Unveiling the World of M&A with Peter Bell, Founder of Cardean Bell

Hello and welcome to The Deal Room. Now this week we have got a slightly different approach. We are delighted to be joined by Peter Bell, the CEO and founder at Cardian Bell. We're going to be having a wide-ranging interview with Peter discussing the differences between bulge bracket, elite boutiques, and smaller advisory firms, how you should navigate your career in the context of really what you want to get out of it. And also what's changed over the last 25 years in the world of M&A and advisory and maybe what's to come. So Peter has had a great career in banking, 25 years working for the likes of Bank of America, Nomura, Lehman, Dresdner Kleinwald, and in 2016 went out on his own and started his own advisory firm. And we're going to talk a little bit about that entrepreneurial journey as well. So, Peter, thank you for joining us.

Not at all. My absolute pleasure. Great to be here.

Fantastic. Well, look, let's start at the beginning. I would love, and I think maybe our listeners would love this as well, I would love you to give us a little bit of a potted history on your career. I mean, a lot of our students are coming out of university. Let's start from the university and move forward.

Yeah, well, I guess I did a similar journey. I read history at Durham University back in the dark ages, 1989 to 1992, um, and I applied in what was then called the Milk Round, um, to become a, um, a young trainee at Clynelwood Benson. Um, and Clynelwood Benson at that time was one of the UK's leading investment banks. They were originally in those days called merchant banks. And, um, at that time the UK did not have a significant US, um, investment banking presence. It was dominated by domestic firms. So I applied in the Milk Round. I applied to Barclays as well, what was then called BZW. I also applied because I wasn't quite sure what I wanted to do to a bunch of other things. I failed the Civil Service exams, I applied to Mars, I applied to Shell, I think, and the only businesses that gave me the offer of an interview were both Barclays and Clymel Benson. So I took those, took those opportunities and managed to get a job in that milk round, starting on the graduate trainee programme in September 1992. Remember it well.

Fantastic. And obviously you enjoyed, you enjoyed it. It's great to hear that you, you didn't really know what you wanted to do, but then you actually landed on something that you kind of enjoyed. And yeah, tell me about how your career progressed from graduate through to maybe more of the senior levels.

Yeah, so I did, I spent 6 years at Clymel Benson. Um, in those days, investment banks were set up very, very differently. We didn't really have sector teams, we didn't have sector specialization. They were literally numbered teams. We also had this strange concept of retained clients where you didn't actually market to your clients very much because you literally sat by the phone and waited for your client to call you up and say, yes, I'm thinking about doing some M&A and this is what we're thinking about doing, and could you help us advise us? Because they just had an advisor who was their regular appointed advisor alongside a regular corporate broker advisor as well. So I started off in a generalist team just doing transactions that effectively came through the door. I guess an early transaction was selling an estate agency chain called Cornerstone, which was at the time owned by Abbey National, which was an old building society that converted into a bank later. Um, I also did some chemicals work, um, and some retail work. And I guess after 3 or 4 years, I got the opportunity to go to Paris. And so I got posted to Paris, which was fantastic. I spent 2 years there doing public offers, um, for, um, basically for international companies looking to acquire French companies. And I was the only non-French speaker in an office of about 30 people. So two great years on secondment in, in Paris. During that time, Kleinwort Benson was acquired by Dresdner Bank and became Dresdner Kleinwort, which was a bank that was in existence from the mid-'90s until the early 2000s. And then in late 1998, as I was about to come back, I was headhunted to go and help start a business called Greenhill, which is now actually been taken over by Mizuho, but was one of the earliest independent investment banking boutiques. Lazard Rothschild obviously been around for a very long time, but Greenhill was one of those very, very one of the first ones to come out and be, um, to, to, to develop that, that's part of the market. That was in 1998. I did 10 years there. I was one of the founding team members, and I was there from, um, up until 2008 working on major transactions across multiple sectors.

Okay, and tell me, tell me, at what point within that kind of arc of your career, at what point did you go from being the receiver of instruction to being the delegator and ultimately being the person responsible for bringing in deals and actually maybe even leading a team?

Yeah, I think it was really the mid-2000s for me. We started to get really very active in the sort of M&A boom that went from the end of the dot-com crash 2003 right up to the great financial crisis in 2008. And I think it would be sort of middle of that period where I was in the the terminology that Greenhill used, I was a principal, so one level below managing director. And at that point, I was starting to originate my own deals. I was managing a small team. So I was, as you say, giving instruction, ensuring that the associates and the analysts were doing the analysis that was required. I guess I stepped up probably more at the kind of VP level to start doing that sort of principal work. And that's what I would say to anybody who's at that stage of their career. Career, once you get beyond— once you become a kind of senior associate, you've got to start effectively doing the job of the, of the level above you. You, you'll know that it's a very critical part of developing your career. But the more you can help those above you by doing their work, in inverted commas, to free up their time to do more deal origination, more, you know, business development, the better. So it was— I would say it was sort of, yeah, I, I guess in my sort of early 30s, mid-30s, that I really started to do that.

And have you seen any, have you seen any examples of, uh, young analysts that have managed to fast-track their way to a decision-making position? There's a lot of, we have a lot of questions from, from students at university saying, I love the theory of M&A, I love the cut and thrust of it, but do I really need to put in 7, 8, 9 years of doing pitchbooks and financial models? Have you seen any other way around it, or do you just have to do your time?

