Lockdowns are sharpening the knives in the cut-throat world of M&A banking.
Stuck at home, armed only with a phone and a laptop, senior advisors are finding out just how strong their relationships with clients really are while frustrated juniors are left to crunch numbers in the shadows, deprived of the personal access to the rainmakers who could give their careers a boost.
With the dreaded "doughnut" – or zero bonus – almost a given this year, and some banks looking to cut jobs to weather the health crisis, the strains on bankers watching multi-billion dollar pre-pandemic deals go up in smoke is taking its toll.
"It's like a Darwinian selection," said a senior advisor at a Wall Street bank. "If you're a senior banker and you don't win a single pitch you can only blame yourself. You've failed to cultivate your relationships and now it's clear to everyone."
"If you don't know them well enough, you will never win a mandate over Zoom," said the banker, who declined to be named.
A lack of face-to-face contact is not just exposing the shortcomings of some senior financiers, it is also making it harder for junior associates to learn on the job and progress, headhunters, lawyers and bankers said.
"Junior bankers are challenged by old problems – long hours, excessive workload and lack of acknowledgement – but this lockdown has made them more acute," said Anna Marietta, co-founder and managing partner of headhunter Vici Advisory.
"Juniors – especially analysts and interns – can also learn through osmosis and they need physical interaction in the office. They need to see how their managers are handling client relationships and solving problems," she said.
Global M&A volumes are down 41% so far this year, a far cry from the champagne-popping records of recent years when bankers at Goldman Sachs, JPMorgan, Morgan Stanley, Citi and Bank of America - the top five dealmakers - were the toast of Wall Street.
Massive government support for companies, particularly in Europe, is keeping many firms afloat and delaying the kind of lucrative takeover deals that have put M&A advisors at the top of the investment banking world, bankers and lawyers said.
But the pressure to drum up business means the workload - which often involves all-nighters and 100-hour weeks - is as heavy and stressful as ever, ramping up the risks for employers who turn a blind eye to potential burnout.
"Employers have always been responsible legally and financially for harm caused when they didn't ensure an employee's mental or physical safety at work," said Melanie Stancliffe, employment partner at Cripps Pemberton Greenish.
"Ensuring the physical safety of employees is the prime business reason to work from home and in this new normal, the focus needs to shift to protecting employees from other risks so they are well and can support - not sue - their employer."
For some bankers, the job stress is compounded by working from home in proximity to their families and juggling chores with conference calls, a shock to the system for people used to jetting around the world to schmooze clients.
"The lockdown for many throws into sharp relief the health of their home lives," Paul McLaren, consultant psychiatrist at The Priory's Wellbeing Centre in the City of London.
"For many high achieving City workers that is an area of their lives which they may have neglected, and participated in only from a distance. Rebalancing the power relationships at home with partners is a particular challenge at the moment."
Still, investment bankers, with their bumpers salaries and bonuses from years past, can afford more palatial setups than most employees working from home during the health crisis.
Some senior bankers in Britain have escaped to their remote country piles while others have hunkered down in spacious pads with attic studies in upmarket London neighbourhoods.
For some, the opportunity to spend more time with their family is a rare gift they relish.
For others, the pandemic is exposing fractures in their personal lives. Well-known lawyers and psychiatrists contacted by Reuters have reported a surge in requests for help with relationships and mental health.
"Suddenly, a high-powered financial professional is stuck all day at home with someone that they usually barely see from week to week and with whom they've learned to co-exist at a distance," said Ayesha Vardag, known in City circles for winning multi-million dollar divorce settlements for her clients.
Vardag told Reuters that inquiries from financial sector employees and their spouses jumped 170% in the week to May 27 as British lockdown restrictions began to ease, with some choosing to call time on their marriages before bonus cuts and layoffs damaged prospective settlements.
"Many financial sector clients and their spouses are reactivating divorce enquiries they made before lockdown, left in abeyance because they wanted to work on their marriages," she said. "Then they found they couldn't stand it any longer."
‘The old-fashioned way’
For junior bankers, who typically range in age from the early 20s to early 30s, the lack of career progress under lockdowns is the main source of stress coupled with an ongoing hiring freeze at most banks.
Shut out of video calls with clients due to digital security concerns, five analysts and associates said their opportunities to learn from - and impress - their bosses were limited.
Instead of knocking on a partner's door to discuss ideas, some juniors said they had to lobby line managers to set up a call with their bank's top rainmakers.
The top two M&A banks, Goldman Sachs and JPMorgan, said they were pulling out the stops to keep junior colleagues engaged.
They pointed to a range of initiatives such as cocktail parties hosted by senior executives on Zoom, wellness programmes, online yoga and virtual choirs to relieve stress.
Banking bosses, meanwhile, are counselling their troops to sit tight and wait, as the deal drought will eventually end.
"From the middle of March until the end of May, nobody felt it was the right time to buy a business. But things have started to change," said JPMorgan's co-head of global M&A Dirk Albersmeier.
"Europe is coming out of this crisis faster than the United States. In certain European markets bankers are already sitting in the same room with their clients which may accelerate the recovery. Getting to an agreement is often easier the old-fashioned way."