Dean Rodrigues is Principal at Greenhill, a leading independent investment bank focused on providing financial advice on significant mergers, acquisitions, restructurings, financings and capital raising to corporations, partnerships, institutions and governments.
Thank you for taking the time for this informal “Coffee Break with”. Please introduce yourself and tell us about your professional and academic background that led you to become a Principal at Greenhill.
I studied Economics and Management at Oxford University and stumbled across Greenhill when I was invited to one of their events. One thing led to another and finally I interned at Greenhill in summer 2008. The financial crisis happened while I was an intern which made it probably the most unique time to have been started a career in the industry – until this year!
Frankly, I didn’t really know what the investment banking industry was all about and what to expect from being an Analyst. However, what struck me, and continues to motivate me over a decade later, is the extremely diverse and fundamentally interesting nature of the work that comes from working as a generalist in the advisory part of investment banking. Of course, you learn about finance, but that was never what has motivated me. Rather, you get to know different industries and the companies and business models that operate within them, and how they ultimately come together to make the world work.
Regarding the activities you perform at Greenhill & Co., Inc. how would you describe your responsibilities? What are your day‐to‐day tasks and which do you enjoy most?
Responsibilities have evolved over the course of my career as I have become more senior. At the beginning (as an Analyst), it is largely about content creation in the form of financial and strategic analysis; then as an Associate it is largely about managing the junior team; then as a Vice President you are coordinating the entire M&A process including managing interactions with the client, other external advisers, and other stakeholders in a transaction process. Currently, as Principal, I am responsible for fostering our client relationships whether or not there is an active transaction being executed, and also generating business opportunities. Ultimately, investment banking is a people business. It is essential to develop a trusted client relationship and to ensure that clients feel you have their back when it comes to making major strategic decisions.
While tasks and responsibilities evolve, one thing remains the same: with every new client and every new deal you learn something new, be it a new sector, new personal dynamics or a new type of M&A transaction, and in one way or another every situation gives you the opportunity to learn, so every day is different. This is what makes it so refreshing, so exciting!
While advising primarily corporate clients on a wide range of transactions across numerous regions and industries, Greenhill has extensive interaction with PE companies on the buy and the sell-side. Are there any particularities when working with PE companies compared to corporates that are potential buyers respectively sellers of assets in the context of M&A?
PE companies are an enormous source of capital and are therefore significant drivers of M&A transactions. The biggest difference when working with PE companies compared to corporates is that PE companies tend to have a lot of inhouse-expertise in terms of having the ability to conduct financial and technical analyses and valuations. Consequently, the more basic / commoditised corporate finance offerings aren’t hugely valuable to a PE firm – so the added value we offer to PE companies increasingly evolves around the navigation of sophisticated executions, particularly in dealing with regulatory and legal matters. Further, PE companies that we are working with benefit from substantial relationships that we have installed in key organizations.
In contrast, corporate clients generally have less in-house expertise as most will be less focused on regular M&A deal-making. Accordingly, there is a broader range of insights and added value we can offer such clients.
How do PE companies behave differently from strategic businesses during auction processes?
A major reason why strategic businesses engage in M&A activity is to benefit from synergies. They expect these synergies to be value-enhancing and as a result you’d typically expect their willingness to pay for the asset to be greater than a PE firm / financial sponsor who wouldn’t typically have existing business activities in the same industry from which to derive synergies.
Conversely, PE companies have advantages in M&A situations in that they may have greater, or more flexible, financing capacity than a strategic acquirer. Corporates usually have to go through a process of raising capital before acquiring a target potentially resulting in timing, public markets and/or shareholder approval risks. Further, PE companies can often have an advantage in terms of speed of execution, as stakeholder management and approval processes tend to be more efficient.
However, all other things being equal you would expect a strategic business with an opportunity to derive synergies to be the winner of an auction process, as the strategic and financial value of their synergies will mean they have greater abilities to pay for the asset.
How does COVID-19 impact your clients’ view on M&A activities? Do you notice a difference in the reactions of strategic businesses compared to PE companies?
It’s hard to overlook how significant COVID is. You probably have to go back to World War II to experience a comparable economic dislocation. I’ve had a few discussions where people have tried to compare the impact of COVID to the financial crisis in 2008, but there are two quite significant differences. First relates to the financial infrastructure of the global economy: unlike 2008, the challenges we face today do not originate from banks/the financial system, quite to the contrary, banks are well capitalized and are providing capital to support companies through the crisis. So, the financial infrastructure is well intact, which is relatively better than 2008. However, the second big difference, which is materially worse than 2008, is the sheer magnitude of the uncertainty about what a post-COVID recovery looks like – whereas other crises will inevitably have a slow and steady post-crisis recovery, this one is constantly at risk of being overthrown by another lockdown. Basically, no one has any clear idea about how many bumps there will still be until we are “back to normal”, or what “normal” will mean at that stage.
However, to get to the heart of your question, precisely what this means for M&A and how corporates and PE companies look at it. Ultimately, it depends on your conviction. When you have a long-term conviction in a particular industry, then you can “see through” the upcoming 12 or 18 months – which might be terrible, okay or even brilliant – however this is not relevant when you have a 20-year horizon. The only relevant consideration is, of course, whether these industries being faced with an existential threat survive the next 12 to 18 months. To some extent it also comes down to the depth of your pockets, but ultimately it depends on whether you believe in the long-term fundamentals of a particular industry or business. When you do, then the appetite will be there and there are even enormous value opportunities in terms of value arbitrage. This view, at least, is very much prevalent at the moment in PE circles.
Throughout your career, what deal contributed most to your personal and professional growth and why?
That’s truly a difficult question to answer as I have been part of so many transactions, each one unique and educational regardless of whether it was more or less successful. If I have to name a specific one, I’d choose one where I worked on a TMT sell-side mandate in the Nordics in 2012. At that time, I was a Senior Analyst with not much more than 2 years of experience. At the outset of the project, the Principal (Director) on the mandate told me that the team for the mandate would consist of a new first- year Analyst, himself (the Principal), a Managing Director and myself. This meant I was being entrusted with acting not only as Senior Analyst, but as an Associate and Vice President all at the same time, which represented an amazing opportunity and was incredibly daunting. This made me realize that the only thing that constrains you as to what you are capable of doing is, quite simply, what you are capable of doing. I.E. as soon as people are confident in your skills, your title or previous work experience is only secondary.
From this experience, I learned that you should focus on doing your best, even if you are taking on roles or tasks that, you think, are seen as being “above” your current level of seniority. Don’t be limited by what is required of you. The only thing that should limit the kind of work you do is what you are capable of! Following this guiding principle is key to becoming successful in organizations that are of entrepreneurial nature.
To conclude our program “Coffee break with”, what advice would you give to our readers that are willing to embrace a career in investment banking?
The big piece of advice I want to share is that when thinking about where you start your career, go for something that you honestly enjoy doing and surround yourself with people who you truly enjoy working with. It’s hard for me to overstate the importance of the latter point in particular – whether it is being branded as culture or whatever you want to call it, it is key to have peers who are aspirational, from who you can learn and who inspire you.
Finally, it is not a question of a company’s reputation or prestige, but whether it resonates to you at an interpersonal level. Ask yourself, whether you can actually imagine yourself having a beer or glass of wine with your potential colleagues (or generally want to interact with them in a social capacity). If so, you will be a far more motivated, ambitious and efficient employee, which will ultimately benefit your career!
Author: Michelle Reichelt
Editor: Florian Kramer