What makes a good MD / deal originator?
Hi there,
I briefly wanted to ask you what makes an MD successful in generating new mandates. I'm asking because I've noticed how some super successful bankers aren't akin to the stereotypical enthusiastic, extroverted salesman type of person but more so to the exact opposite, a.e. rather introverted, stern, or "nerdy-like", if you will. Furthermore, this is somewhat worrying to me given that I am rather on the enthusiastic/extroverted side of the spectrum, and I'm starting to think I banking is a career where the exact opposite of my personality type could have a meaningful advantage over me in terms of being an originator and winning mandates.
I guess my question is: In your experience, are bankers who are particularly adept at winning deals rather the introverted "nerdy" type of characters or the inverse?
Thank you very much for your time and takes!
Far and away the best trait an MD can have is patience for repetition. The difference between the MD that brings in $50M in fees and the MD that brings in $500K in fees is that the MD brining in $50M isn't afraid to go to Version 100 when drafting CIM iterations. A low-performing MD will cut corners. Worry about "efficiency" and bemoan "duplicitous" or "redundant" iterations of the same exercise. Well guess what buddy, that MD who made their Analyst change the shade of Navy used in each chart 100 times is out there selling himself to the clients that turn you down because they noticed you can't even use the right footnote formatting in your appendix.
This is to say, success as an MD, is due almost entirely from repition, repition, repitition. If you're an Associate, it helps to get into the practice young. Never let your Analyst off the hook with just 1 iteration. He should know to come to you with at least 10 different scenarios modeled out for any basic request. Also, constantly improve the small stuff. Did you wake up sweating at 3:00AM with the sudden realization that the shade of red you used on Page 57 may be abrasive? Call your Analyst up and make him change it. Then review again in the AM. Still not right? Make the Analyst change it back then work on reformatting the entire section. ABI. Always Be Iterating. ESPECIALLY when it is redundant or duplicitous.
I don't like this answer and believe this isn't entirely true. I work in PE and did a stint in banking (ignore my bio headline). Arguably the best MDs were the most efficient ones, who knew exactly what the clients wanted - they crafted the optimal 'critical path' for all parties (client, deal team, other internal parties, etc.). Whilst I do agree that multiple iterations are key for the client to understand the business needs, having worked on the buyside I can tell you that the modelling from sellside is mostly useless
With all do respect your lack of experience is showing. What do you mean by "efficient" MDs? Is an Analyst 2 in IB capable of judging the efficacy of a Managing Director? No, he is not. What you mean by "efficient" MD is basically whoever made you do the least work. I'm sure you like working with the guy who only makes you do 5 drafts of the CIM before sending it out first, because you, like all Analysts make it your job to try and get things done with the least work as possible like a bum.
What if I told you that more effort = more results? That every additional turn of the CIM you do results in additional investors signing NDAs? Because that is a real equation. Beating analyses and concepts to death in your model & CIM is the ONLY way to get smarter on the deal. Sorry you have to actually be responsible for something. It is no wonder you went back to Big 4 accounting, which I can see from your profile. Do they only make you do one draft of your deliverables before sending them at KPMG?
Also, why did you lie about being in PE, lol? You know the anonymous feature doesn't actually work on WSO mobile app, correct?
I have never seen somebody get owned + called out for working in Big 4, so brutally before. That was like the Rape of Berlin playing out before me in real time. Pray for this dude, he got owned.
I'm slightly worried if you can't recognise that this is satire
Thank you very much for your take!
Difficult to answer based on enthusiastic vs nerdy. The best MDs I have seen are great people knowers and can be both, based on the client who sits in front of them. For example when pitching to for a young charismatic tech founder, enthusiasm may be the best path and “nerdy” about valuation details and process might be the better for a PE principal.
Thanks for sharing!
The ones who bring genuine useful ideas or actions to clients and add value.
Those that churn work that anybody could provide (Comps / Market Pages/ Desktop bolt-ons etc) or do free bullsh*t work for clients are generally the worst. They hustle but have nothing beyond the hustle to add in value. Think of the MDs that put huge BD books together with all the info under the sun but nothing groundbreaking.
Can you introduce a client to a potential new business client for them? Can you provide an introduction to a founder looking to potentially sell that leads to an offmarket bolt-on for your client? Can you provide some insights that a CFO can steal and pass off as his own at his firm and get brownie points (and then give you the sellside mandate)?
I'm a director now. Honestly as I plough my path toward MD my only advice is this for your senior years if you want to stay in IB - Focus on value. People either give mandates to friends but more often that friendship is just a pitch invite. The real winners are those that provide value.
Can I ask you a question? If I am brilliant (runner up valedictorian of HS) and have near perfect PSAT scores (precursor to the actual SAT), do you think I could add value as a MD through my intelligence alone? I feel very confident when I am in class that I really am the "Smartest Guy in the Room" like that Jeff Skilling guy from Enron used to be called. I feel like if he created around like an $80B business through his brainpower and force of will I could at least hopefully win a few "deals" using my writing skill & computational abilities.
Second question is I really don't like working in Excel or Word. Is there anyways that I can focus on more high-value stuff and/or skip the Analyst/Associate years? I just want to win deals and make money but not neccesarily write 80 page reports on company's. Theoretically if money is all that really matters in finance, I'd think that being the guy who wins money would be more "value" than the guy who writes reports in Word/Excel
Re: Your 1st Question:
If you are such a big brain rainman character then why not go to Vegas and count cards at black jack? Better money and WLB.
Re: 2nd question.
Do you think you can be a navy seal without learning to swim first? People value the end product, not the shortcut bargain store copy.
Hi Lockwood, thank you very much for your time and insights!
Dude, stop trying to steal my thunder with Lockwood. I asked him first and have been a fan of his posts for years.
Side question based on your final paragraph. How much of an advantage do MDs have who have well connected friends which they can easily source deals from? For example, I don't have a strong network from semi-target + family/friends so was curious if this will be a big disadvantage, or are strong connections mainly built from your time on the job. Debating whether to try for a top MBA to build up my network. Or will be providing value as you say be sufficient?
My experience (and I've been at 3 firms now) is that friendships get you invited to the prom but doesn't mean you'll be prom king/queen.
It's very rare that a si gle person has the power to choose who is mandated - life isn't that simple.
Build your network but an MBA wouldnt help that much. I did one and was the biggest waste of time and money in my life short of sleeping with as many women as I could.
Senior clients want people and advisers that bring value. So in other words people that make their lives easier or make then look good.
Is it possible as a junior to align yourself with the MDs who actually add value and don't create useless BS work?
Depends on your individual staffing situation at your firm.
If you do great work for Seniors they can often pressure the staffer to give you work on their stuff.
However, balance this is my advise. You want all the MDs and Ds in your group saying good things about you to get top ranking. So don't neglect doing the odd deal with then.
helps being a jew
Efficiency, knows what the client wants, how to get it done, and the deal mechanics and industry very well. Working with a great MD is a godsend. You know what to expect from a deal, what has to be done, the vision is clear, and even with a heavy workload you can still make time for life outside of work. I've also noticed great MD's, thanks to their reputation, are able to network their way around the industry/product group they cover, and opportunities come up very often without them trying. When a client sees you can execute their deal efficiently, quickly, and know what you're talking about, it's very easy to get deals done, and word spreads.
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