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Bored so thought I’d tell a small story from my time in banking.
One day my director S gets a call from a client asking for $150M. They are looking to purchase a pool of assets and want an asset-backed warehouse to finance this purchase. 1/n
One day my director S gets a call from a client asking for $150M. They are looking to purchase a pool of assets and want an asset-backed warehouse to finance this purchase. 1/n
This is my first year on the desk, so I’m super excited to get on a “live deal”. The other associates and senior analysts realize this is going to be a ton of work and no travel/dinners. I’m pumped to be working on this “deal” all by myself. 2/n
So first step is a call between S and T (head of group). T only comes in 4 days/week and leaves at 3:30pm most days to beat the tunnel traffic. He spend most of the time looking at a chart of our stock price (which is 50% of his net worth). 3/n
S and T refuse to talk to each other in person, so the initial call (between two people who sit 10 ft away from each other) takes a week to setup. It& #39;s decided that we like the assets, and there& #39;s some potential for future ABS issuance so we should get the process going. 4/n
Days after this call, S asks me if the deal is going well. I& #39;m like I have no idea... you tell me.
He loses his sh*t. Calls me a worthless POS and threatens to fire me. I panic, apologize but still don& #39;t know what to do. 5/n
He loses his sh*t. Calls me a worthless POS and threatens to fire me. I panic, apologize but still don& #39;t know what to do. 5/n
I figure out the next step is to loop in J (client& #39;s relationship banker) to see if he supports this transaction.
Another call is setup (S, T, J) and they all agree this would be a great deal and we should move forward, as long as Risk is OK. 6/n
Another call is setup (S, T, J) and they all agree this would be a great deal and we should move forward, as long as Risk is OK. 6/n
P (Risk) is looped in and dumps a ton of paperwork on me. It& #39;s literally 50 pages of stuff I have to copy/screenshot from their 10-K into a garbage internal risk format. All these capital ratios too.
My excitement is starting to run a little low. 7/n
My excitement is starting to run a little low. 7/n
Client has started calling and S responds with the generic "you know how Risk can be".
By this point I& #39;ve finally finished the memo. T has demanded that I massage the numbers so that we can get approval for $400M!!
At this point, I& #39;m just blindly following instructions. 8/n
By this point I& #39;ve finally finished the memo. T has demanded that I massage the numbers so that we can get approval for $400M!!
At this point, I& #39;m just blindly following instructions. 8/n
It& #39;s been weeks since the original call. Risk meeting is finally set up. Lots of people I& #39;ve never heard of are in the room. No place for me to sit.
I& #39;m diligently handing out bound copies of the memo I put together. I really want people to read this document. 9/n
I& #39;m diligently handing out bound copies of the memo I put together. I really want people to read this document. 9/n
Risk is appalled that we& #39;re even considering lending money to a company in this industry. Cue a shouting match with between P and T.
No one even opens my memo. 10/n
No one even opens my memo. 10/n
After the mini-fracas (which I learned later is how every risk committee meeting HAS to go), a truce is reached.
P says we need to talk to K (his boss) and T2 (J& #39;s boss) to make sure this is a valuable client.
T reduces the ask to $300M and promises to "manage the client". 11/n
P says we need to talk to K (his boss) and T2 (J& #39;s boss) to make sure this is a valuable client.
T reduces the ask to $300M and promises to "manage the client". 11/n
Getting my team (S T), risk (P K) and relationship guys (J T2) on a call at the same time takes another 3-4 days. But we& #39;re finally there.
T2 is a senior guy. He& #39;s not sure why he& #39;s involved here. He& #39;s been on the call for 5 min and starting to get agitated. 12/n
T2 is a senior guy. He& #39;s not sure why he& #39;s involved here. He& #39;s been on the call for 5 min and starting to get agitated. 12/n
T throws me under the bus. Says I& #39;m new and should have never asked for $300M and that& #39;s why risk got pissed.
T2 and K laud him for understanding that money isn& #39;t unlimited. Say that we need to reduce ask and make sure DJ is on the next call. 13/n
T2 and K laud him for understanding that money isn& #39;t unlimited. Say that we need to reduce ask and make sure DJ is on the next call. 13/n
DJ is the global head of something. He has no time on his schedule, and an assistant responds to his emails. I have to go see her personally to explain why we need a meeting.
I& #39;m finally figuring out how deals die. 14/n
I& #39;m finally figuring out how deals die. 14/n
Finally, we get a time together (2 months after initial email).
In fact, DJ wants to meet the deal team so we stuff into a room. Very affable guy. Says hello and asks how I& #39;m doing.
Ask is now $200M. Risk is VERY proud how they managed to get that down. 15/n
In fact, DJ wants to meet the deal team so we stuff into a room. Very affable guy. Says hello and asks how I& #39;m doing.
Ask is now $200M. Risk is VERY proud how they managed to get that down. 15/n
Shortest meeting ever. DJ looks around the room and asks if anyone has any issues. No one speaks up. $200M loan approved.
Lots of back-slapping on how we have the best clients and the best deals. 16/n
Lots of back-slapping on how we have the best clients and the best deals. 16/n
No one read the memo, nobody even looked at what the assets were. We didn& #39;t even ask the company why they were buying them.
But we got the deal done. end
But we got the deal done. end