You just have to put your time in. And I think the reason why Anthony, you have to remember that unless you're dealing with a particular, I don't know, startup genre, most of the clients that you're going to be working for are going to be, call it, in their early 40s, 50s. So they want to trust people on their most important transactions. And I tend to work on sell-side transactions, so that's helping entrepreneurs selling their business. This is their most important transaction of their life, and what they want to do is have people who, who've got a lot of experience about how to, you know, to, to manage a sale process, how to transact, how to advise them. So it is possible to do it at a younger age, but it is quite hard work. And the reality is, if you are looking for a sort of fast-paced, shortcut kind of career, I'd almost advise you to go and focus on the market side, um, you know, the public side of investment banking rather than the private side. Because, you know, corporate finance broadly is very much a project-based, relationship-driven, long-term sort of client development process. So you absolutely can start to do it in your early to mid-30s. Um, the best thing of course is to focus on younger clients. I now find myself in the weird position where all my clients are starting to be younger than me, whereas I spent most of my career trying to pretend I was older and mature so that I could advise clients who were older than me. So that's very much an important sort of element to why people will hire you. And frankly, if you can get early experience, develop early maturity, do the work which gives you that that, that experience of that presence to be able to explain to clients, you know, how to do an M&A deal, how to price it, how to structure it, how to deal with difficult legal and accounting issues. If you can do all of that work and learn that experience early, then that's— that can set you up to start earlier. And actually, I was just going to say, Stephen, I think one of the things that's really interesting is you've got more opportunity to do that at bulge bracket firms where the rigidity of hierarchies are a little bit more flexible, and where you can tend to do a little bit more kind of on your own and take early responsibility and be given it. Whereas in the larger bulge bracket firms, I certainly found this is a very, very strict sort of hierarchy. And of course, transactions get staffed by big teams on large bulge bracket transactions, which means you get pigeonholed into your little area and you're not allowed necessarily to get out of that. I have a, a really clear focus that I want small, nimble, fast-moving teams where we all do all sorts of different work up and down what would be seen as a sort of strict rigidity, sort of hierarchy of, of tasks.

Yeah, that makes total sense. And I think just taking a look at your website, two of the most mentioned words were trust and experience. And there is no, there is no, there is no replacement for trust and experience. Again, a 25-year-old going in and trying to lead a deal, I don't know whether that would work particularly well. So I think it's fair advice. But, um, let's fast forward to 2016 and Am I right in saying you were working at Bank of America at the time?

Right, yeah. I mean, it was a tricky time in the— I left Greenhill, which is the firm I went to for 10 years from 1998. I left that in 2008 after 10 years, and it was a tricky time in the financial crisis. So I initially went to work for Lehman Brothers, where I was one of the chaps with the cardboard boxes that everyone's seen on the TV coming out, because I was there during the bankruptcy, which is a very interesting experience. I can't go into that now. A couple of years at Nomura, who bought the Lehman European franchise, but that wasn't a long-term option for me. So I decided to go to Bank of America Merrill Lynch, where actually a bunch of my colleagues were going as well. Quite a large number of the team members from the old Lehman franchise went there, and I went to head up the UK M&A team at Bank of America Merrill Lynch, which I did for 5 years from 2011 to 2016.

Okay, and what, um, what gave you the inkling that you wanted to move on? When did you start getting the rumblings of, all right, I quite want to set up my own thing now?

Yeah, it's really interesting. I mean, I guess I was in my mid-40s. I, I sort of wanted to do it for some time, but to that point I talked about earlier on, you need to have the confidence in your, in your ability to generate revenue, to originate transactions. And you could try and do it earlier, and I thought about it at the end in the late 2000s, the great financial crisis in Davina, which of course was, you know, really problematic for everyone, and deals were really hard to find. Doing that on your own would of course be even more challenging. So I could have put it on the back burner, and I had a really enjoyable time at Bank of America. It's a fantastic organization. It's got a global capability and a global network, which is incredibly important for large-scale M&A. And I was flying all over the world doing really interesting transactions, whether it was in Asia, whether it was in the US or across Europe, or even down in South Africa. Actually did a couple of deals down there. Really, really fun, high-powered, fast-paced, an awful lot going on. But I sort of had a hankering to get back to doing transactions in a particular sector. In which I'd spent a fair bit of time at Greenhill and at Lehman and Maura and at Merrill Lynch— Bank of America Merrill Lynch— where, um, I felt I had a real good client connection. I had a good roster of clients. I felt I could get back to doing that, and, and I could, I could build my own business and be my own boss effectively, which is, you know, ultimately we're all intelligent people in the world of investment banking. You know, working for other people is fine, and of course you've got to do it to develop your career, but at some point I think a lot of people have that itch to be their own boss, whether that means being a partner in a broader boutique or just setting up your own. It's something that's pretty attractive to people.

What was the tipping point? Because I, you know, a lot of people that have entrepreneurial ambitions and they've been thinking about doing something for quite a long time. Was there a client or was there a business partner or was there just a circumstance that really said, okay, Hey, 2016, now's the time.

