MBA for the Mafia

by Kunal Sharma

Papa and the Hot Potato

  Nakul knew what he needed to say to Viraj, the CEO, as he entered the office today. He would spit his grief in the most constructive way that he can and hopefully Viraj would have a sensible point of view to share with Nakul. PanAsia had diligently hired from the best B-Schools in the country but there were rumors lately that some of the selected candidates had not joined PanAsia. This was unprecedented in the industry. The operating model of the firm was under threat. Still, Viraj was aware that there would always be a flourishing supply of IIMs and ISB grads wanting to be investment bankers. In their zeal of becoming bankers, they might not even want to check up on this small enterprising boutique. A couple of weeks after joining the firm, when they do realize what they have jumped into, they would probably not mind hanging around a couple of months for a deal on their resumes which, for some reason, always proved to be elusive to this firm.

  As he made his way to Viraj’s room, he walked past Mona, Viraj's wife and 'owner' of a third of PanAsia. She came across as a genetic cross between an over-frenzied terrier and your everyday Auntiji. She was the self-proclaimed head of HR and Business Development at PanAsia. She usually was seen in office just on Fridays holding on dearly to a MacBook and looking busy. On other days, she was busy portraying the perks of owning a Ponzi business, driving around the city in her Audi. Didn't matter if she did not understand anything about the business. She seemed unfazed by the fact that the average time spent by an employee in her firm was just a couple of months. She was aware of the fact that there will always be a healthy supply of B-School grads aspiring for an investment banking career. Except for Raima, the HR girl who doubled as Mona’s personal assistant, no one in the business fraternity and no one even in Nariman Point knew Mona. In direct contrast, being in the limelight was second nature to Viraj and even though he was far from being perceived as a banker, by virtue of his frequent travelling and meetings, he had built good inroads into the investing fraternity across South East Asia.

  “Gifts and girls,” said Viraj, as soon as Nakul entered his office.

  Nakul looked on bemused, trying to hide his confusion.

  “Viraj, very nice to see you today,” said Nakul, thinking how artificial he sounded when he said that.

  Viraj was overweight. He looked like a resolute bully who was trying to recreate his image as a likeable halwayee. He had hanging cheeks, reminiscent of a bulldog. He spoke with a slur as if he would sleep off any moment and always made sure to flash his iPhone 5 in front of the Analysts. Once, while still in his home, he had dialed in to a conference call with a client from Singapore and Nakul was moderating the meeting. Nakul had politely asked who had joined. After a moment of silence, Viraj had said in a husky, somewhat feminine voice: ‘Papa’. This was his attempt to be funny and to break the ice. He had cultivated bland ignorance of any business etiquette whatsoever. The client had diluted participation in the meetings since then and had eventually shied off from considering any business at any level with PanAsia. Thereafter, Viraj began being referred to as ‘Papa’ whenever Nakul and his colleagues met for a small talk.

  “Neel, very bad, you replied to my mail only at 9 in the morning,” Nakul noticed Neel was seated across the hall from Viraj.

  “Sir, I was sleeping after a late Saturday night”

  “Whose boyfriend have you stolen that you were sleeping with?”

  Neel shrugged, “no one, sir.”

  “I didn't sleep till I was VP!” said Viraj after pausing for a second.

  Nakul flinched and tried to make context of the ongoing discussion. Today, he wanted to talk to Viraj about the possibility of working for a different VP, other than Rohtaj. However, when he went in, he felt like being a part of a schoolboy banter about girlfriends and parties and he didn't want to sound like he spoiled the party. Nakul would not get the opportunity to discuss his issues anytime soon too because, bad enough, Viraj was leaving for Singapore tomorrow.

  Nakul instead turned to plan B and started talking about a deal that was crying to get done. This was a megadeal so viable that you had to be blind not to see how much of an excellent opportunity for PanAsia it was. Even after a couple of months since the company, called NewAge, had hired PanAsia as an advisor, Rohtaj was still sitting on its documents.

  “Investors are waiting to lap up NewAge...,” said Nakul.

  “Yes,” said Papa, “Investors are salivating, I told them last week what a hot potato this was, lying in some corner of Bangalore, we just have to scan the best suitor for this company.”

  For a while, Neel and Nakul thought of Papa’s armory of deceit cleverly disguised as a leadership attribute wielded by an able CEO. Take them, for example. Both had been promised 3-4 month period of training and Singapore relocation post this training yet here they were sitting with Papa, according him every bit the respect one would to a boss and CEO. A couple of employees truly thought of Viraj as a good guy. Keshav was one of them. Nakul though Viraj was probably the best example of PR: a paan waala disguised as a go-doer and a connoisseur of who's who in the world of banking in Nariman Point.

  “If I sell this baby then I need to give you a 200% this year,” Viraj said menacingly. There was definitely a glint in his eye that told Nakul that Viraj hated him for going down this lane. Both knew the story of the bonus carrot. Both knew that it was a myth, especially here in PanAsia. At other banks, bonus mattered the most to I-bankers. The value and the volume of deals you close during a year in turn drives the bonus. For a small boutique like PanAsia, closing even a single deal would result in a bonanza with most of the deal income distributed to the team.

