How does a VP/Director win their first business? (IBD)
As a junior, I see clients come to the bank organically I.e.pitching and through referrals. These referrals typically come from clients we service recommending us to one of their friends or colleagues. Managing directors or directors will be the beneficiaries of these references.
I’m well aware that one of the key considerations in promoting a Director to Managing Director is the clients they maintain and the business they bring in, but how do VPs and directors originate business without referrals? Is it attending events? through connections? How does a VP/Director win their first business?
My 2c from a sponsor perspective. It’s very rare that they do and they’re not being judged on that. I don’t remember any conversation where we picked a bank because we thought the VP or Director was strong. This can be said to a certain degree for junior MDs too subject to size / importance of the mandate. The things that matter for winning serious work are as follows in my view:
These aren’t attributes you can expect from someone with less than 15-20 year’s work experience. That said, there are certain things you can do to help ‘win work’ or in fact actually win work.
Just my views
Yeah good advice, thank you.
It seems 80% are referrals from sponsors or law firms our MD is well acquainted with.
It would be interesting to hear any alternatives you’ve heard of from your banking days (assuming you’re not a consultant) of ways individuals brought in work without a prior relationship.
These ofc are few & far between, perhaps 5% of transactions, but I’d argue is a solid skill to have.
I think it’s very rare and not a good use of your time to actively chase mandates from people you don’t know. You could use pitching as an initial way to build a relationship, or leverage the sell side pitch for a buy side mandate (which are more opportunistic usually), but beyond that you should simply focus on winning work from the people who trust and hire you already is my view.
Understood, thanks.
I think something to be said about the size of the bank & the FaceTime between VP/D & the key relationships for clients.
I worked at LMM/MM prior to my current bank and the VPs & Directors were actively encouraged to bring in deals & were expected to allocate time towards this.
We had pretty good deal flow so I wouldn’t jump to conclude that was the reason why, perhaps future succession was partially responsible for the pressure our MD was ushering.
To answer the question at hand, (and keep in my mind my own background and sector coverage tends to be large cap sponsors), this is how it’s happened for people in the group I run
You develop a niche in an emerging, attractive sector - this will lead to sellsides from growth companies that sponsors care about which makes you valuable and you establish an area of expertise independent of senior bankers
2. You cover the portcos - a common complaint of sponsor clients is their portcos don’t get enough coverage on tack on M&A, relative financing etc. Spending time with the CEOs and heads of M&A is always time well spent
3. You grow with the juniors at PE firms and impress them on execution - as I said above, not out of snobbishness but it would just be weird if I spent time with principals / directors / junior MDs at sponsor. My people who do it well though rise fast because they see ideas early
4. M&A isn’t everything, actively pitch equity and debt and capital solutions. These are easier to win
The final point is no one succeeds in a vacuum. If it’s a big MF sponsor, they need context, execution, creativity and senior sponsorship, don’t try and be a hero and do it on your own. Leverage your senior sponsorship and internal team: the best VPs and Directors are regularly getting my help, and getting the best out of product partners
If only my MD was half as insightful and didn’t spiral into a neurotic shouting frenzies when his own poor communication methods fail him.
Thanks very much!
I will be lateraling asap.
Interesting, quite a different model. I’m in Europe if that changes the context. It’s not uncommon here a that a mid level MD doesn’t see a Partner beyond a handful of times over an entire sell side provided the VP/Principal is strong and actually runs the deal. The only people I’d expect to see less of are the 25+ years Chairman of industry / M&A type folk
I was on a deal where the MD brought in the client but didn’t have a close relationship with them and basically had the VP do all the execution work and handling of the client. Deal went well and next deal from that client came through the VP, who by that point hit director.
Bringing in business for the first time is hard. Some banks won’t promote anyone from Director to MD unless they’ve brought in business, which I think is a poor model. A better model is something where they can get the title of MD without being an originator while the true originators are like SMDs or Partners. This gives those younger senior banks a bit more clout and time to cook with brining in new business.
It depends on the firm.
At a BB (which is why I always endorse that model for up and comers), once you are a coverage officer, you leverage the firm’s capabilities and your seniors to win business (they have all these Vice Chairmen for a reason) and build credibility over time. If I was evaluating for MD promotion at a BB I would be looking to see who could deliver for their clients by leveraging the whole firm (full disclosure; I was once passed over for MD promotion at a BB firm because while I was a strong business generator, I was seen as a lone wolf. I was furious at the time but it was the right decision on their side and I evolved, but only after moving firm.)
At an independent advisory firm, I don’t want to see business generation out of VPs and Directors. I want to see content, creativity, execution ability and the ability to standalone as a banker. That’s why I like the MD / SMD model because it allows good people to have an MD title and build into revenue generation. It’s genuinely harder though than at a BB but the criteria is also very different.
Yeah I was at an independent that expected VPs to essentially do no origination then make the jump to Director and only had like ~4 years to prove themselves an effective originator or else it was up or out. We clearly lost some capable talent that just didn't have time to develop, especially in a slower market.
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