I thought, yeah, do you know what it was? It was a transaction I was doing towards the end of my time at Bank of America Merrill Lynch, which was a business called Argus Media, where there was a family shareholding and an entrepreneur, um, and it was a very complicated deal and we'd won it. And I was furious with the internal hierarchy because they weren't keen for us to take this transaction. They didn't think there'd be much follow-on business, hadn't been on anybody's target lists. They were a bit iffy about the fee that I'd negotiated, even though it's a very attractive one. And I just knew that once we'd done the deal, which was a challenging one, but we got it done, I would not really see much in the way of, you know, the money from that fee. I wasn't going to really— it would just be lost in the overall sort of evaluation and the sort of discretionary bonus that you get at the end of the day. And I thought, actually, if I owned my own business, that revenue would be mine. And that, that's ultimately what I thought was quite interesting, was to be able to set up a, a business where I could control the cost base, control the revenue, and I could make an interesting business from that, which would be highly profitable. So I really enjoyed that transaction. It was great fun. It was just happening sort of towards the time when I was really thinking about moving on. And it was at that point that I thought, yes, I really need to get out there and start to build my own business. And funny enough, the first ever client I got had called me up in the summer after I left, just after I'd left Merrill Lynch, and said, we've heard what a great transaction you did for Adrian Binks and the Mason family on Argus Media. We'd like you to advise us as well. This was a cold call. I did not know them at all. I was obviously out marketing to other, you know, former clients, and that was a— for me was really encouraging. And we did a couple of— took a couple of years to do that transaction, but we did some work for them over the first couple of years, and it was really instructive. So yeah, it was, it was really that transaction which was— that pushed me into it.

Yeah, it's, it's great to hear, and I think it's, it's, it's a piece of advice for anyone thinking about going into entrepreneurship. It's really, really— it's, it's good to come from a position of strength, uh, where you're already enjoying your particular role. And it's also good to jump off through the sheer weight of people that might be interested in your services. When you can't, when you can't bat them away any longer, you've already got revenue coming in straight away if you, if you go, go, go it on your own. So yeah, so some very good advice. So yeah, I mean, we speak a lot on this podcast about the bulge brackets and big banks and the elite boutiques and things like that. Could you just give us a, a, an overview of Cardian Bell? What do you do? Who do you do it for, etc.?

Yeah, absolutely. So we're a small specialist independent, um, investment bank, which means that we focus on transactions which are at a smaller level, smaller scale from those, um, that you would typically do at a large bank like a Goldman Sachs, JP Morgan, Citi, or Bank of Bank of America Merrill Lynch. I must stop calling it Bank of America Merrill Lynch. It's actually Bank of America. They've dropped the old Merrill Lynch piece. So you— we focus on doing smaller transactions, and that's because the market is hypercompetitive at the larger scale. You do need the global network that I talked about a moment ago. And it's— you can get, you know, hard on larger transactions if you're a small specialist boutique. And there are certain boutiques out there like Roby Warshaw that have made a real success of doing that. But I wanted to focus focused on smaller transactions. And the reason for that is I wanted to get back to advising entrepreneurs and people who are effectively founders of businesses. I find that more rewarding than working for professional CEOs. So when you're working for professional CEOs— choose a business, Walmart, Tesco, or whatever— you know, your client CEO's in there for maybe as short as 2 years, maybe 5 years. You know, they're going to do some M&A, they're going to have a big in-house M&A team, and they're going to have an advisor which they'll higher, which will be a bulge bracket advisor, which often actually is hired not on the basis of their, their, their direct ability— you've got to have a good, you know, capability— but because it's their turn, because they're in the credit facility, because they're providing other services to keep board members happy that you're hiring. You know, no one got fired for hiring Goldman Sachs kind of thing, the old UBM— sorry, IBM sort of approach. So I think what I like about doing it at a smaller scale for entrepreneurs is they absolutely value the advice that you're given, and you're genuinely providing advice and you're generally managing the whole project yourself. So we focus on advising entrepreneurs and founders principally. We will also act for companies, we'll also act for private equity firms, but private equity firms will generally be the buyers of the businesses that we are selling. We tend to focus on sell sides, uh, they're more remunerative, they're less speculative, um, than a, than a buy side mandate. And we have two sectors that we principally focus on. The first is B2B information services, and the second is managed services and unified comms And B2B information services means business-to-business providers of content, data, and events. So not quite software, sort of tech end of things, although it does touch on that area because plenty of the business models have a SaaS-style revenue, subscription as a service, business model. And, but these are businesses that provide, um, you know, I don't know, choose a sector, aviation. So airlines and to know what flights are being scheduled by each of competitors on a particular route, you know, London to Frankfurt, London to Milan. And there's a couple of businesses that provide this, one called OAG, one called Cirium. And these businesses are, you know, effectively the Bible for their industries in terms of providing data. That business I mentioned, Argus Media, is an oil and gas pricing business, so it provides prices. So these businesses are incredibly important parts of their particular industry ecosystem, and they have wonderful business characteristics. They have high recurring revenue, high margin, and they're incredibly popular both with corporates and with private equity firms. And London has a little bit of a sort of mini ecosystem in and of itself because a lot of these businesses are built up in this area. And often there used to be sort of old-fashioned, what you'd call B2B publishing trade magazines. So think of Have I Got News for You, where they'd have their guest publication Forklift Truck Monthly, and that would, you know, you'd read that stuff. So it's that kind of— these days they're no longer paper magazines, they're They're online databases and they're really important sort of workflow tools. So we focus on that. And then the other side is managed services, which is IT services, broadband and telco services for SMEs and larger businesses. And there's a whole lot of consolidation going on in that space. So those are our two principal sectors that we focus on.

