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The Epicurean Dealmaker

An occasional review and commentary on Wall Street, global finance, markets, and their participants,by a pseudonymous investment banker.Sometimes we will venture out into the broader landscape of society, culture, and politicsto poke and peer at their cur

Last Build Date: Mon, 17 Oct 2016 09:06:34 +0000


Out of Service

Sun, 05 Apr 2015 13:14:00 +0000

I met a traveller from an antique land
Who said:—Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk, a shatter’d visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamp’d on these lifeless things,
The hand that mock’d them and the heart that fed.
And on the pedestal these words appear:
“My name is Ozymandias, king of kings:
Look on my works, ye mighty, and despair!”
Nothing beside remains: round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away.

— Percy Bysshe Shelley, “Ozymandias”

Look on my works, ye mighty, and take care:
Table of Contents
Preface to the occasional reader
Oop. Time, She’s Up


© 2015 The Epicurean Dealmaker. All rights reserved.(image)

Uncle Warren Explains It All to You

Sun, 01 Mar 2015 21:45:00 +0000

“Sure, sure.”— Sidney J. Mussburger, The Hudsucker ProxyApparently some doddering old fart in Omaha, Nebraska published a celebratory letter yesterday in connection with an obscure anniversary some of you might have heard about. Something to do with a mid-range furniture store or failed textile mill or something. Anyway, I felt compelled to read it, if only because every financial pundit in the Western Hemisphere has been recommending its salutary virtues to me with a fervor approaching the evangelical. Personally, I found it more hokey and self-congratulatory than illuminating, but then again I tend to prefer my moral fiber to come unencumbered by six cups of refined sugar and smug self satisfaction per serving. I know, I know: I am downright un-American.If you care about the content of this man’s nattering—and the compl(i/e)mentary nattering of his partner in cast iron cheer—I would refer you to Matt Levine, who offered a very serviceable summary unburdened by the usual encomia breathlessly showered on this duo by all and sundry. He points out that the success of the business purchasing part of this entity can be neatly reduced to the skill with which the principal buys and sells said businesses, and not hands on management and supervision thereof, which said demiurge studiously avoids. This strikes me as essentially correct. He also calls attention to an aspect of the jolly old elf’s behavior that tends to be overlooked by his cheerleaders: he is a ruthless allocator of the bounteous capital at his command. Far from his image as a genial rich uncle offering cozy and undemanding shelter from the withering blasts of shareholder capitalism to skittish families and corporate management teams in search of a few shekels to renovate their yachts, Mr. Buffett drives a hard bargain going in and, in the event the bloom comes off the rose, delivers an even harder kick in the pants going out.Warren buys cheap, and then he owns your ass in perpetuity, unless he decides to dump you. Which is just fine, by the way: it’s what his shareholders want him to do, and he has been very successful at it. It just amuses me this incontrovertible characterization seems to elude almost everybody who has gushed about him in the past.* * *Aaannnyhoo, Warren Buffett is a serial acquirer of companies, inter alia, and he is indisputably good at it. And this explains (if does not condone) the snarky barbs he sends my direction, railing against investment bankers, to which my response is the entire point of this peroration. Now everybody knows, your defensive correspondent included, that nobody likes investment bankers, so I do not anticipate my remarks will undermine the regard in which the Great Man is held by anybody. Nor do I begrudge a beloved financial celebrity and multibillionaire a little fun in kicking the mangy village cur everybody hates, but I do hope to persuade at least a few of you that Mr. Buffett’s critique of my industry is not disinterested.Uncle Warren’s critiques of investment bankers are scattered throughout his missive, but probably the highest concentration is located in his section on Berkshire Hathaway as a conglomerate, starting on page 29. The money shot, so to speak, is concentrated on pages 31–32:Berkshire has one further advantage that has become increasingly important over the years: We are now the home of choice for the owners and managers of many outstanding businesses.Families that own successful businesses have multiple options when they contemplate sale. Frequently, the best decision is to do nothing. There are worse things in life than having a prosperous business that one understands well. But sitting tight is seldom recommended by Wall Street. (Don’t ask the barber whether you need a haircut.)When one part of a family wishes to sell while others wish to continue, a public offering often makes sense. But, when owners wish to cash out entirely, they usually consider one of two paths.The first is sale to a competitor who is salivating at the possibi[...]

Goldman Sachs Doesn’t Care What You Think

Sat, 14 Feb 2015 17:20:00 +0000

A cat may look at a king.— English proverbSo, in an apparent effort to raise its rank in the Most Recognized Polling Firm in America Sweepstakes, Harris Poll recently published a survey of 27,278 individuals across this fine land to determine America’s 100 most- and least-loved corporations. Bloomberg Business subsequently took time out of its busy day to gleefully report that Goldman Sachs, investment bank and über squid of the global financial markets, finished dead last:People hate Goldman Sachs more than oil spills and the Koch brothers.Well, far be it for me to rain on Bloomberg’s and Harris Poll’s parade, but I am here to tell you children, with complete confidence, that Goldman Sachs just doesn’t care what you think.Now this does not mean there isn’t some poor (relatively) underpaid slob scurrying around Goldman Sachs’ Public Relations Department pulling out his or her hair, fretting that you and your Aunt Millie in Rochester think poorly of his or her employer. After all, big corporations like Goldman Sachs have to employ people like that whose job it is to care, if only for appearances’ sake. Generally conveying to the public at large that you don’t give a fuck tends not to play well and can introduce all sorts of petty annoyances and frictions in the conduct of one’s business, so spending a few otherwise forgettable millions on PR can work out to be a good investment.1 This is common knowledge.But deep in the bowels of Goldman’s money spinning machine and high in the corridors of the executive suite at its West Street headquarters, you may safely assume the people who matter do not give a flying fuck in a rolling donut that you don’t like them. Sorry to be harsh, but there it is.* * *Now I realize such indifference to negative public opinion may strike you as odd, given that our culture’s highest aspiration seems to be getting Kim Kardashian to “like” your Facebook post gushing over her latest dress, so I am happy to take a few hours from my Saturday morning to explain.First of all, of course, there is the fact that Goldman Sachs does not sell soda pop. The Bloomberg article ventures:A bad reputation can affect a company’s bottom line. Harris Poll says 36 percent of adults have decided not to support a business because of something questionable they learned about its conduct. And more than half of consumers now do some research on the businesses they’ve either heard about or are about to spend money on. The findings suggest that companies aren’t as immune from moral blunders—be it expired meat or toxic mortgages—as they once might have been. “The American public strongly believes reputation matters and acts on that belief,” said Carol Gstalder, Harris Poll’s reputation and public relations practice leader.How, pray tell, do you and your Aunt Millie intend to act on your disgust with Goldman? Do you intend to boycott their supermarkets, buy your cell phone from another manufacturer, or drive a mile out of your way to get gas from a less despicable energy company? Oh, I know: you’ll refuse to invest in their mutual funds or use their mobile trading app to make $9.99 option trades, right? Fat lot of harm that’ll do Lloyd Blankfein: Goldman isn’t in any of those businesses. Goldman Sachs operates in wholesale finance—buying and selling securities and other financial instruments across global markets on behalf of itself and institutional clients, advising on mergers and acquisitions for corporations and private equity firms, and underwriting securities for issuers who want to raise money from institutional investors.2 They wouldn’t recognize you or your Aunt Millie if they ran you over in a Wegman’s parking lot. You—America’s vaunted consumers, Harris Poll’s respondents—are not Goldman Sachs’ clients. Your principled pocketbook wields no power over them.Furthermore, among Goldman Sachs’ real clients—hedge funds, large institutional investors, corporations, and private equi[...]

