One evening, Bill Creighton, senior associate, and Mark Finney, administrative associate at Sterling Bank, vented their frustration in Finney's Wall Street office. Finney had been avoiding Bill for several days until Creighton finally caught up with him at 8:00 p.m., just as Finney was leaving for home. Creighton was frustrated because Finney was not giving him any meaningful assignments. Finney was tired of taking heat for "the unknown Canadian". After a relatively charged, but short exchange, Finney told Creighton that he should do something for himself because Finney could not help him.
The temporary transfer Bill had pushed so hard for in Toronto was quickly blowing up into a nightmare. He knew that he would have to straighten things out in a hurry or waste six months in New York and put a black mark on his otherwise unblemished record.
Several hundred banking organizations around the world were providing an increased array of investment banking products and services. Some organizations were exclusive investment banks (such as New York based Salomon Brothers), while others provided both investment banking and commercial banking products and services. The Sterling Bank was a British commercial bank whose main thrust in recent years had been investment banking. Sterling operated a Schedule B bank in Canada and a commercial bank in the U.S. The Canadian Sterling competed primarily with the investment bank oriented Schedule B banks as well as the Canadian investment dealers. In the U.S., Sterling competed primarily with the large U.S. commercial banks (such as Citicorp, Bankers Trust, and Morgan Guaranty) and the large U.S. investment banks (such as Salomon Brothers and First Boston Corporation). Investment banking was an intermediary role that involved selling debt and equity securities to retail clients and institutions, raising debt and equity capital for companies that required financing, advising client organizations on financial transactions such as mergers and acquisitions and providing general financial advice on how firms should manage their balance sheets. Investment banks and the investment banking division of the commercial banks were typically divided into the following major areas: (1) Corporate finance involved developing and marketing financial product that allowed firms to raise debt and equity capital. The corporate finance group acted as underwriters and assumed the risk of issuing new capital. This function typically had the highest profit margins because the compensation reflected the underwriting risk. Corporate Finance also included the highly profitable mergers and acquisitions function which acted on behalf of clients who were interested in making acquisitions or who were the targets of takeover bids. (2) Trading and Sales distributed the new issues generated by corporate finance and responded to clients' needs to purchase securities. Trading and sales included debt and equity transactions that were executed in institutional and retail markets. (3) Research conducted research on a wide range of financial securities. Research findings were made available to clients and were used to support decisions in the corporate finance and sales and trading functions. The investment banking industry was under going several fundamental changes. Firms were becoming larger and more international. The industry was being deregulated and competition was increasing. As a result, risk and returns were at all time highs, and MBAs were being lured with incredibly lucrative salaries and bonuses. In addition, the industry was under close scrutiny because of some high profile insider trading scandals, in which some very senior Wall Street bankers were found guilty of illegally earning astronomical profits. Because the industry was driven by huge profits, many observers concluded that investment bankers were driven by greed. It was not unheard of for young investment bankers to earn hundreds of thousands of dollars per year. The most successful investment bankers earned millions of dollars per year. Most of that income was earned through annual bonuses. Bonus formulae varied from firm to firm, but most depended on the firm's profitability, the department's probability, and the individual's contribution. Some firms encouraged teamwork by weighting bonuses for team results. Other firms fostered star systems where individuals were rewarded primarily for individual effort because every investment banking deal demanded highly specialized skills from several areas, cooperation among colleagues was key to succeeding and earning the really big money. Investment bankers logged more that 60 hours per week, and 100 hours per week was not uncommon, particularly for the younger bankers.
Bill started his investment banking career in the summer of 1983 when he joined Anderson Clark Limited, a major Canadian investment dealer. Previously, he had earned a commerce degree from a small U.S. college and spent a year in the finance department of a large Canadian packed goods company. He earned his MBA at the University of Western Ontario and was a research assistant of a senior faculty member in finance for one year. Bill was Canadian but had been exposed to many cities in North America because of the extensive traveling his father had done when Bill was growing up. Bill joined Anderson Clark at age 25 and spent just over two years in the corporate finance department working on a variety of investment banking deals. During that time, Bill established himself as bright, keen, and ambitious. He saw himself as "a mad professor: He was fun and unconventional. He was the only one who could walk into a senior executive's office and baffle him because he treated him like one of the guys instead of some demigod. The combination of Bill 's likeable manner and his outstanding work earned him considerable respect in Anderson Clark. In particular, Brian Nelson, the firm's most senior investment banker became Bill's mentor
Sterling bank made a strong push in Canada in the spring. They brought in a new senior management team and lured Nelson away from Anderson Clark to become their new Canadian president and spearhead their investment banking thrust. Bill remembers being shocked by Nelson's decision to leave Anderson Clark: "He didn't say a word to any of us about it and then boom, he was gone. I feel as though he betrayed our team and me." Bill did not hear from Nelson until spring when Nelson offered Bill a job with Sterling in Toronto. Bill was happy with Anderson Clark and rejected Nelsons offer. But Nelson persisted for several months and eventually got Bill's interest by adding a sweetener: If he came to Sterling, Bill could spend 6 months to a year in Sterling's New York or London office. Bill knew that some experience would really round out his development, so he joined Sterling in August 1985.
