A few months ago, one of my clients was considering a capital markets transaction to help manage the pension plan’s risks so I spent a couple of hours with two potential counterparties asking them (politely) lots of searching, hard questions on my client’s behalf.
In summary, they were along the lines of: “How exactly will you price this?” “What makes you better than the other guys?” and “What assumptions are you making about market liquidity”? Then I threw in “How much money do you expect to make from this transaction?”
Both counterparties initially choked on their macchiatos but one, (Party A), accepted that my client had the right to expect a super-high level of transparency in such a complex transaction. In fact Party A subsequently sent me a properly detailed list of answers to my questions, including a credible explanation of their expected p&l and a pricing spreadsheet. They even shared some intel I hadn’t asked for.
Party B told me it was all classified information, said they had never been asked this stuff before, and cordially invited me to get lost.
I find it’s all about trust and relationship. The more you show me open palms the more I want to do business with you.
And vice versa.