Odd Lots - Scott Bok on How Bankers Spread the Gospel of Capitalism

Episode Date: May 19, 2025

When we think about the prospect of deglobalization (whatever that means) we often think about it in terms of the goods economy. Supply chains get rerouted. Manufacturing becomes more localized, and possibly less efficient. But changes to the global world order also have implications for Wall Street, and the world of dealmaking. On this episode of the podcast, we speak with Scott Bok, the longtime former chairman and CEO of the investment bank Greenhill & Co., which is now part of Mizuho. Scott is the author of the new book, Surviving Wall Street: A Tale of Triumph, Tragedy, and Timing, which covers his long career as an investment banker starting in the early 1980s. We talk about what investment bankers actually do, and also how the great Wall Street dealmaking boom over the last several decades is, in large part, a story of globalization, and the opportunity for firms to roll up localized companies into cross-border giants. He talks to us about how the bankers themselves served as essentially evangelists of the pro-capitalism message of the Reagan era, spreading the gospel of shareholder primacy all around the world. Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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I'm Joe Wisenthall. And I'm Tracy Allaway. Tracy, I would say that within the broader realm of finance and markets and Wall Street and stuff that we cover, like deals in dealmaking, kind of, maybe we don't cover it enough. 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, you know,

traders taking uddles of risk. I think people are always thinking about the guy on the phone. Yeah. He'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. 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 stuff. 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. 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. You know, 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. 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. No, like, why within a large firm these are natural compliments to each other as part of business? Even that I don't have a great handle on.

I have a feeling that our guest knows exactly the answer to that question. We do indeed have the perfect guest. we are going to be speaking with Scott Bach, the longtime former chairman and CEO of the Investment Bank, Greenhillen company. He is out with a new book called Surviving Wall Street. So, Scott, thank you so much for coming on Odd Lots. It's great to be here. Thank you. 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 kind of a waste of your time. I have a random question when I've always wondered about for so long. you can make a lot of money in investment banking, in dealmaking and making deals happen. What does the investment banker bring to the table? You know, I always think 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?

You know, I actually answer 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, you know, management hasn't

gone off the reservation. The deal actually makes sense. It's going to get a reasonable response. And so it's a kind of a very broad role. And, you know, it's one thing I like about it versus, say, trading or so many other aspects of Wall Street is, you know, this is never going to be outsourced to AI. There's never going to be a button you push in an M&A deal happens. You know, 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.

Kind of an expensive sanity check on corporate management, though, if you get them to talk to bankers and make sure that, you know, the deal is not completely crazy. But to Joe's point about the bulge brackets and why do they have M&A on top of trading or debt issuance? And the money. that sort of thing. Maybe we should talk about the big trend of the early 2000s, which was all the boutique M&A firms getting started and then getting a lot of traction versus the bulge bracket guys like a Goldman Sachs or Morgan Stanley. And as far as I remember, the big pitch for the boutiques was that they don't have a conflict of interest. And, you know, they're entirely focused on getting the best deal for their clients. Was that the pitch? It was that simple? That indeed.

was the pitch, but, you know, that pitch developed out of circumstances as opposed to being the original strategy. Here's a short history of my career, which was kind of laid out in the book. Okay, when I started in the business back in, you know, graduated from college in 1981, it's a terrible time. Dow Jones is below 1,000, which it first crossed more than 10 years before that. You know, M&A almost unheard of, private equity, hedge fund, activist investor, those phrases didn't even exist. And the business was very specialized. So if you wanted to get a tech deal done, you didn't go to Morgan Stanley or Goldman Sachs. You went to Hamburgton-Quist or Alex Brown or Montgomery Securities. If you wanted to do a UK deal, you went to what was called a British merchant bank, Kleinberg,

Benson, Warburg, S.G. Warburg, Bering Brothers, etc. So everything was highly specialized as to what you did. And what happened to sort of the next 10 to 15 years was a massive wave of mergers. At the end of that wave of mergers, you know, the four, what they call the four horsemen who did technology were gone. All the British merchant banks were gone. Many U.S. firms, including like Donaldson Lufkin and Jenrette, had been absorbed. And essentially at the time Greenhill started, I would say almost all the advisory fees in the world were paid to one of nine firms. There were six in America and three in Europe. So it got very, very concentrated.

And I would say Greenhill was formed. and then a whole bunch of other firms sort of followed us, particularly once we went public. Greenhill was formed as kind of a reaction to that consolidation. It's like you'd go to a client and say there are sort of two flavors here. There's nine guys selling one flavor, which is one stop shopping, all the different products, very sales-oriented approach, and then we're selling this other flavor, which is we're totally aligned with you, all we're focused on is M&A. We don't have anything to cross-sell you.

And one thing I talk about in the book, which is kind of interesting, is what really drove that conflict pitch to clients was not something and had anything to do with M&A. I think it's when Elliot Spitzer went after Merrill Lynch and other firms and eventually had a settlement with the whole industry. We just recorded with Henry Blodgett. So this is a good follow-up. Look, and he, sorry to say, got in a little bit of trouble for that one. Just a little. You may recall that. But yes, he was focused on, you know, research analysts writing glowing reports for companies they didn't believe in to try to get share sold in an IPO. But, you know, it woke up corporate America to the fact that sometimes there are conflicts of interest you're not aware of. And why not hire a firm that doesn't have any of those? So we kind of adopted that as our strategy, as our calling card, and it worked really well.