ADJUSTING TO STERLING
Bill and Nelson agreed that it would be appropriate for Bill to spend 2 or 3 months with Sterling in Toronto and then transfer to New York in December or January. Other than Nelson, Bill did not know anyone else in Sterling. Unlike Anderson Clark, Nelson did not work closely with Bill. In fact, Bill and Nelson did not work on any deals together. Bill's new boss was Howard MacIntosh, an executive vice president. MacIntosh was also a relatively new member of Sterling's senior management team. Although MacIntosh and Nelson got along, they had very different operating styles. Nelson was a consummate investment banker: He had been with a large, established investment dealer for his entire career and had established himself as a strong marketing person. Where Nelson was calm and cool, MacIntosh was emotional and sometimes brash, Bill described MacIntosh as a "bull in a china shop". At times, he had very little tact, but if he liked you, he could be just like a teddy bear.
Initially, MacIntosh saw Bill as "Nelson's boy", and rode Bill very hard for the first couple of months. It was not uncommon for MacIntosh to yell at someone to make a point. Bill recalled doing his first financial analysis for MacIntosh, and MacIntosh screaming "what the hell is this garbage, that's not the way we do it around here, who taught you this crap anyway?" Even though his analysis was sound, Bill realized that he had to prove himself all over again in Sterling and especially to MacIntosh. Within a few months, Bill had earned MacIntosh's respect, in fact, MacIntosh eventually told Bill he was the best Associate he had ever had.
NEGOTIATING FOR NEW YORK
By the end of November, Bill had the impression that the powers at Sterling were not keen on sending him to New York. As Nelson once told Bill " We're not in the habit for hiring people for New York, we don't want to think that we'll pick the plums off the tree and send them down" Nelson had not told MacIntosh about the New York deal that he had struck with Bill until late October. Moments after MacIntosh learned about the deal, he called Bill into his office. He told Bill flat out: "Listen, you work for me now, so your deal with Nelson is off. If you want to go to New York, you and I have to renegotiate." As far as Bill was concerned, the deal he had cut with Nelson should be honored. Over the next several weeks, Bill pressed MacIntosh on the issue, and MacIntosh hinted that he might get to New York in a year. If he did get there, it would be for no more than three months. In Bill's mind, that would be reneging on the deal. Bill made it clear, without ever explicitly saying it, that if he was not assured of going to New York for 6-12 months he would leave Sterling.
When Bill returned from a week's vacation in late March, MacIntosh told him about his annual performance bonus. Sterling had made its bonus decisions while Bill was on vacation. Bill was not happy with the bonus; in fact, he was extremely disappointed. Before Bill had joined Sterling, Nelson had led him to believe that his total compensation package at Sterling would be considerably higher than his Anderson Clarke package. However, based on the bonus MacIntosh had just given to Bill, the Sterling package was marginally below what the Anderson Clarke package would likely have been. Bill was angry and let MacIntosh know it. In a move apparently to appease Bill, MacIntosh told him that he had changed his mind and would send Bill to New York for six months starting in September. Bill remembered MacIntosh saying: "I don't give anything easily to anyone. You know that's just the way I am." However, MacIntosh's concession on New York didn't entirely satisfy Bill. He was still really steamed about the compensation issue.
Later that same day, Bill got a call from Nelson. Because they no longer worked together, Bill hadn't talked with Nelson for some time. However, Nelson had heard through the grapevine that Bill was really upset and he wanted to find out why. Bill told him that it had been over six months since he joined Sterling, that he hadn't been transferred to New York yet and finally, that his bonus was ridiculous. Bill told Nelson he was really tired of being "jerked around" and he thought that Sterling was not honoring the deal that had brought him from Anderson Clarke. Nelson, in his customary unemotional manner, assured Bill that things would work out. After his meeting with Nelson, Bill reasoned that Nelson had called MacIntosh later that day, because Nelson was worried about Bill quitting Sterling. In an effort to cool Bill down, Nelson overruled MacIntosh's agreement with Bill and moved the transfer date to May. When Nelson told Bill about the change, Bill told him that he didn't want to leave in May because he was busy on several large Toronto deals, he wouldn't be very busy in New York (investment banking is very slow over the summer months), and a very close friend was transferring to New York in September. Finally after a joint meeting in April, the three of them agreed that Bill would go to New York in September for at least six months.
