13 March 2018

Morning Coffee: The agony of the overworked M&A banker. Brian’s big day

You regularly work until the small hours on pitch books and Excel models as a junior investment banker. But it’s ultimately all worth it – your hard grind helps your team win deals and (large) fees. That’s the attitude that analysts and associates at Bank of America Merrill Lynch, Citi, Deutsche Bank, J.P. Morgan, Moelis & Co, and Morgan Stanley were likely still buying into earlier this week.

For the past few months, bankers at these firms have been advising Singapore-based semiconductor giant Broadcom on one of the largest and most lucrative M&A deals…not just of their careers, but of all time. Broadcom was due to pay its advisors between $110m and $135m for their work on its acquisition of U.S. chip maker Qualcomm, according to Consultancy Freeman & Co.

Now that President Trump has scuppered the takeover (citing “national security” concerns), it’s time to spare a thought for the many bankers who’ve already shed sweat working on it and have suddenly realised that their efforts have been for nothing. The presidential prohibition is not only a massive let-down for Broadcom’s M&A advisors, but also for Qualcomm’s.

The American company was working with bankers at Goldman Sachs and Evercore Partners, Business Insider reports. These firms were jointly set for an estimated $120m to $145m payday from what would have been the biggest ever technology sector takeover. Now the deal has failed, banks on both sides will probably only take home 10% to 20% of what they were hoping to earn. Bonus pools could be diminished as a result.

If the collapse of one mega deal wasn’t discouraging enough for M&A bankers, there are fears that more foreign takeovers of US companies could be blocked as the Trump administration takes a more protectionist stance on overseas ownership.

Separately, how would you like a 37% hike in your compensation for staying put in your current bank? This is the increase that Bank of America CEO Brian Moynihan achieved last year compared with 2016, and it was mostly because BoA gave him higher stock awards after the firm’s revenues rose significantly in 2017. But Moynihan’s $21.8m in total earnings wasn’t just about his base pay and bonus. It included $205k for the use of corporate aircraft – more than double the total comp of BoA’s median employee ($87k).


Solomon will take Goldman from trading to banking. (Bloomberg)

The top-five most important tasks for the next Goldman Sachs CEO. (Financial News)

Why Goldman isn’t doing as many $100m trading days. (Risky Finance)

It’s been a great start to 2018 for Crispin Odey. (Financial News)

London court rejects ex-Barclays trader’s attempt to overturn Libor conviction. (Bloomberg)

Irish regulator issues Brexit warning to banks. (Bloomberg)

Interdealer broker TP Icap searches for post-Brexit hub. (Evening Standard)

Ex-HSBC trade finance head launches renewables-focused boutique. (HFM Week)

An unconventional path into the VC world. (Business Insider)

Quant investing comes to China. (Bloomberg)