Dealing for Dollars--a Lot of Them

It’s after midnight on a Sunday and Mike Connolly is hunkered down in a Century City office tower with about 20 of his colleagues.

Connolly, 31, is no stranger to the graveyard shift. Ten years ago, he helped pay for his college education by ripping apart boxes for Ralphs Grocery at 4 a.m. Now he makes more money in one day--putting companies together--than he used to make in a month.

“My parents keep saying to me, ‘What can you possibly be working on at 1 a.m.?’ ” says the wiry, intense UC Berkeley grad as a cleaning crew wheels a loaded trash bin past his glass-walled office.

What investment bankers like Connolly do during their 15-hour workdays and weekend night shifts is arrange huge mergers. With little notice, they prepare detailed presentations on how and why a deal works, write marketing materials and engage in heavy-duty negotiations. Although it may sound glamorous with its extensive travel and high-priced hotels, it’s basically a demanding--albeit very highly paid--service job.

Connolly is working on several deals for Donaldson, Lufkin & Jenrette, including the pending combination of Ralphs and Hughes Family Markets.

The record deals of 1997 are translating into substantial profits for the nation’s securities industry--and big-time bonuses for bankers such as Connolly.

In fact, pretax industry profits are pegged at more than $12 billion this year, topping last year’s record $11.3 billion and far surpassing the $7.4 billion of 1995, according to the Securities Industry Assn., a trade group.

Not surprisingly, investment bankers are eagerly awaiting their annual bonus checks, which could total several times their base salaries for 1997. For mid-level vice presidents with two to four years of experience and a base salary of about $100,000, year-end bonuses are expected to average between $600,000 and $700,000 in cash and stock, bankers say.

What’s more, bonuses are likely to be as much as 30% higher than last year, consultants and bankers say. Bonuses for highly prized veterans will probably average about $3 million, and a handful of superstars should get bonuses of between $4 million and $11 million.

“The bonuses will be extraordinary this year,” says Emanuel Monogenis, a New York partner with Heidrick & Struggles, a consulting and headhunting firm.

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Unlike in the 1980s, when opulent status toys were fashionable among Wall Street’s “Masters of the Universe,” these days bankers are much quieter about their wealth. Bonus money now is more likely to be funneled into real estate and luxury cars, Monogenis says.

“Most of these people are conservative--but with a very good year and the expectations of an even better year next year, they may feel a bit more liberal than usual,” he says.

With bonuses this big, investment bankers are likely to keep up the furious pace, especially in Southern California.

Jeri J. Harman keeps plastic utensils, salt and pepper, napkins and chocolate bars in a bottom drawer of her desk at Van Kasper in Westwood, since that’s where she eats dinner most nights.

In October, Harman, 40, worked on a $30-million deal for a privately held Southern California company that meant weekend shifts and getting home most weeknights well after 1 a.m.

“We’re shifting gears faster than race car drivers,” says David Horwich, another Van Kasper investment banker, who worked with Harman on a deal for a San Diego company.

On the East Coast, a flurry of frantic pages pulled one mergers-and-acquisitions banker away from the cake-cutting, the bouquet-throwing and most of the other activities at a friend’s wedding this year. At stake: last-minute negotiations on a $1-billion deal.

“There are no holidays in M&A;,” says the banker, who did not want to be identified by name. “There are no vacations.”

Private time, some bankers say, is honored only during honeymoons and funerals.

Patrick Brown, an associate at the law firm Sullivan & Cromwell in downtown Los Angeles, worked on a merger this summer while his wife was in labor with their second child.

“We’d walk around a little together, and then I’d go back and mark up some more documents,” says Brown, 28, a former editor in chief of the law review at UCLA. “I had three or four deals going and I knew I had so much to get done.”

After son Joseph was born at 12:30 a.m., Brown worked on more merger documents from 3 to 6 a.m. while his wife slept at the hospital. “She was not at all happy with it,” he says. “Time has eased the pain somewhat.”

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Brown helped put together H.F. Ahmanson’s plan to buy Coast Savings Financial for about $900 million in just a few weeks. Right now he’s working on four mergers-and-acquisitions deals worth a combined $2 billion.

“It’s been pretty crazy,” he says. “There hasn’t been time to slow down.”

Connolly in Century City is similarly busy.

He worked 20-hour days the entire first week of December to get ready for $145 million in financings. He had meetings on red-eye flights back to Los Angeles from New York and only took a few hours off over the weekend to attend a wedding. After the wedding, he went back to work.

“When they told me I’d be working hard in this business,” he says, “I just had no idea what that meant.”