Investment Banking: A New Haven for Work/Life Balance?!?

While R&R time is most certainly appreciated by employees, what does this mean for the M&A pipeline? One thing is for sure – banks will not and cannot lower their expectations or profitability goals to compensate for time off.

12 February 2014

Investment Banker Rest and Recovery

SCENE LOCATION: Charlotte NC, 1998, anonymous bank:

Office door is open, analyst stands in doorway, VP is seated behind a mahogany desk

ANALYST:  [Knocking on doorframe] Do you have a few minutes?

VP: Do you have that pitchbook done?

ANALYST: I will have it in an hour – I just need to update the EPS estimates on 3 more comps…I was hoping to ask you about next week…it’s Christmas and I was…

VP: You were hoping to take some time, right?

ANALYST: Yes, my plan was to - because Christmas is on Friday – to go home Thursday and come back Monday. Since I have been working every day in the office since August, except the two days for my brother’s wedding, –  I just figured…

VP: What if we need you over the weekend?  We have to hit the New Year running at full speed, we are down two analysts and an associate and everyone has to pull double duty. You need to take time when you can, when things are slow - you know we don’t believe in facetime like some other firms…

ANALYST: But Tom [the staffer] said the same thing to me at Thanksgiving and when…

VP: Alright, enough of the sob story, I am going to give you a break.  Full day here next Thursday and then you can head home, but take the earliest flight back on Sunday. We might need you. And sleep with your pager on just in case!


The tale above is sad but true. It’s probably all too familiar for most of you. Grizzled vets of investment banking, join me in jubilation for the current and future generation of investment banking analysts who have a chance of living a life WHILE working in the industry. You might be one of the lucky bankers whose employer has now recommended you take at least four days off each month. Rejoice for your good fortune and use that much needed break to visit a swanky club, rent [a share in] a beach house, meet a significant other or just catch up on some much needed sleep. Whatever you do though, don’t think about scheduling too many leisurely Sunday brunches because deals aren’t going to wait for you even when you’re “off the clock.”

In the wake of employee health concerns, reports of being over-worked and early departures to other firms or careers, many banks are reviewing their policies around vacation and time off for junior staff. Major players like Goldman Sachs, JPMorgan, Bank of America, Citigroup and Credit Suisse, are recommending that their analysts and associates take at least four days off each month to encourage some rest and relaxation.

Deals Don’t Sleep

While R&R time is most certainly appreciated by employees, what does this mean for the M&A pipeline? One thing is for sure – banks will not and cannot lower their expectations or profitability goals to compensate for time off in this highly competitive environment for securing mandates and closing deals. They will still want the same amount of work (or maybe more) to get done in six days rather than seven, and with a potentially smaller team. Is this reasonable - or even possible?

From a career and employee retention perspective, this move makes sense and has been long overdue. The formula is simple: more time off equals happier, more motivated bankers, which in turn equals bankers that are more likely to stay at their firm and add value. Productivity and efficiency, however, will likely take a hit. According to our recent How Deals Get Done report, only 37% of M&A professionals believe the M&A process is highly efficient to begin with.  Cutting work time by even 15%, this figure could drop even further and banks would need to make investments to counteract the effect of the new work/life balance.

Options for Banks

Banks have three options:

  1. Wink and not follow the policy or have exemptions and exceptions
  2. Invest in hiring more bankers
  3. Invest in technology

It seems that Goldman Sachs has chosen the second option and has decided to hire 14% more analysts in 2014; with average compensation per employee at the firm hovering close to $400,000 annually in 2013 (although I’m pretty sure a first-year analyst  isn’t pulling that down these days), this isn’t really the most cost-effective option.

The third option is to implement and standardize a technology solution that could help increase efficiency by at least as much as a person. Ok, wait for it – so here’s the pitch (sorry, it’s my job, literally): our Intralinks Dealspace™ solution helps cut deal marketing and due diligence time by as much as 50% and can help cut costs of the due diligence process by over 15%. Now multiply that by the 10 to 200 deals your firm or group does each year; all at a fraction of the cost of a new employee. Plus, you’ll develop proficiency on your new, market-leading execution platform with longer-lasting resources. You wouldn’t be the first firm to utilize our platform and get these benefits, but you sure don’t want to be the last. Maybe you can put those brunch plans back on your calendar after all. Mimosas are on…your MD.

If you agree with me that the process can get more efficient add a comment or two; if you disagree, sorry, the comment section has been recently disabled ;).