Know how to constipate a tree hugger? I’ll tell you. Take them for a leisurely stroll around the Debt Capital Markets, Equity Capital Markets or M&A area of an investment bank.
The sheer volume of paper wasted each year on presentations and their drafts could soak up China’s Yellow River, end drinking water, halt irrigation and end rice exports.
What’s the objective of an investment banking ’pitchbook’?
Investment banking presentations and pitchbooks are usually done in PowerPoint. To those of you not intimately familiar with this software, you may think PowerPoint is but a simple tool for putting text on a slide and adding cute little diagrams. Don’t ever voice this to an investment banker or you’ll get stabbed in the ear. With a Montblanc ballpoint pen, if you’re lucky.
In all fairness, and those who know PowerPoint inside out can attest to it, the software can produce remarkable presentations. And with great effect. Now some of you can’t possibly imagine using the word ‘remarkable’ in the same sentence of PowerPoint. I can understand. After all, I was once benighted, too. But when I began living and breathing PowerPoint, and even having vivid dreams wherein I was seated behind a desk working away on building masterful slides, I came to understand it’s very nature. More importantly, I learned that with practice you didn’t merely create just any presentation. You created truth. With that came power…ok so I went off on a tangent on purpose…just making sure you were following :) Point being, it’s a good software.
Though content will usually differ from one to another, a presentation’s raison d’être is to deliver at least one of the following messages:
- I know my shit!
- i.e. the team knows what they’re talking about
- Been there, done that!
- i.e. the team has the credentials and experience necessary to do the job
- It’s never been a better time!
- i.e. the team aims to convince the reader to take action, e.g. give the investment bank a mandate
Why are pitchbooks important?
Why the hell do you have to cut down three pine trees to produce a bible-length presentation for an oil producer in Saudi Arabia? Few reasons…
Size matters (more pages / slides = more powerful): there is some sort of twisted notion in some senior bankers’ heads that the more slides there are in a presentation the more powerful its effect will be. Mark, a managing director in my division, used to say:
Mark: “How the f*@k do you expect to attract a bird (British slang for a young woman) with 3 inches? You show her 10 inches! Where are our credentials? Get the IFR league tables in there and case studies from yesterday’s deal!”
Trust me, when someone says this to you loud enough for at least fifty people in the vicinity to hear, and immediately turn toward you, you don’t forget it.
Client comes first: this is the cornerstone of the business in general. This pretty much means that clients will be placed on a gold pedestal whether it means that some poor 23-yr old analyst will not a) eat a single meal (breakfast/lunch/dinner) away from his desk for weeks, b) set foot in a gym for a month, c) have a single day off for at least three weeks. The presentation must be perfected at all cost. Not a single aberration must exist in the presentation’s DNA. One of my former colleagues, Carlo, used to do pushups and sit-ups behind his chair every night around 11:30pm. Why? Because it was the only exercise he could do.
–> It’s also the reason why so many of my 30-35 year old banker friends look like they’ve just returned home from a long war.
What do you find inside an investment banking client presentation
Feces. Excrement that’s been moulded with such fine care and precision, and flavored with so much bullshit, that people are actually convinced it’s pizza from Naples.
Ok, let’s be serious…
Different sections (you’ll generally find a combination of the below)
- Executive summary: ‘we believe that Bank X is an ideal partner for Client Y’
- Introduction: some fluffly lines and pages about the bank being ‘a leader across products’, ‘delivering the full suite of investment banking products and services’, having ‘global reach’, etc. You may also find some info on the bank’s history, its organizational structure and latest financials
- Market update: here you want the client to know you read the news and understand what’s going on in the markets. This section is prostituted around by everyone so if you’re clever you’ll never do this section from scratch; rather, you’ll copy and paste someone else’s work
–> Regardless of the times we’re in, you always have to put a positive spin on things. I remember this one time, in the midst of the global financial crisis (late-2000s), a senior member of my team nearly slapped me across the face for being dead honest about the state of the global economy on a particular slide in the market update section of a pitchbook.
Senior Banker (SB): (dead serious look on his face) “Do you want to get paid?”
The ibanker: (I was thrown off balance and didn’t quite understand what he meant) “Excuse me?”
