Joe Coletti
Hello, and welcome to Strategic Alternatives, where we uncover new ways to raise capital, drive growth and create value in an ever-changing world with insights and outlooks from the RBC Capital Markets team.
In this episode, Larry Grafstein, Deputy Chairman of Global Investment Banking at RBC Capital Markets, sits down with Peter Nieberg, host of the Investment Banking Leaders podcast, a podcast aimed to help the Investment Banking community grow through learning from successful leaders. You can listen to new episodes of Investment Banking Leaders on altrum.com. In today's discussion, Larry shares his unconventional journey from law and politics to investment banking, offering valuable insights on building relationships, winning major deals, and achieving a work-life balance.
Now, let’s dive into their conversation.
Peter Nieberg
So we have an absolute Wall Street legend on the podcast today, an industry titan, and I'm beyond excited to be joined by Larry Grafstein, the deputy chairman of the Global Investment Bank at RBC Capital Markets in New York. And in his 30 year career, Larry's advised clients on approximately 1 trillion of completed transactions.
His experience spans all industries and geographies and includes some of the largest and most complex M&A, restructuring, equity and privatization deals ever. He's held top ranking positions at Lazard, Rothschild, UBS before joining RBC and his clients have included major public companies such as Aircap, AT&T, IBM and Vodafone.
As well as a range of PE sponsors, private companies, governments, and middle market public companies, too. He's worked on the restructuring of Worldcom MCI, which is one of the largest ever, and he helped set up one of the most hostile transactions in history. Market Basket Supermarkets. So hopefully this experience is going to come through really well today.
And we'll touch on some of these deals cause I'm sure you'll be interested. I've also learned that Larry is passionate about his pursuits outside of banking and giving back to the community. He's been involved with numerous charities, he's served on boards of public companies, private companies, and philanthropic institutions as well.
He's currently the chair of the board of trustees of Horace Mann School in the Bronx, a founding member of the board of the U. S. Foundation of Upper Canada College, and a Co Chair of the Harvard class of 1982. He's also a member of the executive committee of the Wall Street division of UJA. If that wasn't enough, Larry also helped finance the new Republic magazine from 2000 to 2012 as a chair of the advisory committee and also a lead investor.
But having got to know Larry of a little bit, the last couple of weeks, what I've really learned is he deeply cares about people and more importantly, helping them on their journey. So we really couldn't be luckier to have him with us here today. So Larry, I appreciate how busy you are.
Thanks very much and welcome to the investment banking leaders podcast.
Larry Grafstein
Peter, it's a pleasure to be here. Thank you for that introduction. And when one is called a legend, it sounds like, perhaps you're being put out to pasture. And I just want to assure everyone I'm not ready for that.
So it's very kind of you, but I've been very lucky and fortunate to have a wonderful career in finance and on clients and experiences around the world. So it's a pleasure to be here and have a chance to be a little contemplative in a business that is always driven by urgency, daily developments in the market.
So thank you. Pleasure.
Peter Nieberg
Thanks so much. And definitely going to be some reflection here today, I'm sure. So why don't we just start off with a little bit about how did you end up in investment banking?
Larry Grafstein
Totally unexpectedly. This was not the type of thing that I planned for partly because it wasn't as trendy a thing when I was considering my future years ago.
And there was something about the era, the late 1980s when I was in school that it was just a very interesting development. And so I just took an interest in it. I took some courses in law school that related to things like takeovers.
Tax securities laws and followed the corporate law cases. And even though I wasn't necessarily super quantitative, I was never intimidated by numbers. And I just, I wound up deciding to try to do investment banking, for a couple of years. And I've done it for a couple of years and a couple of decades beyond that.
It had a little bit to do with personal things. I grew up in Canada in Toronto. I did go to undergraduate at Harvard and then I went to Oxford and then I came back to Canada for law school. So I was living in Toronto and I thought if I was going to be interested in Wall Street or finance, maybe I should come to New York for at least a few years.
And that's a pretty standard thing to do. Not really intending to stay there, but the truth of the matter is my wife and I liked it and we both started at the same time and we stayed here.
Peter Nieberg
Amazing So from law and from politics into investment banking and from Canada over to New York, and the rest is history.
Yeah, I hope so. So why don't you tell the listeners something unknown or about you, Larry?
Larry Grafstein
Because I had this unconventional background for finance actually, started my life very engaged in political things. So when I was at Oxford, I found myself as President of the Oxford union debating society and my political protege was a young Etonian named Boris Johnson and so Boris and I have been friendly for many decades.
And then later you mentioned one of the firms I worked at Rothschild, I was head of M&A in North America and we had a young banker and in France, who had just come out of the Ze Cole in France named Emmanuel Macron and actually who worked with him on a cross border situation.
So there's very few people probably sitting where I sit who could say that, Boris and President Macron, both worked for me at one point. Although in the case of Macron, it was very brief. So that's, that's an obscure fact.
