What on earth are investment bankers doing (5)

As for me to be the "king of the publishing industry"-I was finally downgraded to the head of the publishing industry-when I asked Kiernan and Joe to do the job, they must have snickered. At that time, the publishing industry was almost under conservative family control, regardless of mergers and acquisitions or financing. Only gannett is an exception. This company is large and independent, and has the need for mergers and acquisitions, but it never needs investment banks to help them. Like everything else in this field, financing is irregular and unpredictable. In short, being king of the publishing industry is like being king of a country, where nothing important will happen. Of course, no one expected that there would be an unprecedented wave of integration in this industry. The process of selling canas consumer magazines is basically the same as dozens of different types of projects I implemented in the next few years. The first negotiation with customers always talks about how to sell, which is nothing more than one-on-one negotiation or large-scale public bidding. Investment bankers like the second method for four reasons: second, bidding is usually more time-saving than negotiation. The only force that urges buyers to decide as soon as possible is competition. If negotiation is adopted, investment bankers can only threaten each other by delisting or finding another buyer, but these two actions may not have substantial pressure. Third, for investment bankers, the worst case is that the transaction fails-the agency fee is usually based on the success of the transaction, and the definition of a successful transaction is that the buyer and the seller have money to change hands. When a customer announces his sales intention, it is difficult to cancel the plan after taking the first step. Fourth, those institutions that do leveraged M&A business, which are called "private equity funds" or "financial sponsors" in the industry, are the most important customers of investment banks. These funds buy billions of dollars worth of equity from pension funds, insurance companies and other places, with the purpose of acquiring companies, and then monetize equity investment through sale, listing or capital adjustment (for example, borrowing money for self-leveraged mergers and acquisitions, or paying dividends to themselves) a few years later. During the period of 1990, only a few funds had capital exceeding 10 billion US dollars, including KKR, Faustmann Little Company and Morgan Stanley. Today, there are more than 250 such funds, so many that even the most experienced investment bankers can't fully grasp the situation. These companies have become machines for producing projects: all they have to do is buy, sell and raise funds, all of which are the core sources of income for investment banks. It can be seen that satisfying financial sponsors is a top priority for investment bankers. In the fund's view, the services provided by investment bankers are like a commodity. They rely on a steady stream of projects to survive-only through transactions can they invest capital. Therefore, investment bankers who keep in touch with the fund are looking for potential projects all day-and then actively encourage M&A experts to persuade sellers and customers to provide as many bidding targets as possible. Therefore, unless only one "best" buyer can be found (preferably two or three, at least competitive), most investment bankers tend to adopt a wide range of bidding methods. However, considering the impact of openness on the company's business and employees, customers usually don't like to take the form of "large-scale" bidding. They don't even like to let some people with uncertain financial ability or not interested in the company have a chance to come in and have a peek. They are also worried about competition. Investment bankers usually compromise with customers in a more comfortable way, suggest a method between negotiation and bidding, such as "controlled" bidding or "selective" bidding, and then actually operate a large-scale bidding. In order to leave room for manoeuvre, investment bankers will still emphasize to clients that it is inevitable to call inappropriate buyers, even though these buyers have been turned away as early as the extensive inquiry. This trick is more or less used in the project of canas consumer magazine.