Okay. And what would you say is your sweet spot in terms of transaction size? How low do you go and how high do you get up?

Yeah, so we'll go— we can go quite low, but it becomes a bit uneconomic for our clients. Given our fee charging structure. So we've done deals at about the sort of £15 million level, which is really quite small, and those, those are normally by exception. But our real deal sweet spot is in the sort of around the £50 million mark, between £50 to £100 million. But we do do larger transactions. We've done a couple, and there's a £250 million mark. We were hired for a billion pound transaction over Christmas, which sadly didn't happen. So I'm pretty flexible going up and down the size space. As you get larger, um, in terms of being over £100, over sort of £250 million, there's quite a lot more competition for those kind of assets, uh, from larger firms. Um, and so that can be more challenging to win those mandates, which is one of the reasons why I like focusing on this sort of the, the smaller end of the market. It's known as the lower mid-market, uh, in the terminology.

And, and, you know, one of my questions was, why would a company go to you instead of a bulge bracket bank? Is it simply that the bigger banks, it just doesn't make sense with their overhead structure and their fee structure to go below below that £100 million EV transaction size.

Yeah, that's exactly right. So they can't earn enough given their fixed overhead allocations from this huge global network that they've got. They just literally can't earn enough from that. So a lot of, um, the large investment banks will have a minimum— when I was at Merrill Lynch, sorry, Bank of America, it was about a $3 million minimum fee size. Um, some of the lower mid-market firms who are playing in that sort of £100 to £500 million will have a minimum fee the size of sort of £1 million, uh, as an approach. So you can imagine if you're down at the kind of £25 million, £50 million level, that's a very, very big number for people to, to put up with as a sell side, as the client. And so the reason why they hire us is based on not just our fee, you know, competitiveness of our fees, but also our particular knowledge of that, those two industries that I mentioned. And that's critically important. You know, we did a public to private last year for a business called Adept technology group. We knew the management very well, we knew the shareholders very well, and our client said, you are the people who are— who our client was buying them, it was a Macquarie-backed business called Wavenet— you know, you know these people best in the market, so we want to hire you. So that's, that's how you get hired, is by knowing the market participants, the potential buyers, and having a trusted relationship with the, um, with the— oh, I can see your dog there in the background, excellent. Um, I'm afraid I haven't got my dog with me today. Um, so, um, so that very Niche is what drives the ability to win business at this sort of level.

Yeah, and again, it's, it's another really good bit of advice for, for any startups. I know this is a banking podcast, but really good. But you've got to find your niche, and you've got to double down on that niche, especially if what you're providing— M&A advisory— is at its very surface level, not as different, differentiated as providing a particular product. So it makes a lot of sense. My last question on, on, on Cardian Bell I was taking a look at your website and I noticed that you hire a lot of ex-accountants. So a lot of, a lot of questions that I have from students that are trying to think about M&A, not necessarily through the back door, but maybe they've missed the milk round or whatever it might be. They're like, all right, does it make sense for me to get my accountancy qualifications and then apply for these types of roles, maybe at an associate level? So yeah, tell me about maybe the advantages and also maybe the disadvantages of coming from an accounting background?

I actually, for a long time, wished I'd trained as an accountant. In the early stages of your career, when you're really focused on financial modeling, on analyzing P&Ls, balance sheets, cash flows, the ability to really understand the accounting, the debits and the credits, you know, all of that, really understanding some quite complicated accounting is really, really important. You could— you don't have to have it, it's not a prerequisite. You can get sufficient accounting training either from your organization that you or through third-party training providers, which is— I had a mixture of both. But it is definitely a good skill to have, and it's a good skill to have generally in all business contexts. You can go through a CFO route, you can end up going through a CEO route. It's a really good skill to have. Now, a lot of people go, "Oh, it's so boring, it's 3 years of hard drudgery." It may not be 3 years anymore, I can't remember the exact training requirements, but I would say look at the long-term opportunities there. And banks absolutely have a place for hiring laterally from accountancy firms at the associate level. It's not as high profile or as visible as the internship programs and the, you know, the way in which people are hired currently, but it's a very important source of good people. And so the typical trajectory is you do your Chartered Accountancy exams, you do your period in audit, then you go into the corporate finance arms of the EYs, the KPMGs, the PwCs, etc., and then under Lloyds, and then you jump from there into the larger investment banks. And everybody has active lookout for those associates to get that skill. So yeah, Jo is clearly a very strong accountant. She's been, you know, she's one of my colleagues, Jo Royden-Turner, Vice President, who has, um, you know, trained as an accountant, worked at an accountancy firm, done corporate finance for them, uh, and has come across and worked very effectively for me when doing that financial modeling and the financial analysis. Um, so I would say it's one of the critical skills you've got to develop, and you could do it without being a qualified CA, but it is a good route. So if you've sort of missed out on that, getting into the internships— my God, it's competitive. I used to run the recruitment program from my old alma mater, from Durham University, and I know how competitive it is. That was even back in the mid-2010s, you know. It remains a highly competitive industry to get into, so it's definitely a good route as an alternative.

