

What it really means: For those who haven’t yet entered the work world and learned the wonders of Alt Tab, it is a shortcut to quickly switch the visible program on your computer.  So if you have Excel and YouTube open at the same time, hitting the Alt and Tab keys at the same time will rapidly switch between the two.  Brilliant.

Tips and tricks: Alt Tab can be used successfully only when you have advance warning.  If someone pounces on you and sees you looking at Dealbreaker or Leveraged Sellout, it’s all over.  So make sure you don’t listen to blaring music, and try to position yourself in your cube so that you can see any incoming enemies and intercept them with Alt Tab.

Staffer

Typical usage: “Just walked by the Staffer’s office… he saw me and now my weekend is completely screwed.”

work_stress.jpgWhat it means for the Analyst: Let’s just say that if you were Spiderman, the Staffer would be Dr. Octopus.  The staffer is your arch-enemy.  He or she can end your life with a single sentence.  Avoid the Staffer at all costs and certainly don’t be anywhere near his/her office on Friday at 4 PM.

What it really means: The Staffer assigns work to Analysts and makes sure work is distributed evenly (theoretically, anyway).  This is one of the most un-wanted jobs at an investment bank, and usually only the most extreme sadists dream of one day becoming the Staffer.  The Staffer is usually an Associate or senior banker who handles this responsibility in his/her “spare time.”

Tips and tricks: Avoid the Staffer on Fridays.  You can try to befriend it, but such beasts are rather difficult to tame, so avoiding it and always looking busy is probably the best strategy.  Just make sure you always have a good explanation for why you’re so busy – the Staffer is a cunning demon and can see through the thin lies you tell.

Closing Dinner

Typical usage: “Sweet!  Closing dinner on Friday in Vegas.”

What it means for the Analyst: Relief.  The Closing Dinner happens after a deal closes and is a celebration picasso.jpgfor everyone involved.  Usually the finest restaurants, the finest wine, and yes, the finest models and bottles are involved.

What it really means: See above.  It’s a big celebration after a deal closes and you usually get to go to an exotic location (or it could just be Vegas), eat $1,000 dinners and drink ambrosia from the hands of the gods.  And the best part: you’re not paying for it.  It’s one of the most fun nights you’ll have as an investment banker.

Tips and tricks: DO NOT GET DRUNK.  Trust me on this one.  No matter how tempting it is, do not get drunk in front of your entire team and start telling stories of all your crazy youthful adventures.

DD

77_smdesdrvrsym.jpgTypical usage: “Deal is taking awhile… their DD never ends.”

What it means for the Analyst: Waiting and sometimes formatting a company’s financials and other information so you can “add value” before sending them to the buyer.  But mostly waiting to see whether or not a deal is going to happen or not.  Sometimes you get to pretend you’re a consultant too, and you travel to wherever the buyer/seller are located.  Just hope it’s not Alaska in February.

What it really means: Due diligence.  Finding out everything and anything possible about a company you’re going to buy.  This is what private equity firms and VCs do all day.  This is usually a faster process if it’s a financial buyer (private equity) rather than a strategic, where they actually hold onto it for a long time and are therefore quite careful.

Tips and tricks: Remove yourself from the process as much as possible.  If there’s an issue, blame it on your client.  You can’t audit every single bit of information they send over.  Sometimes this tactic doesn’t work so be careful or you might find yourself in the conference room waiting to hear your severance number.

MD

Typical usage: “I completely messed up the numbers in front of my MD… my bonus is gone.”

What it means for the Analyst: If the Staffer is your arch-enemy, the MD is the man behind the curtain.   The Wizard of Oz.  The one stockxpertcomdoctor.jpggiving the orders but not directly ordering the Analyst around.  He has the power to fire or hire you, and he doesn’t play nice.  Be respectful but fearful.

What it really means: The Managing Director.  The top of the heap.  The king of the castle.  He makes rain and brings in deals and revenue for the firm.  The only people higher than the MD are Group Heads and the executives of the firm.  The MD is usually a lifelong, battle-hardened banker who has been through it all.

