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Published May 14, 2008 at 1:40 PM
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Kenneth Moelis, CEO of Moelis & Co., spoke about dealmaking at The Deal's Fifth Annual Private Capital Symposium. Here are some highlights of what he spoke about: - I've been been at the heart at some of the place where there were
problems. My mom called and said 'how come you never go to jail?' and I
said 'Thanks mom!'
- When I started in this business, 20-25 years ago, I could name the top 10 investment bankers at the top 10 banks. They had a personalities, they had a point of view, and clients that they lived with. The name of the corporation was associated with the bankers like they were brothers.
- Early on in my career at Drexel, I got a sense of what really happens
at the tail-end of a cycle...when you get to see the power of a cycle.
A year ago I said that this cycle isn't going to end the way that
everybody thinks. We haven't yet seen emails from trading floors. There
is somebody at one of these Justice departments somewhere that is
looking up on the wall - Rudy Giuliani was almost the next president
and Eliot Spitzer was the Governor - these were people who started out
prosecuting what I think were crimes on wall street...He's looking up
on that wall and figuring 'I got my shot here, if I can find who was
the criminal behind this cycle I too can be the governor or run for
president one day."
- Moelis on the financial conglomeration wave: It can't happen. As I say Tiffany
is a great retailer and Wal Mart is a great retailer, and we should all
hope they should never merge. One of the products will suffer. In
investment banking we try to do that, and I think you are seeing the
results of that in the last year.
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If he had to write one rulebook on the deal world, Moelis said, "The principles in
doing these transactions are that you have to have substantial personal
wealth at risk in these deals. You have to have personal skin in the
game, where the victory is a great return."
- It is a tough time for the street. I think credit will go back to being what it should have been. It is a commodity product.
- Everyone would like to play, and the cycles will get better again... About three blocks over on Park there is a full on depression in financial services, and the individuals who participated are really paying the price for it. I think that is capitalism, and I think everybody in retrospect would like to play these cycles a little better. The good news is we will get another chance in another cycle
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Moelis touched upon the departure of the top CEOs. "The level of accountability is real," he said. "Losing your job and zero bonus are no fun, and they hurt. Financially, people are being hurt, and reputations are on the line. If you got bad advice, then it is up to the users of that advice to discipline appropriately. There is a lash-back on the big financial conglomerates to complete transactions
for a payout, and you are seeing the market respond to that."
- The editors
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