 |
||
|
|
||
| |||||||||||
The big generalist bank Founded in 1914 as an underwriting firm by Charles Merrill and his friend Edmund Lynch, Merrill Lynch survived the Great Depression by cutting loose its retail customers and limiting itself to investment banking services. Through a 1940 merger with Wall Street firm E.A. Pierce, Merrill Lynch reacquired its retail business. And in 1971, the company became the second Big Board member to have its shares listed on the New York Stock Exchange. (Donaldson, Lufkin & Jenrette was the first.) For years, Merrill Lynch has been unique among major Wall Street firms. It stands apart from most investment banks, which specialize in serving institutional clients like corporations and the government. Merrill Lynch is also different from big investors and retail brokerages, which sell stocks, bonds, and mutual funds to the general public. Something of a renaissance firm, Merrill Lynch caters to many markets. Ranking high Almost all of Merrill's departments are at the top of their respective league tables (the rankings of investment banks) - or, at the very least, hover somewhere in the top five. In the U.S. in 1999, the firm ranked No. 1 overall in underwriting combined common stock and debt, No. 1 in investment grade debt, No. 3 in common stock, and No. 3 in IPOs. Merrill's market share for domestic issues (debt and equity) was a whopping 16.8 percent - its closest competitor, Salomon Smith Barney, boasted a market share of only 12.8 percent. Also in 1999, the firm was the leader in global debt and equity underwriting for the 11th straight year. In the advisory business, Merrill slipped a bit in 1999, losing its No. 2 spot to Morgan Stanley Dean Witter (No. 1 was Goldman Sachs). Merrill ranked No. 3 on the list of completed worldwide M&A transactions, advising on $517.3 billion worth of deals. In recent years, the firm has been at the forefront of a number of major deals in the American market, including the $8.8 billion acquisition of U.S. Healthcare by Aetna, and Bell Atlantic's $33 billion merger with Nynex Corporation. In 1999, the firm advised Phillips Petroleum in its merger with Duke Energy. Beginning that year, Merrill served as one of three advisors to Mannesman in its highly publicized merger with Vodafone. The $190 billion deal, the largest merger ever, began with a hostile offer from Vodafone, but was eventually approved by Mannesman's management An army of brokers Not only does Merrill have top-notch I-banking capabilities, it also has a massive brokerage army eager to distribute the stocks and bonds the firm helps underwrite. The firm's retail brokerage unit, which has more than 14,000 financial consultants and serves more than 7 million accounts worldwide, is the world's largest. The retail business is based in Princeton, New Jersey, and has more than 600 branch offices. Merrill's mutual funds and other asset management businesses (such as managing pension funds for institutional clients) are also wildly popular - in 1999, the firm reported total assets under management of $558 billion. Blue-blooded no longer Because of its historical willingness to cater to retail investors, Merrill has the reputation of being a "down-market" firm, at least when compared to blue-blooded competitors like Goldman Sachs and Morgan Stanley. But now, many of Merrill's competitors are following in the giant's money-making footsteps. In 1997, Morgan Stanley merged with retail brokerage Dean Witter (which until recently hawked its wares from Sears department stores). That year, famed Wall Street bank Salomon Brothers merged with retail-heavy Smith Barney. And when the creme de la creme of investment banks, privately-owned Goldman Sachs, announced in 1998 that it would make an initial public offering (eventually completing it in 1999), industry observers speculated that the firm was attempting to free up capital in order to finance acquisitions. Following in the bull's footsteps But size and market share aren't enough to ensure profits, as Merrill well knows. Merrill does its best to keep costs contained so that its business translates into profits. Merrill's return on equity, a commonly-used measure to assess the performance of banks, has outpaced most of its competitors. In 1999, the firm's reported return on equity of 23.5 percent, a huge improvement over 1998's 13.4 percent ROE. 1998 was a troubling year for the firm - with the market turmoil, the firm saw its profits drop to $1.5 billion. The following year however, Merrill hit record earnings with $2.6 billion, up 69 percent from 1998. Merrill online In June 1999, unable to ignore the success of online brokerages like E*Trade and Charles Schwab, Merrill announced plans to offer its own Internet service. Customers will be able to make brokerless trades online for $29.95. For a $1,500 annual fee, customers can also choose the unlimited trading option, which includes access to Merrill's research and other services. The firm had for years insisted that it would not offer online trading, as its retail business is predicated on the value of full-service investment advice from its legion of brokers. Its decision to offer online trading is expected to lead literally all other brokerages to do the same. In a somewhat bolder move to own a stake in the online trading boom, in April, 2000, Merrill and London-based banking group HSBC Holding announced that they will commit up to $1 billion to form an online financial services company serving customers outside the U.S. Each will own half of the new firm, tentatively named Merrill Lynch HSBC, which will be headquartered in London. The new company will offer online banking and brokerage services to customers "across the world except in the U.S." The business will model itself after Merrill Lynch Direct, an online investment service targeted at affluent investors. The plan will be to sell customers stocks, bonds, mutual funds and unit trusts tailored to the differing tax laws of various geopolitical markets. Customers will also have access to physical offices and to clerks by telephone. In another sign of the times, Merrill abandoned most of its commodities operations, including agriculture and metals operations, in January 2000. The move, which was expected in the commodities world because of the explosion of dot com business and the skyrocketing stock market, will leave Merrill active in financial futures and options, as well as oil and energy futures. Then, in June, the company announced that it is has entered into a $900 million agreement to buy privately held market-maker Herzog Heine Geduld in a move that will (assuming that regulatory approval is won) vault Merrill to the No. 2 spot on the list of Nasdaq's largest traders. The transaction will expand the number of Nasdaq and other OTC stocks in which Merrill makes markets, to more than 8,000 from 650. Herzog will retain its name and operate as a wholly owned subsidiary of Merrill Lynch.