So conversely, the story I always heard from bulge brackets was like, okay, you can go with a smaller firm that might not have a conflict of interest in all these other businesses trying to get your attention and sell you stuff. But if you go to a boutique bank, there are some down. So obviously they don't have the same financing and credit and capital market services that a bulge bracket would have. And also they get paid only when they complete the deal. And so, you know, they want to complete the deal and they might not actually be providing you advice on why you shouldn't do the deal. What do you say to that pitch? Look, that is the legitimate counterpoint. And then the counterpoint to that is, yes, but our business is built entirely on reputations. And if we're out there telling companies to do deals that don't really make sense, it's going to hurt our reputation. We're in a long-term business.

We're trying to build a brand, trying to build a client base. And so, but fundamentally, there's room for both players. And both players have certainly thrived in the years since then as M&A has really boomed in American around the world. But what we did and what really differentiated us is just that we had a different strategy. It was a different flavor for companies. And many of them were worried about conflicts or maybe they liked a real small firm approach or they liked the hands-on sort of senior guys working on the day-to-day aspect of the deal. And so it worked very well. And really a whole bunch of firms followed us into that once we actually went public and had a lot of success with that.

Yeah, we should talk about that because you were kind of a victim of your own success in some ways. Just to set the context for the rest of the conversation a little bit more, why do you just sort of fill out the short version of your career history and Greenhill specifically you talk in the book about the founder, Bob Greenhill, also at Morgan Stanley, but just sort of give us like, like the sort of the rest of the outline of your slash Greenhill's history. Sure, sure. So I worked at Morgan Stanley for about 10 years after a brief time at the law firm walked out Liptin doing M&A. I was at a vastly different level than Bob Greenhill. He is a full generation, probably 25 years older than I am. So at the time I moved for some period to London

for Morgan Stanley. I was an associate, pretty lowly job at the firm. Bob was president, pretty senior job at the firm. By the time I came back, he was gone. What had happened? And you guys alluded a few minutes ago to, you know, wire sort of bankers and traders under the same roof. Well, back in those days, was when that was first happening. And that caused a bit of a turf war really between a power struggle, really, between Bob Greenhill and John Mack, who obviously went on to an extraordinary career in a couple of different places. And as trading really grew in terms of scale and volume and how much money you could make, how greatly you could scale that business and put capital to work, you know, the investment banking business became less important. I mentioned in my book,

a great quote from a mentor of mine at Morgan Stanley, who I don't mention his name, but he used to say investment banking is the hood ornament on the Mercedes. The engine of the Mercedes is the trading. Is the trading operation. So Bob Greenhill ended up going to work briefly for a client of his named Sandy Weil, another famous guy in our industry. He was not really well suited. I think he would even agree with this as kind of a pure administrator or manager. He's a dealmaker. And so he ended up having a bit of a struggle there with another guy you may have heard of, Jamie Diamond, who was a very, a very... Small world at that level. Exactly. Who was a very young guy at the time working for Sandy Weil, his mentor early in his career. And so they had a falling out. Bob left. He hung out

his own shingle. And I think he did it not so much with any sort of grand strategy. He did it with the sense of, you know what, the big firms are really focusing on these capital businesses. I like advising clients on deals. I'm going to hang on my shingle to do that. And I joined him in the pretty early days when the firm was tiny, I think it had announced one transaction. And I went really for the same reason, actually. I left between the announcement and the closing of the Dean Whitter merger with Morgan Stanley. The firm is going to go from a few thousand people to 40-some-thousand people. And to be honest, I never saw myself working for a place with 40,000 people. And so I was kind of open to the idea of going to a smaller, more focused place. So when Bob called, I took the call

and went there very quickly. Can I ask a cultural question? Because, I mean, the book is called Surviving Wall Street. And you get into, I guess, the daily rhythm of life working in a business like that. But whenever I talk to or when I used to talk to a lot of the big investment banks, all the management likes to talk about how special their culture is. And we do things differently to others. So I guess my question is, what's the cultural difference?

I'm doing air quotes here on a podcast. I don't know why. But what's the cultural difference between being a true? trader versus someone in M&A, who's presumably very client-focused. And then how would you describe the cultural differences between different M&A firms slash banks themselves? Is it really all that different? I think it does differ quite a bit. So first, the question of sort of traders versus bankers. I mean, trading is an analytical profession. I think it's more of an individualistic profession. You know, you're the guy trading a particular kind of security. Just you and your

screen. Yeah, kind of view on your screen. Look, you spend a lot of time at the screen, and you also are tied to the market. I mean, your day, you get there really early in the morning because you want to be ready for markets to open. You're there for the full day. The market's closed. You go home pretty soon after that. Investment banking is much more of a team sport where literally, you know, in your junior years, you're sitting there at 9 o'clock having, you know, pizza or Chinese food you just ordered in with your colleagues because you've got two more hours or three more hours of work to do that night. So it's a real camaraderie that develops in investment banking and dealmaking, in part because people live together so much.

They work long hours and they also travel together. So it really develops a strong camaraderie, which is why culture actually is very important. And yes, everyone says they've got a fabulous culture. I will tell you, I believe it, Greenhill really did. And that won't surprise you at all. But, you know, look, you read these things about analysts who are being abused or being overworked to the point where literally people are getting sick and in some cases worse than that. And you want to have a place where people feel like a human, you know, where they're treated

with respect by the more senior people. Yes, they work harder. Yes, they get paid less money. But you've got to treat those people with real respect. And I think we did that. And I think many of the best firms do that. I think there have been some firms over the years that are, you know, kind of too much of a sweatshop mentality.