Passing Fair

Sun, 18 Jan 2015 21:13:00 +0000

What though the sea with waves continuall Doe eate the earth, it is no more at all ; Ne is the earth the lesse, or loseth ought : For whatsoever from one place doth fall Is with the tyde unto another brought : For there is nothing lost, that may be found if sought.― Edmund Spenser, The Faerie QueeneMunicipal bond market maven, government official, and longtime Twitter fixture Kristi Culpepper penned an interesting riposte yesterday to Leon Wieseltier’s recent jeremiad against the disruptive cultural effects of technology in The New York Times. Leon, you may recall, laid about rather vigorously with his rhetorical cudgel in defense of humanism against the allied evils he sees arrayed against it today, including technologism, scientism, data fetishism, and commerce. He declared—correctly if rather dramatically—that “A culture is an internecine contest between alternative conceptions of the human.” And he, if I may be so blunt, came down on the side of writing, art, and Western cultural patrimony and against the forces who wish to strip, devalue, and denature same in the name of technological progress and efficiency.Now, being as I have consistently declared myself an amateur and aficionado of such arty, literary, cultural-y things, I am sympathetic to Mr. Wieseltier’s arguments, although I do think he lays it on a bit thick in the straw man department. I also have reservations that his full-throated defense of writers and thinkers against the commoditization, devaluation, and impoverishment of a certain sort of careful, deeply informed thinking and writing by the forces triumphant of digital and social media is a bit overblown. For one thing, I would observe Mr. Wieseltier himself seems to have had no problem securing a soapbox at the paper of record for the liberal intelligentsia to spout his opinions, mere weeks after the implosion of his prior perch at The New Republic due to the machinations of the sort of technologist philistines he decries. Second, I utterly fail to see a shortage of intelligent, hardworking writers pontificating on important matters and sundry throughout the English speaking opinionsphere. It seems that everybody and his brother and his brother’s three-legged cat are scribbling as journalists, bloggers, opinion editors, MFA students, novelists, and nonfiction writers nowadays. When I walk into the ground floor of my local 50,000 square foot Barnes & Noble bookstore, I am not struck by any dearth of written material for my perusal, and the ground floor of my store is not filled with the works of dead white men (those are in the basement). Speaking as an acolyte of microeconomics (and a minor unpaid contributor to the general oversupply of published dreck), it strikes me that writers face a supply problem in the market for their wares, not a lack of demand. Maybe if writing weren’t so popular as a lifestyle choice, rather than an actual calling for a dedicated few (as it has been for most of recorded time), fewer professional writers would be bemoaning the parlous state of their bank accounts.Be that as it may, Ms Culpepper takes issue with our Cultural Cassandra from another direction:First, innovation presents new opportunities to define oneself for those that are willing to invest the time and effort. The same is true for society as a whole. That Wieseltier doesn’t want the character of society to be determined by engineers overlooks history. Feats of engineering have been a conduit for conversations about the public good and the ambitions of civilization from ancient Rome to NASA. I don’t understand the temptation to hold art or poetry above these endeavors. I would trade all the Jeff Koons in the world for a better understanding of what lies outside our solar system.(Personally, I would be content to pack all of Jeff Koons’ art and the artist himself on a spaceship launched into the Sun for no counterbalancing intellectual recompense whatsoever. I’d even be willing to erase some [...]

Nerd Intersectionality

Fri, 02 Jan 2015 20:45:00 +0000

Infancy is not what it is cracked up to be. The child seems happy all the time to the adult, because the adult knows that the child is untouched by the real problems of life; if the adult were similarly untouched he is sure that he would be happy. But children, not knowing that they are having an easy time, have a good many hard times. Growing and learning and obeying the rules of their elders, of fighting against them, are not easy things to do. Adolescence is certainly far from a uniformly pleasant period. Early manhood might be the most glorious time of all were it not that the sheer excess of life and vigor gets a fellow into continual scrapes. Of middle age the best that can be said is that a middle aged person has likely learned how to have a little fun in spite of his troubles.It is to old age that we look for reimbursement, the most of us. And most of us look in vain. For the most of us have been wrenched and racked, in one way or another, until old age is the most trying time of all.— Don Marquis, “The Almost Perfect State”I was browsing the online portal for the My Emotional Wounds Are Bigger Than Your Emotional Wounds Victims’ Society1 this morning, O Dearly Beloved, when I encountered an essay by feminist firebrand Laurie Penny in which she took MIT Professor Scott Aaronson to task for justifying nerds’ insensitivity to male privilege in the technology industry. Notwithstanding some hyperbolic posturing about what Penny calls the “disaster of heterosexuality” [sic], it reads as a sensitive and revealing first person demolition of the notion that white male nerds faced some sort of unique hell growing up that can possibly justify their current behavior. I’ll let you go ahead and read it, if that’s your sort of thing.If it is not, or you are back already, I would prefer to direct you to an earlier essay by computer nerd Pete Warden, cited approvingly by Penny and unfamiliar to me until now. In his essay, Warden, a die-hard, early adopter hacker type übernerd, correctly points out (in inimitable nerd fashion) that technology nerds, far from being the underdogs they so painfully remember being in their adolescence, are now Kings of the Hill:We’re still behaving like the rebel alliance, but now we’re the Empire.This is spot on. But then Warden goes and ruins the ride when he corrects Marc Andreessen’s assertion that nerds and bros are natural enemies with this:Sure, we used to be picked on or ignored by the bro’s, but that was when we had no money or power. Now we have status, bro’s are happy to treat us as buddies instead of victims, to the point that we’re unlikely to think of them as bro’s. I’ve pitched most VC firms in the Valley at one time or another, and a lot of the partners come from business or finance backgrounds. There are nerds in there too of course, and they do control the culture, but they also get along perfectly well with the preppy MBAs. The same holds true across the whole tech industry – they might have tried to steal our lunch money twenty years ago, but now they’re quite happy running biz-dev while we do the engineering.This is very muddled thinking as well as remarkably tone deaf observation as to what and who constitutes a “nerd” and a “bro” and the differences between them. But what should one expect from a nerd?2* * *Mr. Warden seems to identify the venture capitalists (“VCs”) and business development (“biz-dev”) colleagues he interacts with as bros because they have business or finance backgrounds, MBA degrees, and/or wear “preppy” clothes. This is just dumb. I have met a number of Silicon Valley venture capitalists and BD personnel over the years, and I can tell you from personal experience most of them would only come across as bros to someone who lives in a basement cave and thinks real women look and dress like Lara Croft in Tomb Raider. These people are as nerdy as they come. Sure, they prefer to geek out [...]

The Morning After

Thu, 01 Jan 2015 14:02:00 +0000

Frans Hals, The Laughing Cavalier, 1624There is an inn, a merry old inn beneath an old grey hill, And there they brew a beer so brown That the Man in the Moon himself came down one night to drink his fill.The ostler has a tipsy cat that plays a five-stringed fiddle; And up and down he runs his bow, Now squeaking high, now purring low, now sawing in the middle.The landlord keeps a little dog that is mighty fond of jokes; When there’s good cheer among the guests, He cocks an ear at all the jests and laughs until he chokes.They also keep a horned cow as proud as any queen; But music turns her head like ale, And makes her wave her tufted tail and dance upon the green.And O! the rows of silver dishes and the store of silver spoons! For Sunday there’s a special pair, And these they polish up with care on Saturday afternoons.The Man in the Moon was drinking deep, and the cat began to wail; A dish and a spoon on the table danced, The cow in the garden madly pranced, and the little dog chased his tail.The Man in the Moon took another mug, and then rolled beneath his chair; And there he dozed and dreamed of ale, Till in the sky the stars were pale, and dawn was in the air.Then the ostler said to his tipsy cat: “The white horses of the Moon, They neigh and champ their silver bits; But their master’s been and drowned his wits, and the Sun’ll be rising soon!”So the cat on his fiddle played hey-diddle-diddle, a jig that would wake the dead: He squeaked and sawed and quickened the tune, While the landlord shook the Man in the Moon: “It’s after three!” he said.They rolled the Man slowly up the hill and bundled him into the Moon, While his horses galloped up in rear, And the cow came capering like a deer, and a dish ran up with the spoon.Now quicker the fiddle went deedle-dum-diddle; the dog began to roar, The cow and the horses stood on their heads; The guests all bounded from their beds and danced upon the floor.With a ping and a pong the fiddle-strings broke! the cow jumped over the Moon, And the little dog laughed to see such fun, And the Saturday dish went off at a run with the silver Sunday spoon.The round Moon rolled behind the hill as the Sun raised up her head. She hardly believed her fiery eyes; For though it was day, to her surprise they all went back to bed!— J.R.R. Tolkein, The Fellowship of the RingHappy 2015. May your new year be a pleasant, safe, and prosperous one.© 2015 The Epicurean Dealmaker. All rights reserved. [...]

