WEBVTT - Interview With Ventresca & Myers: Masters in Business (Audio) 0:00:00.160 --> 0:00:03.159 Brought to you by Bank of America Merrill Lynch seeing 0:00:03.200 --> 0:00:06.080 what others have seen, but uncovering what others may not. 0:00:06.559 --> 0:00:10.320 Global Research that helps You Harness disruption Voted top global 0:00:10.320 --> 0:00:13.880 research firm five years running. Merrill Lynch, Pierce, Fenner and 0:00:13.960 --> 0:00:21.200 Smith Incorporated. This is Masters in Business with Barry Riddholes 0:00:21.400 --> 0:00:25.040 on Bloomberg Radio this week. On the podcast, I speak 0:00:25.120 --> 0:00:31.240 with two fascinating people. Both come from JP Morgan. Chris 0:00:31.360 --> 0:00:35.680 Ventresca and Liz Myers effectively run the M and A 0:00:35.880 --> 0:00:39.440 and the I p O divisions. Uh at JP Morgan. 0:00:39.520 --> 0:00:42.760 That's not their formal title. I'll read that off on 0:00:42.840 --> 0:00:46.800 the actual show, but you will find uh this to 0:00:46.840 --> 0:00:51.960 be a deeply wonky, fascinating conversation if you are at 0:00:52.040 --> 0:00:55.320 all interested in how I p O s run, in 0:00:55.320 --> 0:01:01.720 in how mergers and acquisitions operate, how companies make the 0:01:01.720 --> 0:01:05.479 decision to either go I p O or be acquired 0:01:05.760 --> 0:01:09.560 or make an acquisition. Uh. This gets into a lot 0:01:09.600 --> 0:01:12.520 of the nuts and bolts of that process. I found 0:01:12.520 --> 0:01:16.160 it to be really quite interesting. It it's rare to 0:01:16.280 --> 0:01:20.759 not only speak with to highly placed people within Wall 0:01:20.800 --> 0:01:24.000 Street banks like this who are not the face of 0:01:24.040 --> 0:01:26.280 the firm not on television and radio all the time, 0:01:26.319 --> 0:01:30.320 but really, um, are the people who roll up their 0:01:30.360 --> 0:01:33.520 sleeves and and get the deals done. Uh. It was 0:01:33.560 --> 0:01:37.280 really an interesting conversation. Was also the first time we 0:01:37.360 --> 0:01:40.000 had a conversation with two guests at once. The three 0:01:40.000 --> 0:01:44.280 way discussion a little bit challenging for me as the 0:01:44.319 --> 0:01:48.640 host to try and figure out how to coordinate that 0:01:48.720 --> 0:01:51.960 and to to bring both of them in. UM. I've 0:01:52.000 --> 0:01:55.080 said this before, I'll repeat it again. I have no 0:01:55.360 --> 0:01:58.640 professional radio background of training, and when I watched the 0:01:58.680 --> 0:02:01.840 pros do it, when I watch guys like Pim Fox 0:02:01.960 --> 0:02:06.960 or or Tom Keane or Charlie Rose run a conversation, 0:02:07.080 --> 0:02:11.680 and I have really tremendous respect for how skilled and 0:02:11.720 --> 0:02:16.440 talented and and just experienced and knowledgeable those folks are, 0:02:16.480 --> 0:02:21.240 and and and how effortless and easy they make it look. 0:02:21.800 --> 0:02:24.720 When when you've done a hundred of these, you realize, wow, 0:02:24.760 --> 0:02:27.959 this is much harder than that appears. So for those 0:02:28.000 --> 0:02:31.080 of you who are at all interested in investment, banking, 0:02:31.720 --> 0:02:36.680 in underwriting, I p O S, syndication, and mergers and acquisitions, 0:02:37.360 --> 0:02:40.520 I think you'll find something interesting here. Uh. They both 0:02:40.560 --> 0:02:43.679 have a fascinating background undergraduated Princeton and then they each 0:02:43.720 --> 0:02:48.040 went to different UH schools for for MBA's. I think 0:02:48.080 --> 0:02:51.760 you'll find this to be an interesting conversation. So, with 0:02:51.800 --> 0:02:55.960 no further ado, my conversation with Chris Van Tresca and 0:02:56.080 --> 0:03:02.160 Liz Myers of JP Morgan. This is Masters in Business 0:03:02.200 --> 0:03:06.680 with Barry Ridholts on Bloomberg Radio. My special guest today 0:03:06.720 --> 0:03:09.520 is a pair of bankers from JP Morgan. I have 0:03:09.720 --> 0:03:13.720 Chris Van Tresca, he's the global co head of Mergers 0:03:13.720 --> 0:03:17.000 and Acquisitions, and Liz Myers, she is the head of 0:03:17.080 --> 0:03:21.800 global equity