And that really doesn't, I think, pay off in the long run. Joe, you know what happens after 11 p.m. after the bankers are finished eating Chinese food and they've done the deal docs. What happens? They send them to the lawyers. Oh, yeah. And then the lawyers have to stay up from 11 p.m. to 6 a.m. to finish the docs. I know this from personal experience.

And now you have just explained why I left practicing a lot. Yes. My husband as well. Yeah. I'm Francine Lacqua, an award-winning journalist. And I've got a new podcast, leaders with Francine Lacquois from Bloomberg podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment, but I've always been curious who are these people as leaders. I don't think there's one

right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacois wherever you get your podcasts. You said something in the very beginning that I think was very important, which is that when you started your career in the early 80s, the scale of the deal-making industry. Set aside to dealmaking industry, deals, period, were just not as prevalent. It was just not as, what changed? I think this is going to segue into a really interesting topic, but it did change right around that. I mean, a grand innovation at Morgan Stanley in the years before I got there was when somebody said to Bob Greenhill,

hey, why don't you form a group with three other people and see if we can sell advice to companies who want to do M&A deals? There were four people in the group, right? So it was a tiny, tiny business. And even when I started, got a law school in 1984, it was a very small business. I think looking back, what really drove a lot of that was globalization. I think if you think back to, you know, when I was a kid, I'm sure probably you're younger, but when you were a kid, I mean, every town had its own newspaper, every town had its own bank, every region had its own soft drink brands, its own ice cream brands, its own, you know, other consumer brands. And if you think about what happened in the ensuing years was you had trillions of dollars of M&A, that essentially rolled up companies into first and national and then global sort of champions.

And, you know, I looked back, for example, because I thought this might be a topic given what's going on in the world right now. And if you look at cross-border M&A, meaning buyer on one side target and another, from American companies, I mean, I looked back in the early 1980s. There were some years when there was roughly zero. And for the last 10, 15 years, it's between $500 billion and a trillion dollars a year. So that's what really drove it was you had a very fragmented industry in every industry. And still there's plenty. There's always more deals to be done.

But what really happened was forming these national and global companies through M&A. So one thing you describe in your book and you sort of explain all these different events through your personal career, but five crises that defined Wall Street. So the collapse of LTCM, the bursting of the dot-com bubble, the 2008 financial crisis, the COVID pandemic. and then the sort of aftermath. Talk to us about the aftermath because I think a lot of people would think, you know, 2022 was a terrible year for markets and we saw a lot of deal volume collapse. But what's the sort of existential crisis that's facing dealmaking in the post-pandemic period? Sure. Yeah. Much of the book is really about leadership and sort of navigating those five crises. And the reason surviving is in the title is that a large majority of the Wall Street firms that were in business when I started are long gone.

So it really is a game of survival played on a grand scale. And I do talk about those five crises. The fifth one is the hardest one to name in a pithy way. But I think in some ways it was the most complicated because I would say, if you wanted to describe it, I would say it was the combination of COVID recovery when there was a ton of stimulus put into the economy and the Ukraine invasion. The combination of those things drove up inflation, drove up interest rates. And I think it's fair to say we are still kind of reeling from that. I think they even had political implications in terms of how, you know, what president got elected and for what reasons and so on.

So that, I think, it was a very sticky crisis that also involved the way we work, not just markets, not just, oh, the interest rates are we're going to bring them down to try to reflate the economy and all that, but really literally the way people work, you know, trying to work from home and, you know, not having the same sort of in-office culture and training and kind of team efforts to win and do business. And so that's been a hard one, I think, for American business to work their way through. I want to talk more about the actual reality of globalization and what that means, because to this day, countries feel prideful about their national champions. Even in Europe, a largely integrated economy, some of the issues with further integration has to do with the fact that specific countries within the EU don't want to see their national defense company, whatever it is, rolled up into something that is not. stuck to the nation. What happened in the early 80s such that either countries or regions or companies that there was this ability, like this comfort with folding them all up? Or who saw that vision? Like, talk to us about like this idea that, look, there's a lot of publishing magazine companies in every country. They don't all have to be, there are economies of scale to be had

by integrating them. Like, where did that come from? Or who, how did that get greenlit? Well, I think, you know, the 1970s was a really stagnant period. I mean, I was in high school and early years of college in that period, but it was really stagnant, right? The Dow Jones was lower kind of at the end of that decade than it was at the beginning. So that's a long, difficult period. And I think, you know, with Ron Reagan, with a view that we're going to be more kind of more real capitalism, we're going to let capital flow freely. We're going to reduce regulation, reduce taxes, all that kind of stuff and try to get things to grow. That was kind of, that spread around the world to a fair degree. And now that I look, back as a nation. We think about whether we want to reverse globalization. I think back, like, what were the key events? I would say, number one, the European Union really coming together in a more meaningful way, right? There's not a day they just sort of, okay, we're going to have a European Union. You know, it came in fits and starts. It got more integrated. The euro was sort of formed as its own currency. You know, I remember because it happened right before I moved to London from Oregon, when the Berlin Wall fell. That really changed the attitude in Europe a lot, that Europe was not going to be a bigger,

or more integrated place. There was a lot of opportunity economically. You know, clearly China joining the World Trade Organization was another big event. But I also think what drove it, and this is maybe a little bit circular, but I think it's true, I think there's trillions of dollars worth of M&A transactions that the more you did, you know, it's like deals, but get deals, right? If you're in an industry and you see one of your competitors buy something that gives them a leg up on what you're doing, you're going to go out and try to find something of your own.