Greatest Hits of 2014

Sat, 27 Dec 2014 14:45:00 +0000

“I think it’s just elegant to have an imagination. I just have no imagination at all. I have lots of other things, but I have no imagination.”— The Seven Year ItchYes, O Dearly Beloved, it’s that time of year again. Time to dust off the circuit boards of the dedicated Google Analytics server farm for this two bit opinion emporium and determine which of my 37 beautiful children attracted the most attention from you delightful readers, spambots, and web crawlers in the Year of Our Lord Two Thousand and Fourteen. As I have explained before, this may be the last year I bother to conduct such a shameless exercise of self-congratulatory back patting—and I have already graced these archives with an All Time Greats victory lap—but I am nothing if not attentive to the proclivities of the three obsessive compulsives among you who could not rest if I did not. (And of course that little jolt of ego gratification I receive from enticing a few hundred more of you to click on these links one more time.)Anyway, the way these things work should not be a mystery to you by now, so I will stand discretely in the back while you explore TED’s very own People’s Choice awards. I hope you enjoy them, but if you do not, well, you’re probably not my demographic anyway.THE CANON, 2014 Edition:1) A Fine Disregard for the Rules (January) — A cabal of the largest investment banks on the planet joined together this year and last to institute policies designed to limit and control the near-legendary workloads imposed on their most junior professionals. In this post, your Guide to All Things Workaholic, Finance Edition explains just why it is these poor slobs work such long hours. I won’t give away the punchline here, but you may safely assume it has something to do with client service.2) Where Did He Learn to Negotiate Like That? (August) — There are right ways and wrong ways to employ investment bankers when you want to sell your company. The idiot savants at online real estate company Trulia gave us a master class in the latter, while simultaneously demonstrating that it can be dangerous to negotiate with professional negotiators.3) A Cure Worse Than the Disease (August) — A lawyer took to the pages of to explain, among other things, when and why to hire a mergers & acquisitions advisor to sell your private company. I took to my own to provide what I believe to be a more comprehensive, helpful, and only mildly self-promotional gloss.4) Touring Test (June) — A tendentious screed prompted by more idiocy emanating from the incontinent bowels of Silicon Valley, some of whose boosters and visionaries continue to argue, against all evidence and two decades of wasted technology spending to the contrary, that in-person business meetings can and should be dispensed with in favor of remote, virtual, “telepresence” substitutes. I calmly remind my readers that meetings—and indeed business itself—still actually do involve those pesky entities known as people, most of whom continue to prefer to interact with their counterparts in person, rather than in the pixellated confines of World of Warcraft. For good reason.5) This Situation Absolutely Requires a Really Futile and Stupid Gesture (March) — Gawker editor Hamilton Nolan Is Full of Shit, Part 572. I think it had something to do with hedge fund managers and their earnings this time. Moral: populist polemics based on a fundamental untruth may1 attract page views, but they only make you look stupid to the people who matter.6) Even Cowgirls Get the Blues (February) — Two of the dead horses I most like to beat in these pages—junior banker working hours and women’s career challenges in my industry—come together in one convenient pile of moldering horseflesh for me to flail away at. You may watch the proceedings with amusement from the sanitary safety of your virtual armchair.7) You Go Fi[...]

Show Me the Money

Tue, 02 Dec 2014 17:59:00 +0000

“Money changes everything.”— Some guy, probably without any moneyAndrew Ross Sorkin, access journalist extraordinaire and alleged shill for the Great and Good,1 put up a sensible op ed this morning to which I thought I would contribute a few brief supporting remarks. It seems Mr. Sorkin has taken somewhat of a shine to Antonio Weiss, a successful Lazard investment banker whom the current Administration has advanced as its candidate for under secretary of the Treasury for domestic finance, and he has been defending this paragon of sharp-dressed competence against detractors great and small.Today’s fresh character assassination outrage comes from the capitalist shills [sic] at the AFL-CIO, who have apparently addressed a letter to the boards of several Wall Street banks which takes umbrage at the policy, to be enjoyed by Mr. Weiss among others, that employees leaving their firms for government service can take their unvested pay with them:Why, the letter asked, do banks routinely pay out special compensation packages to executives who leave to take government jobs when those packages were intended to retain them?“Unless the position of these companies is that this is just a backdoor way to pay off a newly minted government official to act in Wall Street’s private interests rather than the public interest, it is very difficult to see how these policies promote long-term shareholder value,” the letter declared.Now Mr. Sorkin waxes poetic and high minded in response to this challenge, nattering on primarily about how we should encourage banks and other employers of bright, shiny, would-be technocrats to doff their gilded yokes of service to Mammon and don the austere chains of public service to the rest of us. He assures us that the interlocking web of influence, conventional group think, and apparent if not actual conflict of interest such revolving door practices engender are indeed problematic, but that the net gain of brilliant, accomplished, successful financiers to the government payroll is worth it, and the aforesaid conflicts can be managed with an unburdensome modicum of care and attention. This is all well and good, and even Your Altruistically Challenged Correspondent can recognize the merits of this argument in the chilly chambers of his frozen heart, but it does not go far enough. As a result, Mr. Sorkin has no compelling response to Big Labor’s additional complaint—bless their capitalist-friendly hearts—that such policies represent a squandering of shareholder value. The thrust of his reply seems to be, yes, these policies cost shareholders money, but they probably help attract some additional members of the Best and Brightest who might have a few public-service-inclined bones in their sleekly coiffured bodies, so that must be a non-numerically-quantifiable Good Thing.This is unnecessarily weak sauce. Let me explain.* * *The principal issue seems to be that our intrepid financial journalist and the shrill harridan of special pleading for labor share a common confusion concerning the payments in question to Mr. Weiss and other would-be servants of the public good. For one thing, they are not special payments at all, as in, “Well done you. Here’s a couple of million or so leafy simoleons to stack alongside your Rembrandts and ill gotten bearer bonds in reward for your selflessness. Remember us kindly.” Rather, when Lazard hands Mr. Weiss a check for twenty million smackeroos give or take on his way out the door, it will be releasing into his sweaty hands money he has already earned.The distinction which Ms Slavkin Corzo draws between this and what Mr. Weiss, e.g., would receive should he instead choose to decamp from the mahogany clad offices of Lazard for some other investment bank—bupkis, plus a swift kick to the seat of the pants—while correct, misses the point. As Your Tireless Ex[...]

His Dark Materials

Thu, 27 Nov 2014 05:40:00 +0000

Joseph Wright, Arkwright’s Cotton Mills by Night, c. 1782
The best one can hope for as a human is to have a relationship with that emptiness where God would be if God were available, but God isn’t. … He’s not available because he’s not a being of a kind that would fit into our availability. … If God were knowable, why would we believe in him?

Anne Carson

* * *

All religions [have] at least one common commandment: “Thou shalt not disfigure the soul.”

— Frank Herbert, Dune

* * *

Seems to me the place you fight cruelty is where you find it, and the place you give help is where you see it needed.

We have to build the Republic of Heaven where we are, because for us there is no elsewhere.

— Philip Pullman, His Dark Materials

Do not forget to build the Republic of Heaven where you are, my friends, starting with your family and friends this holiday season. Most of us have no more important work, and most of us will leave no more lasting legacy than this.

Happy Thanksgiving.

© 2014 The Epicurean Dealmaker. All rights reserved.(image)

Regrets, I’ve Had a Few

Sun, 23 Nov 2014 23:56:00 +0000

Auguste Rodin, Orpheus and Eurydice, 1893Martin Blank: “I’m sorry if I fucked up your life.”Debi Newberry: “It’s not over yet.”— Grosse Pointe BlankWhy do we regret life choices? In retrospect, some are decisions with serious and long lasting consequences we make carelessly, hastily, or without due consideration to relevant factors clearly available to our decision making process at the time. They are important choices poorly made. These are good candidates for regret, because we think to ourselves, “If only I had thought more clearly, or taken more time, or investigated my options more carefully, I could have accomplished something important I would have wanted at the time and perhaps still do.” These are the kind where our overwhelming impulse is to kick ourselves for being so stupid, blind, or rash. And we are right to do so. If you are like me, Dear Readers, these are the decisions I cringe to remember, and for which my ears burn with embarrassment.Others are choices we make deliberately, carefully, with all due attention to the facts as we know them, but that turn out to be wrong, or have unanticipated negative consequences which would have made us choose differently had we foreseen them. These regrets take the form, “If only I had known…” But these are properly weaker regrets, because they hinge on counterfactuals which we instinctively if not explicitly realize were not in our control: information which would have made us change our minds was hidden or unavailable to us, or—a special case of the foregoing—future conditions which we relied upon in making our decision changed after we decided, thereby undermining our intent. Human beings operate with bounded rationality, and even the best and most conscientious decision maker can be foiled by unknown (and perhaps unknowable) data and the vicissitudes of an uncertain future. The consequences may be just as bad, in retrospect, as those arising from a bad decision poorly made—or even worse—but it is pointless to beat yourself up too much for choices you made without considering information completely unavailable to you. Someone who gives more than a passing shrug of regret for the abandoned winning lottery ticket they failed to pick up off the street has their priorities and sense of the possible all messed up.Still others are good decisions, carefully made, incorporating a complete set of relevant data and good anticipation of future developments, that we later come to regret because we discover we no longer want what we thought we did at the time. Perhaps these are just another subset of the second kind, where the unknown facts we did not incorporate into our decision process are future changes to our values or priorities. But these regrets are often the most troubling, because we are stuck with bad consequences we did not anticipate for which we can blame no-one but ourselves. Nobody hid any data from us, we weighed the pros and cons carefully, and the future played out just as we expected, but now the successful results of our decisions prevent us from realizing other desires or values that are just as or more important to us. This kind of regret often is a natural consequence of the normal process of aging, as young people make important and often irreversible life decisions they later come to regret as older individuals.* * *And so we get examples like this, where a 46-year-old banker complains on Reddit that his choices as a young man—for security, wealth, and a successful career—have resulted in a broken marriage, estrangement from his son, and the abandonment of cherished dreams of writing, travel, and adventure he had when he was young. According to his story, he did not make choices rashly or irresponsibly; if anything, his complaint seems to be based in part on [...]