Peter Nieberg
It's definitely an obscure fact and a cool one. So thanks for sharing that very interesting. And I think you're right. Not many have had both of those report to them at some point. Obviously this is a leadership podcast. You're a top investment banking leader. Lots of aspiring leaders listening today who want to make it to the top of the industry.
What advice would you have for them?
Larry Grafstein
Look, I think if you're starting out, in finance, whether it's investment banking or another pocket of finance, and I know, Peter, that you have a very broad following and it's one of the wonderful things about our industry is there's a lot of different things you can do and there's a lot of different paths you can follow during one career.
And I would just say that at this stage, when you're starting out, the most important thing is really working on interesting things and learning. And I think, focusing a little too much on the corporate ladder or, the career trajectory, or of course, compensation can be a bit of a distraction.
I think the experiences that you have early in your career and the relationships that you form both with colleagues and of course if you're in the client business with clients, those types of things. It's easy for me to say, looking back, 35 years, those types of things are really the platform of your career and their foundation of your career, and that enables you.
over the years as you progress, to have a network of relationships and friends. It also more in some ways, even more importantly, allows you to, grow intellectually within finance. And so I always say to people, work on interesting things. Push yourself a little bit beyond your comfort zone.
In my case, I started in finance without having taken a finance course despite having had three degrees and that kind of experience we'll always pay off and everything else will take care of itself. And the other thing I would say is that you'll be amazed at the people that you meet early in your career, what they go on to do.
I have a long list of colleagues and friends who are doing amazing things inside finance, outside finance and the people you meet along the way, just make sure you maintain those relationships because whether or not you wind up working with them or whether they're, that relationship conduces to your economic benefit and what you're doing.
It really will just enrich your life and also you'll be amazed when you look back and it's really part of personal development beyond just, the workplace.
Peter Nieberg
I love that. And I hear that quite a bit about, the network nature in the relationships, how important that is to building your career and getting ahead later on any particular recommendations for building a great network.
Larry Grafstein
Look, it's so interesting. The tools are much better than they were when I started, it's and I use the example of my office mate who was the first CFO of Amazon, a woman named Joy Covey, who since passed away, so Joy and I shared an office in New York.
We were very friendly. She was clearly super talented. I knew she was going to do great. She went off to the West Coast to do venture capital and worked for a small venture capital firm. And after that, having had a bit of success, she was recruited by Jeff Bezos.
And, it was very hard to keep in touch because I moved three times in the five or six years that happened, my, address when I was still at the same firm at the time, but she moved her home address and there was no email. It's hard to fathom. There was no social media.
And there were not even really a lot of cell phones, right? And there was certainly no, text ability to keep in touch. So just use those tools. Everybody knows everybody. You all have networks already from, pre university days. Your university days. I just think you know, checking in and refreshing every once in a while and touching base with people is a very easy thing to do compared to what it was.
And I would just say, and the reason I mentioned Joy is just, it sounds random, but it really isn't because if You know, I ran an interesting job in an interesting place. You've already, just by virtue of having a foothold in this industry, you've already achieved a lot. And so the opportunities are endless, and the people you meet, go on to do wonderful things.
I mention that just because, if I had followed up a little more diligently, I probably would have invested more in Amazon in the early days than I probably would. be a happier person today for that. But no, seriously, it's just, you never know. But I'm sure that if Joy were my office mate today and she was, gonna do something comparable the next couple of decades, I would definitely be in touch with her on a regular basis.
So just use that as an anecdote to try to illustrate a broader point.
Peter Nieberg
Yeah. And you make a good point that there's so many more available tools and just using that and being attentive and putting the effort in can really help you grow. So I love that take. Has anything helped you grow and develop as a leader?
Particularly there's certain training mentors thought leaders. Are you a reader? What's really helped you grow and develop your leadership skills?
Larry Grafstein
No, there's a line that I've been quoting a fair bit recently, which is, the good judgment comes from experience and experience comes from bad judgment.
And so you have to try to learn the lessons along the way of not failures exactly, but setbacks and challenges. And I would say that, at this stage, I look back and gee, I really wish I was just a little bit less anxious when I was starting my career. I always have prioritized, family and non work activities as part of in addition to work and community involvement.
But there were times when, on the margin, I made the decision to prioritize work. And when you look back on it, it really would not have made that much of a difference. This is your career in finance is a marathon. It's not a sprint. Try to take the long view.
And also, the other thing about what we do, and I referenced it into some degree a little bit earlier, the urgent can crowd out the important. Any given day, you all have, hundreds of messages to respond to. You've got lots of things to look into. It's not like you're a lawyer and there's only so many hours you can bill in a year.
And even if you work your hardest and you build thousands of hours, you can't bill any more than that. But as a banker, you can always be doing more as an investor, you can always be looking for more things, as a wealth manager, you can always be looking and reading and you've got to somehow have that skill.
