Hallmarks of a Strong MD

TLDR: My opinion of qualities of the best MDs and senior bankers to look/work for in IBD as well as behaviours to avoid.

As someone who is a JMD and as the end of the year approaches, I've looked back on my career and try to embody the best habits of the top MDs I've worked with. When I was a(n even more) junior banker, I would think of MDs in a 2x2 matrix: X-axis - ability to win business; Y-axis - good human beings to work with. Typically, most MDs would be at the top left (great to work with, but not winning deals), or bottom right (winning lots of deals, but difficult to work with). The nature of the job makes it very hard to be top right. And this industry is littered with a$$holes in the bottom left.

As I started moving up the chain, I've been reflective about the type of banker I aspire to be (that top right). I was always aware that as your vantage point changes, so does your behaviour ("All [children] become like their [parents]. That is their tragedy." OW), so I wanted to do this post as a writing exercise and scorecard that I can review to self evaluate. I hope you find it a helpful exercise too, whether you are on the junior side trying to identify good people to work with or in the enviable position of being top dog (... instead of just "dog").

Also from a resource allocation standpoint, it offends me when I use resources judiciously and other senior bankers do not. Thankfully, the better juniors tend to gravitate towards me naturally as a result which I will happily take. Game respects game.

Mentorship / Apprenticeship Model

Any relationship is a two way street. Sure, junior bankers need to be flexible to the whims of the senior bankers they work with, but (hopefully) senior bankers have respect and extend professional courtesies to their teams. If you are a strong junior, a senior banker who recognizes your talent should groom you and help you elevate your game so that you can take on more responsibility and get promoted (and paid more). It's not altruistic. Whatever level disparity you have with your immediate senior/MD, there should be some grooming going on so that you can assume some of their responsibilities. This in turn allows them to play up also and "aspire to be more" than what they currently are. You have to earn it, but they should reciprocate.

Example: It's rarer now adays, but the best senior bankers I've seen have actually passed relationships down to their junior bankers: helping them build relationships with up and coming stars at the client that they can "grow up with" or even use as a reference to originate future business, or giving them smaller names to cover (which is made much easier with the senior banker's implicit stamp of approval in the form of a warm intro).

Honest Reviews and Feedback

Formal reviews are the worst time to give feedback. If anyone on YOUR team is doing a bad job in anything, they should be told immediately. Throwing people under the bus is usually a sign that you weren't paying attention. As the senior most banker, the buck stops with you. I feel like regardless of what title I've had in my IBD career, I've always been responsible for everything.

Example: I worked on a deal with a very inexperienced MD (did lots of flow business/capital raises, mostly co-manager positions, at a prior firm but had zero M&A experience). He made a ton of mistakes on our sellside mandate (which I helped him fixed before it got too far). Head of IBD was riding his ass for him not being on top of the deal (didn't have answers to key questions during their regular update meetings, despite me seeding him answers). During the review he gave me a below average review. Also saw him give a bad review to another junior on the team (who also did a good job and warranted an above average review). Was clearly throwing juniors under the bus. Thankfully, I established a good enough reputation with other MDs that the senior execs/compensation team knew this was BS and I was still comp'd very well (and promoted). But the story could have had a different ending if this happened earlier in my career or if I didn't have "MD diversification" in my staffings.

Responsiveness and Respect (Valuing Your Time)

In a similar vein, responsiveness is important. We all hate getting that Friday afternoon email for a Monday deliverable when it was sitting in an inbox since Wednesday. I know junior bankers get shit on for not being responsive, but the reason for that is the senior bankers get shit on WORSE for the same reasons. If a client calls or emails and you don't respond pretty f'n quickly (especially if it's urgent), you can bet they'll be PISSED. I know MD time is important, but they need to give you time as well. If you are a part of their team, even if it's for a short while (like a couple of years for many analysts), then they need to spend time with you. If an MD/senior banker isn't giving guidance, it knocks out a huge part of why this job is valuable. Sure the headline comp is good (maybe not when benchmarked against other jobs on a $/h basis) but what really makes this job valuable is the skill sets/relationships you build. If we truly believe people in this industry are talented (or at the very least, hard working), then we all need some mutual respect.

Example: Colleague of mine was working with a Director who said, "I need something this weekend, come in on Saturday morning 8 am to discuss some work". No other instructions given. Buddy showed up right on time. Director didn't show up until 1 pm, no forewarning/communication, spent an hour on his computer "getting ready" before sitting down with the junior guy. That's BS. I don't care what level you are, that's completely disrespectful and unprofessional.