What Is It Like to Be a Banker?

Wed, 19 Nov 2014 02:35:00 +0000

Conscious experience is a widespread phenomenon.— Thomas Nagel, inveterate optimistWhilst conducting primary research into the ontological foundations of metaphysical epistemology recently, O Dearly Beloved, Your Dilatory and Shockingly Remiss Correspondent happened upon a previously unpublished draft of Thomas Nagel’s seminal paper, “What Is It Like to Be a Bat?” I found upon examination of the disintegrating foolscap moldering in dank archives that this eminent philosopher had initially attempted to frame his gedankenexperiment with an empathic exercise even more challenging than imagining himself to be a member of the genus Microchiroptera. Given its patent interest for the history of analytical philosophy and its relevance to issues of concern cognate to this blogsite, I thought I would share the pertinent excerpt with you:I assume we all believe that bankers have experience. After all, they are human beings, and there is no more doubt that they have experience than that accountants or baristas or firemen have experience. I have chosen bankers instead of lawyers or politicians because if one travels too far down the phylogenetic tree, people gradually shed their faith that there is experience there at all. Bankers, although arguably more closely related to us than those other examples, nevertheless present a range of activity and a sensory apparatus so different from ours that the problem I want to pose is exceptionally vivid (though it certainly could be raised with other species). Even without the benefit of philosophical reflection, anyone who has spent some time in an enclosed space with an excited banker knows what it is to encounter a fundamentally alien form of life.I have said that the essence of the belief that bankers have experience is that there is something that it is like to be a banker. Now we know that most bankers (investment bankers, to be precise) perceive the external world primarily by money sense, or moolah-location, detecting the reflections, from monetary instruments or securities within range, of their own rapid, subtly modulated, high-frequency shrieks. Their brains are designed to correlate the outgoing impulses with the subsequent jingling or rustling of exchangeable claims to value, and the information thus acquired enables bankers to make precise discriminations of denomination, fungibility, composition, and theft-prevention protections comparable to those we make by vision. But banker money sense, though clearly a form of perception, is not similar in its operation to any sense that we possess, and there is no reason to suppose that it is subjectively like anything we can experience or imagine. This appears to create difficulties for the notion of what it is like to be a banker. We must consider whether any method will permit us to extrapolate to the inner life of the banker from our own case, and if not, what alternative methods there may be for understanding the notion.Fortunately for the history of analytic philosophy, Professor Nagel apparently abandoned this initial foray as unworkable and, frankly, too outrageous and incomprehensible for anyone but specialists in the study of Homo investmentbankerensis. His revised paper, reframed to less ambitious dimensions, seems to have gone on to some renown, notwithstanding his execrable timidity.Fortunately for you and everyone like you, I am led to believe there is a minor blogsite located somewhere in cyberspace which tackles these recondite issues head on. Perhaps you can drop me a postcard if you find it.By the way, is that a $20 bill in your pocket?© 2014 The Epicurean Dealmaker. All rights reserved. [...]

Quis Custodiet Ipsos Custodes?

Sun, 02 Nov 2014 23:55:00 +0000

Auguste Rodin, The Age of Bronze, 1876“If you meet a thief, you may suspect him, by virtueof your office, to be no true man; and, for suchkind of men, the less you meddle or make with them,why the more is for your honesty.”— William Shakespeare, Much Ado About NothingFrancine McKenna of re: The Auditors recently expressed her dismay that the Big Four accounting firms have continued to be noticeably remiss about engaging reputable accounting firms to audit their own in-house broker dealer arms. The litany Ms McKenna recites of well-known and less-than-well-known failures and deficiencies public accounting firms have been accused of by the PCAOB and the SEC concerning audits of third party broker dealer clients is certainly eye-opening, and it does not give the casual reader much confidence they are sufficiently capable and diligent in this area. However, Ms McKenna’s central concern is a different one: in order to provide legally mandated audits of their own broker dealer units, the Big Four must hire unrelated third party audit firms, and the firms they have hired are tiny, no-name, no-account nobodies.This, on its face, appears to worry Ms McKenna, and it is reasonable to presume it should worry the rest of us who are less informed about the ins and outs of public accounting than she. However, while I profess absolutely no expertise or credentials in the area of public accounting, I do have an insight into the facts of the matter which may allay some of Ms McKenna’s and her audience’s concerns.For one thing, as a lawyer who read her post inquired, the curious among you Delightful People might wonder why public accounting firms have broker dealer subsidiaries in the first place. Well, the answer to that—notwithstanding the corporate doublespeak Ms McKenna cites from the firms in question—is quite simple: they like to do investment banking. They like the fees, they like the prestige, and they are often thrown into situations where clients do hire them to provide capital raising or M&A advice. In particular, the Big Four accounting firms have over the years developed a huge and thriving business providing financial due diligence, accounting, and audit services to private equity firms in connection with the latter’s frenetic buying, managing, and selling of companies. Private equity firms, the cognoscenti among you may recall, are paragons of corporate outsourcing, and because they normally consist of three ex-investment bankers, a part-time bookkeeper, and the bookkeeper’s dog, they must employ an army of outside lawyers, consultants, and advisors every time they want to do a deal. Chief among these, of course—save the ineluctable lawyers—are accountants, since virtually none of the private equity professionals are qualified accountants, either (nor can they be bothered to take time from dealmaking to tot up balance sheets, income statements, or other such trivia).1Private equity firms are occasionally willing to hire accounting firms as deal advisors in addition to their accounting duties because 1) what the hell, they’re already neck deep in the numbers anyway, 2) they may owe the accounting firms some love for the last ten deals which blew up and for which the PE firm accordingly stiffed them on their accounting fees (“We’ll make it up to you next time”), and 3) they’re normally much cheaper than real investment bankers. So Big Four accounting firm partners are always wheedling and cajoling their financial sponsor clients to let their pet investment bankers “do something,” and sometimes the PE guys let them. By the same token, relationship managers at public accounting firms are always looking to soak their corporate audit clients for additional fees, and the occasional co[...]

