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Transcript of Industry Coverage Product Group Capital Markets Sales & Trading Equity Research Growth Equity...
• Industry Coverage• Product Group• Capital Markets• Sales & Trading• Equity Research
• Growth Equity• Large-Cap Fund• Middle Market • Control Equity• Secondaries• Co-Investing
• Client Pitching• Valuation / Modeling• Deal Execution
o M&Ao Leveraged
Financeo Equity & Debt
Solutions
• Deal Origination• Valuation• Investment Analysis
Modeling• Portfolio Management
Private EquityInvestment Banking
Front Office
Middle Office
• Portfolio Credit Analysis
• Pricing• Counterparty Risk• Ratings• P&L Reporting• Mark to Market• Cash Operations• Settlements
• Cash Management• Legal Entities• Tax Structuring• Investor Reporting• Fund Valuation
• Value, Growth, Blend• Long-only,
Long/Short, Short-only
• Fundamental, Distressed, Macro, Event-Driven, Trading, Quant
• Investment Analysis• Portfolio Management• Trading
Hedge Funds
• CFO/COO• Cash Management• Marketing• Legal
• Control Equity• Co-Investing
• Deal Origination• Valuation• Investment Analysis
Modeling• Portfolio Management
Venture Capital
• Cash Management• Legal Entities• Tax Structuring• Fund Valuation
Select Financial Services Segments
• Individuals• Pension Funds• Insurance
Companies• Asset Managers• Corporate
Treasuries• Sovereign Wealth
Funds
• Corporations• Governments• Municipalities
Providers of Capital
Investment Banking
Investment Banks serve as intermediaries between providers and users of capital
Chinese Wall
Sales & Trading
Research
Users of capital
Public sidePrivate side
Strategic advisorySecurities
underwriting
AdvisoryCapital Markets
• Equity capital-raisingo Initial public offerings (IPOs)o Follow-on offeringso Equity-linked (convertible)
• Debt capital-raisingo High-grade or investment gradeo High-yieldo Syndicated loanso Tax-exempt
Overview of Investment Banking
• Mergers & Acquisitionso Buysideo Sellsideo Spin-offs / Splitoffs / Carve-outso Hostile defenseo Hostile takeovers / proxy fightso Joint Ventures
• Financial Sponsors / Leveraged Finance
• Restructuring• Ratings
Execution
• Financial Analysis• Communication
o Management, Board of Directorso Internal Committees
• Identify Potential Investors• Negotiation / Structuring Transactions• Due Diligence• Documentation
Origination
• Client Relationship Management o Ongoing dialogue on financial
markets, industry developments, new products
o Long-term relationship as advisor to Senior Management and Boards
• Idea Generation and Problem Solvingo Strategic Alternativeso Capital Raisingo Optimizing Capital Structureo Risk Management, Dividend
Policy• Assessment Of Opportunities
What Does An Investment Banker Do?
Investment Banking Groups
Product
• M&A• Corporate
Finance
Industry Coverage
• Consumer & Retail
• Healthcare• Technology• Media & Telecom• Industrials• Natural
Resources• Real Estate
Capital Markets
• Equity Capital Markets
• Debt Capital Markets
• Tax-exempt• Leveraged
Finance• Securitized
Products
“Markets” “Technical”
• Two-year program with opportunity for a 3rd year• 6-8 week training• Mentorship programs• Networking opportunities• Summer internship program serves as primary feeder to full-time
analyst positions
Overview of Investment Banking analyst programs
• Be a member of a deal team, executing day-to-day activities surrounding live transactions
• Perform financial analysis and modeling• Develop and prepare client presentation materials (pitches,
roadshows, board materials, etc.)• Coordinate roadshows, and M&A processes• Research and due diligence
Role of an Investment Banking Analyst
ChallengesBenefits
• “Everyday is different”• Exposure to senior management• Steep learning curve• Work with talented and motivated
people• Gain a strong background in
financial analysis• Help execute exciting, landmark
transactions• Networking• Exit opportunities
Why Investment Banking?
• Long and unpredictable hours• Traveling• Demanding senior bankers• High stress/pressure environment
Tools of the Trade
Positives/Drawbacks
• Exposure/network• Magnitude/notoriety
of deals• Responsibility• Skill and knowledge
base development• Compensation
• Long hours• Work-life balance• Stressful
environment• Intensity• Focus on detail
Banker Skill Set
• Motivated• Team player• Quantitative• Personable• Flexible• Articulate
• Aggressive• Deal oriented• Willing to take
initiative• Handle stress well• Professionalism• Responsible
• Little things can mean a lot and poor execution can mask good skillso attention to detailo aestheticso professionalismo timeliness
• Communication is the key to good teamwork and efficiencyo understand what expectations are (timing/deliverable), aka underpromise and overdeliver
• Analysts generally treat their years as an investment in personal capitalo seek out work—be an entrepreneuro vary the people and types of projects to work with/ono maximize client exposure and value add
• Coursework or Work Experienceo that demonstrates comfort with numbers/knowledge of
financial statementso that shows comfort in front of people (e.g., sales position,
student government)o any work experience that demonstrates drive
• A Team Playero team-driven (job/athletic/academic) accomplishments on resumeo the objective is to demonstrate that you work well with others
• A Record of Success and Achievemento academic GPA, scholarships/honors, test scores
• Leadership of student organizations or teamso a high level of athletic accomplishmento community service with a record of achievement
• A Strong Interest in Financeo take courses that demonstrate your interest in financeo ability to explain: what is investment banking? what does an
analyst do? why would you be a strong candidate?
