Hi all,
There's been a lot of talk regarding "generating revenue" in order to be promoted up the ladder quicker. I was wondering what exactly that means, how does a VP generate revenue? Are we talking about revenue in terms of investment banking fees? Does this mean that some technology-related product groups generated a lot more "revenue" than the other product groups in the late 1990's?
If someone could explain what exactly it means to generate revenue be it a VP or an MD, I'd be highly grateful.
Revenue generators bring in deals, or at least potential deals. These are primarily sourced through contacts, which is why networking is so important. Example: MD's fraternity brother is CEO of Visa and wants to IPO it - who do you think the CEO goes to?
Next, revenue generators successfully close the deals, which relates to managing your team well and making the client happy. This gives you a good reputation which may lead to future deals.
Closing deals = big investment banking fees
Summary: Source deal --> Close deal --> Earn fees/better reputation --> More deals sourced...
So it's really all about networking and effective execution?
Here's how an MD, for example, would "generate" revenue:
1) Speaks with guy he has long-term relationship with at private equity firm at an update meeting.
2) PE guy mentions they are thinking about selling a portfolio company and invites the banker to come "compete" for the mandate to sell the company (this is called a "bakeoff" or "beauty pageant").
3) Banker comes in, pitches against a few other banks, and wins the deal.
4) Banker creates marketing materials, approaches buyers, gets someone interested and 6 months down the road, announces the deal.
5) Deal closes in month 7/8, and the banker gets paid a % of the transaction value as a fee. He has brought in revenue.
As you can see, the relationship - step #1 - is most important because nothing else would have happened without it.
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