Courtly Love

Tue, 28 Oct 2014 03:37:00 +0000

Contrary to the cynicism that can pervade discussions of [mergers and acquisitions], many top level M & A advisors have a genuine concern about the integrity of large scale transactions and a desire for the fiduciaries involved to serve the interests they represent in a good faith and effective way. This is not to say that they do not seek to advance the interests of their clients in obtaining legitimate economic advantage, but they do want the game to be a fair one.— Leo E. Strine, Jr., Chief Justice, Delaware Supreme Court 1,2,31 While I appreciate Chief Justice Strine’s sentiment and respect for the basic integrity and desire for fair play which does indeed hold sway among the large majority of professional advisor participants in M&A processes, I find his proposal that we make our lives—and those of our clients—before his and other benches easier by documenting in much greater detail the twists and turns of our recommendations and analyses in medias res of transactions to be both impractical and naive. Surely Chief Justice Strine, among all jurists, must appreciate the role accident, error, and chance play in almost every complex process such as a merger or acquisition and how, even when said twists and turns are faithfully and comprehensively memorialized the twin imps of imperfect memory and hostile interpretation can confuse and bedevil the faithful interpretation of the facts of the matter. I suspect Mr. Strine, being both professionally empowered and constitutionally predilected for the role of fact finder and detective, simply prefers a clearer trail of evidence to allow him to judge the facts of the case properly and render more equitable judgments. However, I also suspect virtually no internal or external investment bank counsel or deal lawyer of any kind will be remotely interested in providing more potential fuel for the fires of devious and aggressive plaintiffs’ counsel for the sole purpose of making Justice Strine’s and his colleagues on the bench’s jobs easier. After all, that is why they pay him the big bucks and solicit him to speak at ABA conferences: because his job is difficult. Plus, we never know when some bozo will relocate litigation jurisdiction away from the Halls of Justice and Light in Delaware to some one-horse hick town in Texas where the judges don’t even know how to read PowerPoint. I’ll go out on a limb and reckon his suggestion is not gonna happen anytime soon. It was a nice try, though.2 This quote also reminds me of an excellent article by philosopher David Papineau, who wrote about the distinction which can be drawn between the rules of the game and the notion of fair play in both sport and politics. I think a similar analysis could be performed for the highly ritualized, rule bound competition which is mergers and acquisitions. Maybe if you’re nice to me and send me a fruit basket I’ll undertake such an explanation one day.3 Does it count as a blog post if the chief substance of your remarks lies sequestered in footnotes? Does it count as a speech? Did Chief Justice Strine read each and every footnote as well when he delivered his speech? These are some of the mysteries which consume my restless nights.© 2014 The Epicurean Dealmaker. All rights reserved. [...]

Sunday Reading from the Archives

Sun, 19 Oct 2014 17:20:00 +0000

Edward Hopper, Early Sunday Morning, 1930“Then I need say no more,” said Celeborn. “But do not despise the lore that has come down from distant years; for oft it may chance that old wives keep in memory word of things that once were needful for the wise to know.”— J.R.R. Tolkein, The Fellowship of the RingPeriodically, O Dearly Beloved, I take a leisurely stroll through the carefully stacked and organized pixels of my back catalogue, clicking from link to link in a solipsistic journey of rediscovery. Occasionally such wanderings illuminate a consistent intellectual preoccupation of mine, which the bored and underemployed among you might find provocative or merely amusing to waste your time with on a leisurely Fall Sunday morning.Today’s theme, I suppose, could be described as the necessity for us, as both individuals and as members of society, to accept our fate, to acknowledge the limits of our agency and the extent of our ignorance, and to accept our mutual entanglement with the fortunes of our fellow human beings. In other words, perhaps: Humility.I like these pieces of mine, even though (or perhaps perversely because) they have not been among my most popular. I hope you find something to enjoy or even make you think. Cheers.• All Together Now – Steve Randy Waldman has said opacity is integral to modern finance. I argue that opacity—and the information asymmetry which it reveals and which creates it—is an emergent feature of all sorts of social functions in complex societies, including finance. Information asymmetry and its associated rents are a convenience tax which members of a society implicitly accept when they agree to the division of labor necessary in complex social communities. Accordingly, I do not believe they can be made to disappear anytime soon.• Punished by Fate – C.J.F. Dillow despairs of the common man’s understanding of chance, declaring it irrational. In contrast, I believe folk notions of justice and fairness incorporate a very sophisticated understanding of our exposure to fate—good, bad, and indifferent luck—and rest upon a communitarian ethics of sharing such undeserved gifts and punishments. Rather than being evidence of ignorance, irrationality, or undeserved entitlement, the average person’s sense of fairness is a very sensible collectivist approach to the problem of just deserts in an uncaring universe.• Occupy Galt’s Gulch – Continuing with the theme of communitarian ethics, Jim Manzi points out that “winners [in society] require shared resources produced by the losers.” I explore some of the implications of this notion in the context of just deserts for self-styled übermenschen who rely on the resources of society, the labors of their fellow citizens, and the uncontrollable vicissitudes of chance to create the conditions for their success, as filtered through the particular lens of American culture and society.• To Whom It May Concern – Drilling deeper into the notion of individual success, I explain the exposure an aspirant in my industry has to luck, both good and bad, and some of the ways of coping with it. I suppose one could call this approach fatalism.• It’s All How You Look at It – Wisdom is good, but it is no comfort. And there is no shortcut to it; no box of Wisdom waiting for you at the local WalMart. You must earn it yourself, with no guarantees that it will make any difference. Sorry.• Prolegomena to Any Future Life – So what are you waiting for? Why are you reading this? You must change your life. Get to it.Happy Sunday.© 2014 The Epicurean Dealmaker. All rights reserved. [...]

The Privy Counselor

Sat, 11 Oct 2014 20:19:00 +0000

Diego Velasquez, Portrait of Pedro de Barberana, 1631No! I am not Prince Hamlet, nor was meant to be; Am an attendant lord, one that will do To swell a progress, start a scene or two, Advise the prince; no doubt, an easy tool, Deferential, glad to be of use,Politic, cautious, and meticulous; Full of high sentence, but a bit obtuse; At times, indeed, almost ridiculous— Almost, at times, the Fool.— T.S. Eliot, “The Love Song of J. Alfred Prufrock”So The Blackstone Group decided yesterday to spin off its advisory business and merge it with Paul Taubman’s advisory “kiosk.” This is just the sort of relatively trivial exercise—the advisory group in question accounted for only 6.4% of Blackstone’s revenue and 2.1% of its economic income—that sets financial journalists’ and Wall Street pundits’ heads to nodding and chins to wagging, based almost entirely on the undeniable fact that Blackstone is big and important in the financial ecosystem.1 But I must pop my head up from my hidey hole, if only briefly, to take issue with some of the hasty conclusions being drawn here. I promise to withdraw swiftly and silently at the conclusion.First, I must disagree with William Alden that Blackstone’s actions somehow contradict prevailing wisdom on Wall Street:For decades, it has been a deeply held belief among many of Wall Street’s giants that a multiplicity of business lines is superior to a more streamlined model.No, the conventional wisdom on Wall Street is and always has been quite simple: do whatever makes the most money. This is actually quite a sensible, beautiful, adaptable, and flexible business strategy. Sometimes, in fact, it does encourage executives to add business lines to their firms when they believe those businesses will add revenue and profit synergies to their existing business while being profitable in their own right (i.e., earning a return on top of paying for the people, assets, and financing costs they require). But more often than not it entails creating new products or services within existing business lines (like derivatives within capital markets operations), or just hiring a bunch of clowns who can cover an industry or execute a kind of business you do not already perform. (A “business line” in my industry is frequently little more than a handful of guys with business cards and a budget.) Often, as in the current environment, it encourages senior executives to discard unprofitable business lines, assets, or personnel by shutting them down, selling them, or just firing the unprofitable clowns because they can’t make money anymore or regulators are forcing you to get rid of unapproved activities.Certainly there is a sensitivity among senior executives in finance to the benefits of maintaining a portfolio of complementary business lines, wherein secular and cyclical variations in the fortunes of certain lines can offset the different variations of others, and often there is a corollary fondness for the diversification accomplished through sheer size alone (usually by executives of big firms, natch). But both these considerations take a back seat to the short-, intermediate-, and long-run profit contributions, both direct and indirect, by the business lines in question to the mother ship. You can suckle at the corporate teat for a little while in my business while you wait for conditions to turn, but patience in the Executive Suite runs out pretty quickly if you can’t pull your own weight over the intermediate and long term. And notice I wrote the business lines must be complementary: if they don’t have the ability to contribute revenue and profit synergies to other business lines or the firm[...]

Farewell, Ghafla Distraction

Fri, 03 Oct 2014 23:54:00 +0000

“Aha! Now we see the violence inherent in the system!”

— Monty Python and the Holy Grail

Yes, it’s true: I’ve left Twitter.

No special reason. All of a part with my reasons for terminating this blog,1 which boil down to being tired of it. I no longer get enough out of the service to merit the near constant immersion and distraction which it seems to elicit from me. I have better uses for my time. And the more substantive readings and links of interest which used to attract me I have sourced otherwise through RSS feeds, so I no longer need to wade through reams of banal tweets on unemployment data, fluctuating bond yields, and the latest outrage du jour of anarcho-social-media-ites to find them.

Of course I am sorry to leave those few friends I have made on Twitter behind. But let’s be frank: there aren’t that many of you, and all of you will get along just fine without me. Besides, if you’re a true friend who’s not a complete mental incompetent, you already know or can find my email address, which remains the same. Those of you who can’t, well, there’s always Kim Kardashian and Justin Bieber. Like your parents, they will always love you and never leave you.

No, really.

1 And no, this does not count as a blog post, except in those pathetic excuses for autofellation some of you frequent elsewhere. My posts have substance. This is a notice, for pete’s sake.