capital markets. Chris has advised on over one 0:03:21.880 --> 0:03:27.120 trillion dollars worth of announced transactions, be they strategic acquisitions, 0:03:27.560 --> 0:03:31.560 mergers and sales. Liz has done not quite as much, 0:03:31.600 --> 0:03:35.640 but almost as much in terms of global equity capital markets, 0:03:35.680 --> 0:03:40.160 including I p O s, follow ons, convertibles. They each 0:03:40.360 --> 0:03:44.520 went undergraduate to Princeton. Liz has an MBA from Harvard, 0:03:44.600 --> 0:03:47.680 Chris has an MBA from n y U. Chris and Liz, 0:03:47.800 --> 0:03:51.600 welcome to Bloomberg. Thank thanks for having so let's jump 0:03:51.720 --> 0:03:55.240 right in with what you do, Liz, for for listeners 0:03:55.280 --> 0:04:00.360 who may not know what exactly are global equity capital markets, Well, 0:04:00.360 --> 0:04:03.320 the Equity Capital Markets group is really the equity underwriting 0:04:03.320 --> 0:04:06.280 group at JP Morgan, and so we are responsible for 0:04:06.320 --> 0:04:09.640 I p O s, follow on offerings for public companies, 0:04:09.680 --> 0:04:14.000 convertible securities that companies issue, and equity private placements. So 0:04:14.040 --> 0:04:17.480 companies that are looking to access equity before they go 0:04:17.600 --> 0:04:20.480 forth with an IPO. And I assume you may do 0:04:20.560 --> 0:04:23.000 some work with the M and A department as well. 0:04:23.279 --> 0:04:25.440 We do. Chris and I have known each other for many, 0:04:25.480 --> 0:04:27.560 many years, and we do spend a lot of time 0:04:27.640 --> 0:04:33.039 on certain client transactions together. Um importantly, it maybe acquisition finance. Uh, 0:04:33.040 --> 0:04:35.479 it may be a dual track I p O and 0:04:35.520 --> 0:04:39.120 sale process. So so let's talk a little bit about 0:04:39.560 --> 0:04:42.800 the state of the business these days. Not too long ago, 0:04:42.920 --> 0:04:44.839 there was an article in the Wall Street Journal that 0:04:44.920 --> 0:04:48.080 said I p O s were at a twenty year low. 0:04:48.520 --> 0:04:51.360 What are you guys seeing in either equity capital markets 0:04:51.480 --> 0:04:53.920 or in mergers and acquisitions? Does that sum up the 0:04:53.960 --> 0:04:56.440 state of the street accurately to you? Well, I think 0:04:56.440 --> 0:04:58.719 it's really This year has been a tale of two cities. 0:04:58.720 --> 0:05:01.520 The first part of the year as much lower in 0:05:01.640 --> 0:05:04.560 terms of volumes, and now as we've passed Labor Day 0:05:04.560 --> 0:05:08.039 and entered into September. As expected, We've seen a huge 0:05:08.080 --> 0:05:10.800 resurgence in the I p o market and broadly in 0:05:10.839 --> 0:05:14.520 the equity capital market, so volumes are up substantially. I 0:05:14.560 --> 0:05:17.400 had mentioned on Bloomer TV back in August that we 0:05:17.480 --> 0:05:20.120 expected to have over twenty I p o s launched 0:05:20.120 --> 0:05:22.919 in the month of September, and that statistics still holds 0:05:23.000 --> 0:05:25.200 holds true. So a lot of exciting things happening on 0:05:25.200 --> 0:05:27.920 our platform. How typical is that for what we usually 0:05:27.920 --> 0:05:30.320 see in the full of each year. Well, the fall 0:05:30.400 --> 0:05:33.239 can sometimes be a catch up period from a slower summer, 0:05:33.279 --> 0:05:36.880 but this year in particular just seems livelier than ever 0:05:36.960 --> 0:05:39.839 across all sectors. It's interesting to see that some of 0:05:39.839 --> 0:05:43.120 our largest deals on the platform are coming out of Asia, 0:05:43.760 --> 0:05:47.000 so just recently pricing the China Postal Savings Bank I 0:05:47.080 --> 0:05:49.960 p o UM, we have an interesting privatization on the 0:05:50.040 --> 0:05:52.760 road in Asia, and a variety of different billion dollar 0:05:52.800 --> 0:05:55.600 plus I p o s. Before I get to Chris's 0:05:55.760 --> 0:05:58.760 M and A work, one would imagine that Asia has 0:05:58.800 --> 0:06:01.680 been ascended to the as few years. Is that a 0:06:01.680 --> 0:06:03.800 fair way to sum that up? Well, I think it's 0:06:03.839 --> 0:06:07.680 