Investment Banking

Report
Select Financial Services Segments
Investment Banking
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Industry Coverage
Product Group
Capital Markets
Sales & Trading
Equity Research
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Front Office
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Middle Office
Hedge Funds
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Private Equity
Venture Capital
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Growth Equity
Large-Cap Fund
Middle Market
Control Equity
Secondaries
Co-Investing
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Control Equity
Co-Investing
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Value, Growth, Blend
Long-only,
Long/Short, Shortonly
Fundamental,
Distressed, Macro,
Event-Driven,
Trading, Quant
Client Pitching
Valuation / Modeling
Deal Execution
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M&A
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Leveraged
Finance
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Equity & Debt
Solutions
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Investment Analysis
Portfolio Management
Trading
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Deal Origination
Valuation
Investment Analysis
Modeling
Portfolio Management
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Deal Origination
Valuation
Investment Analysis
Modeling
Portfolio Management
Portfolio Credit
Analysis
Pricing
Counterparty Risk
Ratings
P&L Reporting
Mark to Market
Cash Operations
Settlements
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Cash Management
Legal Entities
Tax Structuring
Investor Reporting
Fund Valuation
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Cash Management
Legal Entities
Tax Structuring
Fund Valuation
CFO/COO
Cash Management
Marketing
Legal
Investment Banking Overview
Investment Banks serve as intermediaries between
providers and users of capital
Chinese
Wall
Strategic advisory
Securities
underwriting
Users of capital
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Investment
Banking
Sales &
Trading
Research
Corporations
Governments
Municipalities
Providers of
Capital
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Private side
Public side
Individuals
Pension Funds
Insurance
Companies
Asset Managers
Corporate
Treasuries
Sovereign Wealth
Funds
Overview of Investment Banking
Capital Markets
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Equity capital-raising
o Initial public offerings (IPOs)
o Follow-on offerings
o Equity-linked (convertible)
Debt capital-raising
o High-grade or investment grade
o High-yield
o Syndicated loans
o Tax-exempt
Advisory
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Mergers & Acquisitions
o Buyside
o Sellside
o Spin-offs / Splitoffs / Carve-outs
o Hostile defense
o Hostile takeovers / proxy fights
o Joint Ventures
Financial Sponsors / Leveraged
Finance
Restructuring
Ratings
What Does An Investment Banker Do?
Origination
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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
Solving
o Strategic Alternatives
o Capital Raising
o Optimizing Capital Structure
o Risk Management, Dividend
Policy
Assessment Of Opportunities
Execution
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Financial Analysis
Communication
o Management, Board of Directors
o Internal Committees
Identify Potential Investors
Negotiation / Structuring Transactions
Due Diligence
Documentation
Investment Banking Groups
Capital Markets
• Equity Capital
Markets
• Debt Capital
Markets
• Tax-exempt
• Leveraged
Finance
• Securitized
Products
“Markets”
Industry Coverage
• Consumer &
Retail
• Healthcare
• Technology
• Media & Telecom
• Industrials
• Natural
Resources
• Real Estate
Product
• M&A
• Corporate
Finance
“Technical”
Investment Banking Competitive Landscape
Bulge
bracket
Middle
Market
Boutiqu
e
Low
Capabilities
High
Life of an Investment Banking Analyst
Overview of Investment Banking analyst programs
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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
Role of an Investment Banking Analyst
• 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
Why Investment Banking?
Benefits
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“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
Challenges
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Long and unpredictable hours
Traveling
Demanding senior bankers
High stress/pressure environment
Tools of the Trade
Banker Skill Set
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Motivated
Team player
Quantitative
Personable
Flexible
Articulate
Positives/Drawbacks
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Aggressive
Deal oriented
Willing to take
initiative
Handle stress well
Professionalism
Responsible
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Exposure/network
Magnitude/notoriety
of deals
Responsibility
Skill and knowledge
base development
Compensation
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Little things can mean a lot and poor execution can mask good skills
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attention to detail
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aesthetics
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professionalism
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timeliness
Communication is the key to good teamwork and efficiency
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understand what expectations are (timing/deliverable), aka underpromise and overdeliver
Analysts generally treat their years as an investment in personal capital
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seek out work—be an entrepreneur
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vary the people and types of projects to work with/on
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maximize client exposure and value add
Long hours
Work-life balance
Stressful
environment
Intensity
Focus on detail
Qualities that Investment Banks Look for in Candidates
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No one facet is
more important
than the rest. A
well-rounded
candidate who
strives to
encompass a
wide-variety of
talents and
interests often
finds success
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A Strong Interest in Finance
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take courses that demonstrate your interest in finance
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ability to explain: what is investment banking? what does an
analyst do? why would you be a strong candidate?
