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Interview With Ventresca & Myers: Masters in Business (Audio) · Masters in Business

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Speaker 1: Brought to you by Bank of America Merrill Lynch seeing
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Speaker 1: what others have seen, but uncovering what others may not.
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Speaker 1: Global Research that helps You Harness disruption Voted top global
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Speaker 1: research firm five years running. Merrill Lynch, Pierce, Fenner and
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Speaker 1: Smith Incorporated. This is Masters in Business with Barry Riddholes
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Speaker 1: on Bloomberg Radio this week. On the podcast, I speak
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Speaker 1: with two fascinating people. Both come from JP Morgan. Chris
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Speaker 1: Ventresca and Liz Myers effectively run the M and A
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Speaker 1: and the I p O divisions. Uh at JP Morgan.
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Speaker 1: That's not their formal title. I'll read that off on
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Speaker 1: the actual show, but you will find uh this to
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Speaker 1: be a deeply wonky, fascinating conversation if you are at
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Speaker 1: all interested in how I p O s run, in
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Speaker 1: in how mergers and acquisitions operate, how companies make the
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Speaker 1: decision to either go I p O or be acquired
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Speaker 1: or make an acquisition. Uh. This gets into a lot
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Speaker 1: of the nuts and bolts of that process. I found
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Speaker 1: it to be really quite interesting. It it's rare to
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Speaker 1: not only speak with to highly placed people within Wall
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Speaker 1: Street banks like this who are not the face of
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Speaker 1: the firm not on television and radio all the time,
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Speaker 1: but really, um, are the people who roll up their
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Speaker 1: sleeves and and get the deals done. Uh. It was
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Speaker 1: really an interesting conversation. Was also the first time we
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Speaker 1: had a conversation with two guests at once. The three
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Speaker 1: way discussion a little bit challenging for me as the
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Speaker 1: host to try and figure out how to coordinate that
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Speaker 1: and to to bring both of them in. UM. I've
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Speaker 1: said this before, I'll repeat it again. I have no
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Speaker 1: professional radio background of training, and when I watched the
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Speaker 1: pros do it, when I watch guys like Pim Fox
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Speaker 1: or or Tom Keane or Charlie Rose run a conversation,
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Speaker 1: and I have really tremendous respect for how skilled and
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Speaker 1: talented and and just experienced and knowledgeable those folks are,
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Speaker 1: and and and how effortless and easy they make it look.
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Speaker 1: When when you've done a hundred of these, you realize, wow,
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Speaker 1: this is much harder than that appears. So for those
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Speaker 1: of you who are at all interested in investment, banking,
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Speaker 1: in underwriting, I p O S, syndication, and mergers and acquisitions,
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Speaker 1: I think you'll find something interesting here. Uh. They both
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Speaker 1: have a fascinating background undergraduated Princeton and then they each
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Speaker 1: went to different UH schools for for MBA's. I think
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Speaker 1: you'll find this to be an interesting conversation. So, with
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Speaker 1: no further ado, my conversation with Chris Van Tresca and
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Speaker 1: Liz Myers of JP Morgan. This is Masters in Business
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Speaker 1: with Barry Ridholts on Bloomberg Radio. My special guest today
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Speaker 1: is a pair of bankers from JP Morgan. I have
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Speaker 1: Chris Van Tresca, he's the global co head of Mergers
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Speaker 1: and Acquisitions, and Liz Myers, she is the head of
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Speaker 1: global equity capital markets. Chris has advised on over one
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Speaker 1: trillion dollars worth of announced transactions, be they strategic acquisitions,
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Speaker 1: mergers and sales. Liz has done not quite as much,
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Speaker 1: but almost as much in terms of global equity capital markets,
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Speaker 1: including I p O s, follow ons, convertibles. They each
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Speaker 1: went undergraduate to Princeton. Liz has an MBA from Harvard,
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Speaker 1: Chris has an MBA from n y U. Chris and Liz,
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Speaker 1: welcome to Bloomberg. Thank thanks for having so let's jump
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Speaker 1: right in with what you do, Liz, for for listeners
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Speaker 1: who may not know what exactly are global equity capital markets, Well,
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Speaker 1: the Equity Capital Markets group is really the equity underwriting
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Speaker 1: group at JP Morgan, and so we are responsible for
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Speaker 1: I p O s, follow on offerings for public companies,
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Speaker 1: convertible securities that companies issue, and equity private placements. So
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Speaker 1: companies that are looking to access equity before they go
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Speaker 1: forth with an IPO. And I assume you may do
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Speaker 1: some work with the M and A department as well.
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Speaker 1: We do. Chris and I have known each other for many,
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Speaker 1: many years, and we do spend a lot of time
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Speaker 1: on certain client transactions together. Um importantly, it maybe acquisition finance. Uh,
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Speaker 1: it may be a dual track I p O and
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Speaker 1: sale process. So so let's talk a little bit about
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Speaker 1: the state of the business these days. Not too long ago,
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Speaker 1: there was an article in the Wall Street Journal that
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Speaker 1: said I p O s were at a twenty year low.
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Speaker 1: What are you guys seeing in either equity capital markets
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Speaker 1: or in mergers and acquisitions? Does that sum up the
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Speaker 1: state of the street accurately to you? Well, I think
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Speaker 1: it's really This year has been a tale of two cities.
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Speaker 1: The first part of the year as much lower in
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Speaker 1: terms of volumes, and now as we've passed Labor Day
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Speaker 1: and entered into September. As expected, We've seen a huge
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Speaker 1: resurgence in the I p o market and broadly in
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Speaker 1: the equity capital market, so volumes are up substantially. I
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Speaker 1: had mentioned on Bloomer TV back in August that we
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Speaker 1: expected to have over twenty I p o s launched
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Speaker 1: in the month of September, and that statistics still holds
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Speaker 1: holds true. So a lot of exciting things happening on
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Speaker 1: our platform. How typical is that for what we usually
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Speaker 1: see in the full of each year. Well, the fall
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Speaker 1: can sometimes be a catch up period from a slower summer,
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Speaker 1: but this year in particular just seems livelier than ever
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Speaker 1: across all sectors. It's interesting to see that some of
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Speaker 1: our largest deals on the platform are coming out of Asia,
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Speaker 1: so just recently pricing the China Postal Savings Bank I
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Speaker 1: p o UM, we have an interesting privatization on the
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Speaker 1: road in Asia, and a variety of different billion dollar
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Speaker 1: plus I p o s. Before I get to Chris's
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Speaker 1: M and A work, one would imagine that Asia has
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Speaker 1: been ascended to the as few years. Is that a
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Speaker 1: fair way to sum that up? Well, I think it's
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Speaker 1: it's continued to progress, particularly sentiment wise, when earlier in
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Speaker 1: the year there was a lot of concern about Chinese
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Speaker 1: growth slowing, and I think we're seeing more and more
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Speaker 1: signs of the macro backdrop improving, whether it's steel prices,
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Speaker 1: new projects, starts. On the industrial side is starting to
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Speaker 1: feel a lot better, and the Chinese consumer is always
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Speaker 1: of great interest. So christ let me ask the same
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Speaker 1: question to you about uh, the M and A business,
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Speaker 1: the emergence and acquisitions business. What is the sid of
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Speaker 1: the street these days? How active is it? What do
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Speaker 1: you see? So you really have to start with last
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Speaker 1: year was this historic M and A market, huge volumes,
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Speaker 1: driven by lots of companies with great balance sheets, a
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Speaker 1: lot of access to capital, but very weak organic growth
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Speaker 1: and their stock price and then multiple was anticipating ability
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Speaker 1: to grow, but what they looked in their own business plans,
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Speaker 1: they were struggling in this global economy which has been
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Speaker 1: pretty modest. How do I find that stock price are
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Speaker 1: shiation and growth in my company? Let's use M and
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Speaker 1: A as a tool. So last year historic records very
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Speaker 1: much by side driven M and A activity. Companies that
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Speaker 1: could afford it, looking for smart synergistic acquisitions, and as
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Speaker 1: we moved into this past year, much of that has continued.
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Speaker 1: The actual deal count is down about eight percent when
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Speaker 1: we tracked the number of transactions two fifty million dollars
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Speaker 1: and greater, so it is a little lighter. The mega deals,
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Speaker 1: the ten billion dollar plus deals are down greater than
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Speaker 1: that about so a lot of the headlines may say, oh,
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Speaker 1: M and A is not that busy, it's a lot
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Speaker 1: slower than last year. But what we're feeling and actually
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Speaker 1: experiences a continuation of an extremely healthy M and A market.
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Speaker 1: A lot of the themes that were in existence last
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Speaker 1: year are still here today. Very strong access to financing,
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Speaker 1: meaning historically low rates for debt financing. In size companies
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Speaker 1: that generally are trading at a pretty healthy stock price
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Speaker 1: multiple are able to use their equity as an acquisition currency.
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Speaker 1: So if I'm a buyer and go get debt to
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Speaker 1: pay for that purchase price, I can use my own
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Speaker 1: stock and I'm leaning into that if it's a smart deal,
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Speaker 1: that's bolstering what's likely still from any companies weak organic growth.
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Speaker 1: So so let's talk about that cheap fund and saying
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Speaker 1: I've heard from people on the street you know, the
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Speaker 1: FED is the only game in town. If it wasn't
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Speaker 1: for them, none of these fill in the blank mergers
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Speaker 1: I p o s share by backs would would take place.
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Speaker 1: Seems like an overstatement. How significant is the Federal reserve
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Speaker 1: to what what both of you do? So when we're
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Speaker 1: talking with our clients, it always ends up coming back
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Speaker 1: to what's the underlying growth in their business, which is
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Speaker 1: heavily linked to the economic outlook and the growth they're
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Speaker 1: seeing across the globes. So in an environment where there's
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Speaker 1: been low rates, that's largely been because the global economic
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Speaker 1: growth outlook has been so weak. So those companies from
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Speaker 1: an M and A matter in that environment have low
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Speaker 1: organic growth and are using M and A as a
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Speaker 1: tool to bolster their growth profile. Even if rates go up,
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Speaker 1: the answer maybe, well, where it's a going up because
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Speaker 1: the economic outlook is improving, so those companies are gaining
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Speaker 1: extra free cash flow. So even if rates are going
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Speaker 1: up for the right reasons a better global economy, I
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Speaker 1: think that will just continue to support a healthy strategic
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Speaker 1: dialogue among companies. Buyers will still look for ways to
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Speaker 1: put that capital to work. And then if I'm a seller,
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Speaker 1: typically what I found last year is if my stock
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Speaker 1: price was trading at almost an historic high or at
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Speaker 1: least a fifty two week kai, and someone showed up
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Speaker 1: with an acquisition premium, and then I compared that to
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Speaker 1: what I was able to deliver on my own. You know,
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Speaker 1: I may say, hmm, that's pretty good deal for my shareholders.
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Speaker 1: Why don't I crystallize that premium? And the right answer
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Speaker 1: for shareholders to sell my company. I'm Barry rid Helts.
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Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
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Speaker 1: special guest today is Chris Ventresca and Liz Myers of
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Speaker 1: JP Morgan. He is the global co head of Mergers
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Speaker 1: and Acquisitions. Liz is the head of Global equity capital Markets.
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Speaker 1: And let's jump right into what these processes look like
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Speaker 1: from the company's perspective. Walk us through a process. How
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Speaker 1: does a deal begin? If someone wants to either go
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Speaker 1: I P O or do an acquisition or merger, how
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Speaker 1: does that process begin from the corporate side? Well, I'm
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Speaker 1: happy to start. I think the company side for an
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Speaker 1: acquisition really starts with that company's strategic planning process that
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Speaker 1: the senior management team, the board, and very often us
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Speaker 1: as bankers advising them are part of where do you
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Speaker 1: want to see and take your company in the next
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Speaker 1: three to five years. What areas either geographically or product
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Speaker 1: segments or customer segments are we in that we want
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Speaker 1: to grow? What areas are we missing that we think
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Speaker 1: we should be in as a competitive matter, And then
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Speaker 1: the conversation shifts to are we able to accomplish those
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Speaker 1: objectives are on through capital expenditures or R and D
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Speaker 1: or is that not possible? And maybe there is a
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Speaker 1: target out there that fits very neatly into our strategy
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Speaker 1: as an acquisition candidate. That's the classic building or buy
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Speaker 1: it correct and very often that's a discussion that happens
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Speaker 1: over years. So a company is thinking about its own prospects,
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Speaker 1: it's plan its performance, trying to assess where it's competitively
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Speaker 1: strong or weak, and then coming up to some conclusion
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Speaker 1: about this is a part of the world we need
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Speaker 1: to be in. How can we do that. This is
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Speaker 1: a product we're missing, or capability or technological capability or
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Speaker 1: expertise that we're missing. Can we build it? Can we
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Speaker 1: buy it? Who's out there if we want to buy something.