And I think Warren Buffett is the paradigm of this of taking yourself half a step back and focusing on what matters. So that doesn't mean that he doesn't, he talks about how much he reads, he just plows through things and he's trying to accumulate knowledge. But at the end of the day, what he's doing is he's focusing and that's why when he makes an investment decision, he's not making 20 a day.
He's making one every once in a while. And so again, every situation is different. But what I would tell people is keep your eye on the ball. It's very easy to have, an A. D. Attitude to work. It's very easy to always be responding to the most recent stimulus, and you just find it will find yourself following the track, but always try to take a figurative walk around the block.
Think about where you are. Think about what you know you might do better. And also, try to say, Okay I could have done that better and not feel bad or be too hard on yourself about that, because we're all success oriented in this industry, and, we all are used to succeeding in different ways, and people can be too hard on themselves, but in a way, not hard enough when it comes to, just focusing on what really matters and what really matters is.
Most of all on a daily basis is the people you work with. And it's also very easy to get, it's of course, super important if you're in a client business to always be responsive to clients but it's also important to make sure that the people you're working with are enjoying working with you.
You're learning from them. They're learning from you. You're covering for them. They're covering for you. It's part of the teamwork of this. And always, making sure that you're sensitive to that. So when I look back, I just say, pay even more attention to your colleagues, pay even more attention to your non work priorities and pay attention to, how you're thinking about your progress in your career.
Peter Nieberg
Love that so creating space to work on the right things Making sure you're working on the right things being attentive to the team and what's really the priorities. Do you have any tips or advice, to reflect back on the week or the month and understand where you could refine where you're working or your targets?
Larry Grafstein
I think if you want to enjoy the intrinsic experience this is a demanding job and different clients can be challenging because of their needs or their personalities or their complexity. It's also true that one of the great things about these types of jobs is you get a mix of, intellectual stimulation, you're solving problems, but you're not purely academic the way you might be if you were a researcher in a university.
But on the other hand, you also have a chance to expose yourself to a lot of people. And it's not pure salesmanship as some other jobs are, but it's a nice combination of, challenging. Complex problem solving and, people business, because that's what the client business is.
And, so as a result of that, I think you always want to be sensitive to are you striking the right balance in those things? Because you don't want to be pushed too much, in the direction of being the person that always has to, finish the spreadsheet at deadline, but doesn't focus on personal relationships.
You also don't want to be the person who's too far removed from the actual, analytics of a situation, the actual, intellectual content, even if you're, say, a wealth management advisor, you want to really understand what's going on, not just have a good relationship with the families you're working with.
Think it's always important to make sure you're, you feel like you're getting both of those things.
Peter Nieberg
Perfect. Thanks for that. That's great advice. And again, I get the experience you mentioned comes into that a lot. I imagine as you get to know and build your investment banking apprenticeship, as it were you talked about team working with team, understanding the needs of the team.
I know you're a mentor. I know you've mentored higher performing and exceptional leaders, such as Joe Gasparro and industry leaders, such as Josh Rosenbaum. How do you mentor and coach leaders effectively?
Larry Grafstein
I think in, at least in what we do in investment banking, and this is true of anyone that works in the industry, you're very rarely just working with the same three or four people on a situation, all the time.
You're going to wind up working with other product people. You're going to wind up working with a slightly different team, perhaps because of the client coverage universe may be a little different. You're going to be working potentially with different geographies that there's a cross border client.
And so every situation is almost. It's own new team. And one of the skills and I think, over the years, many years, I've developed this a bit is being able to insert yourself into a team in the right way. And on some of the teams that I work with, they happen to be, clients that I've had a long relationship with.
So I'm directing the team. Sometimes people are recruiting me to, to talk about something very specific. It may be as something specific having to do with, M and A structuring, for example. Sometimes, I'm just there as a representative of the firm because I'm a senior person.
And sometimes I'm right there in the details because, we're going to a board meeting and I'm just checking to make sure that everything is correct. And I'm trying to look at it from the perspective of, a board or a CEO and try to make sure we're communicating, distilling the information properly.
So different functions in different situations. And it's really good to get used to doing that. But it's also a skill to be able to work with people. Slot into any team in any role on be able to do that. And I often say to and I don't know, what percentage of people listening fall into this category.
But I often say to people who are vice presidents or directors who are on the cusp of being managing directors or partners, but are a little senior, more senior than starting out. That's the toughest time. In finance, because there are days when you have to basically take over the role of the first year analyst and crunch and at the same time, get the 5am flight to go see the client and present the spreadsheet that you've had to do just because, maybe there's a staffing issue or maybe there's a problem.
And you have to be both an analyst and an MD at the same time, and it's challenging and it's grueling. And as I say, it's a marathon, not a sprint. So you want to preserve your stamina and you need to not ever be afraid to ask for help from your team. And you need to never also be shy about admitting that you don't know something because in most firms, your answer is just one degree of separation away.
