Description
banking presentaion focuses on IB, importance, sales and trading, structure, finance functions, deal team , strategic advisory, M&A, valuation, raising capital and career prospect
Corporate & Investment Banking
Why are we wasting our Friday evening listening to a ?fat? cat banker?
B’coz we need a job…duh!!! ? Sorry that was too direct, because we want to know about banking and all the myth around it. ? We want to know the different career roles in corporate banking, investment banking, IPO’s, QIP’s, M&A etc…. ? I did my summers in a bank and actually hated it. I hope this guy convinces me out of it. ? There were not enough people to fill the seats. Place Com forced me to attend ?
?
Points to ponder…………
?
More and more these days I find myself pondering how to reconcile my gross habits with my net income ? We didn’t actually overspend our budget. The allocation simply fell short of our expenditure ? If you owe the bank $100, its your problem. If you own them $100Mn, its their problem
Investment Banking Myths
?
Most people think I-Banking is about gambling in a pinstripe suit ? Most people think it’s about MONEY - $$$ ? Most people (MBA types-you and me) think it’s cool to be in Investment Banking
Why Investment Banking Exists?
?
The primary mission of any corporate management is to Maximize Shareholder value i.e: the common shareholder’s investment. ?Investment Banking? offers an efficient method of helping companies (private and public) to achieve this “primary” objective. yeaahh…right?
?
So what really is I-Banking ?
?
I-Banking is an umbrella term covering a range of activities which are at the center of many of the most significant and innovative developments in financial markets. I-Banking includes providing clients (Corporations, Financial Institutions and Governments), expertise in a wide range of financial disciplines to assist in achieving their most important strategic and financial objectives.
?
An “investment bank” typically consists of three distinct, but related businesses:
Traditional Investment Banking
Sales & Trading
Research
? Capital raising – Debt – Equity ? Strategic advisory services – Mergers & acquisitions – Restructuring – Takeover defense
? Distribution and execution arm of the investment bank ? Sells and trades stocks and bonds ? Manages the firm’s risk and makes markets for the securities underwritten by the investment bank
? Analysis and recommendations of stocks and bonds ? Includes company coverage and sector coverage
2
Structure of an Investment Bank — Conduit to the Corporate Client
Private Side
Public Side
Client
Sales & Trading
Corporate Banking
Investment Banking Coverage Groups
Capital Markets
? Bank Loans ? Inv. Grade Debt ? High Yield “Chinese Wall”
? Equity
Other Product Groups
? ? ? ?
4
M&A
Research
Financial Strategies Derivatives Liability Management Pensions
An investment bank provides numerous corporate finance functions.
Balance Sheet Management Hedging Capital Raising Equity
Share and Debt Repurchases
Investment Grade Debt
Debt Exchanges
High Yield Debt
Consent Solicitations
Syndicated Loans
Bridge Commitments Advisory M&A
Restructuring
Financial Strategy
5
Structure of a Typical Deal Team
The Coverage Officer has primary client responsibility and the Associate ensures that all members of the working party, both internal and external, are informed and working together.
Client
Accountants
Investment Banking Coverage Officer
Attorneys
Capital Markets
Associate
IBD Support
Analysts
Compliance/ Legal
7
Strategic Advisory
? ? ?
?
?
A good investment banker is a trusted advisor to their client – a CEO’s first call for strategic advice Investment bankers are most valuable when they can provide unique insight regarding a company’s operations or strategic direction As part of a normal client dialogue, investment bankers will show clients strategic ideas that may or may not be obvious to their client CEOs often use their bankers to approach potential counterparties on an informal basis Investment bankers typically handle negotiations and most other aspects of the M&A process, allowing management to focus on running their business – Valuation – Process management – Fairness opinion – Structuring – Purchase/Sale documentation – “Whatever else it takes”
8
Strategic Advisory – M&A
?
