No more toys for the project-based banking deal
February 15, 2009
For decades now, investment banks have relied on financial “tombstones,” strange plastic toys that commemorate the successful accomplishment of a deal. As a recent article on The Wall Street Journal notes,
During the bull market, deal toys became so popular they spawned a cottage industry and stoked duels among banks vying for creative ideas to memorialize mergers, initial public offerings and other transactions (…) a miniature roll of aluminum foil suspended in Lucite, marking a sale last year by Alcoa. A tiny pipeline immortalizes a Sunoco-related deal (…) a replica of a Lawry’s seasoned-salt jar — a token reminder of the spice company’s August sale from Unilever to McCormick & Co.
I first saw these toys in the home bookshelves of an acquaintance of mine, a young investment banker based in London’s Regent’s Park area. Strange, often ugly, the toys looked too decorative to be just a work item, and too work-oriented to be really decorative. Apparently, they are extremely expensive to make.
Now, however, banks seem to be sharply curtailing expenses on these toys. As the Wall Street Journal writes,
Sales of deal toys generally are off by as much as 50%, estimates Jeff Sehgal, a former banker who runs the Corporate Presence, a New York company (…). With 175 workers and a factory in Canada, it is among the biggest makers of such financial “tombstones,” (…) and has branched into broader corporate mementos, such as employee-recognition awards.
But whereas the toys seem to be a superficial luxury, from a social studies of finance perspective they are crucial to the proper functioning of a bank. Investment banking is the ultimate project-based organization. Banks compete on timeliness. Deals are accomplished by ad hoc networks that form and dissolve around specific projects – mergers, acquisitions, initial public offerings, divestments, spinoffs and the like. The pace and intensity of work in those teams is remarkable. A junior bankers might be assigned to a project at 11.00 pm and be asked to work through the entire night.
In that context, giving credit for being in a deal team is crucial. “Not everyone gets a tombstone,” my banker acquaintance used to tell me. Having one of them was a tangible proof that one was part of the deal. They would sit on one’s table. Colleagues would be able to see them, and it would invite conversation (“ah, you were in the so-and-so deal, maybe you can help us in this other one.”). They mobilized stories and knowledge sharing. They were a 3D form of resume. Like the other market devices that this blog has been insistently exploring, tombstones provide a material basis for the capital markets. (See also the book by edited by Michel Callon, Yuval Millo and Fabian Muniesa).
One wonders what will happen to team cohesiveness and banking careers if these disappear. Like other expensive parts of the investment banking edifice –bonuses, retreats, etc.– the present cost saving may be dismantling the structure business model altogether. (Or not — in Silicon Valley, they just use t-shirts). We don’t very well know what the future holds for i-banking, but as the pieces disassembled from the present we’ll soon learn what –if any– functional role they were accomplishing.