And so it kind of fed on itself. And obviously, in the end, created a massive industry that really is focused on doing transactions. And I was a part of that industry. Here's a very loaded question. But what percentage of M&A transactions would you say are people basically trying to copycat their competitors and going, well, they did a big M&A deal? I want to do it, too, versus how many are actually driven by rational, strategic argument? Well, I think it's a little bit of both. but I do think they're mostly driven by rational strategy and it makes sense.

I think those broad strategic themes, I think, cause one company that's a bit more of a leader, a bit more kind of proactive will do something, and then it kind of wakes up the other ones that they need to do something to. And particularly if you think about how technology has changed so many industries, I mean, take your industry, take the media industry. I mean, the so-called legacy media, boy, they have had a rough generation, not a rough couple years, like a rough generation. You know, newspapers sort of largely died, except for a few, like the New York Times. And you broadcast TV, kind of sort of died cable TV struggling. But, you know,

you keep having new models. Podcasts are doing okay. Podcasts are doing okay. Streaming is doing more than okay. So it's not that the business went away. It's just that it evolved. And if you didn't find a way to evolve with it, your company was going to get left behind. I'm really interested in this idea of the sort of like spread of Reaganism and this like comfort with capitalism. And, you know, And yeah, the comfort with the realities of capitalism that your inefficient company here might be better as part of something multinational tied to. Was that something that, like, you could see, like, you know, softening. You know, it's interesting. One thing that we should talk about, we're already seeing how a sort of discomfort with globalization is killing deal activities.

A really good example is U.S. steel. The discomfort, both the Biden and the Trump administrations have had with the idea of selling that to Nippon's deal. But just talk about, like, was there a sort of like softening in the regular? environment everywhere such that these agglomerations, conglomerations were enabled to happen? You know, I'll tell you a story that really makes it seem in some ways even more cultural than sort of legalistic or regulatory. When I remember when I went to Morgan Stanley in 1990, again, right after the Berlin Wall had fallen, and just to paint a picture, Morgan Stanley's offices on were in a rabbit warrant of small

offices behind the John Lewis Department straw on Oxford Street. Right. It was not in the city of London, which is their version of Wall. Street. It was not in Canary Wharf, although later it would be when that got built. It was a very, very small business. Goldman Sachs was very small over there, too. But we were, I literally looked back on it thinking, you know, we were a little bit like missionaries. We weren't selling a religion, but when we traveled the places like France and Germany and the Nordic region and so on, the religion we were spreading is that you should focus on shareholder value. Shareholder value.

Have you heard the good book of shareholder value? Exactly. Because, you know, this thing that we totally came to take for granted about like what are corporations for, what is their purpose is Americans would tell you, and I think around the world they would tell you, they're largely for shareholder value. You can talk about different constituents and so on. But I can tell you when we went to talk to German and French and other companies back in the early 90s, that was a novel concept for them, you know, that it wasn't just about building a bigger enterprise or surviving difficult times and just building great resilience.

It was about, wow, you can actually focus on the goal of creating shareholder value. And that is what drove, I think, M&A. And that M&A just kind of a virtuous circle drove more of that thinking. Tracy, I have to say, you know, like I've been so thoroughly enmeshed by the messianic message of shareholder value. I almost have like a hard time imagining a world in which companies don't perceive that. And governments and citizens don't perceive that as the mission to make the same. stock go up. Really? Okay. Well, here's my next question. And this is the reason why I kind of asked you about the post-pandemic crisis. But it does feel like we are in a somewhat different world. And we now

have a president who I think everyone initially thought he was very pro-business. And we saw stocks of a lot of smaller M&A boutiques go up and stocks of a lot of larger banks go up after the election or around the election. They've since come down because a lot of the measures, a lot of the statements coming out of the Trump administration don't actually seem that business friendly. And we have reports, for instance, of Trump telling companies don't raise your prices too much to offset the tariffs because, you know, it's a political liability for him. That seems to fly in the face of the mission of creating shareholder value. Is this a new regime? It certainly feels like a new regime. I think company's job is to try to figure out how can I create or maximize as the word often used shareholder value,

given whatever circumstances surround me. And those circumstances are both economic and they're also political and they're also regulatory. But I do think one of the reasons that you see, but just really a remarkable amount of volatility right now. And, you know, I said I wouldn't use this word,

but I'll use it uncertainty. That clearly is... Well, you made it about 20 minutes or 25 minutes. It's good. It's clearly impacting markets. But, you know, when I talk about in my book, sort of the Dow below 1,000 on the day, I graduated college, and it's 40,000 today,

me 40 times gain. And I do feel like a lot of that was driven by globalization. And I think if that was going to be reversed, sort of the untangling the strands of spaghetti that we've created in sort of the corporate world, I think, is going to be very problematic. And that's why, you know, you hear things like, I think Secretary Besson the other day talked about how the current situation between the U.S. and China is unsustainable. I think a lot of business people are thinking, yeah, it's unsustainable and therefore they won't sustain it. Yes. They will back off, but I'm not sure that's going to happen and nobody else's either. The bankers are these missionaries extolling the shareholder value mantra around the world.