it's continued to progress, particularly sentiment wise, when earlier in 0:06:07.720 --> 0:06:10.200 the year there was a lot of concern about Chinese 0:06:10.200 --> 0:06:13.240 growth slowing, and I think we're seeing more and more 0:06:13.279 --> 0:06:17.240 signs of the macro backdrop improving, whether it's steel prices, 0:06:17.680 --> 0:06:20.600 new projects, starts. On the industrial side is starting to 0:06:21.040 --> 0:06:24.000 feel a lot better, and the Chinese consumer is always 0:06:24.000 --> 0:06:26.680 of great interest. So christ let me ask the same 0:06:26.760 --> 0:06:29.560 question to you about uh, the M and A business, 0:06:29.520 --> 0:06:32.320 the emergence and acquisitions business. What is the sid of 0:06:32.320 --> 0:06:35.279 the street these days? How active is it? What do 0:06:35.279 --> 0:06:37.159 you see? So you really have to start with last 0:06:37.240 --> 0:06:40.479 year was this historic M and A market, huge volumes, 0:06:40.520 --> 0:06:43.520 driven by lots of companies with great balance sheets, a 0:06:43.520 --> 0:06:47.280 lot of access to capital, but very weak organic growth 0:06:47.880 --> 0:06:51.560 and their stock price and then multiple was anticipating ability 0:06:51.600 --> 0:06:53.760 to grow, but what they looked in their own business plans, 0:06:53.760 --> 0:06:56.560 they were struggling in this global economy which has been 0:06:56.600 --> 0:06:59.920 pretty modest. How do I find that stock price are 0:07:00.080 --> 0:07:01.880 shiation and growth in my company? Let's use M and 0:07:01.920 --> 0:07:04.640 A as a tool. So last year historic records very 0:07:04.720 --> 0:07:07.680 much by side driven M and A activity. Companies that 0:07:07.680 --> 0:07:11.600 could afford it, looking for smart synergistic acquisitions, and as 0:07:11.640 --> 0:07:15.440 we moved into this past year, much of that has continued. 0:07:15.800 --> 0:07:18.880 The actual deal count is down about eight percent when 0:07:18.920 --> 0:07:22.000 we tracked the number of transactions two fifty million dollars 0:07:22.000 --> 0:07:25.120 and greater, so it is a little lighter. The mega deals, 0:07:25.120 --> 0:07:27.760 the ten billion dollar plus deals are down greater than 0:07:27.760 --> 0:07:30.480 that about so a lot of the headlines may say, oh, 0:07:30.600 --> 0:07:32.120 M and A is not that busy, it's a lot 0:07:32.200 --> 0:07:35.080 slower than last year. But what we're feeling and actually 0:07:35.080 --> 0:07:39.200 experiences a continuation of an extremely healthy M and A market. 0:07:39.640 --> 0:07:42.400 A lot of the themes that were in existence last 0:07:42.440 --> 0:07:47.360 year are still here today. Very strong access to financing, 0:07:47.640 --> 0:07:52.200 meaning historically low rates for debt financing. In size companies 0:07:52.240 --> 0:07:55.360 that generally are trading at a pretty healthy stock price 0:07:55.440 --> 0:07:58.800 multiple are able to use their equity as an acquisition currency. 0:07:58.880 --> 0:08:00.760 So if I'm a buyer and go get debt to 0:08:00.800 --> 0:08:02.560 pay for that purchase price, I can use my own 0:08:02.560 --> 0:08:06.840 stock and I'm leaning into that if it's a smart deal, 0:08:07.000 --> 0:08:11.240 that's bolstering what's likely still from any companies weak organic growth. 0:08:11.600 --> 0:08:14.040 So so let's talk about that cheap fund and saying 0:08:14.320 --> 0:08:16.760 I've heard from people on the street you know, the 0:08:16.760 --> 0:08:18.720 FED is the only game in town. If it wasn't 0:08:18.760 --> 0:08:21.880 for them, none of these fill in the blank mergers 0:08:21.920 --> 0:08:25.080 I p o s share by backs would would take place. 