The Myth of the Investment Banking Cartel

“Sometimes we will in fact suggest or bring a company a deal idea, but in almost every instance our idea has more to do with How and When to do a transaction, rather than What and Why.”

Am I really going to write a blog post about a blog post about a blog post?

OMG, I think I am.

James Altucher, who I hope never runs out of hilarious anecdotes, wrote a brilliant post this week talking about the time he almost became a tech stock billionaire.  And yesterday, my pal The Epicurean Dealmaker used it as a springboard to pen a great post of his own – one in which the behaviors and motivations of investment bankers are laid bare for all to see.

One of the most interesting bits concerns this myth that investment bankers exert some type of control over their corporate clients.  TED shows us why nothing could be further from the truth…

But if you really want to understand the true nature of power relations between investment banks and their clients, it helps to examine the extreme example of a hot deal or client. Then you see the sordid truth: nervous, sweaty multimillionaires in expensive suits stacked five deep in a waiting room, desperate to get in and pitch for some juicy piece of business every Managing Director needs to win to make his revenue quota. Five, six, or more presentation books from different investment banks, each with exactly the same “ideas,” exactly the same credentials, and exactly nothing to distinguish each from the other other than different bank logos at the foot of every page.

Not only is there competition aplenty to get the deal for your bank, there is also a truism that the best deals out there are the ones where the banker is merely hopping on for the free ride – the upcoming social media bonanzas being the most current examples.  Nice to know that even the Windsor Knot Mafia henchman in the elevator next to you is anxious about his next pitch too.

Click below for both of these awesome posts.

Sources:

Bar Nothing (The Epicurean Dealmaker)

How I Screwed Yasser Arafat out of 2mm and lost 100mm in the process (Altucher Confidential)

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