  Nakul’s meeting with Viraj was interrupted by a phone call. Viraj gestured him and Neel to leave his office. After a couple of minutes, Viraj was seen leaving the office-briefcase, iPhone, cufflinks, and all. With him left Nakul’s hope of having a constructive discussion about the workplace health.

  “I’ll have to wait a couple of days till he is back,” Nakul consoled himself.

  Nakul’s Financier

  India is sprouting entrepreneurs in tens of thousands every month. Every once a while a corporate employee develops an intense dislike for his boss and his 9 to 5 grind. Everyone has an idea these days, a service that will be availed by a certain segment of people; say, a product that will find use in kitchens. Even an exotic restaurant, given that everyone seems to be experimenting with their palates these days. A small proportion of those ideas is executed in the right way, with lots of hard work to boot. A millionaire is suddenly created; out of sheer ingenuity and smart work.

  Enter Papa. Guys running high growth businesses make good money. Viraj was in the business of reeling their wallets in. Papa, with his ammunition of conviction-filled promises, will really have the entrepreneur worshipping him in no time, in hopes that Papa will show him a new world of possibilities leading to infinite growth. In addition, of course the entrepreneur wouldn't think twice about paying a “retention fee” to retain PanAsia as an adviser.

  Because of PanAsia’s knack for shying away from doing real business, Nakul knew that the firm earned almost all of its revenue in retainer fee. Had this been a normal firm, they wouldn’t have wanted to avoid closing deals to earn transaction-based revenue, which was a lot more. Nakul was pondering over the company’s business model when his phone rang. His father was trying to get a hold of him. Apparently, he hadn’t called his parents over the last weekend.

  Same old drill.

  “Son, you have forgotten us. What is this Banking business that’s keeping you so busy about anyways? Is it some fancy way of making money that they are making you work so hard? I didn’t think uncle Ahuja was making so much money,” Nakul’s father said. He was talking about the cashier friend of his who worked at a bank branch nearer to home and who was dutifully home by 6 PM everyday, in part due to his acute fear psychosis of adhering to the strict tenements of his wife.

  “That’s because he is not. We are in entirely different business. Banking
is not just about holding savings accounts, this is somewhat … different.”

  “How…different like what?” You haven’t even told us what this investment banking is,” remarked Nakul’s father.

  “A small bank like mine is considered a Boutique. These Boutiques make money by taking a percentage of the transaction value. For example, if a client achieved a valuation of $100 million in the market and a binding agreement was signed, the Banker would immediately make anything between $1 million to $5 million. Some firms charge a retainer from the clients as well, which is a fee that a company would pay to retain a Banker. My company takes in only the retainer; it has never closed a deal yet.”

  “Hmm…” said Nakul’s father, oblivious to what Nakul had just said but keen on continuing the conversation. He tried to build on a few words he just heard.

  “Clients huh? Who are your clients?” said Nakul’s father.

  “Clients are businesses that are ‘ready’ for some sort of financial event, be it debt restructuring or a dire need for capital to grow their business. Boutiques like ours relentlessly pursue these companies. The pitch stage is where qualifications and credentials come in handy. These are fancy words for numerous slides that are handed over to the company boasting about the firm’s history of closing similar deals in the past. When a company buys into their story, a mandate is signed. This document lists out the fee structure and the transaction process that will be followed. A few weeks later, the banker will prepare all of the necessary documents including the information memorandum and the financial model of the company and start approaching investors with a teaser. The teaser, as the name suggests, is an advertisement for the company, without naming the company. If the market finds out that it is up for sale, it will do no good to the business. Everything is very hush until the prospective buyer signs the non-disclosure, post which they receive all the documents detailing the business model, finances, strategy, and of course the name of the company. If all goes well, and if God smiles on the banker, the investor will sign a binding agreement and move towards the due diligence of the company. The transaction will close in due time and the banker gets the transaction fee,” explained Nakul, amazed at his capacity to narrate. He knew that his father had lost him right when he started talking about his business but he carried on, nevertheless, as he felt the need to go over the business model for his own benefit as well. He smiled when he thought how confused his father must be now.

  “Ok, ok…I get it, you must have to move things pretty fast then…to get your clients the money they need to grow…” interjected Nakul’s father.

  Nakul was surprised at his father’s quick derivation of the nature of the industry.

  “Yes, that’s quite right,” agreed Nakul.

  “So you don’t really create anything that can be sold…you guys are just…brokers?” observed his father.

  “Yes! Brokers with expensive suits! But we bring suitable businesses together…one may have a stronger sales setup, a product, intellectual property or a better operational setup that the other can utilize….that may help the other in some sort of way, the synergies between the two will be unlocked and that’s how we create value. By finding the best match…kind of finding a suitable bride or a groom,” Nakul suddenly repented bringing up the analogy. What followed was a definitive change in topic. Apparently, in his zeal to be a banker, he had sidelined an equally important part of one’s life. His father betrayed no qualms about diving deep into the topic of his marriage. Nakul was subject to theories, examples, threats…anything that would elucidate a satisfactory response from him. However, marriage did not figure in Nakul’s list of things to do. His focus was to somehow navigate through the ocean that he had just jumped into while trying his best not to drown.