Merrill Lynch accepts resumes by regular mail, fax, and e-mail. Resumes should be accompanied by a cover letter detailing the applicant's interests, abilities, and geographical preferences. Applicants can consult Merrill Lynch's employment Web page, located at www.ml.com, in order to find out about job openings and contact information for the various groups within the company. Resumes submitted to Merrill through both college career resource centers and direct mail are sorted by Merrill's recruiting personnel; all qualified applicants are invited for interviews. The first round of interviews is held on the applicant's campus, and those candidates who make the cut are invited to further rounds at the New York office. Merrill Lynch often gives preference to applicants who have worked as summer associates or analysts at the firm. However, one Merrill employee confesses that "in recent years, Merrill has overhired for its summer programs, with the result being that only 50 percent of the summer class have received offers to work at the company." Insiders also report that Merrill's interviews - even the initial on-campus screening interviews - "can last a lot longer than the typical half-hour interviews that other firms conduct." Summer hires who are made an offer of employment are generally required to respond within 30 days.
No more elephants Gigantic Merrill is known for having many subcultures; insiders agree that Merrill's culture varies "from department to department." The investment banking division, according to one analyst, "is more laid back than most bulge-bracket investment banks, primarily because investment banking at Merrill is relatively new." Says that contact: "Historically, you must remember, Merrill was a 'huge lumbering elephant' because that was the culture in the dominant retail side of business. However, things are changing as Merrill becomes one of the top three investment banks, and we're becoming more like Goldman or Morgan Stanley day by day." Another insider adds: "We're different from other places. The people are nicer than at other banks." A different source doesn't feel so warm and fuzzy. She remarks, "as with any big company, there will be people who are nasty for no particular reason. But there are fewer at Merrill." On the road to diversity Merrill Lynch is "probably the leading firm on Wall Street that is attempting to improve its diversity," according to Tony Chappelle, publisher of Securities Pro newsletter, a New York publication for African Americans in the financial industry. Most recent hires say that they "are truly impressed by Merrill's efforts to diversify." As an example of Merrill's commitment to diversifying its workforce, insiders point to the recent appointment of E. Stanley O'Neal, who is African-American, as co-chair of Merrill's corporate and institutional client group, thus making him one of the most senior black Americans on Wall Street. However, one analyst says that "although the company may be making a real effort to get non-whites, but you don't see too many of them around-yet." Do you read Kafka? The major drawback of working for Merrill, most agree, is the "horrendous" bureaucracy, which "can sometimes combine with office politics to make life miserable and incomprehensible." An insider whines, "sometimes, for no apparent reason, you get blamed for things you didn't do, and get assignments you're not supposed to have, and there's no one to complain to - life becomes like a page from a Kafka novel." Another informant agrees, "While I'm in the world outside, I'm proud to be working for Merrill. But on the inside, I know that bureaucracy and politics can make life pretty miserable." Lush surroundings Merrill Lynch's headquarter offices are "impressive and large." While "they're not furnished in a particularly lavish fashion, they're always tastefully decorated." Employees at the New York office state that "the most impressive feature of Merrill's offices is that they're located in the World Financial Center - Merrill has an entire building to itself." A source remarks: "The views from that office are spectacular! The analysts are actually housed in a bullpen and you have a corner view of the Statue of Liberty." A different contact describes the office's surroudings: "The World Financial Center neighborhood has great bars and shops - though everything is priced exorbitantly." Bank perks are fun Perks at Merrill, according to employees, are "the same as those you get at other banks. If you stay past a certain hour, you get dinner and transportation home." Officially, you have to stay past 8 p.m. to get a car, and past 7 p.m. to get dinner. The firm's dinner plan utilizes six restaurants with which Merrill has negotiated discounts (professionals can charge up to $15 stipend). Some insiders say they get sick of the food, "but a lot of the associates there love it." Those who work on Saturday or Sundays, get all three meals covered, up to $15 each. Other perks include "free travel and accommodations when you travel with clients." "When you travel," one analyst notes, "you have it pretty good-because you use airlines and hotels that must be up to the standard of your clients." The dress code is "the same as at any other Wall Street firm-formal." However, the firm has casual Fridays all year round, and in may, the firm stripped itself of all formality by allowing casual dress all week in the summers. Living large The lifestyle at Merrill certainly doesn't help employees stay in shape. One New York analyst complains: "I worked so many hours at the office that I gained a substantial amount of weight. I got fat, to avoid euphemisms. The problem is, you spend so much time sitting at your desk, with no time to exercise, and you're always eating a lot at meetings at night or ordering food from different restaurants. There's no company gym for easy, during-the-day access to weights or jogging. " There is an "executive gym" in the building for those high up on the ladder; as for the hardworking junior employees, "some associates go to the nearby Marriott, some go to another club."
Mary E. Taylor Human Resources
Charles Schwab;Credit Suisse First Boston;Deutsche Bank;Donaldson, Lufkin & Jenrette;E*Trade;Goldman Sachs;J.P. Morgan;Lehman Brothers;Morgan Stanley Dean Witter;PaineWebber;Salomon Smith Barney;Warburg Dillon Read More Company Profiles For more career information, go to Vault.com ©2000, Vault.com Inc
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