I always believed that the work was as important as the MD made it. I would make a point to put together high quality work as fast as possible (staying late if I had to). But sometimes I needed feedback. Or I needed a senior banker to explain something to me. Spending the appropriate amount of time with your juniors is a huge part of that equation. To any senior person: "If you don't add value between myself and the client, why do I need you?" Client defined as senior banker (internal) or literal, fee paying client (external). The worst I've seen is when an inexperienced senior banker is avoiding giving you proper time because they honestly don't know the answer themselves ("Go figure it out yourself and take a stab at it"). This leads us to the next category...

Industry Knowledge / Experience

This is important for so many reasons. Inexperienced MDs are the worst to work with. For example, how a buyers list is created can be a huge red flag: Your MD is working on a pitch (or worse, deal) and they ask you to do a screen of potential STRATEGIC players. If your MD doesn't know who the strategics are, head for the hills. While screening for PE firms is also not great (how do you not know the potential PE buyers whose investment mandates would warrant some outreach for this asset or not? Maybe you need a refresh of their portcos and recent deals?), not knowing the strategic players in the space is a killer. This has boil the ocean all over it. Plus, that likely means they don't have a relationship so they likely won't take your outreach seriously.

Example: I did a screen of hundreds of potential targets for a JMD/Director for a pitch for a potential buyside mandate. One of the prospects was a small private company that was way too small for the deal. The Director said "Let's make this estimated revenue $50M". I made the change, did a few turns and brought it back. "This company is still too small, let's push the estimated revenue up to $70M". Changed and turned. "$70M is too small to be interesting, let's push it up to $100M". Ok, done. "Wait, how is it possible that this company is $100M in revenue? That's impossible!" I've never wanted to punch someone so much. Thank god, I kept copies of his mark up and politely reminded him that he asked me to make the changes, but I think he would have torpedoed me with a grossly unfair review otherwise. Granted this was over several days and one of hundreds of buyers I had profiled, but it was very clear this Director was "flying the plane while he was trying to build it". Also, he clearly had no relationship with the target whatsoever. I would bet $100 they wouldn't even take his call (even as small and underbanked as the company was).

"Growing Up" In Banking

This one is a bit more specific and can be a double edged sword. It can often breed the feelings of "being a junior banker was tough for me..." and can go either of two ways: (1) "... so don't complain" or (2) "... so I appreciate how hard it can be". Best MDs are firmly in the second camp. Also, not to be a bitch about it, but I don't have much respect for MDs that didn't grow up in banking (with few exceptions). They often don't value the work junior bankers put in, or have only consumed the work as a client (an industry corp dev person for example) and have a very skewed view on IBD. Someone who has only been on the client side can often not realize/appreciate how hard the work is (doesn't have respect for the job).

The exceptions I've seen to this was rock star corporates (former CEO or corp dev. type) who knew their limitations. Had amazing relationships because they were a smart, hard working person with very solid reputations in the industry. But also respected their limitations on the IBD side. If any juniors "pushed back" on work, they would at least listen ("Hey, I know we need this analysis, but it will take a while and this is why..."; "FYI, just so you know if you go down this route, it's fine, but just be aware of X,Y, and Z which may cause you issues later from a process perspective"). It's highly analogous to the MBA associate talking to the 2nd year Analyst. Your title may be technically superior, but you don't have the IBD experience and should certainly listen to your "Junior" banker in certain key areas.

Example: Was working on a deal with another inexperienced (little IBD experience, former corporate type) MD. Asked us to put together a DCF to share with buyers. Told them it was a terrible idea for several reasons: tips your hand on valuation (not always appropriate), DCF carries no water (buyers want to see precedent transactions for M&A), the way they wanted it done was overly detailed (very long time horizon for a simple business, synergies credit which did not make sense for PE buyers) in a way that wasn't valuable, not credible and would have burned a lot of time to do during an extremely busy time period.

Having a Family

I feel like it is a positive quality for MDs to have families. Pragmatically, it helps win business a la Alec Baldwin in The Departed.

But joking aside, I've noticed MDs who are married with kids would rather be at home rather than the office. I know I do. They tend to be more focused and higher impact. No boil the ocean BS. I'm here because I have to be and not a minute longer. If they aren't doing face time, you aren't doing face time.

God help you if you get an MD that hates his family. They'll call you on Thanksgiving or holidays because they don't want to hang out with their family: "Oh sorry, hun, it's a work related call and I have to take it at 11 pm on Christmas Eve".

Example: One particularly prickly MD was known for having issues with his immediate family. One day when he got home later in the evening, he sat in his car for a full hour before going inside. Not because he was worried about waking up his family, but he just couldn't bear to go in.

Epilogue

So that's my take. How about you? SB's for insightful comments.