What was the previous belief system in place before that? If you're in a Germany, what is the role of a company that your vision superseded? I think that in many parts of the world, and even in America, really, you had this sense of just sort of the corporation was an, an, an, entity of itself and had a life of its own and its goal was just to perpetuate itself. You know, there wasn't a lot of M&A. I mean, there was a, you know, of course I mentioned I started my career at Wachtell Lipton. And, you know, Marty Lipton, the founder of that firm was such a great, you know, spokesman for this issue of the market for corporate control that only when you had the discipline

of the market that said, essentially, you're a CEO, you're a board, manage it however you want. But if you don't manage it well, your stock price will go down and we will buy you. And then you will be out of jobs and we will take over and we will run it better than you do. And that market for corporate control created a discipline on companies that they had to try to maximize shareholder value because if they didn't do that, they would get bought. Yeah. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered right to your podcast feed.

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We're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. Green Hill got bought. Can we talk about that deal a little bit? Because we've been meaning to do an episode on the sort of rise slash return of Big Japan, I guess. And we've never quite gotten around to it. But obviously, you know, Missouho, it kind of. coming in, buying a company like Greenhill for, I think it was $550 million?

It's correct, 550, yes. $550 million. A lot of people were saying at the time this is, you know, another big Japanese bank trying to make a splash in overseas markets. Maybe it's about the idea that given tensions between the U.S. and China, there's going to be more opportunity for dealmaking by Japanese companies. There are all these sort of strategies attached to why this deal was being done. you were directly involved with it, I assume, what was your interpretation of what was going on?

The book certainly tells the story of the evolution of our industry. Again, going back, we were a pretty unique business for a long period of time. There were a lot. There's a whole chapter in there, about all the many firms that followed us, particularly once our IPO, not only was a success, but quadrupled in share price over the first 18 months. So we were worth $2 billion, and still not many more than 100 people, including, you know, the receptionist and everybody else. So the sector got more crowded, right? There were more players. And I thought what made our firm so successful at the beginning was we had a different strategy. And so you always have to think about what's the right strategy, not for the last five or 10 years, but for the next five or 10

years. And so having had many, many opportunities to sell the firm over the years and really not showing any interest in any of them. I talk about a lot of them in the book. There are many of them that are spelled out there. But I never had any interest at all. Really didn't even have much of a serious meeting with anybody. But, you know, the Missouho people, through an intermediate approached me. And again, I had no interest, my typical stance. And I just started to rethink things, you know, coming out of kind of the latest, the pandemic crisis, you know, seeing the industry go through another difficult time. Also, frankly, you know, my own personal situation. I mean, I thought about subtitles for the book that would be something like life cycles of Wall Street

firms and the people who run them because, you know, we don't go forever either. And I thought, you know, for the next chapter of Greenhill, I think being part of a strong global, Bank like Mizzouho would be good. So six months after they said, would you have a cup of coffee? I sent back a message through that intermediary saying, yes, I would have a cup of coffee. If the purpose of a corporation is to create shareholder value, for a boutique investment bank, why do shareholders get to split the value with you? Why even bring shareholders in?

It's not a capital intensive business, the people creating the margin. why isn't it just run for the bankers? And actually, this is a criticism, in fact, of like investing in investment banks. It's like, no, the bankers capture all the margin. Why even have shareholders? Well, here is sort of the dirty little secret of the IPO market, which is if you want to crystallize and collect shareholder value, a very good way of doing it is to take your company public. We were the first of our kind to do that. idea sort of came to me one summer when I was doing work for a client in an unrelated industry,

and I thought, hmm, I wonder if we could go public. We decided if we had one more good year, we're going to do that. So on January 2nd, 2004, I called up Goldman Sachs and others and said, hey, would you consider taking us public? And that's a great way to crystallize value, realized value worked out great for our early founders for sure. Being a public company is not nearly as much fun as going public. And, you know, and in fact, I mentioned in the book, part of my thought process when I ultimately decided that we would sell become part of Mizzouho. You know, the number of publicly traded companies in America in the lifetime of our firm fell in half. And part of that is investment funds want to invest in bigger, more liquid stocks.

And part of that is there's more regulatory hurdles to being a public company. And so it declined a lot. So sometimes people will say to me, that really is difficult being a public company. Do you regret that? I'm like, no, I don't regret that because we all made a lot of money by going public. and by the way, had a lot of fun as well, so that was all good. But I think for many companies, and the reason you often see companies go public, be public for some number of years, maybe get taken private by a private equity fund. And then what happens? Three to five years later,

they take it public again, maybe in a slightly different form. So that's the kind of ying and yang of the IPO market, which is that it's not forever. You tend to do it for a period. Wasn't the argument also, if you're a partner at a boutique, M&A firm, you have sort of equity in the business, some sort of partnership stake. But if you IPO, then you basically trade that illiquid equity for something that's public and quite liquid that you can monetize. Well, and even more so, that's all true. Even more so, if you were a partner of Goldman Sachs before it went public, about five years before we did, when you retired or sold your, you know, effectively sold your shares back to the firm, you got paid out a book value.