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Speaker 1: Let's now talk about potential candidates around the globe that
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Speaker 1: could be interesting puzzle pieces for us to put into
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Speaker 1: that and that again is something company starts with. We're
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Speaker 1: by their side helping them think about it. Where we
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Speaker 1: become very helpful in that is sanity checking that strategy
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Speaker 1: and helping identify companies around the world that may fit
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Speaker 1: into the solution they're looking so that that's fascinating to
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Speaker 1: hear that it's a multi year process. The public here's
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Speaker 1: about some crazy idea gets floated. One was that Apple
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Speaker 1: was going to buy the claren came out of the
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Speaker 1: f T. I have no idea if it's true. I'm
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Speaker 1: not going to ask anybody. But the way you're describing
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Speaker 1: it is this fits into the broader context a long
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Speaker 1: term strategic plan. It's not just hey, shiny orange car,
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Speaker 1: let's get those. It's a very very different approach. Yeah,
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Speaker 1: just to reiterate, it is very very often a multi
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Speaker 1: year process. And even when you identify that target, there's
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Speaker 1: then and the bankers are now getting more about We're
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Speaker 1: helping them think through how do we value that target,
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Speaker 1: what's the price that's appropriate to pay. Do we think
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Speaker 1: they'd be willing to take that price? And sometimes with
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Speaker 1: the market volatility, and stock prices moving. Sometimes the advice is,
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Speaker 1: let's wait a quarter or two to just see how
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Speaker 1: the dust settles with regards to some news announcements of
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Speaker 1: their performance, and let's have a strategy of approaching and
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Speaker 1: even once you approach it, maybe another few months or
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Speaker 1: quarters before you actually get to the point of being
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Speaker 1: very definitive on this is the price I'm prepared to pay?
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Speaker 1: Are you prepared to accept it? Type of conversation. And
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Speaker 1: again that could last certainly months and often into years.
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Speaker 1: So so, Liz, when you work with companies that want
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Speaker 1: to go public, the assumption is, especially with startups and
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Speaker 1: tech companies, that's the exit strategy down the road or
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Speaker 1: is it still is it? Is I p O the
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Speaker 1: endgame as much as it might have been uh some
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Speaker 1: years ago. Well, there are really three reasons that a
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Speaker 1: company would decide to go public. One is they're looking
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Speaker 1: to accelerate growth, similar to the theme that Chris mentioned
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Speaker 1: about why they might be looking to make an acquisition.
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Speaker 1: The second typical reason maybe that they have a balance
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Speaker 1: sheet that's a little too levered for their comfort zone,
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Speaker 1: so they'd like to raise some equity capital and pay
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Speaker 1: down debt. And then the third factor that may weigh
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Speaker 1: in is they may be owned by a financial sponsor
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Speaker 1: who's looking to begin the process of exit after three, five,
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Speaker 1: ten years UM, so that can be also a driver
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Speaker 1: of an ip O. Someone sent me an email complaining
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Speaker 1: about the lack of public companies that one point in time,
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Speaker 1: the Wilshire five thousand actually had five thousand companies. So
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Speaker 1: what do we see as the trend in in companies
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Speaker 1: going public? We've heard a lot of complaints from company
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Speaker 1: as well. It's easier to stay private. Uh. You see
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Speaker 1: Uber has had no problem raising capital. Is this a
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Speaker 1: real issue or is this Uh? People just complaining for
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Speaker 1: the sake of complaining. Well, we have a brisk equity
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Speaker 1: private placement business. But what I would say is that
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Speaker 1: it's not a one size fits all type of approach.
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Speaker 1: Not every company is looking to raise private capital. It's
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Speaker 1: typically more dilutive than doing an I p O UM,
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Speaker 1: and they really private equity is more dilutive than an IPO.
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Speaker 1: Not always, but oftentimes the company is earlier in its
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Speaker 1: life cycle, so they may not have predictable earnings, a
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Speaker 1: visible or transparent revenue stream, so there's a lot more
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Speaker 1: risk inherent. Often in companies that are earlier stage and
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Speaker 1: less mature than when they ultimately get to being I
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Speaker 1: p O ready, where we often would recommend that they
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Speaker 1: have good transparency in their earnings, a stronger balance sheet,
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Speaker 1: so just d risked and more mature. So that sounds
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Speaker 1: like a checklist for how to run a successful I
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Speaker 1: p O. What are the other factors and pitfalls that
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Speaker 1: are out there? Sure? Well, I'd say certainly, having being
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Speaker 1: involved in a growing and attractive sector is checkbox number one.
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Speaker 1: Secondly would be having a really attractive niche within that,
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Speaker 1: so leadership within an attractive sector, having a business model
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Speaker 1: that is easily understandable and transparent, having a strong balance sheet,
15:32
Speaker 1: and lastly having strong management. Helpfully to have management who's
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Speaker 1: had public company experience but not required and oftentimes companies
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Speaker 1: that have helpful and credible strategic backing from a private
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Speaker 1: equity firm or venture capital investor. How about you, Chris,
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Speaker 1: what's your checklist for a successful acquisition? What what works
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Speaker 1: and what doesn't? Yeah? I think the key is you
15:54
Speaker 1: go back to what are we good at? What are
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Speaker 1: our core competencies as an acquirer, and can we apply
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Speaker 1: those to this target? I think where companies get in
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Speaker 1: trouble is they stray too far away from what they're
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Speaker 1: good at and they try to expand into areas that
16:08
Speaker 1: they're not as familiar with or don't have the capabilities.
16:11
Speaker 1: So always stick to your knitting, stay in your lane.
16:14
Speaker 1: You know those phrases we use a lot with companies
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Speaker 1: and their boards. The key then once you realize this
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Speaker 1: is a business we can add value to and we
16:22
Speaker 1: understand and we have the skill set and it's filling
16:25
Speaker 1: a need that we have, then we very quickly well,
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Speaker 1: what is it worth? And do we pay a price
16:30
Speaker 1: that actually gives us a return that's better than our
16:33
Speaker 1: cost of capital Because you may find that great target,
16:36
Speaker 1: but if you overpay for it, that's a destructive element
16:39
Speaker 1: to shareholder value. So where we'll end up working very
16:42
Speaker 1: closely with our clients is just that question, what is
16:45
Speaker 1: this business worth? What synergies are created under our ownership?
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Speaker 1: How much of those are we willing to keep for
16:52
Speaker 1: ourselves or potentially pay away in a premium, And have
16:55
Speaker 1: that discussion and ultimately a negotiation with that seller who's
16:58
Speaker 1: on the opposite side of that dial, saying what is
17:01
Speaker 1: my own self worth? What are my prospects. Is someone
17:04
Speaker 1: offering me something that's better than I can do on
17:06
Speaker 1: my own. Maybe it's a stock deal where I don't
17:10
Speaker 1: need to just close the file on this, My shareholders
17:13
Speaker 1: are getting a new piece of equity that has upside
17:16
Speaker 1: to it. Or maybe it's a cash deal where I
17:18
Speaker 1: truly you know, three months from this announcement date, we're
17:21
Speaker 1: going to close our shareholders again and get all cashed out.
17:24
Speaker 1: And how do I feel about that? Did they get
17:26
Speaker 1: enough return above where the stock was trading to make
17:29
Speaker 1: us all feel good that that as a board we
17:31
Speaker 1: did the right thing for our shareholders as a cash seller,
17:33
Speaker 1: those are the key questions we deal with and work companies.
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Speaker 1: Coming up, we continue our conversation with JP Morgan's Chris
17:40
Speaker 1: Vantresca and Liz Myers, looking at the relationship between education
17:45
Speaker 1: and finance. I'm Barry Riholds. You're listening to Master's in
17:49
Speaker 1: Business on Bloomberg Radio. My special guests this week are
17:53
Speaker 1: twenty year veterans of JP Morgan in both the M
17:57
Speaker 1: and A and global equity capital markets. Chris Van Tresca
18:02
Speaker 1: is the global co head of Mergers and Acquisitions at
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Speaker 1: JP Morgan. Elizabeth Myers is head of Global e c
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Speaker 1: M Equity Capital Markets. Both of them have been with
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Speaker 1: JP Morgan for twenty years, and I guess literally have
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Speaker 1: decades of experience in the space. Let's talk a little
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Speaker 1: bit about your educational background and what's needed for this
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Speaker 1: sort of work in finance. Liz, you have an economics
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Speaker 1: degree from Princeton undergrad Chris you also went to Princeton
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Speaker 1: and and have a Bachelors of Science and Engineering in
18:37
Speaker 1: electrical engineering, a little bit unusual. And then both of
18:40
Speaker 1: you have n b as. Chris you at at n
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Speaker 1: y U, Liz you at Harvard. So the first question
18:46
Speaker 1: is pretty straightforward. You each seem to have taken slightly
18:51
Speaker 1: different paths to work your way into finance. What did
18:54
Speaker 1: your educational background lead you towards in terms of of
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Speaker 1: what you wanted to focus on as a career. Senior
19:01
Speaker 1: year in Princeton getting my electrical engineering degree and interviewing
19:04
Speaker 1: around and realized I didn't necessarily want to be an
19:07
Speaker 1: electrical engineer, but I loved problem solving, I love analytical situations,
19:12
Speaker 1: and I did enjoy being around people and being a
19:15
Speaker 1: part of a team. So I had branched off into
19:17
Speaker 1: different areas of either consulting or computer programming jobs at
19:21
Speaker 1: different types of firms, and JP Morgan at that time
19:25
Speaker 1: and still does today, offered what they called a Global
19:28
Speaker 1: Technology and Operations training program where they took folks like
19:32
Speaker 1: myself and became computer programmers or technical folks to help bankers.
19:38
Speaker 1: And I was always intrigued by the financial markets and
19:40
Speaker 1: finance in general, and the opportunity to help bankers think
19:45
Speaker 1: about how to value companies, what tools do they need
19:49
Speaker 1: the analytical tool set to help them do their job
19:54
Speaker 1: was very interesting to me, so I joined the firm
19:55
Speaker 1: on that basis actually spent many years doing that job,
19:59
Speaker 1: which was supporting bankers with all the analytical tools that
20:02
Speaker 1: they needed. As I did that function, I also realized
20:06
Speaker 1: I liked their job a heck of a lot. So
20:08
Speaker 1: I went back um at night part time at n
20:11
Speaker 1: y U cern School of Business and proceeded to get
20:15
Speaker 1: my m b A and finance great managers great mentors
20:19
Speaker 1: along the way early in my career, supporting that I
20:21
Speaker 1: was able to do that while staying at JP Morgan,
20:24
Speaker 1: and ultimately made a career change once I finished my
20:27
Speaker 1: m b A. This is now the mid nineties, I
20:29
Speaker 1: switched over and became what we call an associate in
20:32
Speaker 1: our investment banking program. Became a young investment banker picked
20:36
Speaker 1: the M and A Group at the time. I loved
20:38
Speaker 1: the valuation aspects, the analytical rigor around analyzing companies. I'd
20:43
Speaker 1: like the tactical side and strategic side of advising companies
20:47
Speaker 1: and that whole thought process. It appealed to kind of
20:50
Speaker 1: my core competencies as as well as what I just
20:53
Speaker 1: saw and watched others do with great enthusiasm. So I
20:56
Speaker 1: jumped in with both feed into the M and A
20:58
Speaker 1: Group in the mid nineties and fell in love with
21:00
Speaker 1: the business and have just essentially grown up at JP
21:03
Speaker 1: Morgan in that business, taking on greater responsibilities throughout the years. Liz,
21:07
Speaker 1: you you took a more traditional route economics to M
21:10
Speaker 1: b A. How did you find your academic background helped
21:14
Speaker 1: you in your career well? As an economics major, it
21:17
Speaker 1: was a more natural path that I might end up
21:19
Speaker 1: interviewing with financial firms. And I remember meeting Chris in
21:24
Speaker 1: the early days of working at JP Morgan when I
21:26
Speaker 1: was an industry coverage banker and then in the M
21:28
Speaker 1: and A Group myself. Um, So I had a really
21:31
Speaker 1: great experience as part of the JP Morgan Analyst Training program,
21:35
Speaker 1: and after my work in M and A, I started
21:37
Speaker 1: to think about spending more time in an area where
21:41
Speaker 1: I could have more exposure to the equity markets. I
21:43
Speaker 1: grew up in a family where neither of my parents
21:45
Speaker 1: were financial professionals, but they both really had a passion
21:48
Speaker 1: for the stock market and we used to laugh at
21:50
Speaker 1: they each had their own individual subscriptions to the Wall
21:53
Speaker 1: Street Journal. So I had an interest in the equity markets,
21:57
Speaker 1: and when I returned from business school, I decided to
21:59
Speaker 1: make the transition into equity capital markets and just love
22:02
Speaker 1: the opportunity to work with so many more clients on
22:05
Speaker 1: a regular basis. M and A is a group where
22:07
Speaker 1: you spend a lot of time deeply into analyzing one
22:11
Speaker 1: particular company or situation, and in E c M we
22:13
Speaker 1: have the benefit of being able to study and learn
22:16
Speaker 1: about so many different companies and advise them along the
22:19
Speaker 1: path of raising equity capital. And while I'd say my
22:22
Speaker 1: major and economics was relevant as in terms of making
22:25
Speaker 1: me an attractive candidate, at JP Morgan, we hire majors
22:29
Speaker 1: of all types, everything from classics to electrical engineering, and
22:33
Speaker 1: I think Chris and I we spend a lot of
22:35
Speaker 1: time doing Princeton recruiting and spending a lot of time
22:37
Speaker 1: on campus because that's our alma mater and we we
22:39
Speaker 1: feel quite loyal to it. But I think we're both
22:42
Speaker 1: quite good at identifying what are the right personality traits,
22:46
Speaker 1: skill sets, finding those folks who have expressed interest in
22:50
Speaker 1: our field, and you combine that with JP Morgan's very
22:52
Speaker 1: powerful training program, we can create a dynamic where young
22:56
Speaker 1: people can be very successful and impactful in our field.