I've also had a lot of role models in my career, and I will tell you that they are very different people. We can talk about some of the specifics over the years, but I tried to learn a little bit from everybody. Who was senior when I was junior, there were people that were, just very good at handling.
Tricky situations are people that were very calm when I would get probably more anxious than I should have. There were people that really had creative insights and had a way of developing them, communicating them. And you can learn a little bit from everybody, but you have to be your authentic self.
Because if you're working internally, people that get to know you every day, or you're working with a client, authenticity really matters, and that doesn't mean that you can't form connections with people that might be very different than you, but you shouldn't try to be a different person yourself.
Peter Nieberg
Yeah, that's great. And I think you touch on so many great areas there. We do have a lot of VPs that listen and I agree with you. It's tough. I hear that a lot in the industry, that, that step up to VP and the step up to MD and the change required in the role. So Again, using the team not being afraid to say you don't know something, I think that's great advice.
Any other particular advice for VPs looking to make a smoother transition into a more senior role, MD role?
Larry Grafstein
Oh, I think if you were to summarize, I'd say, look, continue to work on interesting things. Try to take on as much leadership as you can within a situation. A leader just because you're a VP doesn't mean that you're not the senior person for your firm in many contexts and practice, and I think actually, investment banking has a pretty good contemporary way of having, associates manage analysts and the VPs manage associates and analysts.
And so you get these leadership. opportunities, even if you're not necessarily the ultimate senior person in a situation. And I think just cultivating that makes sense. If you're working with a client and you happen to be, the VP assigned to the assistant treasurer or someone lower down on the, the hierarchy, don't take that person for granted.
Today's assistant treasurer is tomorrow's CFO. It may take 10 or 15 years, that's your opportunity. Because I'm, I don't know the assistant treasurers from 10 years ago, but my colleagues do. So those people are going to be the next generation. And don't worry so much.
Things do take care of themselves as a VP some days you just have to accept, you're going to have to do the number crunching, even though it's painful. Some days you're going to have to accept, that you're going to be exhausted because, the MD hasn't had enough time to do it.
So you're gonna have to lead the way. And many VPs are just in the process of starting out families. And, don't, let the demands and the desire to be promoted eclipse having a good time with your partners, good time if you have kids, focusing on the important things.
If you work at a firm any firm I believe wants you to be there for the long term. The hardest thing for us as senior people is when you churn out people that are very talented. Sometimes that's going to happen no matter what and that's fine. And that's part of the industry that we're used to.
But we want you to be successful in the long term and to be, comfortable at your firm. So one very important predicate of that is that you take care of your personal life and that you feel that you're not. Being overly pressured and that you're balancing these things. And so you will rarely get, a good senior leader who is telling you to ignore those things.
And if they are, then you should question whether, you're in the right position, whether it's the firm itself or the department within the firm. But I think the overwhelming majority of people will always tell you to prioritize those things.
Peter Nieberg
Yeah, definitely. And I know you've mentioned that a few times and can't miss out on those things and find the right leader. And you mentioned obviously Talent attraction talent retention. You mentioned it's key how do you recognize success in your teams?
Larry Grafstein
Yeah, I think you have to enjoy the game, Sports analogies are overdone, but you have to really just enjoy the intrinsic nature of what you're doing There are many things about it that are not fun But there are many things that are fun that you don't actually take advantage of So if you're in a business where you travel a lot It's always fun to go to places.
I will, just to use a couple of random examples, if I'm in Detroit, visiting companies there, there's a pie place, which is, one of the best in the country and they sell out by noon or something. So we'll try to schedule our meeting so we can go and pick up a pie before they sell out, but one of the things that I've enjoyed over my career is just going to places you wouldn't otherwise go. And there's so much in, in this country and there's so much around the world to enjoy. And if you have the chance to go on a business trip, of course, you're going to prioritize your logistics. You're going to prioritize the client meetings.
You're going to feel stressed just by the nature of travel and what you have to get back to. But try to actually enjoy the places you visit and take advantage of that opportunity which is a good thing. And then also, try to enjoy getting to know these people that you're working with.
One of the things about being in finance, whether you're, a Wall Street investment banker, whether you're an investor, whether you're, an almost any investor. Part of finances. You are going to meet people and you're gonna meet interesting people and you're gonna have surprising connections with those people.
And they're gonna be much different than you. But over the years, you can enjoy that as well. So it's fun that I know people all over the country and I try to keep in touch with them now that it's a little easier to do that. But try to actually, it's a cliche, enjoy the journey.
Not every journey is fun. I've run a few marathons and that's definitely a situation that's not about the journey. It's true that you you really do have to force yourself to focus on getting beyond the grind. And I think if you can, teach yourself that cognitively you will like it more.
And then, of course, you want to enjoy your teammates. And one of the things I enjoy is meeting new analysts and associates that come into the firm. Obviously a different generation than I am. Some of them are even younger than my kids now, but I like listening to them and learning from them about what's important to them as well.