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Coursework or Work Experience
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that demonstrates comfort with numbers/knowledge of
financial statements
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that shows comfort in front of people (e.g., sales position,
student government)
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any work experience that demonstrates drive
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A Team Player
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team-driven (job/athletic/academic) accomplishments on resume
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the objective is to demonstrate that you work well with others
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A Record of Success and Achievement
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academic GPA, scholarships/honors, test scores
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Leadership of student organizations or teams
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a high level of athletic accomplishment
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community service with a record of achievement
General Preparation
• 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
The Interview
• 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
Resources
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Vault Career Guides
Breaking Into Wall Street
Wall Street Prep
Wall Street Training
DealMaven
Wall Street Training
Corporate Banking Overview
What is Corporate Banking?
• 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 needs
o 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
Corporate Banking
• The Corporate Banking product offering is focused on debt and other
corporate finance products:
Investment
Banking
M&A
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Strategic
Advisory
Divestitures
Acquisitions
Corporate
Banking
Equity
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IPOs
Follow-On
Issues
Preferred
Convertible
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Structured
Products
Debt
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Debt
Issuance
Acquisition
Finance
Bilateral &
Syndicated
Loans
Derivatives
Commercial
Paper
Hybrids/
Convertibles
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Receivables
Securitization
Asset Based
Finance
Project Finance
Synthetic /
Leveraged
Leases
Commodities /
FX
Equity
Derivatives
Pensions
Cash Management /
Treasury
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Cash
management
Securities
Services
Trade Finance
Investments
Agency &
Trust
Corporate
Cards
Corporate Banking
• For large multi-national corporations, corporate bankers primary
contacts in a company are the CFO and Treasurer
Coverage
Product Offering
Board of Directors
Strategic and Financial
Advisory
Investment
Banker
CEO
CFO
Capital Structure Management
Treasurer
Corporate
Banker
Assistant Treasurer
HR
Ops
Cash Management and
other Treasury Products
Corporate Banking
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Prepare client presentations and marketing materials
Participate in customer calls and client meetings
Perform industry and company research to develop a view on financing
transactions
Coordinate due diligence process
Navigate and participate in term sheet negotiation
Analyze the risks associated with a transaction and the implications on
relationship returns
Drive dialogue with Credit Risk Management on client credit analytics and
recommendations
Evaluate impact of products on company’s future earnings, EPS accretion, and
credit ratios
Analysis and dissemination of industry performance and trends
Corporate Banking
• Although skill sets are similar, the role of a corporate banking analyst
slightly differs from an investment banking analyst
Low
Somewhat Low
Financial Modeling
Credit Analysis
Valuation
Pitching/Presentation
Deal Execution
Client Interaction
Hours in the Office
Investment Banking
Corporate Banking
Medium
Somewhat High
High
Credit Risk Management Overview
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
Investment Banking
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Derivatives and other
Traded Products
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Work together on
extending financing on
M&A, LBOs
Bridge Loans
Corporate Banking
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Risk required to approve
any credit exposure
relating to derivative
positions
Work together on
extending credit for capital
structure financings and
other banking products
Credit Risk
Management
Cash Management /
Treasury Products
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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.)
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Legal
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Work together on
identifying credit risks in
credit agreements
Work together on
structuring financings and
negotiating credit
agreements
Credit Risk Management
• Role of an Analyst:
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Prepares transaction credit approval memos
 Focusing on credit quality of the borrower and bank’s commitment
 Participates in due diligence process
Prepare financial models projecting cash flows and ability to repay debt
Compose annual and quarterly credit reviews to determine risk ratings of clients
Complete valuations of companies (discounted cash flow analysis, comparables)
to determine loan to value
o Perform portfolio stress testing to determine potential portfolio losses
o Complete periodic industry and sector overviews, primarily focused on industry
performance
o Design hedging strategies (CDS purchases, asset sales) to mitigate outsized risk
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