Banking and Business Development

There’s been some recent postings on banking and business development, particularly at the junior level. One of the more interesting and challenging jobs I have is to build business development skills in others, and I thought I would share some observations.

I don’t want to share too much of my bio as to not reveal myself but I manage a fairly large including several other MDs, VPs and Directors, continue to be actively responsible for client coverage and lead the execution of several transactions year. I’ve been in investment banking for over two decades and started out as an analyst. Based in NY but have worked in London and HK.

1. Clients hire bankers almost solely for reasons of their economic interest.

This could be because they want a trusted advisor, because a specific banker has the best access or expertise, because they need balance sheet or product, because a certain bank will commit the most resources etc. Sure in a tie, the business goes to someone they like personally but clients make decisions based on what benefits them financially. It’s a complete myth that school relationships, networking, family relationships win business - focus on adding economic value to your clients.

2. The best way to become a good rainmaker is to be a good banker.

How do I define that:

  • Know what your client really wants and needs and how to deliver that
  • Be a true advisor - the clients interests always come first, acknowledging that sometimes acting in the clients best interests is telling them they are wrong
  • Have the commercial instincts, work ethic and creativity to deliver great outcomes on your deals
  • Don’t be a yes man or yes woman - show some spine. 
  • know your industry and the banking products cold. Work with specialists but don’t be reliant on them
  • Manage your deal teams efficiently and effectively
  • If you can do these six things well business will come to you

3. There are many mediocre bankers out there or decent enough bankers who aren’t advisors but can sell their firm's product.

The industry is rich enough to allow this but clients are smart enough to know and value the really good ones

4. Playing golf, nice dinners etc. don’t win you business.

But they are a great way to spend time with clients you already have. Plus golf and good meals are fun.

5. Business development is learned over time.

So how do you develop that skill over? Can walk you through some of the things I did in my career as examples.

  • Junior Analyst: I was working on a very specific industry subset so I developed some good knowledge that was new to my senior bankers. I came up with a list of emerging targets in this sector to go to our large cap clients with.
  • Senior Analyst: The economic cycle turned and we started working on restructurings. I came up with a list of targets and got a green light to call on them with a Director, we got a few mandates out of this.
  • Associate: I was working with an MD who was a major rainmaker but was pretty lazy at that stage of his career. I gave him a list of three deal ideas for each of his clients. Got me in t!he room for every one his meetings pitching them
  • Senior Associate / Junior VP: A lot of the  folks I was working with at sponsors were getting senior enough to be the execution lead on deals or were covering sectors. They were my age and we got on well. I got an early heads up as to what those sponsors were doing and we won some business and I made my bosses look really good.
  • VP / Junior Director: I was running a lot of sellsides at this point. I would call on every buyer on those deals using the sell side as product and got to know them

So by the time I started formally covering clients and a sub sector, I had a lot of established sponsor and strategic relationships in addition to having done a lot of deals.

In terms of my team, I ask our analysts and associates to come up with specific deal ideas and when they make sense pitch them together. I’ve also developed a calling matrix for our sponsors so our associates and VOs are calling on people at their level.

Hope this helps,

 

Thank you for sharing this - it's very selfless and good of you to do so.

The points (A) - (F) you raised are in particular useful - I'm at that VP stage of my career but don't view myself as outgoing or extroverted, which has led my to question my future in the industry. Understanding that content and advice is key, rather than relationship per se, is encouraging.

Comments on what you did in your own development was helpful - is there anything you'd do differently with a second passing (particularly given changes in technology since)?

 
Count WACCula

Thank you for sharing this - it's very selfless and good of you to do so.

The points (A) - (F) you raised are in particular useful - I'm at that VP stage of my career but don't view myself as outgoing or extroverted, which has led my to question my future in the industry. Understanding that content and advice is key, rather than relationship per se, is encouraging.

Comments on what you did in your own development was helpful - is there anything you'd do differently with a second passing (particularly given changes in technology since)?

One thing I would change is that I was an “M&A snob” until way too late in my career. Being able to combine real M&A chops with understanding capital markets and financing has helped me be a much better banker and I discovered this late in my career as an MD.

I am not someone who loves to network and glad hand clients without purpose and I can often get lost in a deal or a client problem to the exclusion of other things. Maybe I would do better if I was more of a salesman, but I’ve come to become quite comfortable with who I am and it works for me and my clients 

 

You seem like the kind of MD every analyst should be hoping to have. 

I’d say about two thirds of my analysts really like me and one third don’t know what to do with me. I’m pretty old school in my expectations of all bankers in terms of work ethic, resilience and responsibility and I am much more focused on turning people into good professionals than softer things but I’d also like to think I don’t waste peoples time and respect their personal lives. 