You know, the day it went public, I think it went public, a like three times book or something like that. So suddenly overnight, the value of what you had tripled. You can read history of Goldman Sachs, kind of like my book is a bit of a history of the industry and see some of the tension over the years because you had generation after generation of partners who would reach retirement and get cashed out of book. And then along came one generation that decided we're not going to get cashed on a book. We're going to do something different. And that's kind of the calculus we made as well at Greenhill. I mean, there was a long history, even before our firm, of smaller boutiques that eventually got sold. They would sell out to a bigger bank. And I wanted to keep us independent. I thought

we could go a long way and build a big global firm and all that sort of thing. And so I thought, really one summer, I just thought, I wonder if instead of crystallizing value by selling the firm, I wonder if we could go public. Let's talk a little bit more about the contemporary environment and the prospect of de-globalization. The initial COVID supply shock obviously woke up a lot of countries, at and key strategic sectors or whatever to have their own capacity, then the war in Ukraine further dividing the world among multiple lines. Now the tensions with China specifically, but also maybe with every other trading partner, including Japan. And talk to us about like what's emerging potentially from your perspective in the place of the ideology that you preached throughout

most of your career. Yes, it is different change from just the kind of the pure shareholder value. We don't care where our plants are. We don't care where our customers are. We just want to have the right configuration to maximize shareholder value. If you or your government has to start thinking about, hey, maybe we want to have some of our own capability in that field. It really changes everything.

I mean, here's a really simple example. If you are running a country that's in a climate that's not the greatest place to grow food, you probably want to grow some of your own food nonetheless. You know, it may be more expensive, maybe more difficult, but you probably want to have some of your own supply. What's now being talked about is maybe that's true in a whole bunch of things. Maybe that's true of, you know, pharmaceuticals. Maybe that's true of our defense products. Maybe that's true of all the electronics that we all, you know, live with

every single day of our lives. And if you start thinking that way, I think it will quickly lead to countries saying, I'm not sure we want to allow this foreign company to buy our, you know, wonderful company here, because if we will lose control of that production, and I think if you, you start to think broadly as a government, you could convince yourself in almost every industry you'd like to have some of your own capability. I was just, you know, this came up on a recent podcast, but the administration recently talked about how much we import in textiles and clothing. And it's just like, this is not a strategic sector particularly.

This is not a sector associated with high margins or high value jobs. So to Scott's point, Tracy, yes, countries can suddenly start. to convince themselves that every sector of the economy needs to have domestic capacity. Why is the U.S. not growing its own silkworm supply? Or bananas. Or bananas or mangoes or avocados. These are the big questions. We love guacamole in this country.

We need our own avocados. We do indeed. Okay. So if we're in a period of heightened protectionism slash declobalization, what exactly should M&A advisories actually do, the dealmakers? Do you start focusing on restructurings instead? I know Greenhill did a lot of restructurings post 2008. Yes, a lot, almost really all the M&A advisory bootooks really added restructuring capability

because you figured out pretty early that when M&A is really slow, there's a lot of restructuring to be done. This cycle, though, I'm not sure that it necessarily shifts into a lot of restructuring because it's not like the economy is that bad. Now maybe it gets there, of course. But I think, you know, what you're seeing in the statistics year to date, certainly, is that there has been considerably less M&A. I mean, somebody told me the last month, some data was showing that it's like the slowest month and, you know, in many, many years. And so I think we're not yet in a period.

I don't think of de-globalization, but we certainly are on the brink of one. And if the tariffs, you know, really got solidified at significant levels, I think that would perhaps create some M&A opportunities. I don't think as many is under the, under the old religion of free trade and shareholder value. But I think it'll create some. I mean, you'll need, you know, European companies that sell in the U.S. might think, okay, we need to have manufacturing capability in the U.S. to service that. And like vice versa, U.S. into Europe and U.S. into other parts of the world as well. So there's always a synonym banker, again, whatever the rules are, you can find deals that make sense. The thing is right now people don't know what the rules are, so they can't quite do that.

How much is it simply Rolodex, knowing the person to call, knowing the person to get the communication with someone else? And how much does that value compound over time such that a veteran dealmaker has a sustainable edge over a junior dealmaker simply by dint of volume? Certainly the Rolodex or the electronic equivalent there is very, very important. I mean, if you think back, you know, it's interesting again about the evolution of the industry, which is so fascinating, it was so small and became so big. You know, initially, very few people were in the business. And a person like, say, Bob Greenhill have found that our firm, I mean, he had a huge market share by himself. You know, I'm not talking to Morgan Stanley's market share, like his market share. And there were a few other guys that had sort of the same thing.

And they did everything. You know, today we're doing a paper deal. Tomorrow we're doing a computer deal. Day after that, we're going to do an energy deal. You know, what happened as the industry grew is that firms realize to create a competitive edge in trying to win business, you should be a specialist. And at first, they thought, okay, you're going to be a health care specialist. And then later that got broken down to, well, that's not narrow enough.

You've got to be either a biotech or a pharma or a health care devices or a hospital management expert. And so you've created all these like sub-specialties where people may not be a household name. They may not ever, you know, get their name in the Wall Street Journal or something. But they may be the leading M&A expert on a niche within health care, within technology, within industrials that builds a great business for them. So it's kind of a narrow but deep rolodex. people try to build now. Speaking of household names and the Wall Street Journal, this is actually something that I wanted to ask you about.