0:08:25.520 --> 0:08:29.160 Seems like an overstatement. How significant is the Federal reserve 0:08:29.480 --> 0:08:31.480 to what what both of you do? So when we're 0:08:31.480 --> 0:08:34.280 talking with our clients, it always ends up coming back 0:08:34.320 --> 0:08:37.120 to what's the underlying growth in their business, which is 0:08:37.240 --> 0:08:40.040 heavily linked to the economic outlook and the growth they're 0:08:40.040 --> 0:08:43.200 seeing across the globes. So in an environment where there's 0:08:43.200 --> 0:08:46.959 been low rates, that's largely been because the global economic 0:08:47.000 --> 0:08:49.880 growth outlook has been so weak. So those companies from 0:08:49.880 --> 0:08:52.640 an M and A matter in that environment have low 0:08:52.760 --> 0:08:55.600 organic growth and are using M and A as a 0:08:55.640 --> 0:08:59.680 tool to bolster their growth profile. Even if rates go up, 0:08:59.840 --> 0:09:01.959 the answer maybe, well, where it's a going up because 0:09:01.960 --> 0:09:05.120 the economic outlook is improving, so those companies are gaining 0:09:05.120 --> 0:09:08.319 extra free cash flow. So even if rates are going 0:09:08.400 --> 0:09:11.600 up for the right reasons a better global economy, I 0:09:11.640 --> 0:09:14.479 think that will just continue to support a healthy strategic 0:09:14.480 --> 0:09:17.559 dialogue among companies. Buyers will still look for ways to 0:09:17.600 --> 0:09:20.000 put that capital to work. And then if I'm a seller, 0:09:20.360 --> 0:09:23.280 typically what I found last year is if my stock 0:09:23.320 --> 0:09:26.040 price was trading at almost an historic high or at 0:09:26.080 --> 0:09:29.080 least a fifty two week kai, and someone showed up 0:09:29.160 --> 0:09:31.960 with an acquisition premium, and then I compared that to 0:09:32.000 --> 0:09:34.160 what I was able to deliver on my own. You know, 0:09:34.200 --> 0:09:36.839 I may say, hmm, that's pretty good deal for my shareholders. 0:09:36.840 --> 0:09:39.760 Why don't I crystallize that premium? And the right answer 0:09:39.760 --> 0:09:42.320 for shareholders to sell my company. I'm Barry rid Helts. 0:09:42.320 --> 0:09:45.520 You're listening to Masters in Business on Bloomberg Radio. My 0:09:45.600 --> 0:09:49.800 special guest today is Chris Ventresca and Liz Myers of 0:09:49.880 --> 0:09:53.200 JP Morgan. He is the global co head of Mergers 0:09:53.240 --> 0:09:57.960 and Acquisitions. Liz is the head of Global equity capital Markets. 0:09:58.280 --> 0:10:02.480 And let's jump right into what these processes look like 0:10:02.720 --> 0:10:07.200 from the company's perspective. Walk us through a process. How 0:10:07.240 --> 0:10:10.199 does a deal begin? If someone wants to either go 0:10:10.440 --> 0:10:13.520 I P O or do an acquisition or merger, how 0:10:13.559 --> 0:10:16.400 does that process begin from the corporate side? Well, I'm 0:10:16.400 --> 0:10:19.120 happy to start. I think the company side for an 0:10:19.160 --> 0:10:23.640 acquisition really starts with that company's strategic planning process that 0:10:23.720 --> 0:10:26.800 the senior management team, the board, and very often us 0:10:26.840 --> 0:10:29.680 as bankers advising them are part of where do you 0:10:29.679 --> 0:10:31.720 want to see and take your company in the next 0:10:31.760 --> 0:10:35.320 three to five years. What areas either geographically or product 0:10:35.400 --> 0:10:38.319 segments or customer segments are we in that we want 0:10:38.320 --> 0:10:41.000 to grow? What areas are we missing that we think 0:10:41.200 --> 0:10:43.760 we should be in as a competitive matter, And then 0:10:43.760 --> 0:10:47.400 the conversation shifts to are we able to accomplish those 0:10:47.440 --> 0:10:50.840 objectives are on through capital expenditures or R and D 0:10:51.240 --> 0:10:54.400 or is that not possible? And maybe there is a 0:10:54.440 --> 0:10:58.119 target out there that fits very neatly into our strategy 0:10:58.400 --> 0:11:01.640 as an acquisition candidate. That's the classic building or buy 0:11:01.640 --> 0:11:05.920 it correct and very often that's a discussion that happens 0:11:05.920 --> 0:11:09.040 over years. So a company is thinking about its own prospects, 0:11:09.080 --> 0:11:12.760 it's plan its performance, trying to assess where it's competitively 0:11:12.760 --> 0:11:15.679 strong or weak, and then coming up to some conclusion 0:11:16.040 --> 0:11:18.040 about this is a part of the world we need 0:11:18.080 --> 0:11:19.920 to be in. How can we do that. This is 0:11:19.960 --> 0:11:24.360 a product we're missing, or capability or technological capability or 0:11:24.400 --> 0:11:27.120 expertise that we're missing. Can we build it? Can we 0:11:27.200 --> 0:11:29.760 buy it? Who's out there if we want to buy something. 