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Interview with Jan-Hendrik Röver, Managing Director goetzpartners.
IS IT SMART FOR BUSINESS STUDENTS TO GO INTO INVESTMENT BANKING? I THOUGHT INVESTMENT BANKERS ARE ALMOST A DYING BREED!
Certainly the trading activities of investment banks have been affected negatively by the 2007 financial crisis and its aftermath. This concerns in particular proprietary trading of banks which is now to a large extent prohibited but also the fixed income side of the business. However, the transactional side of investment banking, i.e. the support of M&A transactions, is relevant as ever. In fact, since M&A is a core growth strategy in market economies, M&A support will always be relevant as long as we live in a market economy. Therefore, the M&A business looks to me rock solid with the caveat that it will always be cyclical in parallel to the economic development. What is more, financial analysis qualifies not only for jobs in investment banking but also in the corporate world.
WHAT IS DRIVING THE CURRENT M&A ENVIRONMENT?
Acquiring new or selling existing businesses is necessary for any company of a certain size and thus constantly stimulating M&A activity. However, today there are also some specific drivers. There is a lot of cross-border activity, not to the least the strong desire of Chinese buyers to get access to technology and western customers. Furthermore, there is the need for companies’ transformation which necessitates M&A activity; this transformation is often caused by fundamental changes in a company‘s business environment such as changes in technology. Currently such a transformation is caused by the ongoing digitalisation of business models to which companies have to find an answer.
WHO WILL SURVIVE – BULGE BRACKET INVESTMENT BANKS OR INDEPENDENT M&A ADVISERS, SO-CALLED M&A BOUTIQUES?
Bulge bracket investment banks, i.e. Goldman Sachs and the likes, have a role in multi-billion, cross-border transactions. However, M&A boutiques have been catching up quickly and in particular niche players with a clear market positioning compete now with bulge bracket investments banks. And many of these M&A boutiques have recently become larger and more international, not to the least by merging with other firms. One thing is certai
n: the traditional players are increasingly under attack; they need to attract talent and have to define their strategy. Run-of-the-mill services without a clear USP will not be sufficient in future.
WHAT DO THE ESTABLISHED M&A BOUTIQUES HAVE TO DO TO REMAIN SUCCESSFUL?
I think they need either a focused or a specific business model. There are focused boutiques which concentrate on one sector or just a few sectors. At the same time there are boutiques like goetzpartners which cover several sectors but have developed a specific business model. In the case of goetzpartners it is an integrated business model in which M&A support and management consulting services have found their place. In essence this combines the three C (i.e. executive) level issues under one roof: strategy, M&A and transformation. We feel it is really helpful to bring together the in-depth sector and company understanding of management consulting with the deal expertise and the investor access of an M&A house.
HOW WOULD YOU CHARACTERISE THE BUSINESS MODEL OF M&A BOUTIQUES IN CONTRAST TO BULGE BRACKET INVESTMENT BANKS (APART FROM THE DEAL SIZES WHICH ARE TYPICALLY QUITE DIFFERENT)?
M&A boutiques are not necessarily – like bulge bracket investment banks – hunting for the one „Big Deal“ (think as an example of the recent take-over of Monsanto by Bayer for a total value of USD 66 billion) but rather are continuously screening the market for transaction opportunities of various sizes. They need to be more agile in uncovering deal opportunities. They will also not just concentrate on the largest clients in a market but be less discriminating when choosing their clientele. Furthermore, M&A Boutiques may become involved in client‘s long-term projects. When goetzpartners supported in the transformation of a leading European telecommunications company over a period of two years we also helped selling several of their businesses, e.g. their optical networks business.
WHAT MAKES A GOOD INVESTMENT BANKER IN YOUR OPINION?
One can certainly point to many factors but in my opinion top contacts to clients and investors, deal experience, adaptability, a willingness to come to real results for its client and emotional intelligence are key characteristics of a good investment banker. And it has to be said: your key focus should not be to maximise leisure time.
WHAT IS YOUR RECOMMENDATION FOR PREPARING A CAREER IN M&A?
It is good to have seen M&A first hand in particular by doing an internship with an investment bank or an M&A boutique. goetzpartners is always looking for interns and many of them joined later our team. And if you are looking for an easy to read story about M&A try Brett Cole‘s “M&A Titans – “How the Pioneers of Wall Street‘s Mergers and Acquisitions Industry Shaped the Corporate World“, which was published in 2008. You will find many interesting stories in this book which is also quite entertaining.
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