Investment banker less frazzled, though not by choice

By Dawn Kawamoto
Staff Writer, CNET News.com
March 8, 2001, 4:00 a.m. PT

Life has been a double-edged sword for Tony Meneghetti.

Two years ago, the 40-year-old investment banker was cranking out more than 20 initial public offerings and at least a dozen mergers a year.

Today, his time is considerably less frenetic--but not entirely by choice. Although Meneghetti is happy that he can spend more time with his wife and two young children, the business slowdown would have occurred regardless of his personal wishes, as the entire investment banking industry has fallen victim to the dramatic decline of the Internet Economy.

"My wife is happy with this balance. But she may not be as happy with the income at the end of the year," joked Meneghetti, a nine-year veteran of Deutsche Banc Alex Brown who heads the bank's West Coast technology investment group and oversees 50 people.

Meneghetti's tale is one that mirrors those of hundreds of investment bankers, who have seen their world turned upside-down since the bubble burst almost exactly a year ago.

Throughout 1999 and early last year, companies in existence only a year or two were going public in every corner of high technology. Some of Meneghetti's more prominent deals include Foundry Networks, which launched its IPO with a 525 percent first-day gain, and Transmeta, which soared 115 percent on its first day.

But such wild success has come at a larger price, one of personal and professional values.

"My favorite part of the job is taking a company public and seeing the management team's dream realized. But in the last few years, with so many companies being formed, it's been awhile since I worked with companies where the CEOs have been grinding away for four years or so before their vision is realized," Meneghetti said.

"There is something to be said about good, hardworking values, and some of that has been lost on Silicon Valley. But I think it will come back," he added. "It's been frustrating to see over the last several years that some companies and employees believe a large net worth is a birthright. It's changed the way companies view they should build themselves up and employees' views on institutional loyalty."

With a number of young companies looking to go public or be acquired at inflated valuations during the markets' ether period, investment bankers were busy competing to work with these companies in contests known as "bake-offs."

"It was a heady time and one we're not likely to see again for some time. We had less time to get to know the companies, know the management teams and, conversely, Wall Street had less time too. It was too much, too fast and a bit unrealistic," Meneghetti said. "You had much less time to spend with one individual client, and it was less satisfying as a banker."

The rapid pace also resulted in a high turnover rate in the banking business. Meneghetti, one of the senior bankers at his company, noted that bankers used to remain in the business for 20 years. The Internet explosion changed that pattern, luring his industry brethren to venture firms or private equity practice after they were just a few years in the business.

Investment banking has seen the pace slow to a crawl in the past year, as both IPOs and mergers and acquisitions have declined. But Meneghetti welcomes the change: "I slept a lot less and saw less of my family. I had about five hours of sleep a night and caught a lot of red-eye flights."

The financial veteran put up with the insane hours because he knew they wouldn't last. "Before 1999, if a banker worked on three IPOs and three or four (merger and acquisition) assignments, that was a solid year. We're returning to that pace," he said. "But so many bankers have only been in this industry three years, so they have the deer-in-the-headlights look. Those in the business awhile knew this would be an aberration."

Meneghetti noted, however, that he expects the pace of mergers and acquisitions to pick up to pre-meltdown levels as company executives come to realize that their company values will likely remain at these lower levels for months. Even through the merger frenzy of recent years, a number of companies have avoided stock-swap buyouts in the belief that their share price was too low to waste as currency.

In addition to advising companies on IPOs and acquisitions, Meneghetti consults businesses on such topics as secondary offerings, corporate debt and private equity.

If his pace has slowed with the market decline, it's difficult to tell. His day, which begins at 6 a.m. with exercising and taking the kids to school, usually revolves around two or three meetings with new or existing clients in Silicon Valley, interspersed with phone calls with chief executives, venture capitalists and financial analysts.

Hard work is nothing new to Meneghetti, who was initially exposed to technology not on Wall Street but in Silicon Valley, as an engineer. He made the transition while studying for a master's degree in science at the Massachusetts Institute of Technology. During the summer break after his first year at MIT, he joined Goldman Sachs as a summer associate investment banker.

"I had been interested in math and science all my life and wanted to see what financial services was like. I was also interested in seeing what it would be like to work in New York and on Wall Street. I thought, 'I'm going to see if I like it or not,'" said Meneghetti, whose father was an economist for 30 years at a bank in Dallas. "I thought I'd do this summer job, go back to MIT and return to Silicon Valley as a product manager."

That's when Meneghetti's career took a detour.

"I liked the pace. I realized it was a great job for someone with a shorter attention span than what a product manager needed. The beginning and end of deals came in shorter periods," he said. "I left that job thinking, 'If I could combine finance and technology, that would be the perfect job for me.'"

His wish came true in February 1992, when he joined Alex Brown, a banking company known as a specialist in technology before the merger that made it Deutsche Banc Alex Brown. The fit was as good as he had anticipated, as he views entrepreneurs as being similar to engineers: logical thinkers, goal-oriented people who share the belief that technology is definitely a cool thing.

"These guys are like the ones I did problem sets with in engineering school," Meneghetti said. "We have similar interests and I can relate to them."