Why January mandates are worth more than the fees

I still remember the collective groan that went around the ECM desks in early 2015. Goldman Sachs and UBS had kicked off the year as bookrunners on a $9bn capital increase for Banco Santander. Just like that, every other bank in the market was starting the year more than $4.5bn behind in the league tables.

You could argue that it shouldn’t matter. There are eleven months left to play. Plenty of time to close the gap. League tables are cumulative, after all. By December, that January deal is just one line item among dozens.

Except it does matter, and more than it rationally should.

The obvious point is about league table positioning itself. Capital markets is one of the few businesses where your performance is published in real time for the entire industry to see. Clients look at these rankings. They form part of pitch credentials. And while sophisticated clients understand that league tables can be gamed and that volume doesn’t always equal quality, ranking still influences perception.

Starting the year with a big deal gives you something to talk about. When you call a client in February or March to discuss their potential transaction, you can reference how the year is shaping up, what trends you’re seeing, and how your activity level gives you market intelligence. It’s not just puffery. Having executed a major transaction gives you genuine insight into investor appetite, pricing dynamics, and execution risk that a competitor without that experience simply doesn’t possess yet.

But the real impact is more subtle and psychological. It’s about how management assesses performance when comp season rolls around again. Human memory is deeply imperfect, shaped by well-documented cognitive biases. We give outsized weight to both what happened first and what happened most recently. The middle stretch of the year, where most of the actual work is done, is blurred in retrospect.

When your group head sits down in December to think about how everyone performed, the January deals stand out. They’re anchored in memory differently than the steady drumbeat of deals that closed in June or September. Similarly, the deals that closed in November loom large because they’re fresh. It’s the spring and summer transactions that risk becoming wallpaper.

This creates a perverse incentive structure. All deals aren’t created equal, even if they’re identical in size and economics. The timing matters for how they’ll be perceived 10 months later when compensation is decided.

Then there’s the momentum factor. Banking, like most sales-driven businesses, feeds on confidence. Close a big deal in January and the entire desk has a spring in its step. The morning meetings have a different energy. People are buoyed and optimistic; hungry for the next win.

That confidence is tangible when you’re in front of clients. A banker who feels they’re winning, who has recent success to draw upon, who can speak from a position of strength rather than desperation, makes a better impression. Clients can smell anxiety. They can sense when you need the mandate too badly, when you’re pitching from a position of weakness.

Conversely, fall behind early and the atmosphere in the office shifts. People start checking the league tables obsessively. There’s a creeping sense of being under siege. Management starts asking pointed questions about the pipeline. The pressure builds, and that pressure changes how people interact with clients and how they approach pitches.

I’ve seen desks that started slowly spend the rest of the year playing catch-up, and the desperation shows. They pitch more aggressively on pricing, which compresses margins. They accept second- or third-line syndicate roles they might have passed on, just to get on the deal. The quality of the business starts to suffer even as the volume picks up.

Starting strong gives you the luxury of being selective. You can walk away from transactions that don’t fit your strategy or where the terms don’t make sense. You can maintain discipline because you’re not staring at a gap that seems insurmountable.

There’s also something to be said for client relationships and how they evolve through the year. The bank that leads a major deal in January becomes part of that company’s story for the year. When that CFO gets asked about their capital markets activity at an investor conference in March, they talk about that transaction. It creates a halo effect that extends beyond the immediate deal.

None of this is entirely rational. In theory, a $1bn deal closed in January should count the same as a $1bn deal closed in October. The economics are identical. The execution risk might even be lower later in the year when you have better visibility on market conditions.

But banking isn’t purely rational. It’s a human business, subject to psychology and bias. Management remembers what happened first and what happened last. Momentum matters; confidence compounds.

So when you see those early league tables and your firm is sitting pretty, savour it. You’ve just bought yourself breathing room for the rest of the year. And if you’re starting in the hole, just remember that you have time to recover, but you will have to grind out the gains.