The Accidental Investment Banker

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naturallight

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Has anyone read The Accidental Investment Banker (which btw is a really terrific book)? I have a question about the author's use of the terminology "buyside".

The author typically worked on the sellside, but he describes a "buyside" project where his role to help secure the financing for a company that wanted to buy Sprint's yellow pages. So he's coordinating between the CEO of the acquirer and Morgan Stanley's HY department to see what kind of terms he can get for the acquirer.

While the author is obviously much more of an expert, I guess I always thought that "buyside" referred more to asset mgmt, like research and port mgmt for a mutual fund, pension plan, or something where you make money based on managing the assets.

But with the transaction above, even though his client is buying the asset, it still seems like the author is working on the sellside, because MS is not managing the assets--rather, MS makes money based on fees for the advice and fees in the financing.

Maybe I misunderstood the whole chapter. Can anyone who's read the book help out? Does "buyside" refer to both asset mgmt and a corp finance role where you help arrange financing for a company that wants to buy something?
 
The "buy side" that the author is referring to is different than the typical "buy side" definition that is most often used.

During an M&A transaction, there will be an investment bank representing the buyer, and another representing the seller. In this case, the author is representing the buyer, so he is on the "buy side" of the transaction, and the other bank that represents the seller would be the "sell side". However, I would still say that the author was working on the sell side under the definition of sell side that is most often used.

Buy side = Portfolio management
Sell side = Corporate Finance/M&A (but this could be representing someone on the buy side of a transaction)
 
Thanks darkstar, that's very helpful. I figured this guy knew what he was talking about, which is why it seemed a little weird to me.
 
No problem.

I don't claim to be an expert either, but that's how I interpreted it when I read it.
 
yeah that's how it's used at my investment bank as well...

i.e. buyside = helping your clients acquire assets
i.e. sellside = helping your clients sell stuff
 
myzegna,
Can you talk a little bit more about the structure at your bank? Does each group (ie M&A)have a buyside component and a sellside component, or do the same bankers just switch off and work on both sides?
 
To the best of my knowledge, most IB's are structured into product groups (Equity Capital Markets, Debt Capital Markets, M&A, etc.) and industry groups (Technology, Media, Energy, etc.). The product groups work on a particular product and have in-depth knowledge of their product, and the industry groups work on companies in a specific industry and have a lot of industry-specific knowledge. If a telecommunications company was going public, the Telecom group and the equity capital markets group would be working together on the IPO.
 
Within each group (industry coverage, levfin, etc) teams will be formed based on the transaction. If a company is putting itself up for sale, teams will be formed to advise the potential acquirers. Plus, a team will advise the company up for sale. Each acquirer will have their own opinion on potential ways to finance the transaction and this part of what the buyside teams are advising on, as well as doing due diligence.
 
darkstar is right... at some banks however, M&A is done within the industry groups and there's no seperate M&A product group.

ditto for steveople. depending on the deal, you would normally get someone from the industry group and the product group (e.g. debt) working together to form the transaction team.

there's no specific "buyers" or "sellers" teams at my bank. you just get staffed on whatever is happening (i am very junior)!

when buying, its all about the price!
 
what exactly do people in ECM do? Is it similar to corporate finance? I have noticed a lot of bankers move into ECM after spending some time in corp. finance.
 
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