ARRANGING THE TRANSFER
There were several groups in corporate finance that Bill considered transferring to in New York. He eventually decided that he would learn the most in the High Yield Group and he spoke to MacIntosh about his preference. The High Yield Group was a small, highly focused group that worked exclusively on "junk bonds," which were specialized debt securities that were frequently used to finance leveraged buyouts.1 MacIntosh had indicated to Bill that he knew someone in the High Yield Group in New York. In fact, MacIntosh had briefly met Nick Mantia, executive vice president in charge of the U.S. High Yield Group, at a recent meeting of Sterling's executive vice presidents. MacIntosh agreed to arrange things with Mantia. Bill found out later that MacIntosh made a short call to Mantia. Bill guessed that the call went something like the following: "Nick, it's Howard MacIntosh from Toronto. How are you doing? Yeah, we met at the EVP's meeting in Florida last month. Listen, I've got a good young senior associate named Creighton who wants to spend six months with your group. Have you got room for him in September? Great. Why don't you have your administrative associate call him and take care of the details? Thanks a million."
Bill called Mantia several times in August to ask a few questions about the High Yield Group. Mantia was never available, and he didn't return any of Bill's calls. Bill did get two phone calls from Mike Finney, the administrative associate, and they briefly discussed the kind of deals Bill might work on. They also agreed that Bill would attend the High Yield Group meeting on September 16. He could meet the 20-person team, be briefed on the current deals, and then move to New York. Bill attended the 8:00 A.M. meeting on September 16-but arrived 10 minutes late. Nick Mantia was chairing the session and did not stop when Bill arrived. After about an hour Mantia said: "By the way, there's a new guy here. Who is he?" (Bill was the only "new guy" in the room; he waved his hand.) "Oh yeah, you're the guy down from Canada aren't you? Tell us something about yourself." Before Bill had finished introducing himself, Mantia rushed out of the boardroom to another meeting. Bill never had the chance to shake his hand. After the two hour meeting ended, Bill met two people he was going to work with on a deal: Tom Soward, vice president, and Ken Conrad, senior associate. Bill also met Mark Finney. Finney showed Bill his office and asked him to get started right away on the deal with Soward and Conrad. Bill was confused; he was only in New York for the day. He wasn't moving to New York for two more weeks. There had been a misunderstanding. Finney was annoyed; he had rushed around the day before to arrange things for Bill.
ARRIVING IN NEW YORK
Bill finally arrived in New York in the last week of September. It was an intimidating experience. Bill had worked on some New York deals from Canada but he has always been on a team with people he knew. He went to the U.S. High Yield Group as an unknown. He had to work on some leveraged buyout deals in Canada but none that had relied on junk bonds very much. He wondered if he would be up to speed technically in the High Yield Group. He also wondered what barriers might exist because he wasn't part of a "class." During the strong bull markets the large investment banks on Wall Street has hired as many as 100 new associates each year. The incoming "classes" spent their initial training together, helped each other on deals and developed very strong social ties. By working and socializing together, investment banking "classmates" developed a strong sense of professional trust in each other. As an outsider, Bill did not have any such ties and had not yet earned the trust of his High Yield colleagues. Bill spent the first week getting adjusted and trying to meet the rest of his new colleagues. He never did manage to meet Mantia. The High Yield Group was relatively small by Wall Street standards with only 20 professionals, including two executive vice presidents.
Mantia had recently brought in a huge leveraged buyout deal from Hoyle, Inc., a major international containerized shipping company. It was the biggest and potentially the most profitable deal that the High Yield Group had seen all year. The Hoyle deal was initially staffed by Soward, Conrad, and some analysts (generally, analysts were undergraduate students who worked on Wall Street for two year before returning to graduate school). The Hoyle deal was referred to as a "black hole" deal. It was so big and so complex that it could totally consume as many associates as were thrown into it. In contrast, a normal deal was staffed by a senior or executive vice president, a vice president, and one or two associates. Soward needed some extra bodies for Hoyle and was willing to let Bill assume some relatively small, safe tasks. Even though he was a fourth-year associate and he was more than capable to assume more responsibility on the Hoyle deal, Bill was still an unknown quantity in New York. Bill participated in several team meetings on the Hoyle deal through October and early November. Bill, Soward, and Conrad updated each other during those meeting in Soward's office.