Qualities that Investment Banks Look for in Candidates
• No one facet is more important than the rest. A well-rounded candidate who strives to encompass awide-variety of talents and interests often finds success
• Network with peers and alumni• Internships• Research - Do I want to do Investment Banking? What type of
firms?• Make sure your resume is clear, concise and error free
o Take advantage of resources available to you (alumni, Feld Career Center, etc.)
o Everything is fair game• Practice, practice, practice
General Preparation
• Be prepared: know as much about the bank and position as possible• Know yourself: what motivates you, your strengths and weaknesses
and be able to articulate those points• Know EVERYTHING on your resume• Be honest and demonstrate enthusiasm and motivation• Read the Wall Street Journal EVERYDAY and use the Vault Guides• Practice interviewing (mock interviews, preparing answers, etc.)• Ask questions
The Interview
• Vault Career Guides• Breaking Into Wall Street• Wall Street Prep• Wall Street Training• DealMaven• Wall Street Training
Resources
• Provides Corporate Finance advisory, structured finance, and the extension of capital to corporate clients
• Corporate Bankers are coverage officers who are the primary point of customer contact (aka “Relationship Managers”). Corporate bankers are responsible for: o forming trusted advisor relationships with clients o developing integrated financing strategies to satisfy complex client
financing needso providing innovative intellectual and financial capital to clients
• Corporate Bankers partner with Investment Banking and product groups such as Capital Markets, Derivatives, and Cash Management/Treasury groups to provide the full spectrum of banking services to clients
What is Corporate Banking?
Corporate Banking
M&A Equity Debt
InvestmentBanking
CorporateBanking
• Strategic Advisory
• Divestitures• Acquisitions
• IPOs• Follow-On
Issues• Preferred• Convertible
s
• Receivables Securitization
• Asset Based Finance
• Project Finance• Synthetic /
Leveraged Leases
• Commodities / FX
• Equity Derivatives
• Pensions
Cash Management / Treasury
StructuredProducts
• Debt Issuance
• Acquisition Finance
• Bilateral & Syndicated Loans
• Derivatives• Commercial
Paper• Hybrids/
Convertibles
• Cash management
• Securities Services
• Trade Finance• Investments• Agency &
Trust• Corporate
Cards
• The Corporate Banking product offering is focused on debt and other corporate finance products:
• For large multi-national corporations, corporate bankers primary contacts in a company are the CFO and Treasurer
Corporate Banking
Board of Directors
CEO
CFO
Treasurer
Assistant Treasurer
HR Ops
Investment Banker
Corporate Banker
Strategic and Financial Advisory
Capital Structure Management
Cash Management and other Treasury Products
Coverage Product Offering
Corporate Banking
• Role of an Analyst: o Prepare client presentations and marketing materialso Participate in customer calls and client meetings o Perform industry and company research to develop a view on financing
transactionso Coordinate due diligence processo Navigate and participate in term sheet negotiationo Analyze the risks associated with a transaction and the implications on
relationship returnso Drive dialogue with Credit Risk Management on client credit analytics and
recommendationso Evaluate impact of products on company’s future earnings, EPS accretion, and
credit ratioso Analysis and dissemination of industry performance and trends
Corporate Banking
Investment Banking Corporate Banking
Low Somewhat Low Medium Somewhat High High
Financial Modeling
Credit Analysis
Valuation
Pitching/Presentation
Deal Execution
Client Interaction
Hours in the Office
• Although skill sets are similar, the role of a corporate banking analyst slightly differs from an investment banking analyst
What is Credit Risk Management?
• Analyzes, monitors, and mitigates credit risk for individual clients by evaluating new transactions and managing a loan portfolio
• Participates in deal teams with primary focus on the bank’s credit exposure to the client
• Manages credit approval process (including preparation of credit approval memos)
• Responsible for approval decision as to whether to lend/commit• Works with Banking (Investment Banking and Corporate Banking)
and Product partners on client strategies relating to capital structure• Monitors the aggregate portfolio risk for corporate clients• Completes hedging strategies to mitigate risk from distressed loan
exposure
Credit Risk Management
• Group Interaction
Credit Risk Management
• Work together on identifying credit risks in credit agreements
Legal
• Work together on structuring financings and negotiating credit agreements
Loan Capital Markets(Leveraged Finance and
High Grade)• Risk required to approve any credit exposure relating to cash management positions (ie. Letters of credit, overdrafts, etc.)
Cash Management / Treasury Products
• Risk required to approve any credit exposure relating to derivative positions
Derivatives and other Traded Products
• Work together on extending financing on M&A, LBOs
• Bridge Loans
Investment Banking
• Work together on extending credit for capital structure financings and other banking products
Corporate Banking
Credit Risk Management
• Role of an Analyst: o Prepares transaction credit approval memos
Focusing on credit quality of the borrower and bank’s commitment Participates in due diligence process
o Prepare financial models projecting cash flows and ability to repay debto Compose annual and quarterly credit reviews to determine risk ratings of clientso Complete valuations of companies (discounted cash flow analysis, comparables)
to determine loan to valueo Perform portfolio stress testing to determine potential portfolio losseso Complete periodic industry and sector overviews, primarily focused on industry
performanceo Design hedging strategies (CDS purchases, asset sales) to mitigate outsized risk