0:11:30.160 --> 0:11:33.959 Let's now talk about potential candidates around the globe that 0:11:34.000 --> 0:11:37.200 could be interesting puzzle pieces for us to put into 0:11:37.240 --> 0:11:40.640 that and that again is something company starts with. We're 0:11:40.679 --> 0:11:42.719 by their side helping them think about it. Where we 0:11:42.840 --> 0:11:46.439 become very helpful in that is sanity checking that strategy 0:11:46.440 --> 0:11:49.199 and helping identify companies around the world that may fit 0:11:49.360 --> 0:11:52.040 into the solution they're looking so that that's fascinating to 0:11:52.120 --> 0:11:55.440 hear that it's a multi year process. The public here's 0:11:55.480 --> 0:11:59.160 about some crazy idea gets floated. One was that Apple 0:11:59.240 --> 0:12:01.400 was going to buy the claren came out of the 0:12:01.520 --> 0:12:03.040 f T. I have no idea if it's true. I'm 0:12:03.040 --> 0:12:06.120 not going to ask anybody. But the way you're describing 0:12:06.160 --> 0:12:09.640 it is this fits into the broader context a long 0:12:09.760 --> 0:12:13.840 term strategic plan. It's not just hey, shiny orange car, 0:12:13.920 --> 0:12:18.040 let's get those. It's a very very different approach. Yeah, 0:12:18.120 --> 0:12:20.920 just to reiterate, it is very very often a multi 0:12:21.000 --> 0:12:26.199 year process. And even when you identify that target, there's 0:12:26.240 --> 0:12:29.000 then and the bankers are now getting more about We're 0:12:29.000 --> 0:12:31.679 helping them think through how do we value that target, 0:12:31.720 --> 0:12:33.839 what's the price that's appropriate to pay. Do we think 0:12:33.880 --> 0:12:36.400 they'd be willing to take that price? And sometimes with 0:12:36.480 --> 0:12:39.720 the market volatility, and stock prices moving. Sometimes the advice is, 0:12:40.000 --> 0:12:42.640 let's wait a quarter or two to just see how 0:12:42.679 --> 0:12:45.240 the dust settles with regards to some news announcements of 0:12:45.280 --> 0:12:47.960 their performance, and let's have a strategy of approaching and 0:12:48.000 --> 0:12:50.400 even once you approach it, maybe another few months or 0:12:50.520 --> 0:12:52.960 quarters before you actually get to the point of being 0:12:53.040 --> 0:12:55.520 very definitive on this is the price I'm prepared to pay? 0:12:55.520 --> 0:12:58.320 Are you prepared to accept it? Type of conversation. And 0:12:58.360 --> 0:13:03.400 again that could last certainly months and often into years. 0:13:03.559 --> 0:13:05.959 So so, Liz, when you work with companies that want 0:13:05.960 --> 0:13:09.920 to go public, the assumption is, especially with startups and 0:13:09.960 --> 0:13:14.720 tech companies, that's the exit strategy down the road or 0:13:14.800 --> 0:13:17.600 is it still is it? Is I p O the 0:13:18.600 --> 0:13:21.080 endgame as much as it might have been uh some 0:13:21.200 --> 0:13:23.920 years ago. Well, there are really three reasons that a 0:13:23.920 --> 0:13:26.400 company would decide to go public. One is they're looking 0:13:26.400 --> 0:13:29.040 to accelerate growth, similar to the theme that Chris mentioned 0:13:29.040 --> 0:13:31.360 about why they might be looking to make an acquisition. 0:13:31.679 --> 0:13:35.280 The second typical reason maybe that they have a balance 0:13:35.320 --> 0:13:37.880 sheet that's a little too levered for their comfort zone, 0:13:37.920 --> 0:13:40.200 so they'd like to raise some equity capital and pay 0:13:40.280 --> 0:13:43.360 down debt. And then the third factor that may weigh 0:13:43.440 --> 0:13:45.679 in is they may be owned by a financial sponsor 0:13:45.800 --> 0:13:49.559 who's looking to begin the process of exit after three, five, 0:13:49.760 --> 0:13:53.360 ten years UM, so that can be also a driver 0:13:53.440 --> 0:13:56.679 of an ip O. Someone sent me an email complaining 0:13:56.840 --> 0:14:00.640 about