15. Microsoft Excel
If this list were in any type of order, Microsoft Excel would probably be at the top. This brainchild of Bill Gates allows investment bankers to do things our parents could have only imagined. This program allows us to value companies using all types of inputs, assumptions and formulas. Back in the old days, bankers had to do this on pen and paper, and most valuations were just like Ebay auctions with bidders using their gut to value the company. And if you decided you wanted to change one little number in the 1,000 rows of data? Well, basically you were screwed. But with handy Excel, once you have the setup in place you can make small changes and everything flows through. It’s simply amazing. Microsoft Excel allows me to do anything my bosses’ hearts desire. Want to see an accretion/dilution analysis by 9am tomorrow morning? No problem. Excel and I will get to work! It truly is amazing to think how things used to be done.
Just because it CAN be done, does not mean I want to do it though. Life must have been great for analysts back in the good old days because there were so many things that could simply not be done. There was no excel and no macros. I couldn’t just go to the SEC website and pull companies 10Ks and 10Qs. I wasn’t able to get a consensus view by analysts on how much company X was going to earn per diluted share in 2010. Unless of course I called each analyst and begged for them to tell me their thoughts. Most of these things were just unheard of. While it’s amazing how the world has changed and how many analyses can now be done, that doesn’t mean we need to do them all. Most CEOs will not even look at half the stuff we present, so why even do it. Excel allows us to go the extra mile, so we push ourselves and go two.
The other things investment bankers love about excel are macros and shortcuts. Where would my life be without you Alt+E+S+T? (Allows you to paste the format from one cell to another). These little shortcuts allow investment bankers to make our worksheets look proper and save us a great deal of time. Macros do the same thing, allowing investment bankers to at a firm all make tables and charts that will look the same so our presentations don’t look different every time. This uniformity lets us to show our clients a clean presentation and analysis. During training, the programs like Training the Street even have contests to see how quickly investment banking analysts can format in Excel using all the shortcuts we have been taught. The sad thing is, they brainwash us to the point where we think it’s cool and really want to be the fastest. Who wants to play the guitar or go for a run outside, when you can be the fastest Excel formatter in the land? It’s like the investment banking wild wild west. Noose anyone? The programs keep a scoreboard from all the banks and lead us in cheers for our top competitors. The fastest formatter can wear this title like a badge of honor and even put this accolade on the good ol’ resume.
Excel can make or break an analyst’s career. Become good at Excel and you will prosper in life. Fail to grasp the complexities of this mystical program? You will be doomed to fail. Don’t let Excel break your will young grasshopper.