 

1. Banking
 Banking is the act of storing money in a bank account. Banks offer different types of accounts including checking, savings, and credit cards. Banks are financial institutions that provide services to individuals, businesses, governments, and other organizations. There are many different types of banks out there depending on what type of business they specialize in.
 2. Business Development
 Business development is the process of finding new clients and customers. A business developer may work directly for a company or he/she may work independently. If working for a company, then the business developer would work for marketing, sales, or human resources. Working independently means that the business developer works for himself/herself.
 3. Business Plan
 A business plan is a document that describes how a person plans to make money. It includes information about the products and services being offered, how much money the business will need to start and run, and who will be involved in the business.
 4. Cash Flow Statement
 Cash flow statement is a report that shows how much money a business makes and spends each month. It helps investors understand if a business is profitable or not.
 5. Credit Card
 Credit card is a plastic card that gives people access to cash advances at stores and ATMs. People use them to pay for things online or in-store.
 6. Customer Relationship Management (CRM) Software
 Customer relationship management software is a computer program that helps companies manage their customer relationships. CRM software keeps track of customer data, such as names, addresses, phone numbers, email addresses, purchase history, and preferences. Companies use CRM software to send promotional emails, respond to customer service requests, and keep records of past purchases.
 7. Direct Deposit
 Direct deposit is a way for employers to automatically transfer money from a worker's paycheck into his or her bank account without any paper checks. It saves time and money for both employees and employers.

 

+1 SB. Extremely interesting read, thank you for sharing. My biggest takeaway was how much additional effort you put in early on in your career. It no doubt paid dividends and is in part the reason you were so successful in banking long-term. This guidance is also a great way to stand out, and I think a lot of it is applicable to Corp Dev and PE

 
Deal Team Six

+1 SB. Extremely interesting read, thank you for sharing. My biggest takeaway was how much additional effort you put in early on in your career. It no doubt paid dividends and is in part the reason you were so successful in banking long-term. This guidance is also a great way to stand out, and I think a lot of it is applicable to Corp Dev and PE

The thing is I never saw it as additional effort, I saw it as a way of making the job more interesting and not just being a grunt 

 

Thanks for sharing - seems the curiosity and learning in a space you were interested proved fruitful, and that's awesome to see/hear. 

How much of doing each of those allowed you to jump companies, if you did? Curious how long you put into cultivating each before figuring out juice wasn't worth the squeeze in each position. Different, obviously, if you stayed one course. 

 
nanometers

Thanks for sharing - seems the curiosity and learning in a space you were interested proved fruitful, and that's awesome to see/hear. 

How much of doing each of those allowed you to jump companies, if you did? Curious how long you put into cultivating each before figuring out juice wasn't worth the squeeze in each position. Different, obviously, if you stayed one course. 

I moved firms a couple times. I would say, one was a necessary strategic move to get the role I wanted in the environment I wanted. The other one was comp driven. I’m happy with where I am but with the benefit of maturity, I’m not sure the comp driven move was necessary. Comp is one of things you can generally work with your employer in banking (unless you work for a European or Asian bank) once you are a revenue producer and should not be a reason to move. 

 

What is it like to go from leading the deal processes to getting to know / cover the clients and becoming their advisor? Is winning their business a matter of pitching the product and hoping they see value in it?

 

What is it like to go from leading the deal processes to getting to know / cover the clients and becoming their advisor? Is winning their business a matter of pitching the product and hoping they see value in it?
 

My perspective is from that of a M&A / corporate finance advisor vs having a lot of product to sell. It starts out specific - when you lead a deal, you have a specific piece of insight (“I know all the buyers for a auto parts distributor in Indonesia”, “I did the first green convertible preferred”?) and you leverage that unique insight to provide specific advice to other clients.

As you build your volume of deals and clients to whom you’ve given valued added advice on specific matters, it naturally morphs into a more general trusted advisory role, particularly if you deliver and show integrity and then you start getting calls on all areas of expertise (“one of my portfolio companies is building a 5bn polyethylene plant, need some blue sky thinking on minority investors and capital structure”)

 
Most Helpful

Thanks a lot for this. Would love to hear more of your thoughts around the impact of your early career experiences.

“Junior Analyst: I was working on a very specific industry subset so I developed some good knowledge that was new to my senior bankers. I came up with a list of emerging targets in this sector to go to our large cap clients with.”

Your notes here struck me as particularly meaningful. At such an early career stage, you developed a penchant for:

1) learning, in self-directed fashion, what it takes to truly understand industries and/or companies; using a very specific sector as your live proving ground (all while mastering the tools to achieve it…advanced googling is one of the best skills going IMO);

2) learning how to synthesize that raw knowledge into digestable insights and actionable ideas that will add value;

3) taking pride in, and accountability for, the quality of those insights and ideas;

4) the resulting exposure to senior-level bankers (and potentially even clients) at such an early stage of your career

How important would you say this Junior Analyst experience was to you becoming a “good” banker? To your overall career success? 

 

Thanks a lot for this. Would love to hear more of your thoughts around the impact of your early career experiences.

"Junior Analyst: I was working on a very specific industry subset so I developed some good knowledge that was new to my senior bankers. I came up with a list of emerging targets in this sector to go to our large cap clients with."