the lack of public companies that one point in time, 0:14:00.679 --> 0:14:04.520 the Wilshire five thousand actually had five thousand companies. So 0:14:05.320 --> 0:14:07.720 what do we see as the trend in in companies 0:14:07.760 --> 0:14:10.720 going public? We've heard a lot of complaints from company 0:14:10.760 --> 0:14:13.880 as well. It's easier to stay private. Uh. You see 0:14:13.960 --> 0:14:17.560 Uber has had no problem raising capital. Is this a 0:14:17.600 --> 0:14:20.560 real issue or is this Uh? People just complaining for 0:14:20.600 --> 0:14:22.960 the sake of complaining. Well, we have a brisk equity 0:14:22.960 --> 0:14:25.560 private placement business. But what I would say is that 0:14:25.640 --> 0:14:28.440 it's not a one size fits all type of approach. 0:14:29.000 --> 0:14:31.880 Not every company is looking to raise private capital. It's 0:14:31.920 --> 0:14:34.960 typically more dilutive than doing an I p O UM, 0:14:35.000 --> 0:14:38.600 and they really private equity is more dilutive than an IPO. 0:14:39.000 --> 0:14:42.120 Not always, but oftentimes the company is earlier in its 0:14:42.160 --> 0:14:45.040 life cycle, so they may not have predictable earnings, a 0:14:45.160 --> 0:14:48.920 visible or transparent revenue stream, so there's a lot more 0:14:49.040 --> 0:14:52.200 risk inherent. Often in companies that are earlier stage and 0:14:52.280 --> 0:14:54.920 less mature than when they ultimately get to being I 0:14:55.040 --> 0:14:57.640 p O ready, where we often would recommend that they 0:14:57.640 --> 0:15:01.680 have good transparency in their earnings, a stronger balance sheet, 0:15:01.760 --> 0:15:04.880 so just d risked and more mature. So that sounds 0:15:04.920 --> 0:15:08.200 like a checklist for how to run a successful I 0:15:08.280 --> 0:15:11.160 p O. What are the other factors and pitfalls that 0:15:11.200 --> 0:15:14.160 are out there? Sure? Well, I'd say certainly, having being 0:15:14.280 --> 0:15:18.640 involved in a growing and attractive sector is checkbox number one. 0:15:19.280 --> 0:15:22.920 Secondly would be having a really attractive niche within that, 0:15:23.040 --> 0:15:27.200 so leadership within an attractive sector, having a business model 0:15:27.280 --> 0:15:31.920 that is easily understandable and transparent, having a strong balance sheet, 0:15:32.200 --> 0:15:36.400 and lastly having strong management. Helpfully to have management who's 0:15:36.440 --> 0:15:40.360 had public company experience but not required and oftentimes companies 0:15:40.400 --> 0:15:44.560 that have helpful and credible strategic backing from a private 0:15:44.560 --> 0:15:47.760 equity firm or venture capital investor. How about you, Chris, 0:15:47.800 --> 0:15:52.120 what's your checklist for a successful acquisition? What what works 0:15:52.160 --> 0:15:54.400 and what doesn't? Yeah? I think the key is you 0:15:54.480 --> 0:15:56.120 go back to what are we good at? What are 0:15:56.160 --> 0:15:59.600 our core competencies as an acquirer, and can we apply 0:15:59.720 --> 0:16:01.800 those to this target? I think where companies get in 0:16:01.800 --> 0:16:05.640 trouble is they stray too far away from what they're 0:16:05.640 --> 0:16:08.400 good at and they try to expand into areas that 0:16:08.480 --> 0:16:11.120 they're not as familiar with or don't have the capabilities. 0:16:11.440 --> 0:16:14.160 So always stick to your knitting, stay in your lane. 0:16:14.240 --> 0:16:16.320 You know those phrases we use a lot with companies 0:16:16.800 --> 0:16:20.200 and their boards. The key then once you realize this 0:16:20.280 --> 0:16:22.680 is a business we can add value to and we 0:16:22.800 --> 0:16:25.320 understand and we have the skill set and it's filling 0:16:25.320 --> 0:16:28.080 a need that we have, then we very quickly well, 0:16:28.120 --> 0:16:30.600 what is it worth? And do we pay a price 0:16:30.680 --> 0:16:33.520 that actually gives us a return that's better than our 0:16:33.520 --> 0:16:36.120 cost of capital Because you may find that great target, 0:16:36.120 --> 0:16:39.920 but if you overpay for it, that's a destructive element 0:16:39.960 --> 0:16:42.640 to shareholder value. So where we'll end up working very 0:16:42.680 --> 0:16:45.600 closely with our clients is just that question, what is 0:16:45.640 --> 0:16:49.200 this business worth? What synergies are created under our ownership? 