So when I first got your book, I immediately went to the index and I looked up every media organization name and then read what you said about Bloomberg coverage, Financial Times coverage, Reuters coverage. And one line that I thought was interesting is you had a criticism of one of the news stories where you said that, you know, it was a news publication that was making out that the departures of some of your bankers were a bigger deal than they actually were. And you make the point that, well, outsiders can't really tell the difference between whether or not, you know, someone who's leaving is a huge deal in their industry or not. What advice do you have for financial journalists

who are trying to figure out whether or not this particular guy is a big deal slash rainmaker in his particular niche? Well, first of all, I was hoping you wouldn't go to the Blint Index and look for your company. By the way, a huge fan of Bloomberg. Thank you. You know, the point I made in a whole chapter is titled from a comment that was somebody made on Bloomberg once. But I think what I talked about a lot in the book is my relations and the firm's relations with the media.

And, you know, and on the way up, boy, did they help us. I mean, it was incredible the way they fed this sort of brand building. And kind of each story added to the luster and helped you win the next piece of business. And that piece of business got you another good story. And then it just was a beautiful, virtuous circle. But the media relationship gets more complicated as time goes on. You know, the media, I think, sometimes has a tendency to both want to build entities or people up a lot. And then it's kind of really interesting if you can sort of tear them down as well.

So, you know, I had my complicated relationships with the media. And I think it's hard for them to know from the outside. I mean, there's a whole, as you well know, there is a whole industry of advisors out there who are trying to help companies, you know, to some degree, fooling. you, right? To some degree, put the lipstick on the pig to put the right spin on whatever happened yesterday to make the quarter sound better than it probably was. So I think you've got a hard job. I mean, I think, look, I think Bloomberg does it well and so to some others. FTE, Wall Street Journal, et cetera, do a nice job. But it's not easy to ferret through. What's the real story on a

quarter or an M&A deal or whatever news there is? Thank you. I appreciate that empathy. Why do deals leak? What is the most common reason that a deal might leak to the media early. I don't understand why anyone talks to reporters. I am very glad that some people seem to be willing to talk to the media, but I never really get it. I would never. Why do deals leak? And what is the most common source of leaks? That I am happy to say is a mystery to me. Certainly they never leaked from me. Part of the argument going back to why the so-called boutique investment banks did quite well for a long time. I mean, part of the pitch we made was if you care about confidentiality, which every company does when they're kind of secretly

hatching some deal, is that if you have a small team, small firm involved, you're less like it. I have a leak than they have a big team, big firm involved. And we used to point out that, you know, if you imagine it, you know, the biggest, the Goldman Sachs, the JP Morgan, like just how many compliance people would even have to hear about a specific deal before they got approval to lend the money to give the advice and things like that. And so it's just a it's a numbers game in some way. But look, it's illegal to leak information on public deals and it's surprising that somehow it happens. And of course, there have been insider trading cases, which is another form of abusing client information that you have. Proud to say, Greenhill, we never had an insider trading

case. So I'm very pleased with that. Can I ask you a personal question? Sure. So there's a moment in the book where you talk about how you're 51 years old and about to go on your first ever two-week vacation, which is kind of shocking. What's work-life balance like? Are you happy with the choices you made in your career. Would you advise young students to consider going into investment banking now? Is it better in terms of work-life balance? I'm not sure it's better. I mean, I feel that, look, that story is true because I always felt like, especially in the firm's early years, I played a pretty central oral even before I was the CEO, because Bob Greenhill was a guy I love to do deals and didn't really like to manage. So I didn't feel like I could be away very long.

And so I would take one-week vacations. But, now, I mean, personally, I feel like I've got good, work-life balance, but everybody has to work it out in their own way. I mean, you know, I'm married to the same woman for 43 years. That's got to say something. You know, I think I didn't miss any of my kids, you know, sports or other theater activities and so on. And, you know, and probably at the, peak, my wife and I saw maybe 50 Broadway shows a year. You'll, you'll see many references to Broadway shows. We were there a client who came along, or is it just you? In some case, but mostly, but mostly us, you know, you just, you know, so I found my work-life balance, but the one balance I didn't have was like long vacations because I just didn't feel like I could be away

that long. Well, it's funny because even in that anecdote, you end up on a call, I think you went on Safari to Africa. In a tent on the coast of East Coast, Africa. There's no such thing as a vacation when you're an adult and you have a job. I mean, I've taken... No, no, no. The real vacation is when you take gardening leave between jobs. If you're lucky enough to get that, that's when you can actually relax. This is the best time to change jobs. Now I say this. Once you're actually, there's no such thing as vacation, if you have a serious job at a place, you could maybe not look at your email for a few hours. Yes. Can I just say one thing more about that? Of course. Yeah. It's just, you know, another little anecdote. And boy, is that true. I mean, and this is one of the things that ultimately gets you to

think, you know, maybe there's a life after this. And I should think that it is time to sort of respond to one of these inquiries to buy the firm. But, you know, I also talk in there about, you know, deal that we've worked really hard on fabulous deal, wonderful about to be announced. And, you know, and I meant like at the mat, at the intermission of a play with my kids in the country, sort of rural Berkshire, you know, summer theater thing. And you get this call that the thing died. I mean, and you have to, I say in the book that, you know, your job then is like, don't ruin your family's day. You know, keep your game face on and just keep moving. But, you know, you're right. The bad news can come at any minute. It can come at five in the morning when you just woke up. It can come when you're at the, you know,

the intermission of a show, it can come in the middle of vacation. And that's a bit the price you pay to be in this industry. In recruiting these days for bankers, is it as important to say go to one of the best schools? You know, people think about where their kids are going to go. Or like, you know, is it fine if someone goes to University of Indiana or University of Mississippi or something like that? Like, how important is that pipeline when you think about the industry today in recruiting of young bankers? I think a good thing is that it has become much more democratic in terms of there's opportunity from almost everywhere. I mean, you mentioned Indiana University. They actually happen to have a great undergraduate business school, and they've sent a lot of recruits. Yeah, I didn't mean in a negative way, but it's not, you know, it's not.