Your notes here struck me as particularly meaningful. At such an early career stage, you developed a penchant for:

1) learning, in self-directed fashion, what it takes to truly understand industries and/or companies; using a very specific sector as your live proving ground (all while mastering the tools to achieve it…advanced googling is one of the best skills going IMO);

2) learning how to synthesize that raw knowledge into digestable insights and actionable ideas that will add value;

3) taking pride in, and accountability for, the quality of those insights and ideas;

4) the resulting exposure to senior-level bankers (and potentially even clients) at such an early stage of your career

How important would you say this Junior Analyst experience was to you becoming a "good" banker? To your overall career success? 

I owe much of my career to my experience as a junior analyst, including:

- having to learn finance conceptually. I didn’t study finance in college, didn’t even really know what EBITDA was when I started. So everything I learned, I did at a conceptual level that was practical to investment banking. That’s made me a better banker 

- the work ethic and discipline. I was smart but all over the place before I started as an analyst, The analyst program got me disciplined

- realizing I enjoyed the many aspects of doing a deal - the strategy, the analytics, the structure, the psychology

- the great relationships I made with my analyst class and other bankers. Some of my best friends still

- learning how to create a concise, thoughtful presentation 

- learning the art of good idea generation

- the nuts and bolts of running a sellside to a high degree of quality, managing a buyside and public company M&A

- corporate governance by virtue of doing special committee work

on that last point, one piece of advice to junior bankers, I know most of not all the big ideas in my ideas. What I don’t know are the incremental and emerging ideas that are SO valuable to our client (“we have a portfolio company that is going to deploy $1bn in incremental acquisitions in cold chain storage? Any ideas?). The analyst or associate who can follow up from that with some good ideas in a sector everyone is still learning is going to go far, and there are so many resources to be able to do this (I can set them up with consultants, experts, buy reports etc). 

 

How does one most efficiently develop industry expertise if covering many sectors, but too overwhelmed to learn about an industry in particular? Is it just a matter of interest in a particular niche + building upon that knowledge over time?

 

How does one most efficiently develop industry expertise if covering many sectors, but too overwhelmed to learn about an industry in particular? Is it just a matter of interest in a particular niche + building upon that knowledge over time?

Do deals. On a deal don’t just go through the motions on writing the CIM and manage the DD, actually understand what is being said. You will develop industry expertise very quickly 

 

Thanks for your post - really helpful to read as a junior just starting out.

How would your advice / career path differ for product bankers? Hoping to get some insight as I'm on a levfin desk and am not too sure how business development would look within the team versus the coverage bankers.

1. Get to know the people at your level at sponsors, both deal teams and capital markets teams

2. get to know some of the analysts and PMs at the key buyers of product (realize this is easier in some shops than others)

3. In lev fin, you have a critical internal client and those are your credit risk people and the hycm people that determine what deals get underwritten and where. Make these people your friends

Lev fin is all about balancing client needs, investor appetite and internal risk management. The smarter and better networked you are on all three, the better the banker you will be

 

Haha, hopefully when you do start your own shop, you hire your first intern through WSO( Can't image the comments a post like that would get), anyways this I also assume has led to a lot of success in your career, you are already very ahead and yet want to actively go further, it's beyond money, a sense of mentality that usually top sports players have.

 

How do you go about identifying business development opportunities without coming across as naive or ignorant as a junior banker? I noticed that I am much more interested in developing ideas for transactions, partnerships, etc. and much less interested in the granularity of building a massive and overly complicated model. I feel that some of my coworkers don’t really get what the client needs and will create more work than necessary to solve a problem that doesn’t exist in order to look good or to do work for the sake of work. How do I focus on real value-add activities while also remaining a solid team-player that does what they’re asked?

 

How do you go about identifying business development opportunities without coming across as naive or ignorant as a junior banker? I noticed that I am much more interested in developing ideas for transactions, partnerships, etc. and much less interested in the granularity of building a massive and overly complicated model. I feel that some of my coworkers don't really get what the client needs and will create more work than necessary to solve a problem that doesn't exist in order to look good or to do work for the sake of work. How do I focus on real value-add activities while also remaining a solid team-player that does what they're asked?

It’s hard for me to comment without knowing the details - and there are plenty of bankers who are all about the “analysis paralysis” - but it’s very hard to be a proper senior banker without a serious technical foundation. And that means mastering the models.

This having been said, the best way to do idea generation is to actually try it on.
 

Whenever you work on a pitch book, especially a buyside book, try to contribute one new idea. Some of these will get shot down (and always ask why), some won’t 

Get yourself on decks that involve industry research and actuallly use those to hone idea generation. Most people hate working on that sort of work so You can differentiate yourself.

but by and large, no rainmaking without the grind 

 

What would you say have been the most effective meeting styles for you when rengaging with clients (maybe comment more on newer relationships)?

For example, I have differnet MDs that do different approaches; some like the target strip book that boils the ocean, some present 4-5 ideas in more detail, some have a 3 page industry update book, and some none at all, etc.

 

Good post, although I disagree with a couple of points. I think it's important to emphasize that context matters. In this case, we're talking about a successful MD at a BB (likely, perhaps I shouldn't purely assume).

Some of the comments around relationships, winning business b/c of golf/dinners/trips has been proven otherwise in the MM and I'd surmise that as one moves lower down the deal value spectrum, they become even more important. 

But, many of the points are distinguishable at any level.

 

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