0:16:49.640 --> 0:16:52.280 How much of those are we willing to keep for 0:16:52.320 --> 0:16:55.400 ourselves or potentially pay away in a premium, And have 0:16:55.520 --> 0:16:58.280 that discussion and ultimately a negotiation with that seller who's 0:16:58.280 --> 0:17:01.280 on the opposite side of that dial, saying what is 0:17:01.320 --> 0:17:03.840 my own self worth? What are my prospects. Is someone 0:17:04.000 --> 0:17:06.639 offering me something that's better than I can do on 0:17:06.680 --> 0:17:10.080 my own. Maybe it's a stock deal where I don't 0:17:10.119 --> 0:17:13.119 need to just close the file on this, My shareholders 0:17:13.119 --> 0:17:16.640 are getting a new piece of equity that has upside 0:17:16.640 --> 0:17:18.800 to it. Or maybe it's a cash deal where I 0:17:18.840 --> 0:17:21.520 truly you know, three months from this announcement date, we're 0:17:21.520 --> 0:17:24.440 going to close our shareholders again and get all cashed out. 0:17:24.480 --> 0:17:25.920 And how do I feel about that? Did they get 0:17:26.080 --> 0:17:29.719 enough return above where the stock was trading to make 0:17:29.800 --> 0:17:31.480 us all feel good that that as a board we 0:17:31.520 --> 0:17:33.680 did the right thing for our shareholders as a cash seller, 0:17:33.880 --> 0:17:36.480 those are the key questions we deal with and work companies. 0:17:36.920 --> 0:17:40.280 Coming up, we continue our conversation with JP Morgan's Chris 0:17:40.359 --> 0:17:45.480 Vantresca and Liz Myers, looking at the relationship between education 0:17:45.840 --> 0:17:49.600 and finance. I'm Barry Riholds. You're listening to Master's in 0:17:49.640 --> 0:17:53.560 Business on Bloomberg Radio. My special guests this week are 0:17:53.880 --> 0:17:57.320 twenty year veterans of JP Morgan in both the M 0:17:57.400 --> 0:18:02.480 and A and global equity capital markets. Chris Van Tresca 0:18:02.800 --> 0:18:05.800 is the global co head of Mergers and Acquisitions at 0:18:05.880 --> 0:18:10.399 JP Morgan. Elizabeth Myers is head of Global e c 0:18:10.720 --> 0:18:13.800 M Equity Capital Markets. Both of them have been with 0:18:13.880 --> 0:18:17.000 JP Morgan for twenty years, and I guess literally have 0:18:17.200 --> 0:18:20.920 decades of experience in the space. Let's talk a little 0:18:20.920 --> 0:18:25.280 bit about your educational background and what's needed for this 0:18:25.359 --> 0:18:29.480 sort of work in finance. Liz, you have an economics 0:18:29.520 --> 0:18:33.360 degree from Princeton undergrad Chris you also went to Princeton 0:18:33.440 --> 0:18:37.119 and and have a Bachelors of Science and Engineering in 0:18:37.280 --> 0:18:40.320 electrical engineering, a little bit unusual. And then both of 0:18:40.320 --> 0:18:42.680 you have n b as. Chris you at at n 0:18:42.800 --> 0:18:46.680 y U, Liz you at Harvard. So the first question 0:18:46.800 --> 0:18:51.120 is pretty straightforward. You each seem to have taken slightly 0:18:51.160 --> 0:18:54.480 different paths to work your way into finance. What did 0:18:54.480 --> 0:18:58.360 your educational background lead you towards in terms of of 0:18:58.400 --> 0:19:01.159 what you wanted to focus on as a career. Senior 0:19:01.240 --> 0:19:04.440 year in Princeton getting my electrical engineering degree and interviewing 0:19:04.440 --> 0:19:07.560 around and realized I didn't necessarily want to be an 0:19:07.560 --> 0:19:11.720 electrical engineer, but I loved problem solving, I love analytical situations, 0:19:12.280 --> 0:19:15.080 and I did enjoy being around people and being a 0:19:15.119 --> 0:19:17.160 part of a team. So I had branched off into 0:19:17.200 --> 0:19:21.480 different areas of either consulting or computer programming jobs at 0:19:21.920 --> 0:19:24.520 different types of firms, and JP Morgan at that time 0:19:25.520 --> 0:19:28.119 and still does today, offered what they called a Global 0:19:28.160 --> 0:19:32.359 Technology and Operations training program where they took folks like 0:19:32.480 --> 0:19:38.640 myself and became computer programmers or technical folks to help bankers. 