People who have real jobs are sometimes surprised to learn how much of investment banking consists of hopeless pitching. Your team puts together a forty-page slide deck with sixty pages of appendices, proofreads it repeatedly, updates numbers every day for two weeks, and prints a dozen glossy spiral-bound copies. Then you lug them halfway across the continent, slog through the first five pages with an increasingly bored potential client, are politely rebuffed, and then cleverly ask “hey do you want any extra copies of the presentation for your colleagues?” so you don’t have to carry them back on the plane. Glamorous work.
It could, however, be worse, in that you typically don’t expect the prospective client that you’re pitching to put your slide deck on the Internet with a condescending link.* Sadly for publicity shy investment bankers everywhere, corporate innovator Larry Ellison wants to change that norm.
If you haven’t heard, there’s a silly spat occurring between Oracle and Autonomy, the software company that Hewlette-Packard agreed to buy in August. In summary, (1) Oracle’s Ellison was asked about the combination and he said something to the effect of “nah, Autonomy asked us to buy them first but they looked too expensive so we passed,” (2) Autonomy CEO Mike Lynch denied ever pitching Oracle, (3) Oracle pointed out that Lynch came to Oracle’s office in April with tech M&A dean and Qatalyst Partners CEO Frank Quattrone to meet with Oracle president Mark Hurd and M&A head Doug Kehring, (4) Lynch claimed that that meeting was just a customer meeting facilitated by Quattrone and that they discussed database technology, not M&A, (5) Oracle called that claim a “whopper” and released what it claims are the pitch slides from that meeting at the link Oracle.com/PleaseBuyAutonomy, and (6) Quattrone jumped in to claim that those slides “were for the purpose of [Qatalyst] independently pitching Autonomy as an idea to Oracle,” were prepared before Autonomy hired Qatalyst to sell itself to H-P, and “were not used in our April meeting with Mark and Doug.”
From looking at the slides (here and here), which are dated January and provide a mostly generic overview of Autonomy based on public information, it seems unlikely that Oracle’s version is accurate. If you’ve ever met an investment banker, you will find it hard to believe that the CEO of a bank would show up to an M&A pitch meeting in April with a client CEO and a pitch book that hasn’t been updated since January. It is just imaginable that they’d have an M&A discussion without a deck – but not imaginable that they’d have that discussion with a four-month-old deck.
Also suspicious is that the deck contains real company names. Ridiculous though it sometimes seems, bankers love the veneer of secrecy that alliterative code names provide. If these slides were for an Autonomy mandated meeting where Autonomy was trying to sell itself to Oracle, they would be labeled “Autoeroticism Overview” and, if they fell into the wrong hands, would disguise the target’s identity so cunningly that even the cleverest reader would fail to recognize it.**
So you can see why Quattrone was so quick to say that the slides came from him and were not used in any Autonomy meetings – first of all because it’s probably true, and second because if these slides were actually used in a meeting between Autonomy and Oracle it would be a pretty lame performance by Qatalyst.
But it’s a little awkward for Qatalyst anyway. Yes, bankers spend a lot of their time rubbing sticks together to try to produce mergers and acquisitions. Yes, every client suspects that the banker that they consider their trusted advisor is leaving their office, going to their competitor’s office, and telling the competitor “you should really buy those guys, I just met with them and they can’t make it on their own.” But it’s still rough to see it in black and white, on the recipient’s computer system – even if the target here came to the same conclusion and sold.
It’s especially rough for Qatalyst, who have made their name as a sell-side advisor. Their web site’s page of tombstones includes only four buy-side deals (and 20+ sell-side deals), and they’ve gotten quite a bit of press for Quattrone’s ability to push up prices. Going to Oracle and saying “you should hire us to help you buy Autonomy” may seem a little awkward if you’re also talking to Autonomy, but it’s clearly part of the game. It’s just not so much part of Qatalyst’s game.
On the other hand, going to Oracle and dropping hints that they should try to buy Autonomy, hoping that Oracle’s approach will inspire Autonomy to hire you as an advisor, is a little more awkward – and much more of a conflict of interest.
Barbs Fly in Autonomy-Oracle Feud [DealBook]
Please Buy Autonomy [Oracle]
* This might actually be better, ex ante, because it could cut down dramatically on analyst workload.
** Unless the reader looked at the stock price chart, comparison of selected companies with all of Autonomy’s competitors named, or the list of Autonomy’s management and directors.