And it's also true that when you work at firms and you build relationships among your peers, that can also be extremely satisfying. You have a long term working relationship, which becomes in many ways personal relationships and you enjoy, you enjoy that as well. Just try to enjoy it.
Peter Nieberg
I love that. I love your take of, being in a place and looking for that positive outcome or that unique thing about the place, whether it's the pie or something else, and then creating the moments with your colleague, with your teammate, as well as with your clients. So there's a lot of stuff to like about that approach, Larry.
And we've slipped in and talked a bit about, that balance, the career, having interest, having family. I mentioned in the intro that you're involved in a lot of boards and charities, what part have your outside activities played in your life and your development?
Larry Grafstein
Okay. I think it's just part of it is again, not to be too hackneyed about this but we are fortunate to be in finance, especially if you're there as long as I've been. And we do all have to figure out different ways to maintain our hobbies, which is important, prioritize our families, which is crucial but also to be part of the community.
And there's a lot of different ways to do that. And, in most Western countries, where your finance professional there's many opportunities to make a difference. And I just feel that's something, that you should always keep in mind.
And it does clearly, even though it adds a little bit of extra burden on your time, it also just, It appeals to anyone as a whole person. And I think, you have relationships. Sometimes they lead to business opportunities. But I would say, not all that often.
But that isn't the point. It also enhances your personal reputation. But that also isn't the point. It's not about being instrumental. doing it for a reason. You're doing it because, it's a form of giving back that will make you more satisfied over time. I've tried to be loyal to my various alma maters, and I have a lot of them.
I definitely I've been involved in those, try to be involved to some degree in the arts. My spouse, Rebecca, has been on the board of a number of theater companies in New York and in Cambridge, Massachusetts. We try to also be involved in Jewish charities.
And we also, are involved in various other causes and we're supporting our friends and their causes. But, giving some of your time as well as some of your money to those types of causes, means a lot. And at RBC, one of the wonderful things is it's a very philanthropic company, probably the biggest corporate philanthropist in Canada.
We also have a tremendous philanthropic energy in our markets like the U S and the UK and Australia and others. And, that's part of the culture of the firm and we all have our opportunities within the workplace as well. I think just the things that you feel You know, have helped you along the way.
It's nice to be able to help them. And it's also, again, very good for, you're feeling good about yourself, even though it makes you work a little bit harder, being frank.
Peter Nieberg
Yeah, it's so important, again, that purpose, that connection with the community. And as you say, I'm sure it's not easy fitting in with everything else that needs to be done.
Congrats on what you've been able to achieve in that area. And I want to change gears a little bit now. I want to talk a bit about deal making. As I said, you've been involved in a few in your career. What does it take to win a multi billion dollar deal?
Larry Grafstein
We often say, when I picked this up from from past bosses over the years, if we tie, we lose.
Sometimes you can win if you tie, if you're in, if you're in a firm that has a leading franchise or there's a conflict for someone else or you're having multiple advisors, which is, in what I do very common but, at the end of the day, you need to have, be able to break a tie and how do you do that?
Obviously you do that through your track record and you do that through your intellectual capital. Okay. And sometimes, you bring financing products, which are, more competitive than others. It's a very competitive industry even with some of the shakeouts that have happened periodically, during market downturns.
And, it's important always to keep in mind that, there are many firms out there, that are formidable competitors and, you always have to have a bit of an angle. And again, if you take a step back always and put yourself in the shoes who you're trying to advise on something, you always have to ask yourself Okay, what do they really need to do?
What would I do if I were them and it's surprising in the intermediary part of wall street how rare that is People often think about processing a deal or they look at precedents or whatever But every situation really is bespoke. And so how do you get inside, the head of a potential client?
And I think, it's also private equity. Now there's many more private equity firms who are credible than there were when I started, 30 plus years ago. And they're all competing for the best investments. And so they have to win over people and they have to differentiate themselves and they have to tell a story about that.
So again, you're always trying to think about, why should you work, with us as opposed to anybody else? And what is it that we're bringing to the table? And I think most people on this call who've been on the street for a while recognize that because it's it gets ingrained into you very quickly.
And, we talk about successes and failures and learning from your mistakes, but you also need a certain resiliency because you're not going to win everything. And, you have to, attitudinally realize, okay, maybe we how could we have done better? And I often say to people, there's usually only one way to win, but there's thousands of ways to lose a deal.
You've got to, you've got to really think about these things. Carefully. And then success, breed success. And I would point to the perfusion of investment banking boutiques. Again, since I worked started 30 plus years ago, I worked for some excellent boutiques. I started at Wasserstein Perella which is may feel ancient to some of the people on the call, but it was it was a hot upstart boutique in the late eighties, early nineties.
That's where I started. And then there was always a handful of distinguished boutiques, but now we have dozens and dozens of boutiques, and so those boutiques are now they all, they've all been established in a way, having certain roles, but they also are competing, not just with us, but with, full service banks, but with each other for boutique type roles.