23:00
Speaker 1: And it's really fun to be able to watch young
23:02
Speaker 1: bankers then grow up and start managing their own deals
23:05
Speaker 1: and telling us what to do. I'm Barry Hults. You're
23:08
Speaker 1: listening to Masters in Business on Bloomberg Radio. My special
23:12
Speaker 1: guest today are the co head of Global Mergers and
23:16
Speaker 1: Acquisitions at JP Morgan, as well as the head of
23:21
Speaker 1: Equity capital Markets, Chris Van Tresca and Liz Myers. Let's
23:25
Speaker 1: jump right into the process from the bank's perspective of
23:30
Speaker 1: what it's like during either an acquisition or an I
23:33
Speaker 1: p O. First question, how do these deals find their
23:37
Speaker 1: way to you? Is it the basis of a longer relationship?
23:42
Speaker 1: Is it always in flux. From the bank's perspective, how
23:45
Speaker 1: do these things come along. We start relationships with our
23:48
Speaker 1: industry coverage officers and those those relationships span many years
23:53
Speaker 1: and it it's not a typical that I might meet
23:55
Speaker 1: a company three years before it goes public, sometimes five
23:59
Speaker 1: years um, and there are other situations where it might
24:01
Speaker 1: be with just a year out. So we're really combining
24:05
Speaker 1: that relationship within our industry coverage area with the product
24:08
Speaker 1: expertise at the right time, and that allows us to
24:11
Speaker 1: really help a client along the path of decision making
24:14
Speaker 1: because they may in those early years still be considering
24:17
Speaker 1: whether an I p O really does make sense ever,
24:20
Speaker 1: or whether they might decide to expand through acquisition or
24:23
Speaker 1: sell the company or stay status quo, private and and
24:26
Speaker 1: happy for many years. How competitive is it when a
24:29
Speaker 1: company decides we're gonna I p oh there are a
24:31
Speaker 1: number of big banks on the street. In my mind's eye,
24:34
Speaker 1: it's a very sharp elbowed competitive fight. What does that
24:38
Speaker 1: look like from the bank's perspective, I'd say there's a
24:41
Speaker 1: mix of situations. There are definitely the as we call them,
24:44
Speaker 1: the big bakeoffs, where there might be a number of
24:46
Speaker 1: competitors in the mix and companies and their financial backers
24:50
Speaker 1: might be interviewing a series of banks in a single
24:52
Speaker 1: day or week. And then there are other situations that
24:55
Speaker 1: are more correlated with the setup I described of of
24:58
Speaker 1: a multi year relationship with our firm where the client
25:01
Speaker 1: never feels that they need to interview others because the
25:04
Speaker 1: advice and trust that's been built over many years is
25:07
Speaker 1: so strong. But it is a very competitive dynamic, and
25:10
Speaker 1: I think what clients are looking for is a combination
25:14
Speaker 1: of that trusting relationship but also very strong expertise and
25:18
Speaker 1: track record in doing numerous complex deals or deals that
25:22
Speaker 1: look very similar to what their situation might look like,
25:26
Speaker 1: combined with a lot of deep industry expertise, support on
25:29
Speaker 1: the research side, vast distribution network. Those are the criteria
25:33
Speaker 1: that most issuers and financial sponsors will think about and
25:37
Speaker 1: where we check those boxes quite well. Have been on
25:39
Speaker 1: the M and A side similar sort of timeline, and
25:42
Speaker 1: and it's very similar in terms of our relationships with
25:45
Speaker 1: clients has measured over many, many years, some of these
25:48
Speaker 1: clients multiple decades, and we've become part of their team
25:51
Speaker 1: and their partners and really focus on being their trusted advisor.
25:55
Speaker 1: Willing to give objective advice, think about their strategy, their business,
26:00
Speaker 1: and give them our input, and then when there's some observation, ah,
26:04
Speaker 1: we are deficient in this area, it becomes a very
26:06
Speaker 1: natural dialogue to say, well, let's talk about acquisitions and
26:09
Speaker 1: here's some names that may make sense. And by definition,
26:13
Speaker 1: as we're having that dialogue, we're getting a little deeper
26:15
Speaker 1: and ultimately will just be their natural first call advisor
26:18
Speaker 1: on that deal. So that's really what we strive for.
26:21
Speaker 1: It happens in the majority of our cases where the
26:24
Speaker 1: client relationship just lends right into been an active project
26:28
Speaker 1: and potentially an active deal, not much of a bakeoff
26:31
Speaker 1: on the M and A. So I for obvious reasons,
26:33
Speaker 1: everything has to be kept a little a little quieter
26:35
Speaker 1: than perhaps an I P O. That's a fair point too.
26:37
Speaker 1: I think confidentiality isn't key, and for clients and boards
26:40
Speaker 1: to have a team that they trust, they know there's
26:42
Speaker 1: continuity in that team, the same people that they've got
26:45
Speaker 1: to respect and learned from over years. Is that same
26:48
Speaker 1: team helping them on a deal. M and A lends
26:50
Speaker 1: itself to that trusted advisor type relationship, which again is
26:53
Speaker 1: built over the longer term. Every now and then, these
26:56
Speaker 1: are fun phone calls to get you know, I'll get
26:59
Speaker 1: I'll get the phone call or someone on the team
27:00
Speaker 1: will get the phone call of I don't have a
27:02
Speaker 1: relationship with JP Morgan, but I've heard such great things.
27:05
Speaker 1: We're considering to sell ourselves. Can we come meet you
27:08
Speaker 1: or can you participate? We're gonna call a couple of folks,
27:10
Speaker 1: or think about adding you to a team. And and
27:13
Speaker 1: again we do have those opportunities. We do welcome them
27:16
Speaker 1: and and do enjoy you know, pitching or meeting you know,
27:19
Speaker 1: new clients, But the vast majority of what we do
27:22
Speaker 1: is long term relationship. So walk me through the process.
27:25
Speaker 1: A company has reached the conclusion we either want to
27:28
Speaker 1: I p O or we wanna acquire somebody or be acquired.
27:33
Speaker 1: What are the next steps? Like what actually takes place
27:36
Speaker 1: within the bank when an existing client says, Hey, it's time,
27:40
Speaker 1: we're going to ring the bell. Let's do this. How
27:43
Speaker 1: does the ball get rolling? Probably the best example that
27:46
Speaker 1: will touch on both the M and A world and
27:48
Speaker 1: the equity capital markets world is when a company may
27:51
Speaker 1: have a division or a subsidiary that they determine, usually
27:56
Speaker 1: with our help, is non core or maybe more valuable
27:59
Speaker 1: in someone else his hands, in their own hands. So
28:01
Speaker 1: then as we're evaluating that, we'll say and think about, Okay,
28:05
Speaker 1: what are the alternatives for this non core division? Can
28:08
Speaker 1: we run a cell side? What would that look like?
28:10
Speaker 1: Who the buyers, what would they potentially pay, what's the
28:14
Speaker 1: tax implications of that? What are the proceeds we would receive?
28:17
Speaker 1: So we'd be doing that analysis and forming a view
28:20
Speaker 1: in our best judgment about those outcomes. Similarly, for that division,
28:24
Speaker 1: is it a public market candidate? Could we I P
28:27
Speaker 1: O it? Could we do a spinoff? Is it capable
28:30
Speaker 1: to be a thriving equity story with new investors? What
28:34
Speaker 1: does that look like? And ultimately we'll bring all that
28:37
Speaker 1: analysis back and talk about it with the CEO and
28:39
Speaker 1: the board and the and the rest of the management
28:41
Speaker 1: team and create some potential outcomes and judgments for them
28:45
Speaker 1: to then make a decision. We like both outcomes, we
28:48
Speaker 1: like potentially running both in parallel and seeing which one
28:51
Speaker 1: ultimately delivers the best for our shareholds. I e. A
28:54
Speaker 1: sale of this division or a spin off or I
28:56
Speaker 1: p O. Let's now create a timeline and a work plan.
29:00
Speaker 1: Let's prepare all the relevant materials for that. Ultimately, there's
29:04
Speaker 1: a point you have to start to make outbound calls
29:06
Speaker 1: to buyers, and there's a point you start to do
29:09
Speaker 1: SEC filings. To extent, it's an i p O and
29:11
Speaker 1: you just map out a project plan and a work
29:14
Speaker 1: plan and go along. You know that timeline. Usually in
29:17
Speaker 1: that case, we're working very closely together. The M and
29:20
Speaker 1: A team, the industry coverage team, and the equity capital
29:23
Speaker 1: markets team are all working very closely together assessing those
29:27
Speaker 1: alternatives to maximize the outcomes for our client. We're speaking
29:31
Speaker 1: with Chris Francesca and Liz Myers of JP Morgan talking
29:35
Speaker 1: about I p O s and mergers and acquisitions. Similar
29:39
Speaker 1: question to you, Liz, A company says, all right, we
29:41
Speaker 1: feel like we're mature enough, we have enough revenue, we're profitable.
29:45
Speaker 1: We've decided we want to go to I p O.
29:48
Speaker 1: What does it look like from the bank's perspective, What
29:50
Speaker 1: what sort of steps follow that decision? Sure? Well, the
29:54
Speaker 1: decision to I p O is one decision, and then
29:56
Speaker 1: the next part is learning what the appropriate value equation
30:00
Speaker 1: might be, and that can be taking place in multiple
30:04
Speaker 1: parts in the process. When when Chris was mentioning if
30:07
Speaker 1: a company was looking at both sale and i p O,
30:09
Speaker 1: they might regularly be where they would be regularly with
30:12
Speaker 1: us evaluating the relative valuation of those two camps. UM.
30:17
Speaker 1: It's also part of the pitch process when we're meeting
30:19
Speaker 1: with clients and expressing our own views around their equity
30:23
Speaker 1: positioning and their valuation. So that's very much a part
30:26
Speaker 1: of thinking about when to I p O and whether
30:29
Speaker 1: it makes sense to do that versus a strategic sale.
30:32
Speaker 1: So once we get going and thinking about how to
30:35
Speaker 1: refine valuation thoughts, which may change along the way depending
30:38
Speaker 1: on business the businesses own development or market conditions, the
30:42
Speaker 1: value of peers that they may be medge marked against,
30:45
Speaker 1: so it's not always a fixed point in the analysis.
30:48
Speaker 1: But as we go forward thinking about that, we're also
30:51
Speaker 1: defining and refining the equity positioning, which is what is
30:55
Speaker 1: the encapsulated description of this company and the investment opportunity
30:59
Speaker 1: for buyers, So thinking about how to size their market,
31:03
Speaker 1: what type of forecasted revenues might make sense UM and
31:08
Speaker 1: those are and those that part in particular our research
31:11
Speaker 1: analysts can be helpful with and the company is not
31:14
Speaker 1: required to commit to specific forecast targets. But the by
31:18
Speaker 1: side is trying to learn what's reasonable in terms of
31:20
Speaker 1: the type of revenues and earnings that a company might
31:23
Speaker 1: produce over time UM and then they also have to analyze.
31:26
Speaker 1: The by side has to analyze very much, and we
31:28
Speaker 1: provide our thoughts and help with this. What are the
31:31
Speaker 1: risks of this investment? What's the downside? What might cause
31:34
Speaker 1: the company's stock price post IPO to trade down? So
31:38
Speaker 1: they have to be very thoughtful about that, and and
31:40
Speaker 1: we not only for the pursuit of being helpful to
31:44
Speaker 1: the full analysis, we also have regulatory obligations to talk
31:47
Speaker 1: about anything that could go wrong with an investment. So
31:50
Speaker 1: when we look at M and A and we look
31:52
Speaker 1: at I p O s, I p O s typically
31:55
Speaker 1: involved many different companies helping to bring the target company public.
32:00
Speaker 1: And I have looked we've all seen books who's in
32:03
Speaker 1: the prime position on the cover? How often are you
32:07
Speaker 1: working with multiple peers on the street to help bring
32:10
Speaker 1: a company public? And what's that process like to coordinate
32:14
Speaker 1: this with with other bankers UH that are a participating
32:18
Speaker 1: in the underwriting. So there are a number of parties
32:21
Speaker 1: typically on an I p O and the lead bank
32:24
Speaker 1: is called the lead left underwriter, and they're typically orchestrating
32:27
Speaker 1: the process of of including other banks. Other banks are
32:30
Speaker 1: included often for research capability, so having just another voice
32:34
Speaker 1: in the market with a slightly different version of how
32:38
Speaker 1: this company could be an attractive investment for the buy side.
32:41
Speaker 1: So it does require great teamwork and as a result,
32:45
Speaker 1: I know many of my peers quite well across the street.
32:48
Speaker 1: And when you say lead left, obviously that's the top
32:51
Speaker 1: left corner of the underwriting prospectives the book that everybody gets,
32:55
Speaker 1: and then the distribution of other banks are all over
32:59
Speaker 1: the cover. How much jockeing goes on with that, There
33:01
Speaker 1: is some jockeying that goes on, and sometimes um, you'll
33:05
Speaker 1: realize that the lead left is just the most highly
33:08
Speaker 1: paid bank. And sometimes the cover might have a couple
33:11
Speaker 1: of banks that are are paid equally, and they might
33:13
Speaker 1: be alphabetically listed, so there might be client might pick
33:16
Speaker 1: two banks that they feel equal comfort and capability in.
