Scott Bok on How Bankers Spread the Gospel of Capitalism

SPEAKER_2 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, I would say that within the broader realm of finance and markets and Wall Street and stuff that we cover, like deals and deal making, kind of, maybe we don't cover it enough.

Tracy Alloway (0:37)

Yeah, it's kind of, I guess it's unfortunate, because I think when a lot of people think about Wall Street, I mean, the guy doing big M&A deals, the rainmaker, is kind of one of the images that people have in their minds, I guess, alongside traders taking oodles of risk. I think people are always thinking about the guy on the phone, who's like, you know, talking to his big client, he's going to strike this big multi-billion dollar deal. So yeah, lots of interest.

Joe Weisenthal (1:04)

Yeah, there's like two images, right? The guy staring at his screen, clicking either buy or sell as the line moves really fast. And then someone, you know, going out golfing and having a nice lunch or something. But I don't really know. I mean, I don't know that much about the first one. I really don't know that much about the second one. Those seem like very good jobs. I think I would be very terrible at that job. But yeah, there's so much to learn on that. I have so many questions about this area and we should probably talk about deals and the trajectory of deals and the history of deals and the future of deals a little bit more.

Tracy Alloway (1:38)

Let's do it. So I have to say, I used to cover the investment banks for the FT and within that, there was obviously quite a lot about the M&A business. The one thing I know for sure is that the bulge brackets, even though M&A is not the entirety of their business, as you know, they care a lot about it. They care a lot about the lead tables and who's doing better than whatever other firm. It's extremely competitive. So let's dig into it.

Joe Weisenthal (2:03)

Just to reveal my own ignorance a little bit more, I don't even think I have a great handle on the question of why within one firm, banking and trading are often parts of the same company.

Tracy Alloway (2:16)

Oh, why they're the same company? I thought you were going to say you didn't understand why they were separated, and that's why I was shocked.

Joe Weisenthal (2:22)

No, like why within a large firm, these are natural complements to each other as part of the business, even that I don't have a great handle on.

Tracy Alloway (2:30)

I have a feeling that our guest knows exactly the answer to that question.

Joe Weisenthal (2:35)

We do indeed have the perfect guest. We are going to be speaking with Scott Bok, the long-time former chairman and CEO of the investment bank Greenhill & Co. He is out with a new book called Surviving Wall Street. Scott, thank you so much for coming on Odd Lots.

Scott Bok (2:50)

It's great to be here. Thank you.

Joe Weisenthal (2:52)

There's so much I want to talk about, and it's so bad that we could probably spend an hour with you just answering very rudimentary questions about the business. That seems like a waste of your time.

I have a random question, one I've always wondered about for so long. You can make a lot of money in investment banking, in deal-making, and making deals happen. What does the investment banker bring to the table? A company wants to buy another company, why can't they just go find it in-house? What does the investment banker bring to the table that's so valuable, that companies, at least in some cases, are willing to make the bankers quite rich?

Scott Bok (3:27)

I actually answered that question early in the book, because I think most people don't really understand. They pay these big fees, what do these people actually do? And there's actually several things they do. Number one, they may tell you it's the right time for an acquisition. They might tell you what is the right value for that acquisition. They might tell you how your stock price might react to that acquisition. Importantly, they also give the board of directors comfort that management hasn't gone off the reservation, that the deal actually makes sense, it's going to get a reasonable response. And so it's a very broad role. And one thing I like about it versus, say, trading or so many other aspects of Wall Street is, this is never going to be outsourced to AI. There's never going to be a button you push and an M&A deal happens. Each one is so different and so much just kind of the human touch of trying to get people on both sides of a transaction to come to agreement.