© 2014 The Epicurean Dealmaker. All rights reserved.

TED’s All Time Greatest Hits

Tue, 30 Sep 2014 02:44:00 +0000

The person who experiences greatness must have a feeling for the myth he is in. He must reflect what is projected upon him. And he must have a strong sense of the sardonic. This is what uncouples him from belief in his own pretensions. The sardonic is all that permits him to move within himself. Without this quality, even occasional greatness will destroy a man.— Frank Herbert, DuneI have used the preceding epigraph before, as some of you Delightful Readers may recall. It is a versatile and thought-provoking sentiment. Like many quotes and excerpts from Dune, which I contend is one of the greatest science fiction novels ever written, it pleases and intrigues me. It also reminds me—when I am smitten with the unwarranted attention the criminally indiscriminate among you have bestowed upon the thin leavings I whimsically scatter here at unreliable intervals like some verbose will-o-the-wisp—that I am anything but great, or even worthy of attention. I use it sardonically, you see.I am not without self awareness.But now I have decided, for the nonce, to abandon you, as I have made clear before. Bummer that, but it cannot be helped. “To everything there is a season,” or some such bullshit. So it strikes me as only fair to post a list of the ten most popular posts I have ever released upon an unsuspecting and undeserving world,1 if only so some people can focus their anger at global injustice and bank overdraft fees on a similarly appalling yet perhaps more accessible target. It is better than reading Slate or Gawker or Jezebel or Guardian pieces, anyway. And they don’t need the page views, I do. I still owe a helluva lot of money for excess pixel consumption, you see.So enjoy, and please remember to deposit your candy wrappers, empty soda bottles, and previously unexamined prejudices in the handy trash receptacles at the end of the show.THE CANONICAL CANON, All-Time Canonical Edition:1) Curriculum Vitae (March 2013) — The canonical career path for young tadpoles to hoary old bullfrogs in my business, corporate finance and M&A. This is what your life will look like if you choose to follow me, children. Warts and all.2) The Mouth of Sauron (February 2010) — A hit piece, richly deserved, on the fabled former mouthpiece of Goldman Sachs, Lucas van Praag, who is no doubt happily torturing small animals with forks on a leafy Victorian estate in his dotage.3) The Rules (November 2012) — Read them. Live by them. Pay particular attention to Rule #5.4) Jane, You Ignorant Slut (May 2011) — The opening salvo in a series of posts about rampant ignorance in the financial press and blogosphere about the nature and mechanics of initial public offerings. This rabbit hole is deep, Alice. Beware.5) The Invention of Leisure (November 2013) — Junior investment bankers work hard. No matter what people may say or think or do about it, this will not change, and there are very good reasons for that. Not bad reasons, good reasons. See Rule #5.6) Overheard at 85 Broad Street (June 2008) — An old post in which I eviscerate those gutless weasels at Goldman Sachs who fucked over junior bankers during the Financial Crisis in a particularly cowardly and reprehensible way. I can neither confirm nor deny rumors that Goldman moved its global headquarters to 200 West Street solely to escape the historical opprobrium of this post.7) Go Ask Alice (September 2013) — The bookend to the series on IPOs, begun with 4) above. Read these two, and the intervening posts, and you will know more about IPOs than most investment bankers and all financial pundits.8) A Fine Disregar[...]

Oop. Time, She’s Up

Sat, 20 Sep 2014 22:52:00 +0000

“I am old, Gandalf. I don’t look it, but I am beginning to feel it in my heart of hearts. Well-preserved indeed! Why, I feel all thin, sort of stretched, if you know what I mean: like butter that has been scraped over too much bread. That can’t be right. I need a change, or something.”― J.R.R. Tolkien, The Lord of the RingsWhen I launched this blog seven and three-quarters years ago, O Dearly Beloved, my first post incorporated the following mission statement:I have started this blog to comment on what I consider to be a fascinating part of the global economy: the global market for M&A and its various inhabitants, participants, and miscreants. Hopefully I will be able to relate some interesting anecdotes, a few enlightening opinions, and a couple of amusing stories that will shed a little more light (or a little more laughter) on what remains for many a murky area best left to investment bankers, corporate lawyers, and other such terrifying bogeymen.Five hundred and sixty-six published posts later, more or less, plus a lumber room of unpublished fragments, ruminations, and provocations, I think I am ready to declare victory and move on. This is not necessarily because even I believe that I have achieved victory, mind you. That is for you Lovely People and the sub-sub-librarians of internet history to judge. But one of the advantages of running a blogsite of which you are the sole, unimpeachable authority, author, and editor rolled into one is the ability to make such unilateral declarations without fear of pesky contradiction from the peanut gallery. (I have not made it a policy here to prevent comments for nothing, children. If you object I can direct you to a convenient pile of nearby sand which needs pounding.)Of course those of you who have made an intermittent study, intentional or not, of my ramblings on this site will be aware that my output has both exceeded and failed to satisfy my stated mission of explaining the market for corporate mergers & acquisitions. The lion’s share of this mission creep (or evasion, if you will), I must put down to my lack of discipline: I have used this platform to hold forth on all sorts of topics and sundry, many of which fall far afield from the cloistered halls of buying, selling, and financing companies, which is my primary trade. I have addressed mildly cognate fields like private equity, Corporate America, and the history, structure, and pay of the investment banking industry; more tenuously related areas including hedge funds, capital markets, and financial regulation; and wildly off-topic digressions such as higher education, philosophy, and identity in the age of Facebook and the NSA. I have indulged my fancy for humor without regard for its funniness to anyone else, and I have waded into culture and art criticism without shame or regard for my lack of training or expertise therein. I have posted pictures and poems that appealed to me, for no other reason than I could.In other words, I have written about what interests me, in addition to that much narrower and shallower range of topics to which I legitimately claim any expertise. The curated list of my more prominent posts runs to many pixels and reveals the breadth of my work. I remain unapologetic about this. This site is a personal blog, not a public service. Those of you who disagree with my choices are welcome to join the protestors from the first paragraph at the nearby mound of silica, etc., etc.* * *I was lucky to start blogging when I did. Financial markets had reached a peak of silliness which offered rich fodder to a financi[...]

Some Work of Noble Note May Yet Be Done

Sun, 14 Sep 2014 16:56:00 +0000

We are not now that strength which in old daysMoved earth and heaven, that which we are, we are,One equal temper of heroic hearts,Made weak by time and fate, but strong in willTo strive, to seek, to find, and not to yield.— Alfred Lord Tennyson, “Ulysses”Ever since the release of Dr. No in 1962, the James Bond 007 films have acted as a touchstone and running commentary on popular culture and society. For over half a century, a parade of different Bonds, Bond Girls, and increasingly over the top villains have offered escapist fantasies of varying implausibility and ridiculousness which have served, inter alia, as travel brochures, fashion statements, and advertisements for the benefits, drawbacks, and terrors of technological progress. They have done this, for the most part, not because it was their makers’ purpose (or even within their power) to critique society, but rather because they were intended to be hip, with it, and relevant, even at the inevitable expense of any seriousness or credibility. (Roger Moore, anyone?) With various degrees of success, these pop confections have held a mirror up to society. It is no wonder not everybody likes what they see.These thoughts were inspired by film critic A.O. Scott’s interesting essay on the death of adulthood in American culture, which seems to be making the rounds of the culturesphere. He says many things, but his major point seems to be that popular culture, moviemaking preeminent within it, has elevated a strain of anti-adulthood and fixation on youth long dominant in American culture to the forefront of everything we see. I am not qualified to judge the correctness of his claim, but it certainly does seem to me the flight from responsibility and adulthood and the joys and tribulations of perpetual adolescence have become a leading subtext or topic for a very large number of popular entertainments nowadays. In particular, this cultural conversation seems to be focused on men and boys and their refusal to grow up.Interestingly, upon reading Scott’s essay, my thoughts turned immediately to the most recent film in the Bond series, Skyfall. It occurred to me this movie can be read as providing a very interesting commentary on the issues of growing up, responsibility, and adulthood for a man nowadays, even if—or perhaps because—it is wrapped up in a popular escapist spy thriller. I claim no special cultural profundity for the film, nor no searing insight for the filmmakers or screenwriters, but I think the mirror which this particular thriller holds up to our current zeitgeist is pretty revealing. Even if the cultural critique I read within it was unconscious, or only semi-intentional, that does not vitiate its insight or force. Perhaps it enhances it. You Delightful Readers can judge for yourselves. If Stanley Cavell can find deep commentary on Hamlet embedded in Alfred Hitchcock’s North by Northwest, I can certainly tease a bildungsroman out of a Bond film. It’s my blog, anyway.* * *I will not tax your patience by relating the plot or other details of the film which you can discover yourself if you like. Nor will I spare you any spoilers. If you have not seen it already, there is no plot element I can reveal that will diminish your appreciation of the movie as cultural critique. In my experience, anyway, it is a measure of the quality of a story that you are willing to reread or rewatch it even when you know how it turns out. Skyfall is that good a movie.The key plot points I would draw your attention to are as follows:At the beginning of the film, Bon[...]

