GUEST COMMENT: The parable of the Great Analyst Cull of 2002-2003

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Analysts circa 2002-2003

Listen carefully, for I am going to tell you a tale: the tale of the Great Analyst Cull of 2002-2003. It is a parable of brutal culling, followed by years of dry pitching, followed bounteous riches. It may offer sustenance in the horrid years ahead.

For those without the folk memory of the Great Cull, it went like this. The years 2000 and 2001 (until September) were very great ones for M&A bankers. Deals were happening, money was flowing, and the greatest fear was that junior bankers would embark on a pilgrimage to a dotcom.

By 2003, all had changed. Markets took fright, deals dried up and dot coms were proven false reliquaries with fictitious profits. The cull came upon us with a fury. Banks assigned graduate recruitment plans to the bin. Entire teams of newly hired analysts and associates had their contracts annulled overnight. And those who didn’t were obliged to slave twice or thricely as hard as a result.

The following few years were times of the hardest labour. There was a lot of dry pitching; many sleepless nights; much in the way of takeaway dinners at desks. But then, one day, M&A activity levels picked up again. And when they did, where were those juniors to work on those deals? No one knew.

Banks tried to find them, but to no avail. They tried recruiting junior accountants and training them in corporate finance, but ‘twas like placing a square peg in a triangular hole. The entire teams of analysts and associates they’d dismissed a few years hence had gone: melted back into the real economy.

This left only the small pool of analysts and associates who’d kept at it during those dry years. These men (and women) suddenly became much hankered after and able to command their weight in gold, or exact their fee in sports cars. I myself was among them. One in our team used to drive his Porsche to work every day. Another bought a farm in Provence. In a reversal of the natural order, some associates in 2005 were being paid more than VPs. It was the best of times indeed.

My moral, my friend, is this: in banking, a period of over-hiring is often followed by a period of over-firing, followed by the realization that there’s a shortage of people who can do the job when markets come back again. It’s happened before and it will happen again. If you can stick out and survive the next few years, you will prove a prize resource. And in ten years’ time, you’ll be telling a similar tale to mine. Hopefully.