You have a lot of competition out there and you're not going to win everything. You have to be resilient and you have to be and I just use boutiques, not as an example of anything other than success, because many of those firms are established simply because they've already successful transactions.
So once you credentialize yourself and establish yourself, they've turned these firms into quite significant players in the market. So again, and there's boutiques being created regularly still. Even though you would argue that maybe in a down market or two, that will be hard for them.
But nevertheless, it just shows that you can establish yourself and that you can build momentum and you can, create leadership at RBC. We've grown in the United States since the financial crisis dramatically. And that has really been a tribute to the people that decided it was a good time and actually a courageous time to begin to build in the U S other firms were Pulling back out of necessity and we've taken a very steady prudent but long term view and you can see in our record we've built market share over the years and so we continue to so again long term strategies can work and nevertheless I think it's rare to win more than you lose on Wall Street which is quite interesting.
Peter Nieberg
I like the take obviously understanding the client putting yourself in their shoes understanding what's the right vehicle what's the right tool to get the deal done And congrats again on the success and the continued growth for RBC I would be remiss of me not to ask about market basket supermarkets one of the most hostile how did you manage to execute such a difficult deal.
Larry Grafstein
Looking back on it was an interesting saga but I worked on world comm which at the time was the biggest fraud in history as well as the biggest bankruptcy in history And that was a very kind of career defining moment for me just because you see people in extremists people in that case almost a hundred billion dollars of equity value evaporated very quickly And it was very painful for the people and it was a great challenge particularly given the financial statement questions and yet it turned out to actually be a very satisfying experience I also have been fortunate I was fortunate enough to work for creative artist agency CAA who are the ultimate talent agents in Hollywood and helping them think through their vision their strategy and getting investments for them And what was interesting about that is they are fantastic client people because they're handling very demanding very talented people in a different context So I learned a lot about client skills from my own demanding clients at CIA And then also Of course there are many other mega deals But but you mentioned market basket that was a deal where it was two sides of a family that were in a dispute for 20 years and it started with two founders and who were brothers and they built up a very nice business and a very strong real estate position in the supermarket business in New England and one of the brothers died and there were a couple siblings on either side and the two sets of siblings wound up fighting with each other based on a true control dispute and went to the Massachusetts Supreme Court seven times and it culminated in the summer of 2014 I'm sorry to believe it was 10 years ago with one side taking over the board and trying to kick out the other side which then led to a consumer boycott and basically a lockout an employee wildcat strike and so the governors of Massachusetts and New Hampshire at the time got involved Deval Patrick and Maggie Hassan And subsequently became a senator from New Hampshire and it was a quite a difficult multi year extravaganza which ended in ultimately effectively a divorce where both sides pretty much got what they wanted the people I worked for sold out at a pretty good price and the people who we're on the other side wound up taking control of the company and by all accounts have done quite well with it but it was it was a life experience And it just shows you that to my point earlier at the end of the day everything is about people And people talking about the corporations we're in the political season and people like to lamb based corporations But what is a corporation It's just a collection of relationships between and among people It's also to be technical about it's a legal fiction which has very useful purposes and but that said these things particularly when it happens to be family emotional things where it happens to be companies or collections of people and collections of voluntary arrangements between and among employees and customers and shareholders that was yes that was a deal that I mentioned in part because we weren't particularly well compensated for it given how intensive it was But at the same time and I really didn't enjoy it going through it that much because of the sheer emotion of the thing on the part of the families involved But I will say as I look back on it I'm actually pretty proud that we helped settle a strike We helped settle a consumer boycott We helped get a win result out of decades of extremely hostile litigation.
