NYC Startup Touts Automated Deal Modeling Aimed at Overworked Junior Bankers
(Bloomberg) -- Wall Street has a reputation for overworking its junior bankers with cumbersome deal calculations, multiple spreadsheet revisions and copious slide deck formatting. A New York-based software startup says it has a fix.
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The company, Mosaic, lets dealmakers input key elements of a potential business acquisition, such as revenue, earnings growth or valuation on a simple interface, and then calculate the profitability of an investment in minutes. Other time-saving features include the ability to export the finished financial model as an Excel, PDF or PowerPoint file.
Mosaic — which sells a proprietary deal-modeling program with the same name — was originally developed with private equity firms in mind. But the startup says it has also received recent interest from some of Wall Street’s biggest investment banks, as the industry grapples with concerns about unsustainable working hours for junior staff, who perform the bulk of the grunt work in analyzing deals.
In response to widespread complaints, for example, JPMorgan Chase & Co. recently said that it’s limiting junior banker hours to 80 per week in most cases, while Bank of America Corp. launched a new internal platform that will closely monitor workloads each day, Bloomberg News reported last week.
Mosaic was based on a prototype conceived in 2019 by founder and chief executive officer Ian Gutwinski, a former principal at private equity firm Onex, while enrolled in Harvard’s MBA program. Now, the startup counts dozens of institutions as customers, including Warburg Pincus LLC, CVC Capital Partners Plc and Gutwinski’s former employer Onex, who collectively have close to $1 trillion in assets under management.
The company doesn’t brand its technology as AI, and it isn’t — the tech works more like a product to automate filing tax statements — but the firm does have a separate integration with OpenAI to help users read screenshots of financial projections and upload it to Mosaic’s templated models.
Mosaic charges $6,000 per year per user to license its software, with some discounts for enterprise customers. Unlike many of its startup peers, it has not yet had to raise venture capital funding, Gutwinski said.
More firms have begun integrating Mosaic as part of their associate training and daily workflows in recent months, according to Director of Operations Manasa Grandhi, who joined the company in March. Having begun her career in finance with stints at JPMorgan and CVC, she is familiar with the tediousness of such work.
It’s “a lot of stress over a lot of little things that are preventable,” she said.
Mosaic was partly inspired by a mistake Gutwinski made when he was a young associate at Onex. He had been grinding away on an Excel spreadsheet, trying to analyze a complex opportunity that had six vastly different business segments.
“I remember at the end of it, one of the senior managing directors was like, ‘Well, how big is this business at exit, Ian?’ And I had no idea,” Gutwinski said. “I was just focused on the calculations and the math that I had no idea what was happening with the big picture.”
The task of building a leveraged buyout model in an Excel spreadsheet — which involves keying in financial levers, checking if they populate in various formulas across spreadsheet tabs, and formatting a presentation deck for the investment committee — may now take only minutes with Mosaic. Users can also share a model with colleagues on different teams analyzing the same deal, an alternative to circulating multiple spreadsheet files over email.
The typical-entry level private equity staffer has “a lot of training,” Gutwinski said, and already knows how “all this math works,” suggesting that spreadsheet work is a waste of their time and talents. “The fact that we’re paying people, like, $300k to format cells and fix column widths, it’s just mind blowing to me,” he said. “I really hope that with the invention of this and other tools, investment professionals will never have to remember an RGB code again, like the color coding of their firm’s palette.”
Skeptics from Wall Street’s old guard may argue that it is through laboring over spreadsheets and formatting pitch decks that junior staff ultimately earn their stripes.
But Gutwinski disagrees. “I don’t think any of these firms are gonna fire anybody,” he said. “They’re just gonna look at more stuff, increase their volumes, and do better deals hopefully.”
At a training session Mosaic conducted to welcome a new class of associates for a large client, Gutwinski said one of the firm’s VPs stepped in to tell the new hires, “I will never have one of you guys say ‘This was this way because Mosaic said so.’ You have to understand exactly how it works and own every cell in this model,” he said.
“And so I think that’s the approach that firms are gonna take,” Gutwinski said. “You have this tool, it’s really great, it’s gonna save you a lot of time, but you can’t just, you know, shut off your brain and use it. You have to be engaged.”
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