Yeah, and I think, I think it builds a little bit at work. It gives you that foundation professional technical ground, and it gives you a little bit more confidence. I, I remember sitting across from some qualified accountants and thinking, gosh, they know what they're doing. Yeah, not that I didn't, but you know what I mean. Um, let's move on, let's move on to the market. I love to get your insights on— so we do this weekly podcast and we talk a lot about macro trends affecting big transactions and look at Goldman Sachs slowing down or speeding up in in terms of M&A transaction value and, and volume as well. So the same big trends, whether it's interest rates or inflation or any other macroeconomic indicators, the same trends impacts the area of M&A that you're in, the smaller deals, the entrepreneurial exits, or is it slightly different at your—

no, it is very much the same trends. Um, and the reality is that, you know, interest rates just drive every valuation. You know, they drive whether you're out of debt, you can put into a, a transaction, or just simply the cost of money. Um, and I think people really struggled to adjust to the ending of the low interest rate environment. Um, and, and it took, you know, several sections of the market a good year to 18 months to understand the valuations, the dynamics have completely changed. And I'm lucky enough with my gray hair to who have seen this, you know, interest rate cycles going up and down, and there is a big change. And what I see at my end of the market is entrepreneurs who go, but I don't understand it. Last year my business was worth— pick a number— $100 million. Why is it all of a sudden worth only $75 million when, you know, I'm still growing, my margins are still great, everything's— and you, you have to take me through the basics of valuation, the basics of, you know, the return on investment, why interest rates drive valuation so much, which if you want to, we can go into on this podcast or into another one. Happy to go into some of the real detailed dynamics there to help people understand. But it does drive what people think about in terms of value of their business. And if you put it in the context of our kind of clients, entrepreneurs who've been building a business for, I don't know, 20 years or so, they're gonna say, okay, well, if it's suddenly only worth 75 versus 100, and this is just a temporary, you know, valuation blip for a year or two, I'm just going to put things off. Why would I look to sell now? I'm gonna wait. So that does drive activity in the market. So we had a bit of a purple patch in our business coming out of the pandemic in 2021, 2022, when there was some bounce back and there was some, you know, pent-up demand to do some transactions. Interest rates were still low, the Russia-Ukraine crisis hadn't hit, and nor had the, um, the sort of, you know, cost of living energy crisis. So actually people took advantage of that. We did 5 deals in a year, which was really unusual for us. We're normally aiming to do 2 or 3 to 4, um, and it was really interesting to see that people took advantage of that. Then suddenly there was a bit of a slowdown when valuations adjusted to the higher interest rate environment, and that happened across larger banks and across the smaller space that we're active in as well. So it was, uh, it, it does impact, yeah, macro definitely. And of course it impacts the way businesses are trading as well. So if you've got a business that's you know, growing, you know, 8, 9, 10% and very happy growth rate, and then suddenly macroeconomic environment hits and they're down at 6, 5, 6%. That can really impact investors' appetites as well. So that drives thinking about timing as well.

It makes a lot of sense. Do you see this changing again across the lower middle market? We see slightly more positive bits of news come out about interest rates and about the economic outlook for the country and for Europe and the US as well. Is there more activity going on now down at the lower mid markets? Is it still a little bit wait and see? What's the latest?

It's definitely got better. I would say that the second half of this year has seen more activity. I've had people talking about more activity over the summer than is typical, which is good. I think the early election in the UK has particularly helped UK activities. I think increasing sort of sense that the US election is going to— it's obviously still very, very close, but there's a feeling that actually Trump could be quite pro-business if he happens to win, but that also Kamala Harris will not be kind of anti-business and that will be a strong continuation and actually The economy's done extremely well under Joe Biden. So sort of either way, the sort of macro picture there is, is not too bad. Of course, the US is heading for a slowdown. And the question is, how severe is that? We've had a little tantrum over the last few weeks in the stock markets, which I think has been exacerbated by algorithmic trading, because normally these kind of things don't happen during the summer months. But on the assumption that there is a sort of gentle economic slowdown in the US, which effectively is followed the one that we've had in the UK, uh, over the course of, you know, Q4 last year and Q1 this year. Um, and absent— again, I'm putting lots of caveats here— absent a, a conflagration in the Middle East or a further conflagration, um, around Russia and Ukraine, if those conflicts just continue as they are without a significant change, then I think you should be set for a reasonable steady upswing from next year. And I often remind people that what drives activity a lot is what the finance director decides he wants to do in the autumn for the next year. So what's he— is he going to finally let the marketing director spend a bit more on the marketing? Is he finally going to let that CapEx project and new product development come through? And it's really important, I think, the sentiment in the autumn often can drive a lot of spending decisions for the following year. And as everybody knows, one person's CapEx is another business's revenue, uh, and that's, that's so important. Um, so you've got to think about it in those terms.

It's really, really interesting to hear the way that you think about and the way that you discuss macroeconomic conditions in the context of what can be some quite small deals, you know, relatively small, you know, and, and entrepreneurs that have been head down working in their quote-unquote niche. But yet we have to think about oil prices and conflict in the Middle East and, uh, who wins the, who wins the elections in the US. And it all reverberates down into investment allocation and bullishness and confidence and stability, which again might determine the, the transaction price of a, of a small to mid-market deal. So it's, it's really interesting. And again, a good, a good bit of advice for students that are thinking, all right, well, why do I need to know about what's going on around the world? Why do I need to know about the Japanese carry trade or what are the yen carry trade? You know, this stuff matters, uh, even at a level that is very specific.