33:20
Speaker 1: But ultimately, UM, there are companies also like the I
33:24
Speaker 1: p O for the opportunity to keep relationships with other
33:27
Speaker 1: banks that may have provided them with helpful financing over
33:31
Speaker 1: the course of their history and may look for that
33:33
Speaker 1: in the future as well. So there are a variety
33:35
Speaker 1: of reasons that clients like to have more than one
33:39
Speaker 1: bank on a deal. But it can be sometimes a
33:42
Speaker 1: lot to orchestrate. But we're quite good at it because
33:44
Speaker 1: it's it's been the dynamic for sometime. But it does
33:47
Speaker 1: really require UH the ability to manage a process in
33:51
Speaker 1: an almost militaristic way UM and have really good communication
33:55
Speaker 1: across the whole syndicate group. Brought to you by Bank
33:58
Speaker 1: of America Marylyn Inch, committed to bringing higher finance to
34:02
Speaker 1: lower carbon named the most innovative investment bank for climate
34:05
Speaker 1: change and sustainability by the Banker. That's the power of
34:09
Speaker 1: Global Connections. Bank of America North America Member f D
34:13
Speaker 1: I C. I'm Barry rid Helts. You're listening to Masters
34:16
Speaker 1: in Business on Bloomberg Radio. My special guest today is
34:19
Speaker 1: Chris Ventresca and Liz Myers of JP Morgan. He is
34:24
Speaker 1: the global co head of Mergers and Acquisitions. Liz is
34:28
Speaker 1: the head of Global Equity Capital Markets. So let's take
34:31
Speaker 1: a typical ten billion dollar deal, be it I P
34:36
Speaker 1: O or M and A or even a smaller deal.
34:39
Speaker 1: What do these look like? What's the structure look like,
34:42
Speaker 1: how many people are working on this from from the
34:45
Speaker 1: bank's perspective, what's actually happening? When okay, everything is green,
34:49
Speaker 1: let's go forward. What does that look like? Well, I
34:53
Speaker 1: can start. There's a few different types of examples. I'll
34:56
Speaker 1: just pick probably the most complex, which is a sale
35:00
Speaker 1: of a company where the buyer could be anywhere around
35:03
Speaker 1: the globe. So typically what we'd have is a very
35:06
Speaker 1: senior team talking with the CEO and the board. So
35:09
Speaker 1: that could be two or three senior bankers, industry expertise,
35:15
Speaker 1: M and a expertise just relationship, maybe in a particular
35:19
Speaker 1: country where that company is located, and that senior team,
35:23
Speaker 1: which hopefully has built a decades plus long relationship and
35:27
Speaker 1: knows that company extremely well. Well. Then add a couple
35:30
Speaker 1: of layers below our title structures the team right out
35:35
Speaker 1: of college. The undergraduates or analysts NBA equivalent types are
35:40
Speaker 1: called associates. The vice presidents, executive directors, and managing directors
35:45
Speaker 1: the most senior, and there's usually one person in each
35:48
Speaker 1: of those levels. The more junior part of the team
35:50
Speaker 1: is and saying, Okay, we have this idea that maybe
35:52
Speaker 1: this company has decided that it's prospects are better to
35:57
Speaker 1: sell themselves than what they can do on their own.
35:59
Speaker 1: What what is the value where the business plan. Let's
36:01
Speaker 1: create a financial model that takes their business plan over
36:05
Speaker 1: many years into the future, maybe runs it to a
36:08
Speaker 1: discount of cash flow or looks at other comfortable So
36:10
Speaker 1: there's an analytical part of the job that a core
36:14
Speaker 1: part of that team is working on fine tuning, working
36:17
Speaker 1: with the clients, spending time with the client, asking diligence questions,
36:21
Speaker 1: understanding all the assumptions, and ultimately that team, from from
36:25
Speaker 1: the most junior to the most senior, forms a point
36:28
Speaker 1: of view is that your business plan or what you
36:30
Speaker 1: think you're able to deliver is worth I'll make up
36:32
Speaker 1: a number a hundred dollars a show, and maybe we
36:36
Speaker 1: then assess where the stock price trading, and we assess
36:39
Speaker 1: is that good enough? Is that enough for our shareholders
36:42
Speaker 1: or is there someone out there that could see us
36:44
Speaker 1: in a different way that may pay us on your
36:47
Speaker 1: fifty dollars a share and is that a good idea
36:49
Speaker 1: for our shareholders to to do that. So there's that
36:51
Speaker 1: first part of the team that's kind of internally working
36:54
Speaker 1: with the client and then there's the question that's often
36:57
Speaker 1: in the boardroom with the most senior bankers advising, saying, okay,
37:01
Speaker 1: what is the next step? Here? Are there people around
37:04
Speaker 1: the globe that may value your business more than you're
37:06
Speaker 1: able to deliver on your own. And then our global
37:09
Speaker 1: franchise plays right into that strength of understanding companies around
37:14
Speaker 1: the globe, having senior bankers sitting in countries around the globe,
37:18
Speaker 1: and in a confidential way, extend that team to include
37:22
Speaker 1: that right level of expertise. You know who in Asia,
37:25
Speaker 1: who in Europe, who in Latin America, who in the
37:28
Speaker 1: US or Canada may make sense as an owner of
37:31
Speaker 1: this business. Let's talk about that with our client in
37:33
Speaker 1: a very thoughtful way, because we know those folks and
37:36
Speaker 1: we know how they view a business like us, and
37:39
Speaker 1: we probably have history around their credibility or ability to pay.
37:42
Speaker 1: And let's get the approval with the board's blessing to
37:44
Speaker 1: say okay, let's run a cell side process. Um. So
37:48
Speaker 1: that team really depends on the type of project I
37:51
Speaker 1: just described. Something that's a very global team. There's kind
37:54
Speaker 1: of a core team working closely with the client that
37:56
Speaker 1: extends globally for the benefit of the client, so that
37:59
Speaker 1: we may be able to introduce them to a buyer
38:01
Speaker 1: that's in a part of the world they've never thought
38:03
Speaker 1: about or never been to, but because we know a
38:06
Speaker 1: client there, we kind of have a sense of what's
38:08
Speaker 1: interesting to them. We create that introduction and we're able
38:11
Speaker 1: to have them visit and have a local banker in
38:13
Speaker 1: market maybe perform that introduction. And the team therefore could
38:19
Speaker 1: range from three four, five to you know, depending on
38:23
Speaker 1: the complexity, and that's really just as people or can
38:28
Speaker 1: they can generally speaking, and if you if you end
38:31
Speaker 1: up them branching off into different types of transactions where
38:35
Speaker 1: maybe there's acquisition financing is needed and there's different ways
38:39
Speaker 1: to do that financing, bid bank financing, bond financing, investment
38:44
Speaker 1: grade bond, high grade, high yield bonds, a different set
38:46
Speaker 1: of expertise is needed. Or maybe that's a cross border
38:49
Speaker 1: deal where you need to pay in Euros and you're
38:53
Speaker 1: a dollar denominated company, so we'll have FX specialists become
38:57
Speaker 1: part of that deal team to explain are we able
39:00
Speaker 1: hedge this, what instruments are in place for us to
39:03
Speaker 1: de risk the transaction using potential you know, interest rate
39:07
Speaker 1: or foreign exchange type edges. So again, one or two
39:10
Speaker 1: or so people could get at it confidentially into that
39:12
Speaker 1: team to work with the client because that's their specialty
39:15
Speaker 1: and they can then you know, have the benefit of
39:18
Speaker 1: talking with the client about that. So these teams could
39:20
Speaker 1: grow depending on the topic and depending on the level
39:24
Speaker 1: of complexity. And I'm assuming that each of these people
39:26
Speaker 1: are working with a a cohort on the corporate side,
39:31
Speaker 1: be it the CFO, the CEO, or whoever their team
39:34
Speaker 1: is is putting together. So there's probably, uh, my assumption
39:38
Speaker 1: is there's a lot of bodies being thrown at a
39:40
Speaker 1: at a pretty big deal on both sides of the table,
39:43
Speaker 1: the company side and the bank side, and correct and
39:46
Speaker 1: depending on the nature of the deal. There are situations
39:50
Speaker 1: where confidentiality is so important it would be very disruptive
39:55
Speaker 1: to that client's business if there was a rumor, if
39:59
Speaker 1: it aim known to the employees or customers as suppliers
40:02
Speaker 1: that they were considering something before they actually had it
40:04
Speaker 1: in hand. So there are situations where they will work
40:07
Speaker 1: with us exclusively and will commit and they'll commit even
40:11
Speaker 1: as a senior management team, not to go too deep
40:13
Speaker 1: in their own organization and we'll do the same as
40:16
Speaker 1: small tighter group as possible, and again that may just
40:19
Speaker 1: be a handful of people that are working in that
40:21
Speaker 1: case for the the logic again of let's keep this
40:25
Speaker 1: as tight as possible, because the sense of there are
40:27
Speaker 1: other situations where a company decided to sell themselves and
40:30
Speaker 1: because they realize they need a lot of help of
40:32
Speaker 1: their own internal people may announce publicly we're reviewing strategic alternatives,
40:36
Speaker 1: including a sale, so they've publicly told the world and
40:39
Speaker 1: their employee base that's happening. That's obviously a little easier,
40:42
Speaker 1: easier than it's a little less sensitive, and the teams
40:45
Speaker 1: could be larger in cases like that. You're nodding your head, yes, Liz,
40:48
Speaker 1: is it. Do you see some similar sort of teams
40:52
Speaker 1: working between companies and the bank? And I assume you
40:56
Speaker 1: don't have the same need at least in the I
40:58
Speaker 1: p O space of secrecy. But what about the add
41:01
Speaker 1: ons and the syndicates, things like that where it could
41:05
Speaker 1: be disruptive if it leaks out early, Hey, we just
41:07
Speaker 1: did an IPO when there's another of stop hitting the market,
41:11
Speaker 1: how do you deal with that? You're absolutely right, the
41:13
Speaker 1: team for an I p O and the stage in
41:16
Speaker 1: which the broader group would be included, would be much
41:19
Speaker 1: earlier because you maybe filing a public perspectus and you're
41:22
Speaker 1: you would want your salesforce to be aware that this
41:25
Speaker 1: deal was coming in let's say a few months UM.
41:28
Speaker 1: So we think of it as in our group, there
41:30
Speaker 1: are four to five people in the equity capital markets
41:34
Speaker 1: group that would work on any transaction, and a similar
41:36
Speaker 1: number of people in the industry coverage, relationship banking area.
41:41
Speaker 1: We also have a research analyst who if it's an
41:43
Speaker 1: I p O maybe has a has a team of
41:45
Speaker 1: one or two people joining them. They would be involved
41:49
Speaker 1: much earlier in the process and would help us UM
41:52
Speaker 1: and we would help them get up to speed on
41:54
Speaker 1: the on the story. They would spend a lot of
41:56
Speaker 1: time interfacing with the issuer client and really developing their analysis,
42:01
Speaker 1: forecast positioning of the company. They would be doing that independently. UM.
42:07
Speaker 1: Then we have the salesforce who gets involved all over
42:10
Speaker 1: the world. So that's a much more significant group. And
42:13
Speaker 1: to your point, if you are doing a public equity
42:16
Speaker 1: a public company's equity ray is a follow on for
42:19
Speaker 1: let's say acquisition or debt reduction, etcetera. That's something we
42:24
Speaker 1: would keep the information on we call it on our
42:27
Speaker 1: side of the wall, So just the equity capital markets
42:30
Speaker 1: professionals and the and the bankers and the research analysts
42:33
Speaker 1: would be told only right before the transaction is ready
42:36
Speaker 1: to be launched, so they have a couple of hours
42:38
Speaker 1: to prepare, but ultimately they're going in and we're leveraging
42:41
Speaker 1: their historic knowledge of the company. Um, and so it's
42:44
Speaker 1: kept very much on the inside of the wall in
42:47
Speaker 1: those circumstances, and the salesforce would find out at the
42:50
Speaker 1: exact same time as the rest of the public market.
42:53
Speaker 1: So um, it's it's definitely a divided environment when you
42:57
Speaker 1: have a public company issuing equity. You mentioned in the
43:00
Speaker 1: lead time. I've gone to a number of road shows
43:04
Speaker 1: pre I p O and some of them are pretty
43:07
Speaker 1: straightforward affairs where it's relatively um, just nuts and bolts,
43:12
Speaker 1: and others are very flashy, you know, whiz bang presentations.
43:17
Speaker 1: What this is sort of an on the fly question.
43:20
Speaker 1: What goes into creating that? Who drives those decisions? I mean,
43:25
Speaker 1: obviously if it's a company like Tesla or somebody that's
43:29
Speaker 1: flashy and and and very forward tech, might be a
43:33
Speaker 1: different presentation than a sort of uh, just running the
43:37
Speaker 1: mill plane fintech sort of company. But but how is
43:41
Speaker 1: that process put together? How are these road shows assembled?
43:45
Speaker 1: And how again another personnel question, how many bodies are
43:49
Speaker 1: thrown at these things? Right? So I would say there's
43:52
Speaker 1: there's a little bit of a culture by industry around
43:54
Speaker 1: how flashy as you would say, an I p O
43:57
Speaker 1: launch might look um and so that's that can vary
44:00
Speaker 1: by sector. But ultimately what you're looking to do is
44:03
Speaker 1: make sure you're getting significant visibility for the deal. And
44:06
Speaker 1: I always say a good deal sells itself and you
44:08
Speaker 1: don't need the flash to be able to get the eyeballs.