Peter Nieberg
So a lot of learnings hard work but a lot of learnings And again congrats on those transactions And what really shines through just listening to you it seems that a lot of those are learnings around people and situations versus actual finance right It seems that's what you really generate from these tough and large transactions So super interesting Thanks for sharing I want to look forward a little bit we've experienced a tough period across the last 12 to 18 months in the industry and for many what do you see is the biggest opportunities for the investment banking industry currently
Larry Grafstein
I think you have to have the long view a lot of people start in investment banking and move on to hedge funds or they move on to private equity firms or they move on to wealth management or corporations or clients and that's all great and that's really as it should be investment banking is always going to be as I like to say for starters for people starting out a paid education not saying you don't work hard and it's a little more more requirements than pure education where we need you to come to class every day More or less not necessarily in the office but we have flexible working arrangements but you need to be there working but you were and you work hard for it but you learn a tremendous amount and so that will never change I think also if you talk to people that go through and you know go through cycles You learn a lot from each cycle I mean I mentioned worldcom and restructuring I hadn't really done that much debt related restructuring until the nasdaq burst in the tech bubble at the turn of the century and the number of the telecom companies that were You heavily capitalized had a shortage of money and so that a lot of them had to restructure and you really learn a lot about business when if you were a merger and acquisition person or a financier corporate financier and then you actually have to go and do a restructuring you learn a lot about cash You learn a lot about liquidity You learn a lot about peeling back the onion of a business what's really there at the core And it's a different kind of mentality As well because it's a bit of a zero sum game when creditors are underwater And that was a learning experience for me before that I had gone through a privatization wave And I advise for example the government Australia on the privatization of Telstra for any Aussies on the phone that was also a wonderful experience and it wasn't the only one that I've worked on so I've worked with governments as well I worked for the governments of Canada and Ontario after the financial crisis from as it pertained to their stake in General Motors Again the U S government also had to take over some ownership of GM after the Lehman Brothers crisis And so that was again an interesting experience And I think as you go through these cycles and you look back on it they really do make you better you also learn to keep the cycles in perspective you said we've had a couple of tough years here we had also 40 years of cycles steadily declining interest rates between 1982 and 2022 not quite in a straight line but that is a long time to have successively lower interest rates and after the financial crisis which has already been 15 years ago plus or minus we had close to 15 years of 0 percent interest rates which no one expected Okay No one felt was going to be necessary And some people historians and economists will look back and question whether that was the right policy so called zero interest rate policy or perhaps that should have been ended sooner Then of course Cove it happened and we had another mini crisis So we've been through a lot of this and we learn as we go And you have to really understand and expect that you're going to have cycles And by the way it's much better to have an adverse cycle earlier in your career because by definition compensation is more variable when you're more senior And that in a way if you go through a tough time it's not just It's not just the the crisis atmosphere of a bad market moment it's also learning the psychological kind of dimensions of Going through a crisis with clients with colleagues And of course often there are going to be in this capitalist economy there are going to occasionally be cutbacks and pay cuts and things like that which can be painful But you learn during these moments the behavioral aspects of economics right Not just the quantitative aspects And I think that also no two situations ever or no two crises ever unfold in exactly the same way but they always have some common elements to them So to my earlier theme about just learning early in your career down cycles help you I was promoted to MD after four years on wall street at Wasserstein Perella that probably wouldn't have happened at any firm but we had a couple of very tough years some of the people left the firm and also my industry happened to do relatively well which I was covering the telecom industry And so I was able to do that on an accelerated basis I already had spent a lot of time in school as I told you Pete but at the same time these crises do teach you things they present potential opportunities and they prepare you for the next one.
Peter Nieberg
Yeah so really leaning into those as opportunities to learn and to grow and to move forward in your career I love that approach What's your outlook for next year?
Larry Grafstein
I think overall people have probably been pleasantly surprised at the market comeback as we sit here in August of 2024 the last 18 months or really just given that interest rates have been sticky they haven't necessarily declined Also there's been quantitative tightening in the U S and I think the U S economy has been able to be a little more robust than Europe and other places which are affected by geopolitics and also local politics so I think we're in a cautious time and but I what I would say to people is you can have a very good financing environment Transactional environment economic environment with the 10 year at 5 We had that pretty much through the entire 1990s It's not going to be so wonderful if as the inflationary 70s and part of the 80s had it much higher than that But this is a pretty normal environment there are exogenous risks I think the geopolitical risks are probably more prominent than they were or at least more visible than they were five years ago No one expected COVID though we were able to respond and rebound to that Even again you can second guess some of the decisions and hindsight's 2020 but there's a reason for hindsight which is to avoid making mistakes in the future so I feel this is a pretty good environment I think that in the United States antitrust enforcement it's going to affect M and a little bit whether the Republicans or the Democrats win because there's an element of concern about certain businesses being too big and too powerful I think there will be still to me having intelligent macroeconomic and monetary policy is important And to be honest if you look at the report card over the last 20 years or so it's been a mixed bag So we need to do better at the sort of fiscal and monetary policy level but if we can avoid big mistakes I feel like this is a pretty good environment and volatility is to be expected I hope we don't go into a serious downturn because that's not good for anyone in our industry and any other industry and at a time too when I think politics are telling us that there's a lot of people who feel left behind So we certainly don't want worse economic and materially worse economic conditions than we're facing now But I would just say I'm cautiously optimistic and I'm definitely a long term optimist and even in the worst markets there's always there's plenty of work to do for people in finance.
Peter Nieberg
I like to be optimistic thanks for sharing that and the insights and yeah let's hope it is a much stronger year and we continue to go on another growth cycle or an improvement cycle let's say you've looked forward got you into 2025 thinking why don't we just look back now So you've shared so much great advice for our listeners If you went back and talk to yourself in the early part of your career what advice would you give yourself knowing what you know today I think
Larry Grafstein
just consistent with what I said a little earlier Pete I think I just be a little more diligent about keeping track of people even though it was physically and logistically harder I just would have devoted a little more of my effort to that and not to say I don't keep in touch with a lot of people but I I think I would do that And also I take the anxiety down a little bit and focus a little bit more on Asking myself a little more regularly What's really important What should I do And you make mistakes along the way and you should expect that and what matters is how you come back from them not the fact that you made them because everybody does so again I wouldn't want to repeat the mistakes if I had a magic time machine but I would not really be too hard on myself in retrospect I feel better about the ability to have had this type of career over a long period of time then I then I feel bad about the mistake or two that I would somewhat regret.