Amakudari Revisited

Wed, 03 Sep 2014 17:43:00 +0000

Thomas Nast, Mr. Moneybags“If you were sensible of your own good, you would not wish to quit the sphere in which you have been brought up.”“In marrying your nephew, I should not consider myself as quitting that sphere. He is a gentleman; I am a gentleman’s daughter; so far we are equal.”“True. You are a gentleman’s daughter. But who was your mother? Who are your uncles and aunts? Do not imagine me ignorant of their condition.”“Whatever my connections may be,” said Elizabeth, “if your nephew does not object to them, they can be nothing to you.”— Jane Austen, Pride and PrejudiceNewly listed advisory boutique Moelis & Company set the cat among the pigeons yesterday by announcing it has hired former House Majority Leader Eric Cantor to be a director of the company and a Vice Chairman in their advisory group. This news seems to have pleased approximately everybody, from Moelis & Co., which is delighted with their prominent and newsworthy new hire; Mr. Cantor himself, who can anticipate being approximately $3.4 million richer over the next 18 months or so; and up to and including critics of the Washington-to-Wall Street revolving door, who are now in possession of rich fodder for tut-tutting opinion pieces bemoaning the sorry state into which our crony capitalist democracy has sunk. In Washington, D.C. and on Wall Street as well, it is an ill wind that blows nobody any good.While the generous cash and restricted stock which Mr. Cantor is receiving from his new employer seems to have been viewed by most as sufficient and self-evident explanation of why he chose to accept Moelis’s offer, there does seem to be some confusion among certain commentators as to why Moelis wanted him. Dennis Kelleher, former Senate staffer and head of non-profit public interest lobbying group Better Markets—about which nobody was talking last week and about which everybody (or at least a larger number of somebodies) is talking this week, thanks to said announcement—claims loudly that Moelis hired Cantor because 1) they wanted the publicity, 2) they want his political insight and connections to lobby for legislation and regulation favorable to their business, and 3) they want to matter more in Washington. While Matt Levine effectively deflates the more grandiose and overreaching of Mr. Kelleher’s claims—and particularly punctures the notion that a focused advisory boutique like Moelis & Co., which faces few of the proprietary trading or balance sheet capital issues its larger integrated universal bank competitors do, has common cause with said competitors in shaping the larger regulatory agenda—I cannot disagree with the broad outline of Mr. Kelleher’s remarks.The important nuance which I would add, however, is that Moelis’s hire of Mr. Cantor must be examined in light of their mission as a client-focused advisory firm. Mr. Kelleher’s claims gain more weight if one properly understands that, notwithstanding the official job titles which Moelis & Co. have granted the deposed ex-Congressman, his real role at the company should be understood as Pet Famous Politician.1 As such, Mr. Cantor has several interrelated roles and duties:Publicity magnet – To raise, by his very presence, the profile and awareness of Moelis & Company in Washington, D.C., the news media, and the general population at large. Ken Moelis, while broadly known on Wall Street and among the business community, does not carry the star wattage to pull this off by himself. This is known as general brand advertising. Fame whore ma[...]

Labor Day

Mon, 01 Sep 2014 18:04:00 +0000

Diego Rivera, Melancholy Promenade, 1904Thomasina: “Oh, Septimus! — can you bear it? All the lost plays of the Athenians! Two hundred at least by Aeschylus, Sophocles, Euripides — thousands of poems — Aristotle’s own library! … How can we sleep for grief?”Septimus: “By counting our stock. Seven plays from Aeschylus, seven from Sophocles, nineteen from Euripides, my lady! You should no more grieve for the rest than for a buckle lost from your first shoe, or for your lesson book which will be lost when you are old. We shed as we pick up, like travellers who must carry everything in their arms, and what we let fall will be picked up by those behind. The procession is very long and life is very short. We die on the march. But there is nothing outside the march so nothing can be lost to it. The missing plays of Sophocles will turn up piece by piece, or be written again in another language. Ancient cures for diseases will reveal themselves once more. Mathematical discoveries glimpsed and lost to view will have their time again. You do not suppose, my lady, that if all of Archimedes had been hiding in the great library of Alexandria, we would be at a loss for a corkscrew?”— Tom Stoppard, ArcadiaDo you take stock, regularly, of what you are carrying in your arms, Gentle Reader? Do you take care to pick up and discard the right things, things which make you happy and proud to carry? Do you seek out and cultivate those things you will be pleased to press into the arms of companions who go on without you? Things they will be eager to carry themselves? Love, knowledge, kindness, and wisdom are big things, things which fill up your arms and your soul, but paradoxically weigh next to nothing: they are easy to carry. They make excellent gifts to bequeath at the end of your long journey.Keep your eyes on the road before you. Stay alert for good things to add to your burden. Those are the legacy you will contribute to the march. That is how we will remember you.It’s time to go back to work.© 2014 The Epicurean Dealmaker. All rights reserved. [...]

All Hail and Farewell, the Trophy Kids

Sat, 23 Aug 2014 20:00:00 +0000

Adolphe-William Bouguereau, The Birth of Venus, 1879Mildred: “That Ted Forrester’s nice-looking, isn’t he? Veda likes him.”Monte: “Who wouldn’t? He has a million dollars.”— Mildred Pierce (1945)Wall Street has a problem.Kevin Roose, who wrote the definitive bildungsroman/sob story of early-2010s twenty-somethings on Wall Street, nails it. Finance is no longer the first choice of ambitious, high-achieving college graduates. Technology is:Hyperdriven, multitalented young people aren’t picking tech over finance because it pays more. They’re picking it because the lifestyle is better, because it’s just as competitive to get into (if not more so), and because being on Facebook’s mobile ad team allows them to feel better about themselves than making DCF models for Fortune 500 companies all day. In their eyes, going into tech is a way to remain among the cultural elite without selling your soul.It’s not that Goldman Sachs, Morgan Stanley, and every other well-known firm aren’t attracting enough candidates, they’re just not attracting the “best” ones:These firms are having no problems drawing applicants out of college, but what I’ve heard from senior Wall Street hiring managers is that they’re not the right kind of applicants. They’re second-stringers, as far as the banks are concerned. The students these firms want to attract — badly — are increasingly going to Google or Facebook instead of Goldman and J.P. Morgan. (Or, almost worse, going to Goldman and J.P. Morgan, working for a year or two, and then quitting to go to Google or Facebook.) And that kills the banks’ sense of supremacy.I suppose it is a measure of our diminished times that Mr. Roose chooses to dub these careerist paragons of conventional wisdom “Renaissance Kids,” but I get that he needs to flatter his demographic that their uninspired and riskless choices denote some measure of intellectual breadth or reflected historical glamour. After all, he has trend pieces to write and books to sell. Personally, I cling to the outmoded notion that “renaissance man” (or woman) should mean something deeper than a Groton- and Harvard-educated 3.70 GPA history major/lacrosse player who read the Bhagavad Gita once in order to satisfy a distribution requirement. But I am stubborn that way.1Instead, I prefer to label these special snowflakes Trophy Kids, since their entire young lives have been spent in pursuit of trophies and awards of all kinds, scrapping and scrambling to get into the best schools and the best clubs and the best jobs from the moment their hypercompetitive parents decided they should. Of course, “best” in this context means what everybody else thinks is best, so the trophies we are talking about are clear, unambiguous, and well recognized by everyone: top grades in school, passionate commitment to approved extracurriculars, conspicuous community service to high profile, photogenically needy causes, and the right employer out of college.“Trophy Kids” is also apt because these socioeconomic poster children make themselves highly desirable as acquisitions by those institutions which aspire to have the best themselves, just like aging billionaires like to accumulate trophy wives and girlfriends. It is not too far to stretch a metaphor to observe that Trophy Kids’ relationships to high-prestige employers are fundamentally the same as trophy wives’ to their husbands: an often temporary marriage of convenience in which the[...]