On two occasions, Nick Mantia popped into the meetings and inquired about the progress of the deal. Mantia specifically addressed his questions to either Soward or Conrad even though some of the questions could only be answered by Bill. For those questions, Soward acted like an interpreter, repeating Bill's answer to Mantia. Bill was livid. Mantia was treating him like a total rookie. To make matters worse, Mark Finney, who was responsible for farming out work from the senior and executive vice presidents, was not giving any work to Bill because none of them had asked for him to be on their deals. Bill was frustrated because he was stuck with only a small number for simple tasks and he was being treated like a ghost by the senior people in High Yield, especially Mantia. He had called MacIntosh twice in October and asked him to speak to Mantia. Since Mantia was not speaking to Bill, he never knew if MacIntosh had spoken to Mantia. Bill figured that MacIntosh wasn't anxious to make things easy for Bill in New York. MacIntosh was concerned about losing Bill. In one of their phone calls, MacIntosh had said: "If you try to end-run me and stay in New York, I'll yank you out of there faster than you can say Sterling Bank."
In their late night meeting on November 12, Bill's frustration came to the surface. Bill was not known for his diplomacy or for flowery language, and he always called a spade a spade:
Bill: Look Mark, I'm tired of sitting around here doing nothing. What the hell is going on? I've been twiddling my thumbs for over a month, I still don't have a secretary and Nick hasn't said boo to me since I've been here.
Mark: So what do you want me to do? You came down here without any credibility-you're not even a vice president. No one from Toronto called to even see if you'd arrived, and Mantia's riding my butt because you're not doing anything. You're a bloody thorn in Nick's side, and he's taking it out on me. And no one else is asking for you on their deals. Let's face it Bill-you're a big question mark down here. Why don't you get some backup from your senior guy in Toronto?
Bill: Wait a minute, I just missed making VP for three reasons: I am relatively new to Sterling, they considered it a real perk that I was sent to New York, and, because I am only 28, they didn't want to put any noses out of joint. They told me I am VP quality, but politics got in the way. So I don't think that my capabilities should be an issue.
Mark: Yeah, I agree-your capabilities shouldn't be an issue. In fact Tom (Soward) and Ken (Conrad) are real impressed with your work. But nobody else down here who counts knows that.
Bill: I've already spoken to MacIntosh and nothing has changed. I can't get an appointment with Mantia to talk to him. Sonya (Mantia's secretary) treats me like her son, but the bastard doesn't even say hello to me. I've thought about going into his office and talking to him about it.
Mark: Listen, cowboy, this is New York. You don't walk into an EVP's office without his invitation or without an appointment. Those guys are working on billion-dollar deals. They've been known to fire wise-ass associates who have interrupted them.
Bill: I've also talked to Paul Harper (the other executive vice president of the U.S. High Yield Group) about my situation. He said he would speak to you about getting me some more work.
Mark: Harper hasn't said squat to me about you.
Bill: C'mon Mark, I busted my tail to get this transfer to New York. I don't care if I have to call Toronto and have work sent to me; there's no way I'm going to sit on my hands for the next four months. I'm tired of being treated like a first-year associate. And there's no way I'm going back to Toronto before my time is up.
Mark: Suit yourself, Bill. I feel for you but there is nothing I can do. I think you had better do something for yourself. If I were you, I'd work through your senior guy in Toronto. Frankly, it sounds like you've been hung out to dry and he's not doing anything to help you. But you better do something . Listen, I've got to leave now or my wife will kill me. Let me know how things go.
Bill spent the balance of that evening reflecting on his situation. He wondered if he was responsible for the mess he was in---had he mismanaged his bosses? Or had he been mismanaged by them---first Nelson, then MacIntosh, and finally Mantia? Although he was unsure about why certain things had happened, he focused on what he should do the next day. He had already called his parents and some friends in Toronto to talk about the options that were available to him. But he had no idea which option to choose or how exactly to exercise the option he chose.
Answer each of the following questions, individually or in small groups, as directed by your instructor.
1. What was Bill's perception of MacIntosh? What was his perception of Mantia?
2. How did Bill's perceptions change during the case?
3. What were MacIntosh's and Mantia;s perceptions of Bill?
4. How did their perceptions change during the case?
5. How did Creighton's, MacIntosh's, and Mantia's perceptions differ?
6. What "Shortcuts" possibly affected Creighton's, MacIntosh's, and Mantia's perceptions?
7. What did Bill attribute Mantia's behavior towards?
8. What were Creighton's, MacIntosh's, and Mantia's attitudes toward the situation?
9. How did cultural differences affect the situation?
10. How could the situation have been improved?
Thank you for posting today. It is my goal to provide ideas, definitions, research help, and instructions on how you, the student, should approach the assignment.
I'll try to talk through some of these questions so that you can be better prepared to answer them.
1. What was Bill's perception of MacIntosh? What was his perception of Mantia?
My read on this situation is that Bill and MacIntosh were not buddies. While Bill may have eventually started trusting MacIntosh a little but, he probably should not have. After all, it was MacIntosh's alleged friendship with Mantia that got Bill into the High ...
The solution presents a step by step answer to each of the questions posed at the end of the case-study.