0:19:38.720 --> 0:19:40.760 And I was always intrigued by the financial markets and 0:19:40.760 --> 0:19:45.720 finance in general, and the opportunity to help bankers think 0:19:45.760 --> 0:19:48.520 about how to value companies, what tools do they need 0:19:49.040 --> 0:19:53.920 the analytical tool set to help them do their job 0:19:54.040 --> 0:19:55.880 was very interesting to me, so I joined the firm 0:19:55.920 --> 0:19:59.560 on that basis actually spent many years doing that job, 0:19:59.600 --> 0:20:02.879 which was supporting bankers with all the analytical tools that 0:20:02.920 --> 0:20:06.360 they needed. As I did that function, I also realized 0:20:06.400 --> 0:20:08.520 I liked their job a heck of a lot. So 0:20:08.560 --> 0:20:11.600 I went back um at night part time at n 0:20:11.760 --> 0:20:15.080 y U cern School of Business and proceeded to get 0:20:15.080 --> 0:20:18.960 my m b A and finance great managers great mentors 0:20:19.000 --> 0:20:21.080 along the way early in my career, supporting that I 0:20:21.119 --> 0:20:23.399 was able to do that while staying at JP Morgan, 0:20:24.160 --> 0:20:27.119 and ultimately made a career change once I finished my 0:20:27.240 --> 0:20:29.760 m b A. This is now the mid nineties, I 0:20:29.840 --> 0:20:32.800 switched over and became what we call an associate in 0:20:32.800 --> 0:20:36.280 our investment banking program. Became a young investment banker picked 0:20:36.280 --> 0:20:38.640 the M and A Group at the time. I loved 0:20:38.680 --> 0:20:43.920 the valuation aspects, the analytical rigor around analyzing companies. I'd 0:20:43.920 --> 0:20:47.639 like the tactical side and strategic side of advising companies 0:20:47.920 --> 0:20:50.560 and that whole thought process. It appealed to kind of 0:20:50.600 --> 0:20:53.080 my core competencies as as well as what I just 0:20:53.320 --> 0:20:56.520 saw and watched others do with great enthusiasm. So I 0:20:56.600 --> 0:20:58.199 jumped in with both feed into the M and A 0:20:58.240 --> 0:20:59.960 Group in the mid nineties and fell in love with 0:21:00.000 --> 0:21:03.320 the business and have just essentially grown up at JP 0:21:03.440 --> 0:21:07.240 Morgan in that business, taking on greater responsibilities throughout the years. Liz, 0:21:07.280 --> 0:21:10.440 you you took a more traditional route economics to M 0:21:10.520 --> 0:21:14.840 b A. How did you find your academic background helped 0:21:14.840 --> 0:21:17.560 you in your career well? As an economics major, it 0:21:17.600 --> 0:21:19.919 was a more natural path that I might end up 0:21:19.920 --> 0:21:24.159 interviewing with financial firms. And I remember meeting Chris in 0:21:24.160 --> 0:21:26.600 the early days of working at JP Morgan when I 0:21:26.640 --> 0:21:28.760 was an industry coverage banker and then in the M 0:21:28.760 --> 0:21:31.240 and A Group myself. Um, So I had a really 0:21:31.280 --> 0:21:35.600 great experience as part of the JP Morgan Analyst Training program, 0:21:35.720 --> 0:21:37.919 and after my work in M and A, I started 0:21:37.920 --> 0:21:41.240 to think about spending more time in an area where 0:21:41.240 --> 0:21:43.240 I could have more exposure to the equity markets. I 0:21:43.280 --> 0:21:45.240 grew up in a family where neither of my parents 0:21:45.240 --> 0:21:48.200 were financial professionals, but they both really had a passion 0:21:48.280 --> 0:21:50.879 for the stock market and we used to laugh at 0:21:50.920 --> 0:21:53.280 they each had their own individual subscriptions to the Wall 0:21:53.359 --> 0:21:57.000 Street Journal. So I had an interest in the equity markets, 0:21:57.000 --> 0:21:59.320 and when I returned from business school, I decided to 0:21:59.320 --> 0:22:02.760 make the transition into equity capital markets and just love 0:22:02.800 --> 0:22:05.560 the opportunity to work with so many more clients on 0:22:05.600 --> 0:22:07.840