A Cure Worse Than the Disease

Sun, 10 Aug 2014 17:11:00 +0000

Messenger: “I see, lady, the gentleman is not in your books.”Beatrice: “No; an he were, I would burn my study. But, I pray you, who is his companion? Is there no young squarer now that will make a voyage with him to the devil?”Messenger: “He is most in the company of the right noble Claudio.”Beatrice: “O Lord, he will hang upon him like a disease: he is sooner caught than the pestilence, and the taker runs presently mad. God help the noble Claudio! if he have caught the Benedick, it will cost him a thousand pound ere a’ be cured.”— William Shakespeare, Much Ado About NothingI suppose it does little harm to admit, O Dearly Beloved and Long-Suffering Readers, that this site is shot through and through with what my colleagues across the gaping divide in Sales & Trading would call “talking your book.” Notwithstanding the slings and arrows sent this way by those who can see no redeeming social or economic benefit to my profession, I am proud of what I do, and I firmly believe I offer real value to my clients in return for the shiny simoleons which they so graciously bestow on me, however so (and too) infrequently. This should not really be that surprising. I think there must be few human beings who do not find some sustaining or redeeming value in their daily occupation, even if only as a sop to their self esteem or a dodge against despair, and despite all your protestations I continue to aver that investment bankers are human, too.If you prick us, do we not bleed?That being said, I think I have been pretty honest in these pages (and in the conduct of my daily duties, too) that M&A advisory services are not for everyone. There are many reasons a client might consider in deciding whether to employ someone like me, and not all of them make sense or can be justified by any honest calculus. While there are plenty of dissembling shysters roaming my industry intent on imposing their services and extravagant fees on anyone they can convince to write a check, I have always been of the opinion that you make a client happy in the long run by only recommending what is truly beneficial for them, rather than yourself. And often, hiring an M&A advisor is not the best course of action. At least not yet.* * *So I am pleased to take this opportunity to respond to an article on private equity and venture capital shill site peHUB, written by a corporate attorney, about things to consider when you are selling a private company. As advertised, it is geared towards the owners of private companies, who generally face a simpler and less complicated set of constraints and obligations than the Boards of publicly held ones. Of its type, it is a reasonably comprehensive and useful guide.1In it, Mr. Stewart offers the following considerations concerning whether you should hire a flesh-eating investment banker like me when you are selling your private company:*Do You Need an Investment Banker? Investment bankers can add significant value in an M&A process, but they are expensive. Investment banker fees typically range from 1 percent to 2 percent of the deal value, although the fees vary by deal size and profile. Typical benefits of having a banker in an M&A process include having an agent to (1) advise on market trends and valuation, (2) approach potential acquirers with which the target’s executive management would not otherwise have contact, (3) take the difficult, “bad cop” negotiating positions, and (4) co-manage the[...]

Where Did He Learn to Negotiate Like That?

Sat, 02 Aug 2014 22:39:00 +0000

Korbin Dallas: “We need to find the leader. Mangalores won’t fight without the leader.”Mangalore Leader: “One more shot, we start killing hostages.”Korbin Dallas: “That’s the leader.”Mangalore Leader: “Send someone to negotiate.”Security Chief: [to Dallas] “I I I I I’ve never negotiated I…”Korbin Dallas: “Mind if I… try?”Security Chief: “No, no, sure, sure. Sure. [to Mangalores] We’re sending somebody in to negotiate!”Korbin Dallas: [walks into room, shoots Mangalore leader between the eyes] “Anybody else want to negotiate?”Security Chief: “Wh-wh-wh-where’d he learn to negotiate like that?”— The Fifth ElementUnlike many of you, O Dearly Beloved, I am old enough to remember a time when air travel did not offer wireless internet in flight. As a result, when junior bankers like me did not have work papers to review or spreadsheet modeling or presentation editing to do on our laptops,1 we were thrown back on our own devices when it came to entertaining ourselves with something other than the crappy movies playing on low res CRT screens hanging from the ceiling. Normally I would bring some combination of newspapers, magazines, equity research reports, and a book or two to occupy my time, but occasionally said distractions would fail to engage me or I would simply run out of material to read before the flight ended. On those occasions, in desperation for something to distract me from the grim environs of a 30-year-old narrow body aluminum tube stuffed with sweaty tourists and bedraggled business travelers, I would sometimes stoop to leafing through the airline magazine jammed conveniently in the seat back pocket in front of me.This rarely offered much relief, but I do recall frequently encountering the same stiff, glossy multipage ad for a well-dressed chap named Chester Karras, who generously offered to teach the ambitious road warrior the secrets to becoming a master negotiator, for a hefty price. “You don’t get what you deserve,” his tagline warned, “You get what you negotiate.” Putting aside the wisdom of advertising such services to the rumpled middle manager wedged into the middle seat of aisle 32 on the 9:18 pm flight from Dallas to Abilene, these ads always reminded me that true negotiating skill is surprisingly rare among most businesspeople.* * *For spectacular anecdotal proof of this observation, we need only turn to last week’s article in DealBook about the nasty bollocking mustachioed technology advisor extraordinaire Frank Quattrone’s firm Qatalyst Partners delivered to its erstwhile client, Trulia, in the latter’s recently announced sale to competitor Zillow. To an aficionado of the dark arts of M&A, there are many odd and interesting nuggets to be gleaned from this brief article about the behavior of Trulia and Qatalyst, which I thought you kindly people would find amusing to review with me on a languid Saturday afternoon.First, there is the apparent fact that, after hiring Qatalyst three years ago to sell itself to (presumably) Zillow and perhaps one or more other potential buyers, Trulia apparently never terminated the engagement when it failed to lead to a sale. This, as we technically describe it in the trade, was Just Fucking Stupid. Engagement letters between clients and financial advisors are normally open-ended contracts which describe reciprocal duties and obligations which do not expire until t[...]

Improve Yourself

Sun, 27 Jul 2014 20:08:00 +0000

Liberal Education makes not the Christian, not the Catholic, but the gentleman. It is well to be a gentleman, it is well to have a cultivated intellect, a delicate taste, a candid, equitable, dispassionate mind, a noble and courteous bearing in the conduct of life.— John Henry Cardinal Newman, The Idea of a UniversityLast week, former Yale professor and current essayist and writer William Deriesiewicz penned a jeremiad against elite higher education in this country which not only excoriated his former employer but also all such cognate institutions of higher learning which aspire to the top of the annual listing of “best” colleges and universities put out by U.S. News & World Report. He has many criticisms to offer, including the fact that colleges like Yale do not in fact teach their students to think, but rather to be timid, anxious careerists following blindly in the well-worn ruts of privilege their parents, peers, and society have picked out for them:Our system of elite education manufactures young people who are smart and talented and driven, yes, but also anxious, timid, and lost, with little intellectual curiosity and a stunted sense of purpose: trapped in a bubble of privilege, heading meekly in the same direction, great at what they’re doing but with no idea why they’re doing it.Contrary to their carefully maintained public image and stated mission, Deriesiewicz also denies that these institutions’ educational curricula are as intellectually demanding or their student bodies are as truly diverse as they like to claim. Instead, he blasts them as bastions of existing privilege which train and credentialize a blinkered socioeconomic elite to reproduce itself.Allowing for some artistic license and the exaggeration natural to a magazine article writer intent on drumming up advance sales of his book, I have to say I cannot materially disagree with Mr. Deriesiewicz. The only question I have is why it has taken him, a college professor with a decade at least in the very belly of the beast, so long to discover what everybody else has known for approximately ever.* * *Mr. Deriesiewicz seems shocked, shocked to discover that 250+-year-old institutions charging rack rates north of $60,000 per year to convey some tangled Latin prose on sheepskin to spotty youngsters at the end of four or more years—institutions for which the combined endowments exceed the gross national products of several small countries—should be complicit in the perpetuation and justification of entrenched socioeconomic power structures. Whence, exactly, did Mr. D think these universities’ wealth, status, and prestige come from? Whence the demand for their services? From whom?From the dimmest reaches of time on, Most Patient and Attractive of Readers, elite educational institutions have been founded, mirabile dictu, to educate the elite: to inculcate and train the ruling class in those arts, preferences, and temperaments which would be conducive to their wielding of power and privilege (q.v. Cardinal Newman supra) and to introduce them to their peers and future colleagues in business, government, and society. In the earliest days, such institutions mostly served as high class finishing schools for the sons [sic] of the rich, as well as training grounds for a limited class of administrators and functionaries the rich relied on to manage their affairs, such as politicians, military offic[...]