44:11
Speaker 1: Is if the financial profile of the company and their
44:15
Speaker 1: leadership in their sectors is notable, the eyes will find
44:17
Speaker 1: them without too much effort on our part. Some clients
44:20
Speaker 1: just have a culture um as an issue where client
44:23
Speaker 1: have a culture of a more um flashy persona and
44:26
Speaker 1: they enjoy the splash of leveraging the I p O
44:28
Speaker 1: event to actually increase visibility from a cut from their
44:31
Speaker 1: customers perspective. UM. So it's kind of a free media
44:35
Speaker 1: event and we'll see the New York Stock Exchange in
44:37
Speaker 1: the NASDAQ also contribute resources to help in that regard
44:41
Speaker 1: when when we're doing an I p O. UM, But
44:43
Speaker 1: ultimately it's it's really about the quality of the story
44:46
Speaker 1: and does the valuation make sense, And that's what really
44:49
Speaker 1: drives how subscribe something is and what sort of interest
44:52
Speaker 1: there is on the street. I did blow through so
44:56
Speaker 1: many questions I want to UM, I want to just
44:58
Speaker 1: go back and take look at a few we missed
45:01
Speaker 1: before I get to the the standard ones. UM. You
45:06
Speaker 1: mentioned aftermarket performance and add on what what what determines
45:12
Speaker 1: whether a company does UH poorly or well in the
45:16
Speaker 1: aftermarket and the one that really stands out, UM, And
45:21
Speaker 1: I don't want to ask specific questions, but you know,
45:23
Speaker 1: the Facebook IPA was widely considered a flop. They had
45:27
Speaker 1: the technical problems, the stock traded down afterwards, and then
45:31
Speaker 1: they had I think it was about nine months later
45:34
Speaker 1: they had their mobile announcements, and there's been no looking back.
45:37
Speaker 1: The stock has gone straight up, straight up. When you
45:41
Speaker 1: look at an I p O like that, what is
45:44
Speaker 1: it that makes any given I p O successful or
45:47
Speaker 1: less successful? And and was that kind of a unique
45:50
Speaker 1: one off situation at Facebook? Because I think it looked
45:53
Speaker 1: like especially giving this nephew with NASDAC. It looked like
45:57
Speaker 1: that had a couple of one off issues. I wouldn't
46:00
Speaker 1: take Facebook as the right case study for thinking about
46:02
Speaker 1: what drives the right aftermarket because there were some technical issues.
46:06
Speaker 1: As you point out that we're pretty unique to that situation.
46:09
Speaker 1: I think as a general matter, overall demand combined with
46:13
Speaker 1: allocation strategy is what drives the aftermarket, and they're intricately related.
46:18
Speaker 1: What is allocation strategy? So allocation strategy means you have
46:22
Speaker 1: a list of let's say a hundred and fifty accounts
46:24
Speaker 1: that have come into an I p O and you
46:26
Speaker 1: have X amount of stock to distribute amongst all of them.
46:29
Speaker 1: So that's a very as not an automated process. It's
46:33
Speaker 1: very manual and it's very um conversation based where we're
46:37
Speaker 1: really putting together a lot of information. It might include
46:40
Speaker 1: feedback from the issuer client about how they felt that
46:43
Speaker 1: client that investor understood their business um. We also will
46:48
Speaker 1: factor in what price limits an investor might have placed
46:51
Speaker 1: around their order. That may, depending on where the deal
46:54
Speaker 1: is priced, may exclude them from even being eligible for
46:56
Speaker 1: an allocation if it's if the the arket clearing prices
47:01
Speaker 1: above where their limit was for example. But ultimately, what
47:04
Speaker 1: we're really trying to do is have a deal that's
47:07
Speaker 1: an average sized deal. You were shooting for a multiple
47:09
Speaker 1: time subscription, so you have excess demand versus the amount
47:13
Speaker 1: of shares and their scarcity value, and that demand tension
47:15
Speaker 1: helps with the aftermarket and the strategy of allocation is
47:19
Speaker 1: to allocate less than what an investor would ideally like,
47:22
Speaker 1: but enough to be meaningful so that the resulting dynamic
47:25
Speaker 1: is they go and round out their allocation in the aftermarket.
47:29
Speaker 1: So they're looking to fulfill the demand they placed with
47:32
Speaker 1: us in the aftermarket as well as through a partial
47:35
Speaker 1: partial placement by US shares directly from the I p O.
47:39
Speaker 1: So this process sounds subjective and very much more art
47:44
Speaker 1: than science. Is that is that a fair way to
47:46
Speaker 1: describe that. Let's say it's a fair way, and we
47:48
Speaker 1: do it with great thought and and conservative approach and
47:52
Speaker 1: an inclusive approach as we think about what our issuers
47:56
Speaker 1: interests and preferences are. But ultimately, i'd say issuer and
48:00
Speaker 1: underwriter's preferences are always aligned to have a positive aftermarket
48:03
Speaker 1: so that this event of of bringing buyer and seller
48:06
Speaker 1: together results in a long term partnership. So before I
48:10
Speaker 1: jump back to the m and A side of it,
48:13
Speaker 1: there's always seems to be a battle between do we
48:17
Speaker 1: price it high and maximize dollars to the company, or
48:21
Speaker 1: do we price it a little lower so that there's
48:25
Speaker 1: more participation and over the long haul it seems to
48:28
Speaker 1: work out better. How is that dynamic tension resolved? Again,
48:33
Speaker 1: it sounds like it's more art than science. So that
48:36
Speaker 1: can either be an easy conversation or a multiple hour
48:40
Speaker 1: conversation depending on the circumstances and the complexion of the
48:44
Speaker 1: order book. So sometimes it's very clear from just showing
48:47
Speaker 1: the order book to an issuer client that the market
48:50
Speaker 1: clearing price is top of the range or middle of
48:53
Speaker 1: the range, for example. UM some issuers will ask what
48:57
Speaker 1: would it look like if I priced the deal a
48:58
Speaker 1: dollar higher, And so we have to try to interpolate
49:02
Speaker 1: from the data we have what that might mean in
49:04
Speaker 1: terms of aftermarket performance. So we'll give some guidance which
49:07
Speaker 1: is just our best estimates for what that change might mean.
49:11
Speaker 1: But we can for sure show them what accounts would
49:14
Speaker 1: drop out of the book, and so what would their
49:16
Speaker 1: subscription level reduced to if they push price higher? For example, um.
49:21
Speaker 1: So sometimes there is some nuances and maybe a dollar
49:24
Speaker 1: a dollar difference is hard to ascertain a meaningful difference
49:28
Speaker 1: in the aftermarket, and sometimes it's extremely clear where you
49:31
Speaker 1: may have an order book where if you went one
49:33
Speaker 1: dollar higher you would lose half the order. So you
49:35
Speaker 1: have a lot of visibility when people say, oh, you
49:38
Speaker 1: know they price that too low. They left all this
49:40
Speaker 1: money on the table. You really don't know what's out
49:43
Speaker 1: there aftermarket, but you could see what the immediate demand is.
49:47
Speaker 1: So you're really working within a framework that's at least
49:51
Speaker 1: on the I p O pricing that seems to be
49:55
Speaker 1: a little more science than art. Beyond that is I
49:58
Speaker 1: guess where the art comes in. Is that a their
50:00
Speaker 1: way to describe exactly And we're never solving for just
50:03
Speaker 1: how to allocate the stock for that moment. We're solving
50:06
Speaker 1: for making sure that the deal trades well so that
50:08
Speaker 1: the company's reputation is enhanced by this event rather than
50:12
Speaker 1: hurt by it. So it's it's not just about maxing
50:15
Speaker 1: what you generate from the underwriting. There's always a balance, right,
50:19
Speaker 1: We're we're looking to optimize price. So the issue where
50:21
Speaker 1: gets the absolute most proceeds that we can deliver while
50:25
Speaker 1: still having the stock trade well in the aftermarket. That's
50:27
Speaker 1: the magic number, and there's going to be some trade
50:30
Speaker 1: offs between the two of those. You could take something
50:33
Speaker 1: perhaps generate a little more underwriting income to the company,
50:37
Speaker 1: but at at a cost of how well it trades
50:40
Speaker 1: after right, we might do We could have a situation
50:42
Speaker 1: where we've created more proceeds by moving price let's say
50:45
Speaker 1: a dollar a share, but then the aftermarket doesn't trade
50:48
Speaker 1: as well. And if you think about in an I
50:49
Speaker 1: p O typically depends on the circumstance of the region.
50:53
Speaker 1: Let's say in the U S. A typical I p
50:54
Speaker 1: O might be of the company. You don't want to
50:57
Speaker 1: lose value for that other percent by focusing too much
51:03
Speaker 1: on proceeds realized on moment one. So there's some art
51:08
Speaker 1: and science to pricing I p O. I always look
51:11
Speaker 1: at at acquisitions or sales of companies as more of
51:16
Speaker 1: a poker game where you're playing against a number of
51:19
Speaker 1: other players, potential other bidders. What's it like when you're
51:23
Speaker 1: in the midst of trying to acquire a company and
51:27
Speaker 1: another buyer comes along and throws a bid in uh
51:31
Speaker 1: and sort of toss as a monkey wrench at what
51:34
Speaker 1: you have going. Let me let me first link back
51:37
Speaker 1: to what List said, because there's a very interesting analogy
51:40
Speaker 1: in M and A. When you're doing a deal as
51:42
Speaker 1: a target for all stock, or maybe it's half stock
51:46
Speaker 1: and half cash with an acquirer, so a more merger
51:49
Speaker 1: like deal. This same tension happens when I'm on the
51:52
Speaker 1: cell side. If I get a greater and greater premium,
51:55
Speaker 1: if I extract from that buyer a higher and higher price,
51:59
Speaker 1: the odds are Aventually there's a price where that buyer's
52:01
Speaker 1: shareholders are not going to like the deal, and that
52:04
Speaker 1: buyers stock is going to go down. So the equity
52:07
Speaker 1: they're giving me in the M and A deal may
52:09
Speaker 1: go down in value if I extract too much out
52:12
Speaker 1: of them. So you're always trying to find very similar
52:14
Speaker 1: in pricing of an I p O this equilibrium where
52:17
Speaker 1: I'm getting enough upfront value while being cognizant of the
52:21
Speaker 1: fact that I may be playing a longer term value
52:24
Speaker 1: game and therefore the importance of how that equity trades
52:28
Speaker 1: after announcement is key. So we do have that same
52:31
Speaker 1: struggle and debate very often about upfront premium verse wouldn't
52:35
Speaker 1: it be great if we took this equity and the
52:37
Speaker 1: buyer stock went up so that the premium grows post announcement.
52:42
Speaker 1: And I do think there's some similar dynamics happening on
52:45
Speaker 1: the M and a deal and your question of when
52:47
Speaker 1: another bidder shows up. What we try extremely hard to
52:50
Speaker 1: do upfront. If we're on the acquisition side with the
52:54
Speaker 1: client and we made the first move, we've publicly announced
52:57
Speaker 1: an acquisition at a price, it's a price we feel
53:00
Speaker 1: good about. We would have gotten bored approval, the other
53:02
Speaker 1: side would have agreed to it potentially, and someone comes
53:05
Speaker 1: along and offers a higher price, we would have done
53:09
Speaker 1: the work up front to understand how much value were
53:11
Speaker 1: we creating in this deal, how much cushion did we have.
53:16
Speaker 1: Think about that in advance, so you don't get deal
53:18
Speaker 1: fever and you try to chase something that may not
53:21
Speaker 1: be economic. Try to create some ground rules upfront about
53:24
Speaker 1: at this price or above it starts to not make
53:28
Speaker 1: sense for our shareholders and we should walk away. And
53:30
Speaker 1: if someone wants to pay above that, well, good for them,
53:33
Speaker 1: but that's not in the best inswer for our shares
53:35
Speaker 1: as will let them win. It's like any auction, you
53:37
Speaker 1: have to know in advance what your limited raising you
53:41
Speaker 1: paddle once across is that and what's also happened very
53:43
Speaker 1: interesting in them and a in the last year or
53:45
Speaker 1: two especially, is certainty of getting to closing has become
53:49
Speaker 1: extremely important, almost as much, if not more than just
53:53
Speaker 1: that upfront purchase price. For example, if I'm on the
53:57
Speaker 1: cell side of a deal and I agreed to a price,
54:00
Speaker 1: and I think it can get to the finish line,
54:01
Speaker 1: meaning through regulatory approval or sharehold approval, and someone else
54:05
Speaker 1: shows up at a higher price, but let's say, for example,
54:07
Speaker 1: they have regulatory risk. Am I willing to forego the
54:12
Speaker 1: lower price that's very certain and take the higher price,
54:15
Speaker 1: But it has a lot of risk. It's very disruptive,
54:17
Speaker 1: as you know, to announce a deal in twelve or
54:19
Speaker 1: eighteen months later find out it can't close regulatory reasons.
54:22
Speaker 1: And we've seen a few of these exactly a couple
54:23
Speaker 1: of years, and it's been a huge surprise. So part
54:26
Speaker 1: of the dialogue we have with our clients, both on
54:29
Speaker 1: the Cell side and evaluating two bidders that we may
54:32
Speaker 1: be presented with is the certainty of those bids and
54:35
Speaker 1: when we're on the buy side, understanding what we're competing against.
54:38
Speaker 1: There was an interesting deal a year ago that we
54:40
Speaker 1: had worked on for Dollar Try. We made an acquisition
54:43
Speaker 1: of Family Dollar, and Dollar General came out and put
54:46
Speaker 1: out a higher bid, but it was deemed that on
54:49
Speaker 1: our side, the Dollar Try side, that our bid was
54:51
Speaker 1: more certain we had less regulatory risks, so we stuck
54:54
Speaker 1: with our quote, lower bid, and ultimately the board of
54:57
Speaker 1: the target saw the same thing we saw and ultimately
55:01
Speaker 1: signed up our deal and kept with it, and that
55:03
Speaker 1: deal did close eventually successfully. So boards have to weigh
55:07
Speaker 1: this tension between certainty of getting to the closing verse
55:11
Speaker 1: up from purchase price, and again we deal with that
55:13
Speaker 1: on both sides. You reference regulatory risk. Everybody on the
55:18
Speaker 1: street has been complaining about changes from Dodd Frank and
55:21
Speaker 1: how regulations have impacted. It sounds like, at least in
55:25
Speaker 1: the examples you're giving, this is really just another factor
55:29
Speaker 1: in the giant calculus calculus of will the deal get done?