Because, because one of the critical things, Stephen, you've got to do is advise your client when to do the deal. You know, the, the sort of default position for all us dealmakers is, well, let's do it tomorrow because I need the revenue. That is bad advice. You've got to say to your client, actually, do you know what, you should wait until next year when you've got a bit of a recovery coming in your business and you're seeing a better appetite amongst buyers. Don't forget, it's not just the client's business. The buyer has got to feel confident in their business, and they've got to have the confidence of their board to say yes, go and take a risk and go and buy a business. So economic confidence is a key driver in what is quite cyclical business segment, cyclical industry. And, you know, I think back to the times in my career, you know, there was a brilliant period from early days, '95 through to 2001, the dot-com crash. That was a nice economic expansion globally, and it worked really well for investment banks who invested and did extremely well. Ditto 2003 to 2008, that was another fantastic bit of a bull— an over-egged bull market at the end, but really strong period. Then there was a financial crisis. We had a mini boom, if you like, in the early 2010s, but then it's got more and more difficult in the late period, but in a late 20, uh, late 20, uh, the late 20-teens, because of all of that problems around, you know, the, the pandemic, the Russia-Ukraine crisis. And there are always these crises globally, they go on all the time, but they have had quite— and for us in Brexit as well, as impacted trade. So for all of these reasons, it's been quite a sticky period. And I would say to anybody who's just coming into the market in the last 5 years, it can get better. Bull markets are more fun. They're great fun for doing deals. It will be good. I've been waiting for it because I want another one in my career before I, before I retire, because they're brilliant fun. So I'm hoping, and we're always optimistic, us deal dudes, that it's sort of around the corner and that then the latter half of the 2020s turn into a really nice bull market.

So just kind of on adjacent to that point, a lot of, a lot of students when we're teaching M&A, they ask the question, now, is, is there not a slightly, a slight conflict of interest or a perverse incentive for the M&A advisor to get the deal done, even, even if the deal is not maybe the perfect timing, or maybe it's not the perfect deal because you don't win the deal, you don't consummate the deal, you don't get paid. So how do you deal with that low-lying conflict of potential conflict of interest within Cardian Bell?

Yeah, it's a really interesting point because I've been accused of that a lot over my career. One of the things I think is really important, it goes back perhaps to that sort of what stage can you start being an originator and actually managing these these deals. If you're a bit desperate because it's your first deal, you might be tempted to— oh, you know, you should crack on, guys, doesn't matter that they've only offered 90. I know you wanted 100, but, you know, get on with it kind of thing. I'm lucky that I've been around long enough that I don't have to do the deals, and I can advise against doing a deal. You win so much by way of plaudits from your clients if you say, actually, this is not the time to do the deal, and they will come back to you and you'll do another one. Um, really important. The bulge bracket firms of Bank of America and Goldman's will say, we've got such a big business and there's so much going on that it's much more important that you give the right advice to the client, and it doesn't impact Peter Bell's bonus at the end of the year because he's going to get bonus, he's going to work on the deal. I'm not so sure that's really the case, but anyway, that's how they would argue it. What I argue in my business is that I am— I've got the financial wherewithal that we can stand not doing deals for anything up to 2 or 3 years, and there's plenty of transactions around that keep us going without worrying about that. So I'm really happy telling clients not to do a deal. We had one earlier this year which partly the client was getting cold feet about it, and partly the buyer found it a more difficult transaction to consummate. So we actually on both sides decided to, to pull, to pull back. Um, but I think that's important for, you know, for you to have credibility with your clients, to be able to say, no, don't do the deal.

Makes total sense. And we've spoken a little bit about how the market has changed and the cyclicality of the market. And we've also spoken a little bit about, you've got to put in your time, you've got to do the hard work, and you've got to gain the experience. A lot of students are talking about automation tools and artificial intelligence and why do I need to complete this model? Surely this is programmable. Programmatic. Why do I need to do this pitch book? Surely it's programmatic. Have you seen, and maybe how nervous should young new graduates be about the wave of AI that's hit a lot of industries already? Are we gonna finally be removed from having to do Excel all day?

Yeah, my personal view is I think it's gonna be really useful for some tasks, some repetitive of tasks. But, but I, uh, maybe that I don't want to come across as a luddite or old-fashioned, but it is, it is so important that you don't have a cookie-cutter approach when you look to do a, you know, a, a, an M&A transaction. Every single situation is different, and you've got to analyze each business very, very carefully. You know, if you just think, ah, Tesco's is the same as Sainsbury's Breeze, you're going to make a big mistake, a big, big mistake. So you've got to get under the hood, you've got to have a look. What's the customer feedback? What's the market share? You know, how is their pricing? What— how good is the product? Um, you know, what's their sales and marketing function like? What's their new product development like? All of this, so many different elements. And all of that, what I would call sort of qualitative analytics, critical thought then needs to be captured quantitatively in the model. So if you've just got a, you know, a standard model and you go, well, every retailer grows its top line at 3%, um, I mean, you know, they're going to make margins of, I don't know, 5%, 7%, whatever it is— I'm not very good on retail these days— you know, if you just plug that in, you're going to come out with an answer which might result in a really bad thing for your client. They're overpaying because you've over-optimistic because you've taken some over-optimistic comparators, or you're going to underpay and you're going to miss out on the asset because you haven't realized how unique it is. So I would say that pitchbooks, I can imagine becoming highly automated in a large investment bank. But don't forget, my secret advice to people is, what is a pitchbook in an investment bank? It is an anti-embarrassment document for the managing Correct. Okay.

