Monkey Business: Swinging Through the Wall Street Jungl…

What are your favorite quotes from the book?
“In an investment bank, the managing director figures out what reasonable valuation number he is going to need to tell the client in order to win the business. It then becomes the associate’s job to work backward to figure out a way to display analysis that will validate the target value. In the process, associates try to convince themselves that what they’re doing is solid analysis and not simply pure pretzel logic or high-level finance magic tricks.”
“Another key weapon for the creative banker is the discounted cash flow (DCF) analysis. The DCF is the granddaddy of all crocks of shit.”
“My father taught me many years ago not to believe my own bullshit. Well, we didn’t heed this sage advice, and we were so deep in our own garbage that we were suffocating underneath its weight. All of us, as associates, made ourselves believe that we were different and special, We would soon learn the real truth., But until then, we felt great about ourselves and our choice to careers.”

What is a specific real world application that you will be able to make from what you learned in this book?
The one part of a prospectus that should always be read is the “Use of Proceeds” section the authors pointed out: “Not too many people pay attention to this section, but they should. A careful reading of the section will tell you where the hell all the money from the offering is going. lg it’s not going into the company coffers to help grow the company, but instead is going to pay out existing owners
and management, then stay away. If the owners are cashing out, there’s no reason for you to be cashing in.” With this knowledge, I will always look for this section of the prospectus to see where the proceeds are going.

What is the one thing that you think you will do differently or think differently about since you read the book?
After reading about Rolfe’s due diligence tour it’s hard to ever put any weight on a prospectus as he put it “I was now the sole fount of DLJ’s institutional knowledge on GWA;s operations. I’d slept through a few diligence sessions and zoned out trough almost all of the others. All I had to show for the eight days’ work was a page and a half of notes and a headache. DLJ was going to attempt to sell GWA’s equity to their best institutional accounts based on my assertions that the deal was a good one. I hoped that somebody, somewhere, had their fingers crossed.”

What is one point you disagreed with, or at least questioned, in this book?
“The capital markets aren’t prefect. Those who need money, and those who have the money, can’t
always identify each other. The buyers of businesses don’t always know the sellers. Independent third parties are sometimes needed to confirm business value. What many of the bankers don’t grasp, though, is the tenuous nature of available information sources continues to proliferate, and access to that information becomes less proprietary, the bankers’ ability to extract excess fees from the information will inevitably dissipate. It may happens slowly, but the bankers’ value will diminish and melt away as surely as the Wicked Witch of the West in a South Florida rain shower.” They must have figured out something to sell as the investment banking business is still going
strong. On the HR side it would be interesting to know if the intensity of the culture has been reduced with additional HR over site or if the banks have continued with this dog eat dog culture.