55:33
Speaker 1: What does this mean for this bid and this bidder
55:36
Speaker 1: versus someone else? What's been the impact of these regulatory
55:41
Speaker 1: changes post crisis on I, P, O, S and M
55:44
Speaker 1: and A S. I know that we had some loosening
55:47
Speaker 1: in the Jobs Act, at least in terms of crowdsourcing
55:50
Speaker 1: and other things. How have the regulatory changes impacted um A,
55:56
Speaker 1: the odds of getting a deal done or an IPO done,
56:00
Speaker 1: and be the desire of people to either go public
56:03
Speaker 1: or stay private quickly on the on the M and
56:06
Speaker 1: A side, Just to continue the theme of the analysis
56:09
Speaker 1: that goes into that is as deep and including many
56:14
Speaker 1: outside experts and lawyers up front. Before you make that announcement,
56:19
Speaker 1: you have done your homework and assessed as best you can,
56:22
Speaker 1: even though it's imperfect the odds of success. So certainly
56:25
Speaker 1: compared to five plus years ago, companies when they announced
56:29
Speaker 1: a deal today have done much more work with outside experts,
56:33
Speaker 1: evaluating the regulatory risk, what things may need to be divested,
56:37
Speaker 1: if they had to agree to get a deal done,
56:39
Speaker 1: what's the impact. So then we're announcing the deals, they're
56:42
Speaker 1: certainly smarter, but there are still, as we've seen a
56:45
Speaker 1: great deal of uncertainty and risk that goes into it.
56:48
Speaker 1: And there's then that debate is it worth it is
56:51
Speaker 1: if I'm the seller, is the price high enough for
56:53
Speaker 1: my shareholders that if this unwinds twelve months from now
56:57
Speaker 1: or eighteen months, and the ripple effect, which is only
57:00
Speaker 1: negative of having a failed deal. You know, how can
57:03
Speaker 1: I manage that and how can I plan for that
57:05
Speaker 1: contingency with my employee base to keep them retained and
57:08
Speaker 1: keep them around in case that event happens. All that
57:11
Speaker 1: is much more thoughtfully considered in today's market than certainly
57:15
Speaker 1: five That's quite fascinating. What are you see on the
57:19
Speaker 1: I p O side? So very you mentioned the Jobs Act,
57:21
Speaker 1: which I think has been a very helpful and productive
57:24
Speaker 1: new regulation that has allowed companies who are considering a
57:28
Speaker 1: U S I p O to be able to test
57:30
Speaker 1: the waters a little bit and get some feedback from investors,
57:33
Speaker 1: which historically had been prevented until a red herring was filed.
57:37
Speaker 1: And by that point, you're putting a price range on
57:39
Speaker 1: the cover, and you right, you're having to make a
57:42
Speaker 1: lot of decisions without perfect information. And while investors are
57:46
Speaker 1: never going to provide you perfect information, the environment is
57:49
Speaker 1: is definitely more constructive from that perspective, and that is
57:52
Speaker 1: more reflective of actually the global capital markets, is that
57:55
Speaker 1: overseas in Europe and Asia, there's a much more accommodative
58:00
Speaker 1: There historically have been a much more accommodative environment as
58:03
Speaker 1: it related to pre marketing deals, educating investors, and soliciting
58:07
Speaker 1: feedback around what price the market might bear. So I
58:12
Speaker 1: know I only have you for a finite amount of time.
58:14
Speaker 1: You guys both have busy jobs. So let me jump
58:17
Speaker 1: into some of my favorite standard podcast questions. I asked
58:22
Speaker 1: all my guests, UM, you we talked about your your
58:26
Speaker 1: back educational backgrounds and how they led to the financial
58:29
Speaker 1: services industry. Let's let's talk about mentors who have you
58:33
Speaker 1: each worked with in the past that have mentored your
58:36
Speaker 1: career along well. I've I've always had wonderful bosses at
58:40
Speaker 1: JP Morgan over the years, and I think there isn't
58:44
Speaker 1: one of us who isn't very inspired by our leader,
58:47
Speaker 1: Jamie Diamond, both as someone to work with and to
58:49
Speaker 1: learn from. That our late vice chairman Jimmy Lee was
58:52
Speaker 1: one of my big mentors and sponsors more recently in
58:56
Speaker 1: my career, and I've also been inspired, i would say mentor,
59:00
Speaker 1: but inspired by other business leaders like a Warren Buffett
59:04
Speaker 1: for example. Um. And then you know, going back early
59:07
Speaker 1: to growing up, I think my parents mentored me about
59:09
Speaker 1: the value of hard work and the desired who try
59:14
Speaker 1: to get your own seat at the table. That sounds
59:17
Speaker 1: pretty reasonable, Chris, how about you who are mentors in
59:19
Speaker 1: your career? Very similar echo Lizzes comments. But for me,
59:23
Speaker 1: because I went through a career transition and was effectively
59:26
Speaker 1: a mobility candidate from a computer programming job into a
59:30
Speaker 1: banking job getting my MBA at night while working, I
59:34
Speaker 1: needed to have and luckily did have extremely understanding managers
59:37
Speaker 1: at the time that were willing to invest in me
59:41
Speaker 1: allow me to do that transition, you know, go from
59:44
Speaker 1: point A to point B to point C. So again,
59:46
Speaker 1: early on in my career have always had terrific managers
59:49
Speaker 1: who kind of were thinking about the long term career path.
59:53
Speaker 1: And at JP Morgan again, I've been surrounded by those
59:55
Speaker 1: folks really throughout my give names who who who moved
59:58
Speaker 1: your career forward. So i'd that first phase when I
1:00:01
Speaker 1: when I moved from uh, the computer programming job into
1:00:06
Speaker 1: an intermediate step that was directly with the bankers. Donald
1:00:08
Speaker 1: Larson was a was a terrific manager of mine, and
1:00:12
Speaker 1: she also was getting her m b A at n
1:00:16
Speaker 1: y U and understood that process and the rigor of
1:00:19
Speaker 1: balancing your day job while getting her MBA at night.
1:00:22
Speaker 1: So when we had that discussion and raised it, she
1:00:25
Speaker 1: was a big fan and supporter of yes, you can
1:00:26
Speaker 1: do it. Yes, I'll help you do it. I'll give you,
1:00:29
Speaker 1: you know, all the support you need. Um. Then, when
1:00:32
Speaker 1: I transitioned from you know, that part of my career
1:00:35
Speaker 1: into the M and A group, there were two folks
1:00:38
Speaker 1: that I always think about when I was again a
1:00:40
Speaker 1: young associate now finally transferred, you know, as an investment
1:00:44
Speaker 1: banker sitting in the M and A group, The one
1:00:47
Speaker 1: that taught me the most about M and A skills
1:00:50
Speaker 1: and what does it mean to be a world class
1:00:52
Speaker 1: M and A banker and valus was Jimmy Elliott, who's
1:00:54
Speaker 1: getting a long time ahead of our head of our
1:00:56
Speaker 1: group now retired, but his rigor around the analytics and
1:01:02
Speaker 1: the skill set and almost the science part of the job,
1:01:06
Speaker 1: as well as being able to express a point of
1:01:08
Speaker 1: view in a clear kind of bold way, you know,
1:01:11
Speaker 1: those things are always kind of resonate with me. And
1:01:14
Speaker 1: then the first client banker I ever worked with, Henry
1:01:16
Speaker 1: harnisch Feger, who's still at JP Morgan today covering our
1:01:20
Speaker 1: our metals business and clients globally, taught me everything, how
1:01:24
Speaker 1: to be a great client executive and a salesperson, how
1:01:27
Speaker 1: to how to deliver and create great advice to a
1:01:31
Speaker 1: CEO or a board, how to build rapport, how to
1:01:33
Speaker 1: create that chemistry naturally, and just watching him from a
1:01:36
Speaker 1: young age, just very naturally build trust with a client
1:01:41
Speaker 1: you know, and how to establish world class relationships. You know,
1:01:43
Speaker 1: still sticks with me today and Chris and I still
1:01:45
Speaker 1: have the same boss, Carlos Hernandez, who runs our global
1:01:48
Speaker 1: investment banking franchise, who's had a background both in markets
1:01:52
Speaker 1: and on the advisory side, and it is great fun
1:01:55
Speaker 1: to work with and has mentored many of us for years,
1:01:58
Speaker 1: and he has a style as imagined. Liz and I
1:02:00
Speaker 1: are part of Carlos's management team and really has brought
1:02:04
Speaker 1: you know, the hallmarker JP morgan is and culture and
1:02:07
Speaker 1: conduct and teamwork and partnership and the ability of all
1:02:10
Speaker 1: of us to sit around a table, share ideas, best practices,
1:02:13
Speaker 1: work together as one cohesive team under his leadership has
1:02:16
Speaker 1: been really phenomenal last couple of years. But Liz, you
1:02:19
Speaker 1: mentioned one Buffett any other investors stand out as as
1:02:23
Speaker 1: having influenced the way you think about underwriting. I P. O.
1:02:27
Speaker 1: S and and other things. Well, I think of my
1:02:30
Speaker 1: mentorship by investors is is really fluid and organic. I'm
1:02:34
Speaker 1: meeting with different investors across the globe every week, and
1:02:38
Speaker 1: it's interesting to see their perspectives as they manage through
1:02:42
Speaker 1: sometimes turbulent times. So I wouldn't I wouldn't want to
1:02:45
Speaker 1: favor any one or the other, but it's it's it's
1:02:48
Speaker 1: so critically important for me to be able to be
1:02:50
Speaker 1: in close touch with that community and seeing really the
1:02:53
Speaker 1: struggles and the successes that they have, learning why they
1:02:57
Speaker 1: have more cash in reserve at a particular time. I'm
1:03:00
Speaker 1: and thinking about what deals really made money for them,
1:03:03
Speaker 1: what deals did they find very challenged um and just
1:03:07
Speaker 1: finding better ways to deliver good quality product to that community.
1:03:11
Speaker 1: And let's talk about books. This seems to be the
1:03:14
Speaker 1: section that segment that everybody is so enthralled with. What
1:03:19
Speaker 1: are some of your favorite books, be they fiction or nonfiction,
1:03:22
Speaker 1: investing related or or rodorant general interest. Well, I don't
1:03:28
Speaker 1: know if these are my favorite books, but I can
1:03:29
Speaker 1: tell you what I'm reading right now. So I've been
1:03:32
Speaker 1: interested lately in just thinking about a little bit in
1:03:35
Speaker 1: the neuroscience topic. So have two books going that sort
1:03:38
Speaker 1: of loosely relate to that. One is actually written by
1:03:41
Speaker 1: a neuroscientist, UM Francis Jensen, about the teenage brain. So
1:03:45
Speaker 1: I have kids that are growing up and thinking about
1:03:48
Speaker 1: how do their thought processes evolve as they mature as
1:03:51
Speaker 1: human beings, And there's a lot more to learn about
1:03:53
Speaker 1: that today, um than there used to be. Is that?
1:03:56
Speaker 1: Is that what that's called teenage the teenage brain, the
1:03:59
Speaker 1: teenage brain, and and there's a long subtitle to it,
1:04:02
Speaker 1: but it's been interesting to read. And then am I
1:04:05
Speaker 1: correct in saying My wife is a teacher and says
1:04:08
Speaker 1: they're not done cooking yet, Not not at eighteen, not
1:04:11
Speaker 1: at college. I think it's something like twenty three or
1:04:13
Speaker 1: twenty five. The brain is still evolving, It's for sure
1:04:16
Speaker 1: at eighteen it's not done. So I would say that
1:04:19
Speaker 1: it's it sounds like they're even some data that would
1:04:24
Speaker 1: indicate even up to the age of thirty there will
1:04:26
Speaker 1: be still changes that are evolving. And also that the
1:04:29
Speaker 1: brain changes with life experiences, which I hadn't reflected on
1:04:33
Speaker 1: a lot previously. And then I'm just reading a book
1:04:35
Speaker 1: called The Art of Critical Thinking, UM, which is really
1:04:38
Speaker 1: about refining your decision making and thinking about how not
1:04:41
Speaker 1: to fall into the traps of human nature. Who's the
1:04:45
Speaker 1: author of that, Ralph de Belly, Ralph de Belly. And
1:04:49
Speaker 1: then for fun, I'm reading a crime novel by Peter
1:04:52
Speaker 1: Spiegelman called Doctor Knox that I'm just starting to get into.
1:04:56
Speaker 1: How about you, Chris Giving some books, say some some
1:04:58
Speaker 1: of my favorite readings were from Malcolm Cladwell. His approach
1:05:02
Speaker 1: to the analytical party appeals maybe my engineering background or
1:05:06
Speaker 1: analytical thinking, but the way he looks at a situation
1:05:09
Speaker 1: and then analyze it either an Outliers or David Goliath
1:05:12
Speaker 1: or Blink of these other books. I've always enjoyed that
1:05:15
Speaker 1: style of thinking of a topic and then attacking it
1:05:19
Speaker 1: from a couple of different areas, different stories. So again,
1:05:21
Speaker 1: he's one I generally keep an eye out when something
1:05:24
Speaker 1: new comes out from him or some of his talks
1:05:26
Speaker 1: that he's done listen to. I I it's okay. I say.
