What skills investment bankers lack the most?
All in the title, also applies to investment banks as a structure. We make IB look like a super-human sweatshop, but what skills are lacking according to you?
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Sleeping skills
This and social skills
Financial modeling skills, if I've learned anything from the recent influx of posts.
Effective leadership and management skills (for seniors).
Thinking outside the box / contrarian viewpoints
Definitely. Pretty much everything we do is because that is how our MDs were taught so that's how we do things and the cycle continues on and on even though there are much better ways of running a deal process. In my opinion building a 60+ page CIM/PPM is the biggest waste of time, just give potential buyers a well built model and maybe 10 pages of content and skip over the month of building a giant book that most people don't even read.
In my view, the CIM is less about providing info to buyers and much more about justifying your fee to the client.
Understanding how the other 97% live.
3% seems pretty low..
What do you mean?
Being empathetic
.
Case in point buddy
Self-awareness
Self love
Self confidence. So many insecure people working in finance
Having left IB Coverage and moved on to industry where I now get pitched by banks every now and then... the primary area "average" bankers lack is operational understanding of certain businesses. The good bankers have a general sense and don't ask dumb questions. The absolute beast bankers (MD's i've had the honor of working with and even an MD or 2 that have pitched me now) know your business inside out like you know it yourself as the owner operator. Those bankers make you TRUST that they know what they're doing.
Average to below average bankers view a buy or sell-side as a "process". In fact that's what they call it lmao. It works because it generates fees if they run the volume of deals up but when the deals get complex enough they're weakness in cookie cutter approaches gets shown.
^^ All this is senior banker stuff. From a junior perspective, I'd say it's actually the opposite and trying to go too "big picture" as most generic advice states and not actually getting the technicals down. When you leave as an analyst, I'm not looking to hire someone who has MD level skills in sales or client presentation. I want someone who knows accounting and finance like they know english. The other stuff can only be learned over time.
Could you comment on operational understanding, and what kind of ideas are lost upon some bankers? Perhaps some examples to illustrate?
Poor precedent transactions or public comps universe selection. That's the quickest one without giving specifics away.
I'll see a company i'm intimately familiar with (as in they're my damn customer and I interact with them on a day to day basis) and realize immediately it's not a comp and ask why it's included.
MD falters a bit and says we're in the same product sphere and sell the same thing. I remind him I'm in manufacturing and they're in distribution. I was never an all star banker but from my time there and even a preschooler should know those 2 companies don't trade on the same multiples.
Intelligence
Management skills
creativity
Writing.
They overestimate how smart they are and underestimate how hard it is to build a business and operate it.
"Oh you're growing through M&A? You are paying 5-6x for your deals? You should be looking for value deals at 3-4x and look for synergies in your deals. I think you should renegotiate your current deals to a lower multiple."
Yeah go try and get an entrepreneur to sign an LOI dipshit spreadsheet monkey.
Gotta pump those multiples up, those are rookie numbers
The ability to step back and think about the target audience for the memorandum, curating the narrative, upside story and points that drive value instead of just data population. This would fall under creativity but is likely more of an experience issue.
This right here. Luckily I learned this early when tackling a CIM.
Having the balls to chase their own dreams instead of working brutal hours for someone else
This cut too deep.
As arbiters of company valuations and experts on company business models, bankers can't run their own firms effectively. I'm surprised there aren't activist campaigns against publicly traded banks.
The confidence to stand up for themselves.
Many people unfortunately become "Yes men" to appease their seniors to hopefully get a promotion.
Lack of emotional intelligence.
Often times it's deep knowledge about a client or industry. I've seen when the mentality becomes so transaction-focused, bankers often overlook properly grasping a business or who would be a good buyer / target from a strategic fit standpoint. Yes, for sell-sides they can tier buyers by fit or priority for example but I've noticed that many times the "strategic rationale" is flawed and only makes sense at a glance rather than actually meeting the needs of management.
I've also seen that clients or potential clients can often get turned off by the very idea of speaking with bankers given the conversations are often driven by bankers making fee-generating suggestions one after another. I think some of the best bankers really embrace the trusted advisor role and know when it's time to engage in actual transactional dialogue vs when a CEO/CFO is seeking general or strategic counsel.
Dating skillz
Buyside recruiting skills mainly.
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