Quote:
Originally Posted by krishsuraj
The number of closed deals have certainly come down, but there is one difference. The number of unsuccessful deals have been very high especially in private placements and other such dealings with the PEs. Promoters not able to raise money through IPOs, go to PEs. For the uninitiated, this is how it typically works
Make a pitch, get the mandate, talk to the company and its employees ( which takes about 20 days including plant visits and others), make the financial model ( make the promoter understand that the valuation he is seeking is too aggressive and its not possible in this market), make the information memorandum, send it to 10-15 PEs ( of which only 1-2 would want to take it forward) and initiate the deal. This process easily takes about 40-45 days during which you are normally required to put a lot of '15+ hr days'. If the deal falls through, which is highly probable ( 2-3 in 10 is the current ratio), none of this even appears in the number of deals the company has done during the year. So lets just not go by number of deals. Ya working hours are not as long as it was during last year, but IBD has certainly not become a '9-5' job. There are people in IPO execution and ECM teams who are absolutely jobless, but they certainly are not representative of the majority  |
Valid point, one month stands a small timeline from getting a mandate till deal execution, and even then if it is best efforts, probability of raising money stands bleak - given present market conditions. In any of my previous posts on this thread or elsewhere, I never said any I banker could expect 9 to 5 working hours - however, I disagree to the statement "Trader works far less than some I banker - in Syndications / Mergers and Acquisitions sector".
It is difficult to generalize things, that someone in M&A has more working hours compared to a trader in Sales and Trading. Like your example above, let me quote an example, A trader wanted to take position in debt markets, after some research he did, he realised that taking position in FCCBs issued by Indian companies since 2005, will provide better opportunities than investing in emerging equity markets. If you check Bloomberg you would know there are around 250 such FCCBs issued by 184 companies. After working with these 184 companies, it was concluded that investing in 12 such companies will provide the opportunity the trader was looking for. It might look simple to read that 12 of 184 he shortlisted, however it involves much more due diligence, than someone had did in deciding pricing for a LBO.
However, we always tend to forget the effort people take up, which eventually do not add up to the revenue of the institution. Traders are no different and same is for I bankers, getting a mandate, analyzing a screen for a prospective deal, which might get executed...however it is certianly a countable effort that some I banker does. But on the other hand a tarder does so many things which are not counted.
Just to point out one thing - I disagree to the fact that trader has average chill life when compared to someone in working in M&A or probably in Syndicated Finance. However, it is an open forum and people have their own views, their own way of looking at things.
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