Yes.

So they want 30 pages because they're feeling naked going into the meeting. What do I mean by that? They haven't done the work. They don't know the counterparties. They're probably doing multiple other transactions. They're probably slightly skirting in an area where they don't know very well. So they want to have a quick read of this late one night, get completely up to speed, and then bullshit their way through the meeting. So if it's an automated thing and it's just an information upload, load to your boss, then I could see that being, so what are the comps in this space? How does it work, et cetera? But if you just look at a bold set of comps straight out of FactSet, Bloomberg, whatever, you know, downloaded, it doesn't give you the insight that you really need to know about each of the businesses in there. And I think the people who win at this game are those who are able to do the unique analysis and to really understand it. And I would say, if you want to really add value as an analyst, as an associate, is give your senior bankers really interesting insights that don't just come from a regurgitation, an automated production of a document. That's really boring. You want to be doing some really good research to say, do you know what I've been looking at? I've been using supermarkets as an example, which is bad for me because I don't know them very well, but I've been looking at Sainsbury's, you know, geographic footprint, footprint of its stores. I'd be looking at its categories split between, you know, confectionery and, you know, what the allocation of space is across these, and looking at their sales per, you know, or gross margin per square meter rather than just sales per square meter. Try and do a unique piece of analysis which then gives your senior banker something which is really differentiated from what they are getting from a bog-standard piece, and that's what will help win the and help make you and the managing director look, you know, really clever.

Which is— it's amazing advice, and it's quite reassuring, uh, to anyone that thinks, gosh, all right, at an analyst level, I am just being a cookie cutter and I'm doing the same thing over and over again. And I think, again, as an analyst, if you are— or maybe as an associate— if you are feeling like you are doing the same thing over and over and over again, that's a very, very dangerous place to be.

In.

And therefore you should be thinking about, all right, how can I do things slightly differently every single time? That obviously removes the likelihood that you're going to get automated away, and it increases the satisfaction of your role as an analyst and makes you a better senior when it, when it comes to it as well. So I think it's brilliant.

And I think of the comparisons to other professional services. So audit, you know, they need to check transactions, you know, back to original general ledgers, etc. That's right for automation. My brother is a finance lawyer, and they often have to review leases, and they now have AI tools that will review 500 leases in 2 hours and highlight the 5 which have got some interesting things to look at, whereas that used to take a paralegal, you know, 5 weeks to do or something. It was absolutely ridiculous. So I think where there's a highly repetitive task, that is where the automation will come in. I think if you try and use that automation for tasks that look highly repetitive but actually benefit from an extra analysis and extra insight, then I think an organization will not produce as good a piece of work.

Totally agree. And we all know that this is a human business at the end of the day. Let's move on. Last, last little section, let's do a, a quickfire on a bit of, bit of career advice. So, uh, question number 1: what makes the perfect analyst?

I guess I've slightly just touched on it. It's somebody who goes to the extra yard. Bad thing to say in our industry because people work incredibly hard, but I always say to people, it's not about the hours you put in, it's how smart you are. Be smarter over it. So it's the extra yard doing that extra piece of analysis, that extra bit of insight, and try and work— try not to be spread across multiple projects, but go deep into one, really get a good understanding of it, and really provide added value. That's difficult to do, I completely appreciate it, but when you're stuck there at 10 o'clock at night, you know, crunching over another pitch book, another set of analyses, to me it's about, "How can I change this? How 'How can I make it interesting? How can I make it, you know, a little bit controversial?' Take a view. Be shouted down by your manager, that's absolute bollocks, but have a view. Make sure you've got a point of view to say, because as you start to develop those, at some point you'll have a view that's like, 'Oh, that's really interesting. I want to use that in a meeting and I'll copy it.' And, you know, that will provide a real sense of you being, you know, more than just a processor, someone who's really adding value. And I would I always say grab as much extra responsibility as you can in transactions. Um, always try and do the job of the person above you. Watch what they do, learn, and then try and do it.

Makes total sense. Does that advice, or does the perfect— does the shape of a perfect analyst, a perfect junior, change between bulge bracket, Bank of America, and smaller boutique?

It shouldn't. Um, I think it sometimes slightly does, but really shouldn't. You— the same qualities are needed. You would get more opportunity to take that early responsibility, as I alluded to earlier on. There's less rigidity in the hierarchy, and therefore you can— you, if you're good, you'll be trusted to do things a bit earlier than you would in, in larger bulge brackets. Some of them are getting better at it, but I think it's still quite— it's still quite hierarchical. So I think that's— there's a bit of a better opportunity in some of these, um, boutiques to, to, to move up, to start doing the jobs early, if you like.

And is there any way to— would you recommend a grad join a boutique straight out of university, or do they need to cut their teeth in a larger organization first?

I would say it's ideally better to do a large organization. It's not bad to have been in a boutique. You'll still get really good experience, but it might be slightly narrower. Most boutiques just focus on M&A. It is useful to get a bit of exposure to some financing, to some capital markets work. Um, so some of that breadth of understanding is quite important. If you can do a bit of leverage finance as well, that's quite interesting. So you can get all that exposure at a boutique as well. But yes, I would, I would look to, if it's possible, get a bit of experience first in a, in a bulge bracket and then do boutique.

