This past summer I interned in William Blair’s healthcare
investment banking group. My role was to help execute M&A, IPOs and debt
offering transactions for companies that operate within the broad spectrum of
the healthcare industry (ex. medical devices, hospitals and other healthcare
related services) . More specifically, as an analyst I conducted routine
financial analysis, prepared marketing materials and sat in on client meetings.
In addition to these main categories of responsiblilites, I was also given one-off projects
from other members of the deal team in order to ease their workload. Each transaction that took place within the group
had a corresponding deal team responsible for execution. William Blair has one
of the strongest healthcare teams within investment banking due to the successful
structure of their deal teams.
Each deal team consists of a managing director, vice
president, associate and analyst. The managing directors role is to bring in
clients and convince them to take part in one of the transactions William Blair
specializes in. The majority of the workflow stems from the client interactions
and is delegated by the managing director to other members of the group. For
example, if a client would like to sell their business, the managing director
would tell the vice president to speak with the CFO to learn more about the
financials, have the associate research potential buyers and the analyst to
create an excel model that values the business. There are many tasks to
delegate and this is a finite example, however, the main point is that the
managing director “runs the show” and the team is focused on getting the deal
done no matter.
This basic hierarchy proved successful time and time
again. The simple structure allowed the
managing director to easily and effectively communicate orders downward. Each
task and step in the process aimed to close the deal. The younger members of
the team have immense respect for the managing director and have the
opportunity to earn income based on the deals the “MD” sources. The MD really
made the team feel as though they had a greater sense of purpose, having direct
impact on the financial markets and helping to improve products/services that
help improve peoples lives. The team rallied around this concept to not only
complete the deal, but to also go above and beyond to provide quality work.
In some instances the deal team exhibited a dual authority
structure. The Vice President strives to become a managing director. In
order to do this, the VP will attempt to source his or her own deals and
practice “running the show” or taking command of the deal team to complete a
transaction. Everyone in the team is constantly learning news skills and
working with other members to improve. In these circumstances the MD will help guide
the VP and help him or her improve client facing, negotiation and sales
techniques. In my experience, this situation was very rare and more often than
not the VP would learn these skills through practice, rather than sourcing the
deals themselves.
In terms of the channel or network structure, it was
generally the associate’s task to make sure all the junior level work was being
completed. There was a strong sense of communication and accountability between
members. Everyone trusted that their individual tasks would be completed and
not let anyone else down.
The structure of our deal team encompassed many of the core
aspects that Katzenbach and Smith and Bolman and Deals spoke too. The sense of
direction and motivation stemming from the MD shaped the group to take
advantages of opportunities in their path. This common purpose helped members develop
their professional careers and earn an income. Each step was outlined in detail in order to
ensure a high level of accuracy in completion. The size of the deal teams
created strong bonds amongst teammates and fostered communication.
I had a great experience this summer and truly learned the
art of managing a successful team. These core characteristics can be applied in
many group settings and I believe the reading showed that different structures
work better in some situations vs. others. When a group creates a proper
structure and works towards a common goal, great things happen. This summer I
saw the completion of two IPOs and four acquisitions, it was great seeing all
the teams hard work pay off.
It sounds like interesting work. One question that seems immediate from this discussion - was there any business turned away, because the quality didn't meet William Blair's standard. For example, a new company may want an IPO but is still too immature in its business to go ahead with that. Did something like that happen when you were there? Somewhere in your piece you said the goal was to have a deal no matter what. What drove that as the goal? Might it be possible that a deal falling apart is actually better?
ReplyDeleteI didn't quite understand from what you wrote whether you were an intern or a regular employee. If you were an intern as an analyst, did the group you work with also have a full time analyst? A related question is that, given the business happens all year round and not just during the summer, does the group function change because of having an intern present? Or does it stay pretty much the same.
One other part you might have talked about a bit more is whether there was competition for business within the Health Care Investment group. In other words, were there some decisions made outside your individual group about what transactions got routed to which group?
One other question you might comment on is group size. Your description has a four-person group. There are some very big players in Health Care. If they had business with William Blair, would they have gotten a single four-person group assigned to them, or something larger? If most of the transactions you were involved with were of comparable size and scope, the the four person team structure makes sense to me. But if some of those transactions were much larger, then that the team structure would adjust to that makes sense to me. Did you see something like that?
Professor, thanks for the comment. The questions you raised were extremely relevant and interesting. When William Blair acts at the lead book running in an IPO they essentially take on the responsibility to market and sell the majority of the stocks the client is bringing to market. Although anyone can use a broker to purchase a few shares, the majority of the equity is sold to large institutions where Blair has strong relationships. Before they agreed to do an IPO the investment bankers, traders, equity research team and C-level management voted on whether they should do the deal. Each larger division in Blair needs to benefit from the transaction. Here is an example: As an investment banking summer analyst (intern) I helped prepare valuation materials that were used in the meeting. If the IPO transaction closed the investment banking team would receive a fee regardless if the IPO priced well or flopped. However if the deal went bad the trading and equity research department would actually lose money and their reputation for failing to meet sales quota or dealing with angry clients.
ReplyDeleteI worked directly with a full time analyst who helped show me the ropes, I was the most junior member of the deal team. The group function doesn't change if there is an intern present or not. Essentially the internship is just a 10-week long interview. I certainly helped out and added value to the team, but realistically a full time analyst could have probably done my work in half the time simply because they have more experience.
The deal teams don't generally change in size for deals between $200mm-$2b. At those sizes the workload is usually pretty even. The reason why investment banking analysts work 100 hour weeks is because it is really hard to split up the analytical work. It's not something you can take turns working on. Deals that are larger than $2 billion might have a few more senior members to hold the hands of the clients management team but there is usually never more than 2 analysts.