No, but it used to be, when I started out, I mean, I think at Morgan Stanley, we recruited at very few schools, undergrad or even fewer MBA schools. And at Greenhill, it was kind of the same way. But over time, and part because the industry needed so much talent, you know, then you sort of started going to the Big Ten. Then you start going to the smaller liberal art schools and you start going to the southeast schools. And now I think young people who, you know, who work hard, who take enough of the STEM stuff to be able to do the math to be a banker, they can come from almost anywhere and build a great career. So I think you told one of our fellow journalists, Sujit Indap, who has actually been on this podcast as well. But you described your role on Wall Street as kind of like being Forrest Gump. So not necessarily the most important guy in the room.

but someone who had a front row seat to all these really big moments in financial history. When I think of Forrest Gump, I think of how surreal a lot of those scenes are and, you know, Forrest Gump in the White House and things like that. And with MLK and the Washington. That's right. What was the most surreal moment for you looking back on it all? Wow. It's really hard to pick out one. I would say, I mean, it's funny.

I flippantly came up with the Forrest Gump line. I think I'll tell you one thing I think got my career ahead is I didn't feel like I always needed to be the most important guy in the room. And so I was happy to let Bob Greenhill, a generation old to me be a more senior, more important guy. And by the way, if you stay in the advisory business, I mean, your client should always be more important than you. So you have to kind of subordinate yourself to the CEO, the chairman of the board. I mean, you're whispering in the rear. You're giving them great advice. Often you're giving that advice to the whole board.

But it's not all about you. You know, it's supposed to be about the client, the client's objective. and so on. So, you know, lucky for me being at the firm I was at, I did end up almost like Forrest Gump being in an interesting spot for the dot-com crash, the financial crisis 9-11, the COVID. I mean, I sort of saw all those. And, you know, I'm not sure what I would pick would do the most surreal, but that's a really good question because there were a lot of them where, you know, where you just kind of can't believe you're there at kind of this critical, kind of pivotal moment during one of these crises. There is this backlash.

globalization happening. There is people, there's on many levels, there's the security concerns. People feel a certain sense of sadness that like, you know, the local potato chipmaker got bought and is now part of Frida Lai or whatever and that brand that they loved as a child. And like I get, you know, these things that you describe, which were sort of pivotal to this expansion of the global economy and so forth, do you have any regrets or change of perspective on some of these questions over time about the sort of the zeal with which many people were spreading the shareholder value mission and this sort of perhaps understandable loss of like their local environment. What made their area distinct, et cetera? When you look back over it, what is your

perspective on that? Look, I think an interesting book for somebody other than me to write would be where do we go next in what I would call the whole transaction ecosystem? Because I know when I started out. I mean, again, I talked about how the 1970s, again, I was a very, very young person then, was kind of a stagnant decade, really very little economic growth, very in no stock market growth, et cetera. I think the country needed a real jolt of energy and activity and kind of a market for new shareholders to take over companies and run them differently. You know, at some point there's got to be diminishing returns on that. And we now have this huge industry of lawyers and bankers that sort of do that kind of thing. And, you know, I think it's a legitimate question.

Should there be some constraints on that? So that's a question to be answered for the future, I think. Scott Bach, the book is Surviving Wall Street, a tale of triumph, tragedy, and timing. Thank you so much for coming on to odd lots. That was fantastic. Thank you. I really enjoyed it. Thank you. Tracy, I really liked talking to Scott. And there's a lot in there, but just this idea of bankers is the missionary of a sort of shareholder value. thinking about corporations and capitalism. Super interesting thing to think about. Absolutely. And coming with their talking points about synergy. Oh, yeah, totally. The other thing I was thinking of, so economies of scale. That's right. One thing I hadn't considered, you know, he talked about

how low share prices can be like a form of discipline on corporate management because if you have a low share price, then someone's going to start eyeing you and going, well, we could just buy that thing. and then you're probably going to be ousted as management. I hadn't really considered that, but it is true. Yeah, no, it's totally true. And it's a hard constraint on the ability of any management team to prioritize anything other than shareholder value. So it's like, I'm sure, you know, they're like, well, we want to keep people employed in this country because we've always had a history in this country. Well, if that's not profitable, productive employment, it's going to be a drag on your stock price.

and you create the opportunity for one of your competitors to buy you. And then they're going to, they who have no emotional resonance with this place, they'll do the hard job of laying off the workers. And I get why, you know, frankly, it's not surprising to me why there are individuals and businesses and politicians who want to curb that. It all comes down to incentives, doesn't it? Yeah. That's really what drives everything.

All right. Shall we leave it there? Let's leave it there. This has been another episode of the All Thott. podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Jill Wisenthal. You can follow me at The Stalwart. Check out Scott's book, Surviving Wall Street, a tale of triumph, tragedy, and timing that's now out. Follow our producers, Carmen Rodriguez, at Carmen Armin, Dashel Bennett at Dashbot and Kail Brooks and Kail Brooks. For more Odd Lots content,

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