In the Business Insider article "How Goldman Sachs Blew The Facebook IPO," author Henry Blodget tells the tale of how Morgan Stanley became the coveted "left lead" banker and how Goldman Sachs was relegated to the third slot, behind JP Morgan. As a former banker, I found this article very interesting and it provides a good overview of how investment banks market to potential IPO clients. Here's the link: http://www.businessinsider.com/morgan-stanley-goldman-sachs-facebook-ipo-2012-5?op=1
According to a report on Fortune Term Sheet, Wall Street financial company are poised to slash nearly 21,000 jobs, focusing on investment banking and trading departments. The layoffs will include senior bankers, and those remaining could see compensation drop by 30%. Here's the link: http://finance.fortune.cnn.com/2012/04/30/wall-street-layoffs-21k/
This supports an earlier story by the Wall Street Journal on the topic that was covered in a prior post. Here's a link to the post: http://www.allenlatta.com/1/post/2012/04/layoffs-expected-for-wall-street-investment-bankers-wsjcom.html
The Wall Street Journal reports that the ax is about to fall on investment bankers at some of the largest banks, as a result of lower M&A deal volume this year. According to the article, global M&A revenue fell 17% in the first quarter of 2012 compared to the same period last year. With pay and bonuses shrinking at the banks, it's a tough environment for bankers.
Here's the link: http://online.wsj.com/article/SB10001424052702303978104577361833023859446.html
Picking an investment banker is both easy and hard. Easy because it's as simple as inviting bankers to pitch the business, and hard to find the bank that will really do the best job. In M&A, bulge bracket firms can have all sorts of conflicts of interests; smaller, boutique M&A advisory firms have less internal conflicts but may not have the breadth or depth of experience. In "How to Pick a Banker: Nasdaq CFO Cites Red Flags," some of the considerations are outlined when hiring a bank for M&A deals. Worth a read. Here's the link: http://blogs.wsj.com/cfo/2012/04/03/how-to-pick-a-banker-nasdaq-cfo-cites-red-flags/
Greg Gretsch , a Managing Director as Sigma Partners, has a good posting on his blog www.greggretsch.com entitled "The JOBS Act Is Good, But SarbOx Shouldn't Get All The Blame." In this article, he describes some of the factors that led to the dearth of venture-backed IPOs, including the disappearance of the "Four Horseman" boutique technology investment banks, the Global Settlement which impacted investment banks' ability to publish research on IPOs, and the impact of decimalization. The article is a good reminder of how the venture IPO market arrived at its current state.
Here's a link to Greg's article:
In his article "How Wall Street Deals With Conflicts," on NY Times Dealbook, author Peter J. Henning discusses the conflicts of interest that may exist at full-service investment banking firms, and how other industries deal with conflicts. Here's the link: http://dealbook.nytimes.com/2012/03/19/how-wall-street-deals-with-conflicts/
When I was a practicing attorney, we were required by state law to disclose any conflict of interest to all parties involved and to obtain written consents prior to continuing with the representation. No such requirement exists in investment banking. Perhaps it's time that investment banking begins to do something similar?
A recent study by Alexandra Michel of the University of Southern California explores whether working on Wall Street has an impact on health. In the study, Ms. Michel followed incoming associates at two investment banks for a period of nine years (she studied two incoming classes so the study is 10 years). Ms. Michel was herself an associate at a Wall Street bank before entering academia. The results of the study are interesting: in years 1 to 3, the associates were able to control their bodies and work up to 120 hours a week (in some cases) and be highly productive for the banks. However, beginning in year 4 the bodies started breaking down. Some of the ailments were colds, flu, heart problems, insomnia, cancer, alcoholism and depression. There's more to the study, but based on my experience as an investment banker, the study rings true.
Here's a link to a Los Angeles Times story on the study: http://www.latimes.com/business/money/la-fi-mo-wall-street-health-20120215,0,1521210.story?track=rss
Here's a link to a Time magazine article on the study: http://business.time.com/2012/02/17/study-working-on-wall-street-is-bad-for-your-health/?iid=biz-main-lede
Here's a link to the study: http://asq.sagepub.com/content/early/2012/01/30/0001839212437519.full.pdf+html
Banker bonuses are down and bankers are having to adjust to the new realities, according to an article posted on WSJ.com. In "Honey, They Shrunk My Bonus" the spending habits of Wall Street bankers are examined in the new reality of lower cash bonuses. Interesting read, but my feeling is that this likely doesn't apply to star investment bankers. Failure to pay these stars market rate will mean that the talent will move to private firms where they can earn market rates without the public scrutiny. As a result, there could be a talent drain from the major bulge-bracket firms. Here's the link:
There's a good article from Reuters yesterday discussing the dynamics of how investment banks are vying to obtain the coveted "left lead" position for the Facebook initial public offering. The article discusses fees (which may go as low as 1% of the offering proceeds, down from the usual 7%), league table rankings (Morgan Stanley won the IPO crown last year) and personal relationships. Here's the link: http://www.reuters.com/article/2012/01/27/us-facebook-ipoview-idUSTRE80Q21920120127
Many bulge-bracket investment banks offer private wealth clients the opportunity to invest in funds managed by a bank that in turn invest in hot private companies (such as Groupon and Zynga) prior to the initial public offering. Andrew Ross Sorkin recently posted an article on NY Times DealBook that discusses how investment banks can profit from these types of investments. Essentially, through these bank-managed fund investments, the banks already have an investor relationship with the company, which may help secure a lead manager role in the company's IPO. Interesting article worth a read. Here's the link: http://dealbook.nytimes.com/2011/12/19/two-ways-for-banks-to-win/
NY Times DealBook reports today that Zynga's investment bankers made $32.5 million from Zynga's initial public offering, citing data from Standard & Poors. Not bad for a few months of work. Here's a link to the story: http://dealbook.nytimes.com/2011/12/19/zyngas-bankers-reap-fees-as-stock-slides/
Jive Software Inc. has priced its initial public offering at $12 per share, above the filing range of $8 to $10 per share, selling 13,439,600 shares and raising over $161 million in the IPO. The IPO gives the company an implied market capitalization of over $700 million.
The company's common stock will begin trading tomorrow on NASDAQ under the symbol JIVE. The company sold 10,072,463 shares and selling stockholders sold 3,367,137 shares in the offering. This was an increase of nearly 2 million shares than was indicated in their prior S-1/A filing.
The lead underwriters were Morgan Stanley and Goldman Sachs. Venture capital investors in Jive Software include Sequoia Capital and Kleiner Perkins Caufield & Byers.
Jive is an enterprise social networking company that enables companies to communicate and collaborate with its employees, customers and partners.
Jive Software press release: http://www.jivesoftware.com/news/releases/2011/12/jive-software-announces-pricing-of-initial-public-offering
Wall Street Journal article: http://online.wsj.com/article/BT-CO-20111212-714832.html
In "How to do a successful IPO," Patricia Sellers interviews Lise Buyer (former CSFB technology analyst and Founding Principal of Class V Group) for tips on conducting a successful IPO. Here's the link: http://postcards.blogs.fortune.cnn.com/2011/11/03/how-to-successful-ipo/?iid=SF_F_River
Ms. Buyer outlines the following tips (I'm paraphrasing):
All in all, I feel this is a very helpful article for any company considering an IPO.
About this Blog
This Blog is a collection of thoughts on a variety of topics of interest to me, including:
Find me on LinkedIn
Find me on Twitter