And then a lot of, a lot of students might think that working for a boutique, maybe the, the hours are slightly less and maybe consequently the pay is slightly lower. I don't know if you have any general, uh, outlook on the difference as an analyst associate within a boutique versus—

yeah, I think the hours can be more flexible and they can still be very long, um, but there can be slightly longer down periods. I often say that, you know, big bulge brackets, it's sort high, you're up there at the top, but, you know, work goes a little bit like that. Whereas in boutiques, it can be up, along, down, up, along. So you get slightly longer breaks, if you like. I, I think pay is still pretty competitive. I don't see much difference. I mean, there are obviously, you know, differences between Goldman Sachs and, you know, other smaller boutiques, but, but generally it's not that differentiated.

What the, what is the one piece of advice you wish someone told you when you were starting out way back, way back when? That's a good question.

Um, look, I think it, I think it's be patient. I was quite impatient, like a lot of analysts. Uh, there's a phrase known in the bulge bracket firms called managing analyst syndrome, which is when you've got a, an analyst who's, I don't know, 3 years into it, just about become and associate, and they start to think that actually I can do the deal, man. I've done all this work, I know how it all works, I'm going to start doing it. And you have to sort of calm them down, make them understand it's a slightly longer-term game. You've got to do 10 to 15 years before you're really up there and can actually genuinely start to originate. So it's about accepting that this is a longer-term career and having that patience. I was probably a little impatient in the early days, but I think it's an important skill good about.

And then finally, what is, what is the best, what's the best response to a question you've heard in an interview with a junior? And maybe on the flip side, what is the worst or maybe most jarring thing a young applicant has said in an interview? Take this where you want to.

Well, I want to tell you what I was asked in my interview by this brilliant chap called Patrick Jacobs, long, long since retired. Retired. And I went in, I was interviewing— this was at the end of our graduate program— to see which division I was going to go into. And he led the financing division, and his first question was, 'Are you greedy, Peter?' I thought, 'Oh no, that's a nightmare question.' Oh gosh. And he was a big chap with a massive tummy, and I was like, 'Okay, this is not about food, this is financial greed.' Uh, and I 'Oh God, does he want the altruistic answer or does he want the, you know, the sort of the, the, the honest truth?' So I went with a slightly honest truth one, said, 'Yeah, I am financially very greedy,' uh, but I slightly, um, perhaps copped out by saying, 'But I think if I get my clients to succeed, I will succeed financially,' which went quite well. But it was one of those heart-stopping moments. What's the right answer to this question? And I think I've Got away with it, by the way, because he did what he said. Good. I want you to be financially greedy. Um, so that was— he was quite an old-fashioned banker. So, um, so look, I— yeah, I'm trying to think of other questions. I, I, it's— it— you often get people coming in and saying, I've already done a deal and therefore I'm a very experienced banker. Don't say that, because you haven't done the deal. You've been supporting senior bankers who've been negotiating the transaction, you haven't actually done it. So just be wary of your sort of how you characterize it, I guess. That's what I would say.

Okay, just to finish, if there's a student listening or if there's a graduate listening that's thinking, all right, boutiques sound really interesting, I like the entrepreneurial nature, what are the steps? Maybe your first or second year working in a big investment bank. Where are the watering holes? How do you find out about jobs that are in boutiques? Is it you wait for a recruiter to call? What's the— how do you go about getting a job at a boutique?

Well, it's slightly more difficult actually than the bigger firms because, you know, boutiques don't always use recruiters, but definitely recruitment firms are used. A lot of it's word of mouth actually, um, so that's quite difficult because you ask your boss, does he know of any jobs going in a boutique? But, but it's asking peers, it's asking other people around, um, and actually it's going out there and being proactive. I actually used to spend a little bit of time in my sort of mid-level years just meeting other senior bankers for a coffee that I came across. So if I was opposite a senior MD in another bank, I would, you know, after the deal— but I say opposite, I wasn't the same level, but I was in an opposing team, after the deal I'd just send them a quick email and say, "I really enjoyed working opposite you on this transaction. I'd love if you wouldn't mind going for a quick coffee where I could pick your brains and get some career advice." And it often, it was more about just checking them out and seeing what their organization was like. And in those sort of situations, you can then have a coffee with someone and they can say, "Well, you know, we're not recruiting, but I know such and such boutique is recruiting. Let me introduce you to them." And it's those sort of referrals you get. So I always encourage people to do a— it seems counterintuitive, but to do networking in other investment banks, whether they're big bulge bracket ones and you're bulge bracket to bulge bracket, or whether you're in a boutique environment. Always worth doing to get to know some of your sort of peers and more senior peers, if you like, because they're the people who are thinking about recruiting.

Peter, thank you so much. This has been a really, really useful, wide-ranging conversation. Thank you so much.

Let's do it again. I'd love to do it again.

Well, let's dive into some interest rates. I think that's going to be the follow-up. As always, if anyone wants to ask a question on the Q&A function on Spotify or on Apple, please do. Obviously, get in touch with us via LinkedIn. Ask any questions that you have. Hopefully, this has been useful. Peter, thank you so much for your time. To another boom before you retire.

Exactly, we need another 5-year boom, that's what we want.

Thank you, Peter.

No problem, thank you.