Project California

Nothing, and I mean nothing, can prepare you for the first deal you’ve ever worked on. Especially not when you’ve been sitting around, playing online games, trying to go to sites that are inevitably blocked by the firm and chatting with your cube mates.

As I wandered down the hall to the office Apathetic Associate shared with the Evil Incarnate, I passed the corner office of the Hot VP. I gave a little wave and donned that award winning smile I’ve been known to give. His eyes, full of intensity, glanced up from the massive document he was reading and gave me a slight nod and smile. Wandering into the office, I tripped over a bright red mini Hermes Birkin which belonged to none other than Evil Incarnate. Note that at this point in time, this fresh-faced and naive first year thought that we could actually be friends. I was in shock. If the Evil Incarnate could afford a Birkin ($10,000 starting price) on her previous year’s bonus, this gig wasn’t too bad.

“Oops, my b!” She smiled and pulled the bag away from the walk way. “How’s it going? You kids settling in alright?”

“Yes. Just came by to see Apathetic Associate.” At the mention of his name, AA plucked out an earbud from his ipod and began gathering up some things.

“Right, Project California. We’re putting together a stapled financing package for the acquisition of this asset for Poorly-Named-PE shop. The coverage team did the M&A work, representing the Seller of the asset. Poorly-Named-PE shop was the high bidder at $406 million. The syndicate desk likes this deal because it’s stable.” As he began to explain what we would be doing, my eyes glazed over and my mind began to wander. I noticed the little ear hairs he had starting to sprout out at the ripe young age of 26. His posture was one of a defeated man as he eased back into the $1,000 Herman Miller chairs which the Investment-Bank-that-No-Longer-Exists insisted on getting for everyone.

“I think it’d make sense if you went through the Confidential Information Memo (“CIM”) that the coverage guys put together. Should give you a good sense of what the asset is like.”

“Sure.” Gathering the papers up, I walked out of the office, confident and smiling. First deal staffing and it really wasn’t so painful. Forgetting that it was Friday afternoon at 4, I sat down to begin digging through the crux of what was going on in this deal. The Seller was not a private entity and was unloading the asset as a result of low capital and low liquidity. In short, the Seller needed money, fast. Additionally, the asset would be better harvested by a private group rather than a public one. From all standards in my particular industry, the asset was considered a very good one, generating stable cash flows from its 3, 10 to 15 year contracts with offtakers of the services the asset provided. Should be a “slam dunk” as bankers would refer to a deal that was so easily executed and closed.

Then, at 5 pm on the nose, it felt like the floor had been abandoned. Smelly Homeless Kid (“SHK”) got up with his duffel bag. “Time to hit the gym. I’ll be back for some Seamless action.”
(Sidenote: The ‘action’ that SHK was referring to is the online food ordering system known as Seamless Web. My sources tell me that before this nifty system, bankers who worked past a certain time would receive a per diem for dinner and could subsequently leave the confines of the office to breathe in a few lungfuls of that pollution filled city air. They would round up a few of their friends and have a nice meal before returning back to the office. However, once the Seamless Web system came into fruition, all bets were off. No one could leave for a nightly meal and instead were relegated to “team dinners” in the conference rooms (assuming people liked each other enough to order together). The rules with ordering Seamless Web were quite simple. Begin ordering at 6pm ONLY if you left after 8pm. Like everything in life, when you leave a bunch of bankers who spend their every waking moment trying to pitch you shitty products and unnecessary services, you’ll find people who game the system. Thus, the now defunct Investment Bank started making people not only swipe in through the entrance, but they had to swipe out as well. That way, they could track whether or not you were actually staying past 8pm to order the meal.)

As SHK wandered out with a walk that can only be characterized as a duck with a stick up its ass, the Evil Incarnate rapidly walked past my cube with Apathetic Associate in tow. Naturally, they both had all their things and were headed out. She quickly waived and disappeared around the corner. Not 3 minutes later, I received an e-mail.

From: Apathetic Associate
To: Fashion Financier(e)
Sent: Fri Oct 26 17:11:34 2007
Subject: Model

Hey. Hot VP wants to put together a debt sizing for Monday. M&A model is on the drive. Could you please put one together? I will review on Sunday. Thanks.

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What. the. fuck. I hadn’t opened Excel thusfar unless you counted getting high scores on all the games imbedded in Excel. I didn’t have a clue in hell as to how to even begin. It was clear from the beginning that my cube mates, while good for chatting and causing trouble, were not going to be helpful in any work sense. They worked on completely different products. I put my snooping skills to good use as I waded through the folders on our deal drive HOPING to find some resemblance of the model that I was put together. Luckily for me, this type of model was the only type we put together. No discounted cash flow models, no comps, no valuations of any sort.

I finally started a new sheet which I so creatively entitled “Project California Debt Sizingv1.xls” and got to work.