How has raising capital through equities changed?
Ward: Two years ago, you would have had a two-week roadshow. Now you have accelerated book-buildings [short-notice transactions in which a bank prices and sells huge blocks of new stock for a company in one day]. There is growing pressure for banks to put their capital at risk [by guaranteeing a floor price for the stock.] Sellers are increasingly concerned about taking any price risk. That tells you something about the sentiment of CEOs and the pressures on them. The days of endless shrimp cocktails over presentations are gone. Another difference is that you have to factor in the weight of hedge-fund money. If you don’t have an in-depth understanding of the hedge-fund community, your risk increases dramatically. The good news is that the universe of banks that would backstop these deals is substantially smaller. Q: After all the cost-cutting in the past year, is there still overcapacity in investment banking? Weinberg: Sure, particularly at firms that have undergone large, strategic m
