Consider this inspiration for all the twenty-somethings toiling away as analysts and associates at big banks, thinking the spreadsheet that they’re working won’t have any real-world meaning. YOU DO MATTER. However, know that you may not be reminded of your own self-worth until something like this happens.
The deal in question was Vista Equity Partners’ $4.2 billion acquisition of Tibco Software. Or at least that’s what Tibco’s board thought they were getting when they originally signed off on the deal.
Vista’s offer was for $24 a share. However, when pitching the deal, Tibco’s adviser, Goldman Sachs, reportedly did an incorrect calculation on the number of outstanding shares, double counting some common stock and equity awards, according to the Wall Street Journal. So while the $24 per share offer was accurate, the final tally of outstanding shares was off. The end result was what they thought was a $4.2 billion offer was really a $4.1 billion offer.
The spreadsheet error also affected Goldman’s fairness opinion, which valued Tibco at 18 times the company’s adjusted earnings before interest, taxes, depreciation and amortization. In fact, the offer was 17.6 times Ebitda.
So Goldman had to go back to the board and let them know that the offer was for $100 million less than had originally been pitched – after the deal was announced. Luckily for Goldman and all the employees who handled that spreadsheet, Tibco’s board decided that $100 million wasn’t the end of the world and agreed to the deal all over again.
So be diligent. Look over that spreadsheet one last time before calling it quits.
Morgan Stanley’s investment bank is smaller, but those who remain are enjoying the spoils of an impressive quarter. Pay is up across the board.
If you want to work in investment banking technology, these are the skills that banks are demanding currently.
Credit Suisse named Jim Amine and Tim O’Hara co-heads of its investment bank and added both men to its executive committee. The investment bank now has three co-heads, which is a bit different.
Just how crazy was the volatility in the markets last week? Goldman Sachs, Credit Suisse and UBS had to turn some clients away from their dark pools and tell them to come back later – they were a bit too busy. Wednesday was the busiest day for stocks in three years.
Here’s an interesting article on the fallout for those who worked at Galleon Group following the arrest and conviction of the hedge fund’s founder, Raj Rajaratnam, who was jailed for insider trading. The Galleon name tarnished their resume and hurt their career, despite having no links to insider trading themselves. The same has not happened at SAC Capital, where traders are hot commodities on the market.
Research firm Muddy Waters (awesome name) is mulling the idea of starting a hedge fund. The firm, which employs just 10 people currently, creates and distributes short-selling research, so you can guess what kind of fund it’ll be. Think activism and betting on companies to fail.
Goldman Sachs cut pay per head during the third quarter, but it’s still a livable wage. The average paycheck is on pace to hit $427,000 for the year.
Buzz Around the Office
If you are not afraid of Ebola, you can at least be afraid of people who are afraid of Ebola. Take this woman, sitting casually at a Texas airport adorned in a homemade hazmat suit.
Quote of the Day: “This is a little bit like the genie in the bottle. You wish, you wish, you wish and now all of the sudden you have an avalanche of volatility.” – Goldman Sachs CEO Lloyd Blankfein on the market last week