Purchasing other companies – Friendly Mergers – Hostile Takeovers – Leveraged Buyouts ? Selling companies – Selling entire companies – Spin-off of subsidiaries ? Defending Company Buyouts – Poison Pill
9
Life of an M&A Transaction
The Pitch The Mandate: Deal is Live Announcement Closing: It’s Official!
?
Specific pitch ideas Beauty contests
? Preparation
?
? Solicitation of preliminary bids
? Solicitation of binding bids
? Preparation for announcement – Press release – Q&A script
? Week of announcement ? Negotiations – Market reaction – Roadshow? ? Contract Signing ? Banker’s work is largely done once the deal is made public
10
? Between announcement & closing – SH vote – Other regulatory approvals ? Closing – Lucites – Dinner
Valuation: The Foundation of Every Deal
Primary Valuation Techniques ? Discounted Cash Flow Analysis
? ? ?
? How is my client trading relative to peers? – WHY is it trading this way?
? Growth? Margins? ? “Hot” market versus fundamentals
Public Market Analysis (Comparable Companies) Private Market Analysis (Precedent Transactions) LBO Analysis
– HOW can the company improve its valuation? ? Does an acquisition make sense? ? What is an appropriate price?
Secondary Valuation Techniques ? Pro Forma Consequences Analysis
– – –
? ?
? Is cash or stock a better choice?
Accretion/dilution Capital Structure EPS Growth Rates
? What is appropriate leverage?
? How would the market value the company in a public offering? ? How long will a company take to pay back debt holders? ? Do cash flows support an LBO?
Relative Contribution Analysis
Liquidation Analysis
11
Valuation and the Associate
The associate is responsible to ensure numbers are accurate and assumptions are realistic.
Valuation is NOT . . .
?
Valuation is . . .
?
A single, quantitatively derived answer ? A precise number ? A static number
Lots of number crunching ? More art than science ? Heavily dependent on judgment
12
Raise Capital for Clients
?
One of the most common functions of investment bankers is to assist companies in raising capital ? Investment banks are the intermediaries between users of capital and providers of capital ? Equity – IPO – Secondary Offering – Preferred Stock ? Debt – Investment Grade – High Yield Debt – Structured & New Product Financing
13
Capital Raising Assignment
The associate manages the flow of information and therefore must be organized and anticipate everything.
Pitching
Pre-Filing Preparation
Marketing
Pricing / Closing
Post-deal follow-up
14
What will you Do ?
? ?
?
? ?
Origination & Coverage: Getting deals on the table, relationship management etc. Research: Assist various departments by analyzing companies' positions in relation to their competitors and making recommendations about various companies' stocks. Corporate Finance: Provide varied financial and business advice in pricing and purchasing securities (stocks and bonds) for an initial public offering (IPO), a secondary offering, or a debt issuance. Financial Structuring Mergers & Acquisitions Sales and Trading
Job Prospects
? ? ? ?
? ?
?
? ?
Two things you need to know about jobs in I-banking. One, these jobs pay a lot, with year-end bonuses that can match your salary. Two, bonus or no bonus, you are going to work very, very hard. That said, investment banking is one of the best ways a young person can learn about finance and make a lot of money right out of school The fight for recruitment is overwhelmingly competitive You will typically join as an Associate level, rising to AVP, VP, Director and MD (designations vary) Your work life balance is not exactly balanced You will have to decide when to stop As an i-banker you can get jobs everywhere!!!!!
