Zoom calls and Slack chats don't cut it for Wall Street anymore.
At a time when many are still working from home, Wall Street dealmakers are not only back at their offices, they are traveling a lot again, to woo clients and to negotiate mergers and sales.
It's not that the work can't be done from home: In fact, investment banks posted record profits during much of the pandemic, when bankers and traders were confined to their homes.
But Wall Street holds fast to tradition. It's an intensely competitive industry where advising on a single deal, or helping to take a company public, can bring in tens of millions of dollars in fees. And nobody wants to lose out to a competitor who proved their mettle by making the trek when others phoned it in.
"Even during the pandemic, if your clients were in Texas, if you didn't go down and see them, they knew you were a wimp," says Jonathan Knee, a senior adviser at the investment firm Evercore. "And they didn't want wimps working for them."
And although video conferencing has improved dramatically and made Wall Street more efficient, veteran dealmakers like Knee, who is also a professor at Columbia Business School, argue there is still no substitute for in-person negotiation.
During in-person meetings, Knee, who previously worked at Morgan Stanley and Goldman Sachs, pays attention to body language and look out for subtle clues.
When he asks tough questions about sensitive subjects, including compensation and sales targets, he is interested in the answers, of course, but he also wants to see how an executive reacts to the interrogation.
"You can do that on Zoom," Knee says. "But it's very hard to see the sweat dripping down their forehead."
Tests and quarantines: A look at pandemic travel
It's not that Wall Street banks are not cautious or health-conscious. The delta variant has renewed concerns about infections, though not enough to shut down travel.
Investment banking is, after all, a client-driven business, and for Wall Street, FOMO — fear of missing out — is real, according to Vik Krishnan, a partner at McKinsey & Company.
A pivotal moment is when "you're in a competitive situation with a company that is looking to conduct a large, multi-billion-dollar IPO, and it's not quite clear that you are going to win that business against your competition," he says.
All it takes is a single competitor resuming travel before everybody else feels compelled to join.
That fear is summarized in a sign that hangs in the lobby of Goldman Sachs' global headquarters in New York: "Don't let a day pass without client interaction – In person beats video, video beats phone, phone beats email."
James Davies, who heads the investment bank for the United States at Deutsche Bank, is a senior banker who is traveling again.
He took a three-week trip to the United Kingdom earlier this year to meet with clients and colleagues he hadn't seen in person for months. It was a different experience.
"I, despite having been vaccinated twice, was tested eight times," Davies recalls. "I had to quarantine in one place for five days when in London."
But all the headache was worth it, Davies says: There's nothing like establishing trust when meeting someone face to face.
"I think that is especially important if you are looking to actually sign a deal with someone," he says.
But some things do change, even in Wall Street
Still, even Wall Street is making adjustments.
Travel is much more targeted, and meetings that can be taken over Zoom or video are still part of day-to-day reality. Banks have also made commitments to reduce their environmental footprints.
Bill Curtin, the global head of M&A at Hogan Lovells, jokes that before the pandemic, he "lived on United Airlines," hopscotching on quick-turnaround trips around the world.
But now, he is trying to figure out how often he and his colleagues will leave the office. He says virtual negotiations have made it possible for his team to get more deals done, and that has lowered costs considerably.
"I think the landscape has changed," he says. "It has not eviscerated the need for business travel, but it has dramatically reshaped it."
Still, nobody on Wall Street expects virtual meetings to replace business trips altogether any time soon. It's tradition, after all, and on Wall Street, change takes time.
"I think that's going to be a process that's going to take awhile for people to come to grips with," Knee says.
A MARTINEZ, HOST:
As the delta variant of coronavirus spreads, many firms on Wall Street are pushing their workers to get back to dealmaking in person. NPR's David Gura reports.
DAVID GURA, BYLINE: When a company tries to buy another company, negotiations can get heated. Jonathan Knee is a senior adviser at the investment bank Evercore. And he says there are bound to be tough questions about sales targets and compensation.
JONATHAN KNEE: And you can do that on Zoom, but it's very hard to see the sweat (laughter) dripping down their forehead when you do that.
GURA: In mergers and acquisitions, the bankers and lawyers on one side of the table pride themselves on being able to size up the bankers and lawyers on the other side of the table. James Davies has spent more than 20 years doing deals at Deutsche Bank. And he says that in his line of work, there's just no substitute for negotiating in person.
JAMES DAVIES: I think that, especially if you're looking to actually sign a deal with someone, I think the body language, the - you know, the nonverbal cues are incredibly important. And I don't see that changing.
GURA: And, really, Wall Street doesn't want that to change. A few months ago, many financial firms, including Goldman Sachs, JPMorgan and Deutsche Bank, decided it was safe enough to give the go-ahead to bankers to travel again.
DAVIES: So I've done quite a lot, and it's important.
GURA: Davies has learned how to navigate testing and quarantine requirements. One of his first trips was to the U.K.
DAVIES: I, despite having been vaccinated twice, was tested eight times. I had to quarantine in one place for five days when in London again having tested negative and being vaccinated twice.
GURA: But he says the chance to meet with clients and colleagues was worth it. Investment banking is a client-driven business. There is a sign in Goldman Sachs' New York headquarters that reads don't let a day pass without client interaction. It's one of the firm's principles, and there is an addendum - in person beats video, video beats phone and phone beats email. Jonathan Knee at Evercore says at this point, two things are driving business travel, and first and foremost is what customers demand.
KNEE: Even during the pandemic, if your clients were in Texas, if you didn't fly down and see them, they knew you were a wimp, and they didn't want wimps working for them.
GURA: Which brings us to the second reason bankers are back on the road and that is FOMO. This is Wall Street, and no one wants to miss out on a deal, especially one that could bring in millions of dollars' worth of fees. But this push to travel again also has to do with tradition because bankers' business has been just fine during the pandemic. In fact, this has been a record-setting year as COVID-19 forced dealmaking into the digital age. Attorney Bill Curtin, for one, welcomes the change.
BILL CURTIN: Pre-COVID, I lived on United Airlines.
GURA: Curtin is the global head of mergers and acquisitions at a big law firm called Hogan Lovells. And for almost 30 years, he's done what M&A lawyers do - or what they did do until recently. His weeks were filled with quick turnaround trips to Munich and Asia to cut deals in person. But now...
CURTIN: I think that the landscape has changed. It has not eviscerated the need for business travel, but it has dramatically reshaped it.
GURA: Curtin argues virtual negotiations make it easier for his colleagues and him to do more deals. But Jonathan Knee says, on Wall Street, change happens slowly.
KNEE: I think that's going to be a process that's going to take a while for people to come to grips with.
GURA: And in the meantime, financial firms are reverting to the way things were, and bankers are going to continue to travel. David Gura, NPR News, New York. Transcript provided by NPR, Copyright NPR.