Tips and tricks: Don’t screw up.  If you do something wrong in front of an Associate or VP, that’s one thing, but screwing up repeatedly in front of the MD is one sure-fire way to assure yourself of a bottom-bucket bonus and no recommendations for those exit opportunities you’ve been dreaming of.

Just Wait, There’s Even More (Maybe)

Lingo is one of my favorite topics so expect to hear more about this one in the future.

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.

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by Brian DeChesare Comments (29)

Investment Banking Lingo: How To Walk, Talk And Act Like Gordon Gekko

Investment Banking Lingo: How To Walk, Talk And Act Like Gordon Gekko

“I have read Monkey Business, Liar’s Poker, and When Genius Failed each 3 times and consider them my collective bible. I know I have the eye for perfection and artistic vision to create truly immaculate pitch books. I am Microsoft Certified in Excel, and I know all the shortcut keys (alt-i then r, that will insert a new row). Furthermore, I consider myself a whiz with numbers. I know I would be able to build robust models and complete precise calculations for Lehman Brothers.

Most importantly, however, I want to stress how willing I am to do “anything for the team.” I realize the possibility of long hours exists in such a position, and I am ready to work as hard as necessary. I have been practicing staring at a computer monitor for extended hours; I can currently sit motionless in front of a screen for 28 hours, and I am improving daily.”

RE: Lehman Brothers Recruiting, The Leveraged Sellout

So, how do you succeed as a young investment banker?  How do you perform best in your upcoming summer internship?  What if you’re a full-time hire and you don’t want to be laid off 3 weeks into the job?

Dressing for success and buying some nice clothes might help (don’t go crazy, though).  And yeah, make sure you network and make a good impression on everyone.  Maybe try to learn some modeling before you start.

But one aspect that advice-giving bankers often overlook is the lingo.

Not the basics, like IPO, M&A and LBO – you can read about those in some book called the Vault Guide.

Let’s just skip to the interesting lingo.  The lingo that determines your life or death as a young banker.

Fire Drill

firefighters.jpgTypical usage: “Sorry for the fire drill, but we need to get this presentation out in the next 30 minutes – can you take care of it?”

What it means for the Analyst: Your life is going to suck for the next 30 minutes… or next 2 hours… or even longer, but at least it will be over at some point.  No, not your life.  The sucking.

What it really means: A “fire drill” is an emergency where you need to finish a presentation or analysis under very tight time constraints.  Generally it’s client-related (so the firm might end up getting paid something for all the insanity), although often it turns out to be completely useless.

Tips and tricks: Unfortunately, you can’t do much when confronted with a fire drill except extinguish the flames as quickly as possible.  The good thing about a fire drill is that it forces you to focus for a set period, and then all the work is done.  You may lose some hair in the process, though.

Bake-off / Beauty Pageant

Typical usage: “We have an IPO bake-off on Friday – can you work on the pitch?”bread-baker.jpg

What it means for the Analyst: Your life is going to suck until the bake-off is over.  There will be many, many (as in potentially over 100) revisions of the presentation until every last comma is placed in exactly the right location.

What it really means: A “bake-off” (also called a “beauty pageant” or “beauty contest” though that sounds even weirder…) refers to several investment banks competing for the same business, whether it’s an IPO, a financing or an M&A deal.  These types of “contests” involve long and very painful pitchbooks.

Tips and tricks: The best way to deal with an upcoming bake-off is to do as little work as possible and to only do specifically what you’re told without going overboard.  If you don’t need a graph with market share by competitor, don’t do it.  Don’t submit work too far in advance of the actual deadline – this just gives people an excuse to add unnecessary material and increase your workload.

Bandwidth

Typical usage: “We have an IPO bake-off on Friday… do you have any bandwidth?”