1:05:29
Speaker 1: My wife's a young adult teen author, so I read
1:05:32
Speaker 1: a lot of her work, and she's got her second
1:05:35
Speaker 1: novels coming out in about two weeks. So I enjoyed
1:05:38
Speaker 1: reading her work as is progressing, and then once it's
1:05:40
Speaker 1: finally ready to go and publish. So she's got a book.
1:05:43
Speaker 1: Um uh Sky Pony Press the publisher. It's Black Flowers,
1:05:46
Speaker 1: White Lies that's coming out now, and that's that's been
1:05:48
Speaker 1: a real fun part, uh to be part of that
1:05:51
Speaker 1: support network with her and be her biggest fan. And
1:05:54
Speaker 1: we have two teenagers, so they're her toughest critics. So
1:05:56
Speaker 1: once it passed my son and my daughter's test, she
1:05:59
Speaker 1: knows it's it's ready for prime time out there. So
1:06:01
Speaker 1: again that's where I spend most of my time, you know,
1:06:03
Speaker 1: reading Who knew Chris was a book editor on the weekends.
1:06:06
Speaker 1: You go. Um, So let's talk a little bit about
1:06:09
Speaker 1: what's changed since you joined the industry. What what have
1:06:12
Speaker 1: you seen over the arc of twenty plus years that's
1:06:16
Speaker 1: significantly different today than than when you began your careers.
1:06:21
Speaker 1: I'd say one thing on our front and the equity
1:06:23
Speaker 1: capital markets is that I p O and other equity
1:06:27
Speaker 1: road shows are substantially shorter, So we get a lot
1:06:30
Speaker 1: more deals done for clients in any given year. Shorter
1:06:33
Speaker 1: in terms of start to finish your shorter in terms
1:06:36
Speaker 1: of when the announcement is made to the point where
1:06:40
Speaker 1: you actually complete the road show. Is it the actual
1:06:43
Speaker 1: event itself or the whole process. We're both. I was
1:06:46
Speaker 1: thinking specifically about how many days a management team needs
1:06:49
Speaker 1: to spend on the road, and these are extremely grueling
1:06:52
Speaker 1: processes where they are out pitching investors repeatedly, multiple times
1:06:58
Speaker 1: a day, with little breaks, and we try to make
1:07:00
Speaker 1: sure they at least get to eat um. So if
1:07:02
Speaker 1: you think about an I p O. When I first
1:07:04
Speaker 1: started in equity capital markets in the late nineties, we
1:07:07
Speaker 1: were regularly on the road for three weeks, two to
1:07:11
Speaker 1: three weeks, three weeks if it was a global deal,
1:07:13
Speaker 1: and now many of our deals that are let's say
1:07:16
Speaker 1: US centric in their approach, would be as little as
1:07:19
Speaker 1: seven days. How much of that is due to technology
1:07:22
Speaker 1: that you don't physically have to be in the room, right,
1:07:24
Speaker 1: So a lot, And I would say technology is probably
1:07:26
Speaker 1: the other theme that's changed, And the related theme that's
1:07:29
Speaker 1: changed our business is our ability to reach more investors
1:07:32
Speaker 1: is just substantially greater, and I think it's just better
1:07:36
Speaker 1: and fairer that more people have access to information, and
1:07:40
Speaker 1: that's definitely helped ease the burden on management teams as well,
1:07:43
Speaker 1: because we don't want to take them away from their
1:07:45
Speaker 1: day jobs for too long because that's bad for the company.
1:07:48
Speaker 1: So UM, and it's also having shorter road shows. You
1:07:51
Speaker 1: think of a traditional follow on. Back in the late nineties,
1:07:54
Speaker 1: we would have marketed for five days, let's say, so
1:07:56
Speaker 1: public company raising additional equity. So there they were out
1:07:59
Speaker 1: there for five days of market exposure, and we could
1:08:02
Speaker 1: never predict exactly what the market was going to do
1:08:04
Speaker 1: or what their stock price was going to do while
1:08:06
Speaker 1: we were out there. So now UM, in some certain
1:08:10
Speaker 1: certain circumstances, we can price a deal overnight, so announce
1:08:13
Speaker 1: that the close of the US market and price it
1:08:16
Speaker 1: sometimes that night or certainly by the time the market
1:08:19
Speaker 1: opens the next morning. That's substantially different than the old
1:08:22
Speaker 1: substantially different, and there's some in between obviously today as well, Chris,
1:08:25
Speaker 1: do you see is M and A the same thing,
1:08:28
Speaker 1: or is the process you're selling a company or buying
1:08:31
Speaker 1: a company is the same as it was twenty years ago.
1:08:33
Speaker 1: There's a certain element that is the same when you're
1:08:36
Speaker 1: when you're selling a company, it takes time to prepare,
1:08:38
Speaker 1: to think about the materials, contacting buyers, getting them the
1:08:42
Speaker 1: sign confidentiality agreements. That that part of the process looks
1:08:45
Speaker 1: and feels very similar in ten or twenty years ago.
1:08:48
Speaker 1: What's very different is just the speed of information flow,
1:08:51
Speaker 1: the ability to work remotely. Very often we have to
1:08:54
Speaker 1: develop these valuation models, or suddenly someone sends in a
1:08:58
Speaker 1: letter with a price in it, and in the older days,
1:09:00
Speaker 1: it may take a week or so to analyze that
1:09:03
Speaker 1: and value the company and think about who the other
1:09:05
Speaker 1: person is. And now effectively seven remotely you can log
1:09:10
Speaker 1: in get that information. Valuation could be updated very quickly.
1:09:14
Speaker 1: It's much more real time. Where if we get, for example,
1:09:17
Speaker 1: a hostile offer bid comes in, so an unsolicited bid
1:09:20
Speaker 1: where that company we've received it, we're working with that
1:09:23
Speaker 1: target company, we very quickly can get on the phone
1:09:27
Speaker 1: with the board, usually within twenty four hours, and be
1:09:29
Speaker 1: very thoughtful, here's the value of that bid, here's who
1:09:32
Speaker 1: the bid or is. Here's the value of our own company,
1:09:34
Speaker 1: Here's how it compares, and do all that analytical work
1:09:38
Speaker 1: extremely fast, again remotely wherever that happens, whenever, time of day, boom,
1:09:43
Speaker 1: we're on it. You know, five seconds later we're working
1:09:45
Speaker 1: because we know what that product needs to look like
1:09:47
Speaker 1: to give the board the best advice and the best input.
1:09:50
Speaker 1: So I think access to information, speed of information, quality
1:09:53
Speaker 1: of information, the ability to work remotely around the globe
1:09:57
Speaker 1: seven has just made our business fast and more thoughtful,
1:10:01
Speaker 1: and the types of discussions we have are just based
1:10:04
Speaker 1: on deeper amounts of analysis and information in a much
1:10:07
Speaker 1: short time series. So the thought of bankers working nights
1:10:10
Speaker 1: and weekends in the city in the summer when just
1:10:13
Speaker 1: picture of August weekend and the city is empty, is
1:10:19
Speaker 1: that not as true as it once was. You can
1:10:22
Speaker 1: log in from a laptop in the Hampton's and not
1:10:24
Speaker 1: have to be in Manhattan, or is it all hands
1:10:27
Speaker 1: on deck? There's certainly in the M and A business
1:10:30
Speaker 1: there's a greater and greater ability for the analytical work
1:10:35
Speaker 1: to be done remotely, but there's still no substitute, and
1:10:39
Speaker 1: there is still no substitute for just sitting across face
1:10:42
Speaker 1: to face with your client talking through the issues, or
1:10:44
Speaker 1: in front of their board in the boardroom, face to face.
1:10:47
Speaker 1: So there is still the importance of having that human
1:10:50
Speaker 1: interaction together talking through the issues, but the preparation for that,
1:10:56
Speaker 1: generally the valuation work, the analytics the analysis could have
1:11:00
Speaker 1: up and remotely do not need to be sitting at
1:11:02
Speaker 1: an office or a cubicle. The technology we have and
1:11:06
Speaker 1: our our teams have access to is terrific for them
1:11:09
Speaker 1: to do that in real time and very seamlessly. So
1:11:12
Speaker 1: so let's extrapolate all this forward. Those are the changes
1:11:15
Speaker 1: that took place. What are the next shifts that are
1:11:18
Speaker 1: going to happen? Well, I think we continue to think
1:11:23
Speaker 1: about how to leverage technology so that we can get
1:11:27
Speaker 1: more done. Right so that if I can work on
1:11:29
Speaker 1: an I p O or a big equity raise while
1:11:32
Speaker 1: I'm traveling the world, that means we can get more
1:11:34
Speaker 1: done in a day. So I think that theme will
1:11:36
Speaker 1: continue as we go into future years. But we're also
1:11:40
Speaker 1: thinking about ways that we can leverage technology, things like
1:11:45
Speaker 1: artificial intelligence, and ways that we can use technology to
1:11:49
Speaker 1: analyze and be predictive around deals um and to help
1:11:52
Speaker 1: clients think about extrapolating um what might happen for them.
1:11:56
Speaker 1: So there are it's almost it almost could be a
1:11:59
Speaker 1: full time job just thinking about how we could leverage
1:12:02
Speaker 1: technology to help issue our clients, or get more done
1:12:05
Speaker 1: on our side, or be more um thoughtful and creative
1:12:08
Speaker 1: around future situations that might happen. But but tech is
1:12:12
Speaker 1: the big change that that's been driving things in the past,
1:12:15
Speaker 1: and it sounds like it's going to continue to drive
1:12:18
Speaker 1: things in the future. I would agree, Chris. I do
1:12:21
Speaker 1: think there's there's an element of big data or analytics
1:12:25
Speaker 1: that could be very helpful, and it is becoming more
1:12:27
Speaker 1: helpful for our business in terms of targeting. You know,
1:12:29
Speaker 1: we have a finite number of bankers or resources and
1:12:32
Speaker 1: a much larger list of potential clients, and the ability
1:12:35
Speaker 1: to to think about and analyze who may need our
1:12:38
Speaker 1: help the most, who may be vulnerable to a sher
1:12:41
Speaker 1: old activists showing up in their stock, who may be
1:12:43
Speaker 1: vulnerable to a hostile takeover, who looks like they're struggling
1:12:47
Speaker 1: on a competitive basis, and where maybe a division or
1:12:51
Speaker 1: or an acquisition or divestit or may make sense. And
1:12:55
Speaker 1: given the vast amount of information out there, to have
1:12:57
Speaker 1: thoughtful people combed through that data, uh using technology and
1:13:01
Speaker 1: surface up a list of priority clients, really prospects or
1:13:05
Speaker 1: potential clients folks we may not have a relationship with,
1:13:08
Speaker 1: or if we do have a relationship with them, to
1:13:09
Speaker 1: flag that Hey, if you haven't had a conversation on
1:13:12
Speaker 1: this topic, you know, our our screening methods say you should.
1:13:16
Speaker 1: And that's great in terms of ensuring everything we're working
1:13:19
Speaker 1: on and everything our teams working on is of its
1:13:21
Speaker 1: highest and best use. So high quality, high yield, meaning
1:13:25
Speaker 1: in terms of where we're spending our hours, they're valuable
1:13:28
Speaker 1: hours our clients want us to be talking to about
1:13:30
Speaker 1: that topic. So a more predictive element to the business.
1:13:34
Speaker 1: I think we're feeling that happening today and I think
1:13:36
Speaker 1: it will continue for So I asked the same eight
1:13:40
Speaker 1: or nine questions to everybody each week, and one day
1:13:43
Speaker 1: a reader's a listener sent an email and said, you know,
1:13:47
Speaker 1: I'd love to find out from your guests what they
1:13:50
Speaker 1: do outside of the office to relax, what they do
1:13:52
Speaker 1: to keep mentally sharp, and how do they stay physically fit.
1:13:56
Speaker 1: I thought that was that. That's the short version. The
1:14:00
Speaker 1: preface was, Hey, all these folks have really stressful jobs,
1:14:05
Speaker 1: really demanding jobs. How do they how do they wind down?
1:14:11
Speaker 1: How do they relax? So let me ask you both.
1:14:14
Speaker 1: This will be the first time this question has worked
1:14:17
Speaker 1: its way into the regular podcast questions. So, so, what
1:14:20
Speaker 1: do you do to kick back on the weekends when
1:14:23
Speaker 1: you're not in the middle of an underwriting or an acquisition.
1:14:26
Speaker 1: I guess a couple of topics. Again with with kids,
1:14:29
Speaker 1: my weekends generally have been great to to help them
1:14:34
Speaker 1: and watch them with sports and just play around the
1:14:36
Speaker 1: backyard or go their games. So that certainly has been
1:14:39
Speaker 1: a fun time to spend, you know, outside of work,
1:14:42
Speaker 1: focused on them and interacting with them. I played football
1:14:45
Speaker 1: at high school at college and always enjoyed weight lifting
1:14:48
Speaker 1: and trading, and every now and then my basement will
1:14:52
Speaker 1: have me pop into it and and and do a
1:14:54
Speaker 1: little bit of that as well. Again just as a
1:14:57
Speaker 1: good way to half hour an hour just go down
1:14:59
Speaker 1: there and sercize in in that format. I am not
1:15:02
Speaker 1: a very good golfer, but I love to play so
1:15:04
Speaker 1: well I may not be able to get out there
1:15:06
Speaker 1: and play a full round of golf, I'll go to
1:15:08
Speaker 1: the driving range for an hour and just you know,
1:15:10
Speaker 1: there's nothing like trying to hit that little white ball
1:15:12
Speaker 1: to make sure you can't think about anything else. Um.
