Skip to main content

League Table Gamesmanship

  • Author:
  • Updated:

Dennis Berman—one of the Deal Journal boys—breaks into the real paper with a big article revealing one of the worst-kept secrets on Wall Street—the league tables are a “farce,” as Berman puts it.
Berman describes how investment banks game the league tables, and push for deal credit on deals in which they played only the most minor roles. His term for it is "grubbing"--a term more familiar to DealBreaker from our days as a philosophy teaching assistant, when we were constantly accosted by not-so-bright young things who believed their essays on Aristotle deserved higher marks than their work merited.
The article describes the mess that happened after Altria announced plans to spin off Kraft Foods for $61 billion earlier this year. Originally, two advisors were named: Lehman Brothers and Centerview Partners. Over the next few weeks the banks piled on in various roles. When all was said and done the list of advisors read like a yellow-pages of investment banks. JP Morgan Chase, Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley all had titles, roles and, importantly, shots at getting league table credit for the huge deal.
Banks care about the league tables even though they don’t necessarily reflect things like actual fees paid.They are used as ways to recruit young, up-and-coming bankers who may have opportunities to work at a variety of Wall Street firms. They provide a way for banks to keep score, to measure their competitiveness with rival institutions. Most importantly, they’re used to pitch deals to clients, who the banks hope will be impressed by high rankings.
But the gamesmanship that has evolved in getting—or “grubbing”—league table credit maybe undermining their purpose, according to Berman.

It all may seem like a silly game -- until you realize the grubfests have the effect of trivializing the very advice for which investment banks are charging millions of dollars.
"Clients laugh about league tables," says Herald L. Ritch, formerly mergers chief at Donaldson, Lufkin & Jenrette and now president of Sagent Advisors. "Everyone comes in and says they're No. 1 in the world in everything. It's a stupid way to run a business, and because it makes a bunch of grown-ups look silly to their clients, it's not helpful."

The video above has more discussion from Berman himself about the league table grub game.
Gaming the Game: How Street Plays The 'League Tables' [Wall Street Journal]



No Points For Guessing Who Topped The 2016 M&A League Tables

This is Lloyd Blankfein's favorite game...that isn't Russian Roulette.