20070628-bandwidth-survey.jpgWhat it means for the Analyst: Unless you answer “no” with a compelling reason, your life is going to suck until you finish whatever it is the senior banker is indirectly asking you to do.

What it really means: They are trying to give you work and assess whether you have any “capacity” (bandwidth) left to finish it by a certain time.  If you are leaving before 2 AM every night, you have bandwidth.  If you have 3 other bake-off pitches in the next few days and 5 active deals, you don’t have bandwidth.

Tips and tricks: When you’re trying to convince them you have no bandwidth, focus only on future deadlines.  It doesn’t matter how many all-nighters you’ve pulled in the past week, all that matters is how much work is due in the next 24 hours.  This one is straight out of Monkey Business and is as true today as it was back in the 1990’s.

Face Time

Typical usage: “I’d leave right now but it’s only 9 PM… need to put in some face time.”

What it means for the Analyst: Even if you have no work and no one has successfully detected this and given you work, your life is still going to suck because you can’t go home and risk alerting the higher-ups of this truth.

What it really means: “Face Tiofficespace1.jpgme” refers to staying in the office until an acceptably late time (11 PM or later, though some offices can be more like 2 AM) so that everyone thinks you’re busy and no one gives you more work.  This concept might seem strange to those of you who don’t work in finance.  Don’t worry – it still seems strange to me and I’ve been doing this for 2 years.

Tips and tricks: Actually, many firms and offices are not as big on face time as they once were.  If you have a bad staffer (the one who assigns work to Analysts), he or she might actually go back to the office late at night and check to see who’s still there.  But even at bulge brackets, most groups have become more reasonable in recent years.

If you are in a bad group or one where a lot of face time is required, I would find other ways to get out of the office, like going to the gym on weekdays.  Also, you can start a blog on investment banking to pass the time. :)

Below The Bar

pullupbar.jpgTypical usage: “This deal is below the bar… I think we’re going to pass on the business.”

What it means for the Analyst: Your life, for once, is not going to suck because your MD has decided to give up a client that was too small for the firm.

What it really means: Every firm has a “bar” or “minimum size” deal it will do.  The minimum size can be based on either potential fee or potential deal size (the 2 are not always directly linked, though generally a larger deal will result in a larger fee).

Most bulge brackets, for example, will not do deals below $300 million or so in size.  In a tough market this can change, but bulge brackets focus on deals over $1 billion.  At middle-market firms, the “bar” might be $25 or $50 million.

A small deal takes as much work as a large deal and generates a lower fee, so why spend time and resources on the small fish when you can land the whale?

Tips and tricks: Just keep your mouth shut and be glad you avoided some extra work.  Small deals are really painful anyway because those involved tend to be less sophisticated and cause an uproar over small issues.  So be glad you got to work on Microsoft-Yahoo, even it fell apart, rather than the sale of some $10 million family-owned business with more leaks than the Titanic.

Low Hanging Fruit

Typical usage: “Currently we only have 1 office in Europe but we’re getting requests from European customers all the time… so staffing up there to meet demand would be some real low-hanging fruit.”

What it means for the Analyst: Your life will consist of many painful PowerPoint charts and you may have visions of being a consultant for awhile.

What it really means: Clients usually use “low hanging fruit” to refer to any easy opportunities to increase sales that will become available240px-pears.jpg only after they get sold… or raise money… or get taken private.

Generally “low hanging fruit” is not low hanging at all and requires substantial time and resources.  It’s just a “selling point” or “acquisition consideration” you might try to sell investors on.

Tips and tricks: Use your presentations department.  Avoid the temptation to do too much PowerPoint yourself.  I’ve seen this mistake in many banking newbies.  Also, try to mentally replace any reference to “low hanging fruit” with “this is going to take a lot of time and money and it’s all a lie.”

More To Come

This just scratches the surface – what other investment banking lingo do you use a lot, or do you want to hear about?  Again, nothing as simple as defining IPOs or M&A- you can read about those in an outdated version of the Vault guide.

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.

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