There are many interesting aspects of the ABN Amro acquisition, including the current attractive arb spread — 11% — and the debate over whether the Home Depot deal price reduction will cause a price cut in the ABN deal — 3:1 against, hence the spread.
But I’m intrigued today, however, by the number of i-bankers hitching themselves to the company. Apparently 19 investment banks all call themselves advisers guiding ABN Amro to any eventual takeover. 19! That is somewhere between terrifying and appalling, like some sort of greed-centric three-ring circus. You have to love it.
Anyway, quote of the day on the subject goes to someone from a London-based bank:
“Increasing the number of advisers doesn’t increase the
quality of the advice.”
Truer words were ne’er spoken. Because the relationship isn’t even flat, it’s an exponential decline function.
[via Bloomberg]
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It’s a flat curve. Use 1 or use 19. You’ll still get the same advice. They all want the deal done.
You think it’s flat? You’re an optimist. My experience is that the more bankers there are involved, the less chance a deal gets done. Go back to your dog-eared copy of “Barbarians at the Gate” for examples.
paul, your view confuses correlation with causation. more bankers are involved when a deal hits roadblocks. big, sputtering deals attract lots of advisors, but the advisors don’t cause the deals to sputter.
@ Sandy Kory:
It is also a ‘big’ deal for the RBS consortium, who have just 1 advisor, although given the upcoming frantic activity (planned events in September), I am sure many more are clamouring to get in on the act.
Just because lots of advisors are attracted to the deal, it does not mean ABN had to sign them all up, does it?