Technological advancements in IB
A while back I read an article about Lazard and Peter Orszag. In that article, one paragraph read: "True to his wonkish background, Mr Orszag is emphasising data analytics as a strength. He said Lazard has just won its first client mandate where it had used machine learning and natural language processing in its analysis." (SInce I am new here, I am not allowed to post the link of the article.)
I assume they are talking about a mandate related to M&A, but I could be wrong. Does anybody know if more companies use technological advancements (i.d. AI/ML/Big Data) to automate parts of the classic IB business (e.g. M&A, Restructuring etc.)? Will people without technological skills (i.d. programming skills) become obsolete in the future? Are other IB busy with creating software to help or replace analysts?
I would love to hear more information or opinions about it. Thus, if you have a good read, observation or opinion on the topic please share. I found one read that looks interesting: "Corporate Finance and Machine Learning" by Bo Meng.
I am pretty familiar with the project Peter Orszag is referring to and From where I sit, it’s some snake oil bullshit. Sorry to be harsh but gotta be honest.
Basically Lazard has this M&A analytics sub-group that attempts to dazzle clients by overstating the complexity and importance of basic market data. For example they’ll look at recent options purchases and tell the client “look the market is positioning around a near term catalyst” just because someone bought calls expiring in 6 months. I’ve seen a few of the decks, the analysis fails basic scrutiny, like it’s not even statistically significant. It’s basically like looking at the clouds, you can make the data say whatever you want.
I’m not saying there aren’t some fun ways to tell stories with numbers that might be somewhat useful to clients, but IMHO this stuff is vastly overrated and the real strategic insights that make an MD a favorite of CEOs are qualitative insights. Companies want to hire smart people who can lead a deal process by getting the major strategic decisions right: who to market to, how to position the company, timing, structure etc. They’re not looking for basic analytics oversold as AI. In short they’re looking for a wise and steady hand . . Warren Buffett or Jamie Dimon type of personality, not Albert Einstein.
More generally people need to pump the brakes on AI in a lot of areas. Just came back from CES and good lord, people are pounding the AI koolaid like here’s no tomorrow. No doubt there will be cool AI shit but nothing will change the reality that not everything that matters is measured and not everything that’s measured matters.