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Ok this will be my last #TalesFromInvestmentBanking for a while.
1/n In the late 90s I was assigned to help run a financing for a public phase II biotech company. A plum job,as it was one of our banks first "top left" (i.e. lead underwriter/agent) biotech deals, a chance to show our chops.
2/n Up until then, we had a bit of a saying in the investment bank, that "the only thing worse than not winning top left was winning top left", as our bank was run by a couple of a fixed income humps that had no clue how to pull the various divisions of a bank together...
3/n To execute on a deal, you needed investment bankers to get deals and manage relationships, equity sales humps to sell deals, a syndicate desk to interface with other banks and "co-book runners", plus some old white "Office of The Chairman" men to sit around leeching fees..
4/n Without strong leadership at the top to dictate and enforce the entire firm to get behind a deal, execution was a problem. E.g. Equity Sales Guy "fuck you I'm not showing that to my accounts" with no recourse. But I digress.
5/n This particular biotech had some promising data and has raised some prior rounds with a scrappier smaller bank. We convinced them it was time to "move up to the top tier" by letting us lead the deal. But i-bankers are expert whiners with the wounded puppy routine...
6/n so the other (former lead) bank was cut in for a big chunk of the deal as a "co-lead". To the client, this was the best of both worlds. In reality, not so much. More on that.
7/n One of the ways were able to win the deal was touting our "London Office". You can't really call yourself a top i-bank without being able to talk about your "London Office". Clients would be all:
8/n The smaller bank didn't have a "London Office", so our tales of "broadening your institutional shareholder base", and the implied fun of a European boondoggle fell on eager management ears.
9/n The "London Office" was really just a hump that the bank hired from some douchebaggy Swiss bank to sit in an office earning 2M sterling a year base salary with a townhouse in Mayfair provided. The job description was getting on Monday morning firm-wide calls and when...
10/n asked "anything new from London?" just reply "Making some good progress here, establishing lots of relationships" to approving nods from the North American bank execs. They had a London Office, which meant they were running a firm with a London Office. They made it.
11/n So it was my job to take management on the promised "European road show" coordinated by our "London Office". We delegated the setting up of meetings to London. I flew to London with the CEO and CFO and arrived in the London Office around 4:30pm...
12/n Our London Office guy was clearly getting ready to leave. I pulled him aside in his office to talk about the schedule for the following day in London, and to see how mainland Europe was shaping up.
13/n This fucker told me that he had set up a grand total of ZERO meetings. Not one. I think he actually forgot we were coming and when we walked into the office he was all:
14/n At this point it was more about not looking like the clown show we were in front of the clients, and this jackass realized his sweet gig was in jepoardy if he fucked up one of our first "transatlantic road shows" So he started scrambling. He made some calls and we got a
15/n breakfast meeting the next morning. Our London Office clown couldn't even come out for dinner with us as he had "plans" so I took the CEO and CFO out to a pub. At about 7pm the CEO's "cell phone" rings (this was pre-smart phone), which was about 2pm EST.
16/n One of his directors had called and told him that the stonk price was imploding on high volume for no reason. The CEO asks me to find out "what the fuck is going on". So a call our syndicate desk back home "bro, what the fuck, yo!" and he tells me
17/n That he can't prove it but he heard the co-runner on the deal (the one we "beat" with our "London Office" rubbish, but was still going to make a bundle for doing nothing) was calling all the clients from the last deal and telling them to dump their stock...
18/n They were so pissed they wanted to make us look like clowns (didn't need the help on this file, but thanks!), and telling "the accounts" they could just buy in cheaper on the deal and "maybe even get a warrant" etc.
19/n I needed to tell the client something so I tattled. I told him what "chatter" we were hearing. He called the other firm which denied it of course. He then demanded to know (as I inhaled stout) why we weren't "supporting the price" with our own balance sheet.
20/n I couldn't tell him that it was because it would cost about 5X the fee we would make to support the price, so I just told him it would be "illegal market manipulation" for us to interfere with the price by buying it. No idea to this day if that was true...
21/n So we're at our first breakfast meeting with a very sharp lady who was a portfolio manager a a stuffy old British asset manager. Even our London guy showed up. The meeting went very well, and our London guy after the meeting said "wow this is compelling" and suddenly
22/n decided to start doing his job, so made a flurry of last minute phone calls and got us a few more meetings for the day. He then told us there was a guy in Brussels we "had to meet" so we scrambled to City Center airport and flew to Brussels that night for a morning meeting.
23/n The stock price dropped another 20% or so that day but nobody called the CEO and I never mentioned it to them. Our London guy arranged for a car to take us to our meeting "in Brussels" which was really in Ghent, about an hour away...
24/n The Belgian guy told us he loved the story, but "couldn't invest in biotech", so mission accomplished there. I called our London clown "WTF bro!" and he was all "Ok ok I got one more guy you can meet, he does biotech for sure, he's even in Switzerland" TBC in next thread
25/n The CFO starts getting antsy "let's just go home" etc. I convince them we need to fly to Geneva that day to meet with this "major" biotech investor, as we could use "Swiss money" (i-banking is like consulting, you can just pull stuff out of your arse"
26/n So we scramble to the airport and hop on a plane to Geneva. We are scheduled to land about 3pm and be at this investor's office about 4pm. It's only a 1 hour and 20 min flight to Geneva.
27/n So we're in the air heading for Switzerland, and the plain starts veering to the left, pointing to Norway or Finland. A few minutes later the captain comes on and tells us, basically, that the U.S. Air Force was sending a swarm of B-52s to bomb the shit out of Kosovo from
28/n bases in England, and they had to clear the airspace for the B-52s. The captain pointed out you could see the smoke or whatever in the distance from the bombers. Net result is we arrived late in Geneva. I called the number of the Swiss Eurodouche as we got in a car
29/n I get Hans on the line and he tells me he's leaving for the day (it was about 4:30 or so, which is like working until midnight in Geneva). I begged him to stay and give us 30 minutes. He was kind enough to agree. We got to his office and management gave
30/n an abbreviated pitch. The whole time, Hans was glancing at his Patek Philippe with his knee bouncing up and down. We then flew back to North America.
31/n When it came time to "price the deal", the stonk was down about 40% from when we launched, and the order book was close to empty. On the "syndicate call the CFO asked about orders from Europe. I was proud to announce a number of "zero".
32/n The deal eventually got done with some "how much of a discount and how many warrants do you need" calls to the fine folks that smashed the stock into the dirt while I was farting around Europe with management. #TalesFromInvestmentBanking
33/33 oh eventually Phase II failed and the company went under. Good chuckles were had by all.