1:15:15
Speaker 1: So I find that therapeutic at times. So those are
1:15:17
Speaker 1: a few things that I do just uh, spend some
1:15:20
Speaker 1: time about you, Liz, when you're not chasing um your
1:15:23
Speaker 1: kids around as well, right, I think, similarly similarly to Chris,
1:15:27
Speaker 1: being with my family is the great reward. And I
1:15:29
Speaker 1: have a fantastic husband and two incredible children who keep
1:15:33
Speaker 1: me very active on the weekends as well. And now
1:15:35
Speaker 1: everybody's old enough that we can actually play a few
1:15:37
Speaker 1: rounds of golf together, play doubles tennis, which is a
1:15:40
Speaker 1: little erratic but really fun, and so that's that's been great.
1:15:44
Speaker 1: And having that time, I think really helps me put
1:15:47
Speaker 1: things in perspective and and hopefully I do that for
1:15:50
Speaker 1: my husband, two's in the financial world, has a crazy
1:15:52
Speaker 1: intense job as well. Um. And then I think on
1:15:55
Speaker 1: the exercise front, I love yoga and pilates and starting
1:15:58
Speaker 1: to learn more about out or starting just scratching the
1:16:01
Speaker 1: service of learning more about meditation, and just thinking about
1:16:04
Speaker 1: I've just been inspired hearing about how so many successful
1:16:07
Speaker 1: business people have used it to hone their own performance.
1:16:12
Speaker 1: Both both interesting uh answers. Let let me go to
1:16:15
Speaker 1: my favorite two questions. Um, this comes up a lot
1:16:19
Speaker 1: from from listeners. So a millennial or recent college graduate
1:16:24
Speaker 1: comes up to you and and says they're thinking about
1:16:27
Speaker 1: a career in finance. What sort of advice would you
1:16:30
Speaker 1: give them? Well, I think, firstly, be prepared to work
1:16:35
Speaker 1: hard right anything that you want to be successful in
1:16:37
Speaker 1: you need to work hard and commit to and I
1:16:40
Speaker 1: think as we talk a lot about millennials and the
1:16:42
Speaker 1: different perspectives that evolves as each generation comes through the ranks,
1:16:47
Speaker 1: and I certainly think one bit of advice would be
1:16:50
Speaker 1: to not forget about the value of consistency in your
1:16:54
Speaker 1: job and end the and the ability to develop subject
1:16:58
Speaker 1: matter expertise that doesn't come necessarily from jumping to a
1:17:01
Speaker 1: new job every two years, even if your friends are
1:17:04
Speaker 1: doing that and you feel like you might be missing
1:17:05
Speaker 1: something is to buckle down and get really good at
1:17:08
Speaker 1: what you're learning. And my limits test was always, when
1:17:12
Speaker 1: I go to work every day, am I happy to
1:17:14
Speaker 1: be going and am I learning and growing as a
1:17:16
Speaker 1: professional and as a person. And if the answers were yes,
1:17:20
Speaker 1: keep at it. And that strategy has worked really well
1:17:23
Speaker 1: for me. And so that's why we continue to think
1:17:25
Speaker 1: about ways to make sure that our junior employees are
1:17:28
Speaker 1: getting the experiences and also some of the other broader
1:17:32
Speaker 1: benefits of working for a large organization that they're seeing
1:17:34
Speaker 1: that very clearly every day and getting that opportunity to
1:17:37
Speaker 1: really advance themselves through multiple years working with JP Morgan
1:17:42
Speaker 1: and I know Chris and I really enjoy so training
1:17:44
Speaker 1: that next junior banker coming up the ranks. How about you, Chris,
1:17:48
Speaker 1: what what? What sort of advice would you give a millennial?
1:17:51
Speaker 1: Very similar? Once you're you're inner job, and maybe if
1:17:54
Speaker 1: you can do with some internship or talk to folks
1:17:56
Speaker 1: to understand it before you get in it. But let's
1:17:58
Speaker 1: assume you've decided this is the job I want and
1:18:00
Speaker 1: I'm in that. Just master that job before you start
1:18:03
Speaker 1: to look up at the next one and the next
1:18:05
Speaker 1: one and the next one. It's almost a similar way
1:18:07
Speaker 1: of saying what what Liz was just saying in terms
1:18:10
Speaker 1: of invest in being great at the task at hand.
1:18:12
Speaker 1: So what is your job description? What are people expecting
1:18:15
Speaker 1: of you? Master that quicker, faster, smarter um then lift
1:18:19
Speaker 1: your head up and look at what the people more
1:18:20
Speaker 1: senior than you were doing and saying, hey, how can
1:18:22
Speaker 1: I how can I help you? How can I take
1:18:24
Speaker 1: some things off of your plate? How can I expand
1:18:26
Speaker 1: my responsibilities? Where I've seen people fail is they start
1:18:29
Speaker 1: doing the second part before they've mastered the first part,
1:18:32
Speaker 1: so they're already looking at the next job, the next
1:18:34
Speaker 1: you know, path in their career, and they haven't quite
1:18:37
Speaker 1: mastered the first part, and they're disappointing the people that
1:18:40
Speaker 1: are directly relying on them because they're off thinking of
1:18:43
Speaker 1: step three and four and they haven't really finished step
1:18:45
Speaker 1: one or two yet. And that basic advice, I do
1:18:48
Speaker 1: think goes a long way. It's very consistent about just
1:18:51
Speaker 1: just focus on what you're doing, do that really well,
1:18:53
Speaker 1: then lift your head up and go on to the
1:18:55
Speaker 1: next thing and the next thing. Um And I always
1:18:57
Speaker 1: have this kind of three criteria when I'm when I'm
1:18:59
Speaker 1: talking to someone. I used this myself throughout my career.
1:19:01
Speaker 1: Are you learning new skills? So? Are you in a
1:19:04
Speaker 1: job where you're just developing your own talent these skills?
1:19:07
Speaker 1: And are they marketable skills? Are they reusable? Can you
1:19:10
Speaker 1: use it within your job and beyond or even beyond
1:19:12
Speaker 1: the current job so you never feel trapped? So you're
1:19:15
Speaker 1: learning new skills? Can you check that box yes or no?
1:19:17
Speaker 1: Do you like the people you're working with? Do we
1:19:19
Speaker 1: enjoy going to work? Do you enjoy the team you're
1:19:23
Speaker 1: part of? And then the third are you at a
1:19:26
Speaker 1: firm you're proud of? You know? Are they heading in
1:19:28
Speaker 1: the right directory? Do you like telling your friends or
1:19:30
Speaker 1: family where you work, and and just if you're able
1:19:32
Speaker 1: to check those three boxes and then ask yourself that
1:19:34
Speaker 1: everyone has a different frequency of this, But every three
1:19:37
Speaker 1: months or every six months, go back and I learning
1:19:39
Speaker 1: new skills. Do I like the people I'm with? Do
1:19:41
Speaker 1: I do? I feel proud about the company? And for me,
1:19:43
Speaker 1: I've done that throughout my whole career JP Morrigan and
1:19:46
Speaker 1: have consistently been able to check those through box internal
1:19:48
Speaker 1: self review exactly and be honest about it with yourself
1:19:52
Speaker 1: and and to extent you're you're not checking all those boxes,
1:19:55
Speaker 1: I think it's you know, then you think hard about it,
1:19:58
Speaker 1: but again, you know, Luckily, for for me, I've been
1:20:01
Speaker 1: able to check those boxes. I think that third one
1:20:03
Speaker 1: about the firm is sometimes outside of your control and
1:20:05
Speaker 1: you maybe get a little lucky. You know. When I joined,
1:20:08
Speaker 1: you know, I didn't know JP Morgan would evolve and
1:20:10
Speaker 1: continue to be, you know as it seems. So it
1:20:13
Speaker 1: seems the company you work for. You have to not
1:20:17
Speaker 1: only work for a good company with a good culture.
1:20:19
Speaker 1: You have to hope that you get a little lucky,
1:20:21
Speaker 1: and things don't this week especially, I won't mention any names,
1:20:24
Speaker 1: but there has been some folks testifying in Congress and
1:20:29
Speaker 1: from a variety of fields, not just finance, and they
1:20:31
Speaker 1: all um seem to have tripped themselves up a little bit.
1:20:36
Speaker 1: And if if you're a junior guy in a in
1:20:38
Speaker 1: a big company that's wholly out of out of your control,
1:20:43
Speaker 1: it never hurts to get a little lucky, does it.
1:20:45
Speaker 1: So my final question with with that little uh digression,
1:20:51
Speaker 1: you know, we don't have the TV on in the office,
1:20:54
Speaker 1: but every time I'm here, there are screens everywhere, and
1:20:57
Speaker 1: it seems the past few times I've been in the
1:21:00
Speaker 1: Bloomberg building, it's been congressional testimony all day long. So
1:21:04
Speaker 1: you just say, gee, I hope I never have to
1:21:06
Speaker 1: deal with that. That looks like that's no no fun. Um.
1:21:10
Speaker 1: So our final question, and and one of my favorite,
1:21:13
Speaker 1: what is it that you know about your field? About underwriting?
1:21:17
Speaker 1: An I p O is about mergers and acquisitions today?
1:21:21
Speaker 1: What is it that you know today that you wish
1:21:23
Speaker 1: you knew twenty plus years ago when you began let's
1:21:27
Speaker 1: start with you list, I'd say that everything you do
1:21:32
Speaker 1: when you work at a big company like JP Morgan
1:21:35
Speaker 1: can actually shape the market. And I think I didn't
1:21:38
Speaker 1: really appreciate that early on in my career that some
1:21:41
Speaker 1: of the things that we were doing back then is
1:21:43
Speaker 1: we were building our equity capital markets franchise. Way back
1:21:46
Speaker 1: when is we were defining the market. And so that's
1:21:49
Speaker 1: a really exciting thing to think about. And sometimes I
1:21:51
Speaker 1: have to remind our group, is these deals that you're
1:21:54
Speaker 1: working on, they are shaping what's going on in the
1:21:57
Speaker 1: financial world. That's why they're on the cover of the
1:22:00
Speaker 1: newspaper and being discussed on Bloomberg on TV. So it's um,
1:22:05
Speaker 1: we're an incredibly Chris and I and our colleagues are
1:22:08
Speaker 1: an incredibly privileged position to be able to use our
1:22:11
Speaker 1: skills too. We believe make change for the better in
1:22:16
Speaker 1: terms of whether it's getting companies money, you're helping them
1:22:18
Speaker 1: progress in their growth trajectory and defining what makes sense
1:22:22
Speaker 1: in terms of connecting buyers and sellers, and and really
1:22:25
Speaker 1: contributing to that market environment. Chris, what is it you
1:22:29
Speaker 1: wish you knew twenty years ago about M and A
1:22:32
Speaker 1: that you know today. That's something that I've kind of
1:22:35
Speaker 1: felt evolve over my career as you realize how small
1:22:38
Speaker 1: the world really is, and certainly when you work at
1:22:40
Speaker 1: at a global company like JP Morgan, and you're involved
1:22:44
Speaker 1: in global deals. The people you're interacting with, even at
1:22:48
Speaker 1: a very young point in your career out of out
1:22:50
Speaker 1: of school, the treasurer assistant at the company, the junior
1:22:57
Speaker 1: lawyer at the law firm, a junior analyst at a
1:23:01
Speaker 1: public relations firm, when you're working with them on a deal,
1:23:05
Speaker 1: you're kind of growing up with them in the business.
1:23:07
Speaker 1: And many of my closest clients today were people who
1:23:11
Speaker 1: were just as junior as me many years ago that
1:23:13
Speaker 1: I've moved up the organization, and it's just as always
1:23:16
Speaker 1: a great reminder that everyone you meet, you know, treat
1:23:20
Speaker 1: with respect, treat in the proper way, you know, do
1:23:24
Speaker 1: the right thing, because it always comes back and and
1:23:26
Speaker 1: and it's a real career booster, you know, as you
1:23:29
Speaker 1: grow up in your business, you know, so that I
1:23:31
Speaker 1: have many examples where the business development person at a
1:23:35
Speaker 1: client or the CFO over time becomes the CEO or
1:23:39
Speaker 1: critical board member, and having that history and positive relationship,
1:23:43
Speaker 1: you know, it really does help our strategic dialogue and
1:23:46
Speaker 1: trust in the types of relationship we're building. So again,
1:23:48
Speaker 1: that's been a good lesson I've watched happen over my
1:23:51
Speaker 1: career and just I always share that with others as
1:23:53
Speaker 1: they think about their early days in their career, to
1:23:55
Speaker 1: make sure everyone they interact with matters for the long term.
1:23:58
Speaker 1: And the corollary to that is your friends can become
1:24:01
Speaker 1: your clients. That's quite interesting. We have been speaking with
1:24:07
Speaker 1: Chris van Tresca. He is the global co head of
1:24:10
Speaker 1: Mergers and Acquisitions at JP Morgan and Elizabeth Myers, head
1:24:15
Speaker 1: of Global Equity Capital Markets, also at JP Morgan. If
1:24:20
Speaker 1: you enjoy this conversation, be sure and look up an
1:24:22
Speaker 1: inch short down an inch on iTunes and you could
1:24:25
Speaker 1: see the other hundred and eight or so of these
1:24:28
Speaker 1: conversations we have had. I would be remiss if I
1:24:32
Speaker 1: did not thank Taylor Riggs, my booker, Michael Batnick for
1:24:36
Speaker 1: helping out on research and is it still Charlie in
1:24:39
Speaker 1: the booth, Charlie Valmer, our recording engineer. I'm Barry Hults.
1:24:44
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio,
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