Peter Nieberg
for sure I hear that a lot as well Don't be so anxious enjoy the ride more right is the saying so I can't believe it We've been chatting for about an hour already So I'm going to move to a couple of final questions I'm a big believer that leaders are readers maybe not just books these days actually with podcasts and the materials available But is there anything that you recommend to the audience that's had an impact on you
Larry Grafstein
Yeah I'll put in a plug for the Free Press which is Barry Weiss's new not that new couple year old subset My son Isaac is one of her early employees Great And and so I read that I like to support new publications I did for a while finance the New Republic for 15 years I owned it shortly for a few years after the financial crisis I took it over with Bill Ackman and a few other friends of ours who knew the editor and we kept it going and turned it around and sold it and so I think the free press is a nice air ideologically and to the old New Republic New ownership is taking it in different directions So I like that I do read a lot I do like I'm very lucky I like to read the books of my friends I'm friends with Bill McKibben the environmentalist so I read everything he writes We were in college here Jeff Toobin another college friend who's written many wonderful books on legal topics and I'm also a big reader of Sir Neil Ferguson who is another Oxford friend of mine and I like to read about nonfiction and and history in my spare reading And in terms of podcasts I'll just put a plug in for the Strategic Alternatives podcast we do here at RBC with Vito Sperduto my partner and colleague but also try to you You're absolutely right I try to absorb as much information and in different points of view as I can across the political spectrum and also across the economic spectrum You're trying to think through trends and things often the interesting trends and ideas come from outside the mainstream and that doesn't mean we should all be outside the mainstream but it does mean you should always be trying to assess and evaluate it new creative ideas I think we really need to think about public policy a little more It's been a while since we've had what I would say excellent public policy ideas there's standard ideas that that the left has standard ideas that the right has and there's old favorites of both parties in the United States and both ideologies in other countries But I do think we need to think about about more creatively Public policy to get us out of some of the problems we have And I think it's it doesn't have to be about the ultimate solution It has to be directionally We can do a lot better And I know people are trying and everyone has pet causes and pet priorities but I do think there's room for for more creative public policy which I think in bringing people together a little bit more in consensus what's the antidote to polarization It's what can we agree on and how do you form consensus And so I do think that at least in the policy realm that's good So I read a lot on that and try to also in my own small way contribute.
Peter Nieberg
It definitely do with more consensus and fresh ideas I couldn't agree more we'll definitely put the link to your podcast and some of the books into the show notes So for those that listen and want to grab hold of those footsteps you'll be able to And I guess final question we've got several thousand listeners anything I haven't asked you that you feel the audience should know.
Larry Grafstein
that's a broad question But look I do thank you for the chance to reflect a little bit and if you don't take time like this to reflect sometimes you don't really do it but I would just say that I really feel that one of the great things about finance is that there are so many different ways that you can Build a career And you asked me questions that were directed to my personal experience And even though I've touched different parts of finance over the years as an investor as a advisor obviously we're all to some degree going to focus on our own personal paths But I would say there's just so much out there Just the Keep an open mind and you really don't know when I look back Pete and when I started hedge funds there were very few hedge funds Investment banking boutiques there was a handful of investment banking boutiques as opposed to dozens Private equity firms were relatively new It was yes the LBO was well developed in the 80s and that was part of what some of the corporate raiders were in part drove a lot of activity There was no activism All these things have really just either been created or grown Just in my I would not say short career but in a relatively defined time frame when you think about how big private equity is and how ubiquitous activism is and how important some of the other developments are that didn't even exist And then you flash forward and think okay what's going to happen in the next 20 years or so there will be new opportunities for everyone on this podcast and there will be something that will interest you and something that will lead to a rewarding career both monetarily and more importantly otherwise in terms of personal satisfaction So I just think keep your eyes out Because there will always be new things in this industry of ours.
Peter Nieberg
What a great way to finish keep the eyes out look for that next movement enjoy the ride as well as you mentioned hey Larry you didn't disappoint It's been an absolute pleasure again Thanks so much for your time and for helping our audience out.
Larry Grafstein
It's a pleasure and thank you to Ultram and to you for doing this and to everyone on this podcast, best of luck. I just hope you have as much fun as I've had. Thanks a lot.
Joe Coletti
Thanks for listening to Strategic Alternatives, the RBC Capital Markets podcast. Remember to subscribe to the podcast to stay up to date on all our future episodes. This episode was recorded on September 30th, 2024 and was originally broadcast on The Investment Banking Leaders podcast. If you'd like more information or to continue the conversation, please contact your RBC representative or visit rbccm.com/strategic alternatives. See you next time.