There is an entertaining article on Bloomberg on "black card" concierge services in NYC (link below). I was quite surprised by a comment from "Richard, a sell-side banker":
"Say we do a billion deal. Three percent of that is 30 million dollars. Bottom line, a night out at $100,000 is just not relevant,"
Is that for real?? I know depending on group culture etc MDs can treat the team to a night out, but saying 100k is a drop in the bucket seems unreal. can you really expense that???
Yep. Closing dinners are expensive, after all, you're not going to Applebee's. And then of course you need the mandatory deal toys..
Most banks have caps on closing events. Generally $10k. More importantly, for M&A deals (unlike equity or debt closing dinners), the banks pay for the dinner themselves (i.e. it is not expensed to the client or the syndicate). As such, $100k closing event is highly improbable. To go over the bank approved cap, exceptions need to be made by senior bankers (i.e. head of investment banking). Even then, the most I have ever seen is $25k for two boxes at a Giants game.
Also, 3% fee on a sell-side that big is pretty much unheard of.
This is accurate.
A billion dollar deal neither nets you a 30mm fee or a 100k closing dinner budget, so whoever made that quote is clearly a wannabe.
$10-15bn could net you $30mm, and you can justify 100k on that.
Of course, its just tacky to take a client to a nightclub with njguido. Golf at St. Andrews and scotch tasting in the highlands or dinner for 25 or marlin fishing near cabo, that stuff works.
Heard of 150 euro per person as the highest for my team...
That "reporter" did a really shitty job.
I'm tired of liberal sensationalist reporters making absurd comments about people with money. It just creates more ammo for the people bitching about inequality, when its entirely not true.
Agreed. The article tries to paint a picture of the handful of clubs they name as being something akin to a Drophead Phantom parked in the middle of a courtyard at a french chateau, flooded to the sunroof with champagne and chilled with frozen softball-sized uncut diamonds. In reality, they're something between a Jersey OTB and a trendy restaurant.
It reads like its written by a 15 year old who snuck into a club with his older sibling and came back to all his pimply faced friends to tell them of his mystical night rubbing elbows with Jay and Bey while popping bottles with Floyd Mayweather and Juster Bieber in between trysts with the sex nymphs that were strewn about like discarded Dom P corks.
Image in my head - priceless. And accurate probably.
That jut seems incredibly unrealistic and incorrect. I'm no professional, and I'm not even in the industry, but I don't really even see how it's very possible to even blow $100k on team members in a night.
wtf did you post?
I'm saying that it seems super unrealistic and unlikely, is that more clear?
You sound like the 15 year old kid Marcus described haha
no chance
100k isn't the number that's off here... I can blow that in 15 minutes in NYC by myself.
It's the 3% fee on a billion dollar deal that's laughable.
an MD would never get the discretion to spend that type of money. Sensationalism
I've always wondered why team members are required to take deal toys and not receive a cash bonus in the amnt of the deal toy. Even if it's just a $150 tiny lucite, I would have to think some analysts would rather have the money than follow on toy.
Hahaha. I would love to see the look on your MD's face when you seem that hard up for $150. Would it be pity or disgust? lol
It may not make any logical sense but people like trophies... we're boys trapped in mens bodies looking for shiny cars and pretty girls.
Can someone explain how this got to the front page?
Back to my $5 night out with a six pack of PBR.
its this kind of drivel that lacquers a shitty shine on IB and makes ppl think it's more "prefitigious" than a career in plumbing
Agree w above commenters re: extremely improbably.
Also agree 3% is too high for advisory fees - but potentially likely for financing fees.
Yes 3% is more in line with financing fees, considering ECM would charge 3-5%, any public debt would be 1-3% and any term debt would charge much more interest and further fees so it is very likely you could generate $30m. The advisory portion would be closer to $5m though or 0.5%
In this transaction RBC was intending to make $19-25m on a $675m deal so $30m seems plausible
http://www.bloombergview.com/articles/2014-03-10/rbc-carelessly-drove-a…
Unless that team consist of 1,000 grunts there's no way anyone in this day and age can expense that kind of money. 3% fees is just plain stupid to say around deals of that size. He'll get his 3% on a 10m mom and pop deal, but never on a billion dollar deal.
Talk about fuckers fronting like it's going outta fashion with these ridiculous claims.
+1.
Maybe companies aren't splurging like Bloomberg says they are, but some ultra wealthy families are. Check out this Article in BBC.
$230,000 on a family vacation??Dude...family of 5 (say) flying first-class to a place pretty far away could cost well upwards of $50,000 in flights alone...
That's easy man. A luxury house rental in a tier 1 vacation spot can easily run 10k a night. Add on private jet, expensive dinners, activities, etc. Totally easy to blow 230k on a family vacation if you have to money and don't mind spending it.
I take any of this hand shake, club stuff with a grain of salt. Who knows how much money is actually being swung around and I'm sure there are people who will pay 100,000 grand for an all you can drink, limo fest in NYC.
Also, why on earth would you pre-swipe your card for 100 to 200 grand. Who actually does that? If you are spending that much on a night out I'd suspect you'd want a lot more control over it than these guys will give you. Maybe I'm totally off base but I think that the guys who run this 'scene' are more show than go.
Waits for 1000+ high school kids with a keen interest in finance sign up on WSO and ask which school, major, bank, group, SA watch, shoes and etc will get them to THAT 100k night
Regardless whether 100k on a night is realistic or not, if that asshole MD/Associate/VP gives me a 6 pack with a pat on the back, I'm smiling.
The more money you make, the more people complain they can't do enough with it. During my SA, an asshole MD complained that he couldn't have a vacation with his wife and two kids for under $50k. This was a day after I managed to find flights to Rome for $120 and thought I was ballin'. Perspective is a wonderful thing. We used to travel to games in college on cramped buses for 4/5 hours. Nothing would posses me to spend 1k on first class to Rome for a 4 hour flight. NOTHING.
Yea that's possible (didn't read the article). Just not in a bank at the moment...
At the moment you get spanked for anything under the sun, GBP 150.00 per head in S&T when we used to pretty much have no real limits as long as you brought the money in (assuming you were not dropping 10k on your friend who pays you 50K a year in comms...).
In IBD you'll have a nice fancy closing dinners, but you won't be dropping 100K on your client in "da club" to celebrate the 100k of fees you just made on a recent IPO where you were 5 banks sharing that fee...
Although, If you are closing a deal in the $50mln+ OF FEES I could see how you could have an exception made to spend that much money. Just don't really see that happening at the moment...
People going to IBD and doing 90+ hours weeks to do 100k nights once every year are losers. Personally, I don't go to the closing dinners of the deals I closed. I'd rather spend the night working on a high-profile and exciting RfP to bring in the fees 1 year later
That sounds miserable.
That's fine dude, just don't hate on me while I'm out eating wagyu beef and prawns that some japanese girls are cooking on our personal grill and drinking Dom from an oil barrel shaped lucite all while sourcing floozies to bring to our table
What a bag of hot air. We had a hard time spending more than 5k divided on 5 guys tonight. Granted we need to work tomorrow.
And this is new to you? AIG used taxpayer money to sent their execs to spas...
http://www.nbcnews.com/id/27075884/ns/business-us_business/t/after-bail…
What are you a fucking elementary school teacher?
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