Book Review: Christopher Mayer's 'Invest Like a Dealmaker'

I read Christopher Mayer’s “Invest Like a Dealmaker: Secrets from a Former Banking Insider” during my vacation.

How does Mayer define a “dealmaker?” From the book:

Dealmakers are people who think about stocks as whole companies, as things with real assets and cash flows that exist in the real world.

Central to the book is the idea of two markets – the public markets, with known price quotes, and the private market, where price is not immediately knowable. Although the author might not agree with my characterization, I see four main parts to this book:

• The “two markets” lesson
• “Think like a creditor”
• Lessons from famous money minds
• Occasional case studies on investment situations



Part of discussing public and private prices is going over valuation ratios, where Mayer downplays P/E and ends up focusing primarily on EV/EBITDA. Though it would be helpful to those just starting out, most non-beginner investors can probably skim this section – it’s really just a way of introducing the concept of fundamental investing.

The meat of the book is spent discussing the methods of successful investors who focus on managing risk through balance sheet analysis, examples Mayer has highlighted in his newsletter, and ways investors can identify these opportunities on their own. In the first case, some of the names (Martin Whitman, Seth Klarman, Joel Greenblatt) will be familiar to readers, but the wide variety is certain to turn up a few new names.

As much as I enjoyed the introduction to Roy Neuberger, for example, I thought this section could have benefitted from being trimmed down, as there was a lot of repetition in the strategies of the investors highlighted. (That does fit into one of Mayer’s points that good investors have a handful of value-oriented traits).

Since examples in an investing book can only be so relevant at a later point in time, will this book’s framework help you going forward? I’ll say yes, as long as you’re able to take the variously-stated principles and apply them – a big if, maybe, but hardly different than with most investing books.

Three closing points:
1. I see the real value-add from Mayer’s experience as a lender being in his ability to think like a creditor, and I thought that could have been a more well-developed facet of the work. There are different analytical processes at work in assessing ownership of a business and lending to a business, and I think that’s a subtle and underrated difference (probably worth a future post).
2. This is not a “new” book; it has a good deal of accumulated wisdom. This isn’t necessarily a bad thing, because what really works in investing tends not to be new – needless to say, this is not a book for the aggressive growth investor, or an action-oriented trader.
3. To editorialize for a moment – part of the “dealmaker” approach, and that of the investors Mayer highlights, is their focus on tangible book. The insistence on tangible assets has grown extremely high of late, and I’m starting to wonder if tangible assets are overbought, and intangibles oversold. Many businesses rely on their intangibles to generate earnings, so it’s better not to be overly rigid and apply the “throw out intangibles” rule to situations where that is the primary generator of value (again, probably worth a future post).

Disclosure: The book publisher provided me with a free copy to review. If you purchase the book using a link from this page, I earn a small commission, but that does not result in you being charged anything extra.