SB: “Do you want to earn a bonus so you can buy a car, a Cartier or pop Champagne bottles at a club?”
The ibanker: (thinking ‘no, I love the job so much I’m happy to put up with your shit’) ”Yes, of course I want to earn a bonus”
SB: (pointing to the shoeshine guy who was doing the rounds on our floor – yes, we have a shoeshiner come round twice a week on the floor) ”Do you think it’s going to come from his pocket?”
The ibanker: “huhhh? No.”
SB: ”Then don’t be a fucking idiot, change the title so we get the client to do as we say”
After the usual round of abuse, the title of the relevant slide was changed to:
Despite generally challenging market conditions, EM sovereign bond issuance has never looked more favourable
- Structure: you may find information on the legal requirements of the particular deal, the maturity recommended, the listing venue (e.g. London, Luxembourg, Hong Kong, Singapore)
- Pricing: this is the part of the presentation where the client will see the price they will have to pay for the particular transaction at hand. The client may also find some details of recent pricing by regional or sectoral peers
- Fees and expenses: this is self explanatory
- Credentials: the point of this section is to show off as much as possible. Naturally, you’ll highlight the big deals the bank has participated in and led. You’ll tend to find a tombstone page which shows deals completed in a nice, cute and rectangular format (see below)
What the client does with the pitchbooks (warning: this may cause some analysts and associates to cry)
I’ve had the pleasure of getting to know a number of clients on the other side of the table over the last number of years and this is what happens when a member of senior management receives a presentation:
Example: Larry is the Chief Financial Officer of large European telco
- Larry’s Microsoft Outlook inbox new message alert goes off
From: kissass@___bank.com / Subject: Market Update
- Larry’s brain cells send off chemical signals which result in the following though: ‘one for the bin’
- Those signals then make their way into Larry’s spinal cord and force Larry’s finger to hit the DELETE button!
Larry receives market updates from over a dozen investment banks each week. 99% of the shit smells exactly the same, regardless of whether the author is a vegetarian or meet eater. Larry may read the first few pages but he will invariably, within seconds, either delete the e-mail or move it into a folder (i.e. cemetery) where it will rest peacefully alongside a multitude of docs representing wasted effort. Luckily these were soft copies, pdf-ed for the occasion. After all, there are in-person meetings which take place, where the bankers will bring anywhere from a few to a dozen or more pitchbook copies, in color no less. Oh, they are all binded; with a hardback; and with a transparent cover.
In the years I spent at the bank, I’ve attended countless meetings and rarely was there one in which we went through a whole presentation with the client. The only slide these guys care for is the pricing page.
So I’m sitting there, looking like a zombie and struggling to keep my eyelids open. Why? I’ll tell you. Because I only slept 3 hours the night before. So I’m thinking to myself, why did I put my body through another round of hell if we barely opened the presentation? To what do I owe this immense pleasure? Ah, yes, of course. My thoughtful and considerate line manager.
I got a head’s up yesterday evening at 7pm by my line manager letting me know that the presentation is required for the following morning. (THIS IS ABSOLUTELY THE NORM). What drives me crazy, and those of you who’ve been in that seat know exactly what I’m talking about, is when I later find out that my douchebag superior knew about this requirement earlier that day. I guess it would have been too much of an inconvenience to have sent me a text or note letting me know to get started early.
So if the client would only look at a few pages then why not prepare and printout a 5-pager then with only the relevant info, you ask? Good question.
Yes, Yes, Oh God, Yes
“Make me wanna masturbate to it,” was a common expression used by one of my Managing Directors. If he had nothing else to say when he walked past me as I worked on a presentation then that was his one-liner.
A Managing Director’s orgasm potential is highly dependent on the quality of a pitchbook. The more sophisticated it is and the thicker the deck, the bigger the orgasm. Throw in lots of dizzying pie charts, line charts, bubble charts, waterfall charts, nice logos, matching fonts, catchy financial buzzwords, and lots lots lots of slides.
Churn ‘em out Johnny
Let’s face it, when you work on the sell side…well…you sell.
The bank makes money from each capital raise or M&A transaction it undertakes so the more it does the more it earns. Wasting countless sheets of paper and ink is insignificant when taking into consideration the revenues which can be earned by doing a deal.