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calls and voicemails. Today, a lot happens via Blackberry. In many instances, this can be faster, but in other instances, it might not be. Having a real conversation with somebody can create a very different type of relationship than trading emails back and forth ever could. Would you recommend that students start to work in Europe or other parts of the world in order to gain international exposure and experience? I am a German citizen and I thought that I would come to the US, work here for a couple of years, and then go back to Europe. But I have had way too much fun here. I was provided with great opportunities by JP Morgan. Investment banking has become more and more similar in Europe and the United States, as clients have become more global and more sophisticated. The specific industry sectors tend to be larger in the US compared to Europe – thus industry specialization tends to be more intense. In Europe, many sectors tend to be broader, so bankers need to cover companies in many different countries. The local element always plays an important role. Given that your level of specialization can be bigger here, you can get a more specialized skill set more easily. The world has become truly global. What are the most important leadership lessons you learned, working in a globalized marketplace? Clear communication, both internally and externally, which includes giving very direct feedback. There is often a tendency in the United States to put a nice spin on everything, and not to be direct. I believe that it is very important to be encouraging, but people will only trust you if you are very direct and give them real time feedback. Building relationships that way works very effectively. Communication and direct feedback are key. You can lead by example, but you also need to see the right opportunities to allow others on your team to shine. Everybody must have a meaningful role. Speaking of internal communication: how did you experience the integration of Bear Stearns into JP Morgan? Our senior management is very well organized regarding M&A and has overseen a large number of our own acquisitions. As a firm we are very experienced with integration work. All things considered, the integration went extremely smoothly. Especially in my area, there are fewer complications than in other areas. Within a month or so, everybody knew where they were working, who their boss was, and what they had to do. Having

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real conversations was crucial, and could not have been replaced by sending emails back in forth. Looking at the overall market situation today, what do you expect looking forward? We are pretty optimistic. There is an expectation on the M&A side that 2010 will be a nice rebound off of 2009. We have seen an increase in strategic dialog, and regained the necessary underlying economic stability. Ultimately, M&A is driven by CEO confidence. Making important strategic moves is difficult when there is no confidence in either your own business or the business you want to acquire. Many transactions in 2009 were executed by companies with strong balance sheets and no financing issues. Stocks had declined significantly so it would have been hard to reject compelling offers. There will be significant strategically-driven deal activities in 2010 even if stock prices continue to appreciate. To what extent do you believe that the rise in asset values, namely stocks, is a result of excess liquidity in the markets, rather than an actual economic improvement? Liquidity in the financial markets is obviously a key driver. The debt capital markets are very strong right now. We are looking at a completely different world than we were just a year ago. The high yield market is very strong as well, and we have seen a real surge in activity in the equity markets and equity issuance. We are also beginning to see a larger number of significant IPOs. When companies have more alternatives to raise capital, M&A should increase. Liquidity is only one key factor; economic stability and CEO confidence are just as important. What lessons are to be learned from the crisis? At the end of the day, you have to go back to transactions that make sense from a strategic perspective. Just because there is cheap financing available does not necessarily make a deal good. We have seen many transactions that were ultimately driven by excess capital. I believe that strategic rationale, not purely financial rationale and cheap financing, should be driving deals. Also, it is easy to criticize how TARP was handled by the government, but I believe it was essential that the government took action to provide some stability and confidence for the capital markets. What regulatory measures should be changed? I am skeptical that increased regulatory measures could improve things. There will always be people with wrong

International Business Review - Spring 2010  

The Spring 2010 edition of the IBR.

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