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Michael Frankel, senior vice president of business development and M&A at LexisNexis, kicked the discussion off by asking if investment bankers had "gone the way of the dodo" as far as corporate development was concerned. The question struck a nerve with audience members. "It used to be investment bankers were advisers. Now they're traders," said one, apparently a subscriber to the theory that investment bankers, if not extinct, were well on their way toward meeting the same fate as the bird. Investment banks have become more concerned with their own profits than with educating the clients, while advisory expertise is now supplied by a few boutique firms. For the middle market in particular, investment bankers were not necessary at all for most deals, the audience member said. Other participants pointed out that investment banks are necessary for specific things, even (if not especially) in the middle market. Smaller acquirers need a way to source deals, and i-banks can be helpful on valuations. For example. "I feel so much better when I know what my number is," said one person. Panelist Mark Copman, vice president of corporate development at 3M Corp., said his company uses bankers on the sell side, sometimes simply to take a load off of internal staff. "The process of having people come in and kick tires, etc., gets repetitive," he said. But even here, the service provided by banks has its limits. "It's valuable until about 11:15 the night before the deal closes," said Copman. "Then they just want to get the deal done. That's when we realize they [bankers] are on their [buyers'] side and that we need to make transition." To do so requires "a pretty strong constitution" and support of management, he added. "It sounds like there's going to be a lot of investment bankers that won't work for investment banks anymore," said Frankel. He asked if audience members would be willing to hire somebody straight out of an investment bank for a corporate dealmaker role at their company. Very few hands went up. "The second Wall Street comes back to life they quit," said one audience member. "How many definitely wouldn't?" Frankel asked. About the same number of hands went up. Most attendees appeared at least open to the idea. One said it would depend on what the individual did before their career in investment banking. David Blaskey, who leads corporate development for AvisBudget Group, said it depends on the individual, period. The moral of the story for investment bankers eying a career in corporate dealmaking (other than to apply to Avis)? A clean break is likely necessary. - Nathaniel Baker
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The Wednesday morning corporate dealmaker panel at the ACG InterGrowth conference in Las Vegas, moderated by The Deal's Kenneth Klee, featured a lively discussion on the role of investment banks and investment bankers in corporate development.
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