Keys to Success as an Associate
Goals ? Develop credibility early with team, especially analysts ? Leadership: Delegating authority ? Time management skills: Balance multiple projects Pitfalls ? Presenting materials with mistakes or typos ? Waiting to get involved ? Failure to anticipate ? Not leveraging firm’s resources appropriately ? Getting lost in the detail and missing the big picture ? Insubstantial interaction with clients ? Does not properly delegate work ? Losing confidence under pressure ? Lack of attention to detail ? Lack of follow through ? Lack of involvement in recruiting and training activities
? Understand the transaction and communicate both up and down
? Develop a rapport with the analysts and communicate the big picture ? Manage expectations and define responsibilities ? Get your hands dirty ? Don’t be afraid to ask questions ? Proactive client interaction ? Educate senior bankers and exceed expectations
18
Personal success factors:-
1. Never forget your roots. 2. Always stay grounded (with my weight, its easy) 3. Operate at the next level 4. Networking or no working 5. ALWAYS WORK IN GOOD FAITH….WITHOUT NEGLIGENCE
Thank you
doc_908170171.ppt
banking presentaion focuses on IB, importance, sales and trading, structure, finance functions, deal team , strategic advisory, M&A, valuation, raising capital and career prospect
Corporate & Investment Banking
Why are we wasting our Friday evening listening to a ?fat? cat banker?
B’coz we need a job…duh!!! ? Sorry that was too direct, because we want to know about banking and all the myth around it. ? We want to know the different career roles in corporate banking, investment banking, IPO’s, QIP’s, M&A etc…. ? I did my summers in a bank and actually hated it. I hope this guy convinces me out of it. ? There were not enough people to fill the seats. Place Com forced me to attend ?
?
Points to ponder…………
?
More and more these days I find myself pondering how to reconcile my gross habits with my net income ? We didn’t actually overspend our budget. The allocation simply fell short of our expenditure ? If you owe the bank $100, its your problem. If you own them $100Mn, its their problem
Investment Banking Myths
?
Most people think I-Banking is about gambling in a pinstripe suit ? Most people think it’s about MONEY - $$$ ? Most people (MBA types-you and me) think it’s cool to be in Investment Banking
Why Investment Banking Exists?
?
The primary mission of any corporate management is to Maximize Shareholder value i.e: the common shareholder’s investment. ?Investment Banking? offers an efficient method of helping companies (private and public) to achieve this “primary” objective. yeaahh…right?
?
So what really is I-Banking ?
?
I-Banking is an umbrella term covering a range of activities which are at the center of many of the most significant and innovative developments in financial markets. I-Banking includes providing clients (Corporations, Financial Institutions and Governments), expertise in a wide range of financial disciplines to assist in achieving their most important strategic and financial objectives.
?
An “investment bank” typically consists of three distinct, but related businesses:
Traditional Investment Banking
Sales & Trading
Research
? Capital raising – Debt – Equity ? Strategic advisory services – Mergers & acquisitions – Restructuring – Takeover defense
? Distribution and execution arm of the investment bank ? Sells and trades stocks and bonds ? Manages the firm’s risk and makes markets for the securities underwritten by the investment bank
? Analysis and recommendations of stocks and bonds ? Includes company coverage and sector coverage
2
Structure of an Investment Bank — Conduit to the Corporate Client
Private Side
Public Side
Client
Sales & Trading
Corporate Banking
Investment Banking Coverage Groups
Capital Markets
? Bank Loans ? Inv. Grade Debt ? High Yield “Chinese Wall”
? Equity
Other Product Groups
? ? ? ?
4
M&A
Research
Financial Strategies Derivatives Liability Management Pensions
An investment bank provides numerous corporate finance functions.
Balance Sheet Management Hedging Capital Raising Equity
Share and Debt Repurchases
Investment Grade Debt
Debt Exchanges
High Yield Debt
Consent Solicitations
Syndicated Loans
Bridge Commitments Advisory M&A
Restructuring
Financial Strategy
5
Structure of a Typical Deal Team
The Coverage Officer has primary client responsibility and the Associate ensures that all members of the working party, both internal and external, are informed and working together.
Client
Accountants
Investment Banking Coverage Officer
Attorneys
Capital Markets
Associate
IBD Support
Analysts
Compliance/ Legal
7
Strategic Advisory
? ? ?
?
?
A good investment banker is a trusted advisor to their client – a CEO’s first call for strategic advice Investment bankers are most valuable when they can provide unique insight regarding a company’s operations or strategic direction As part of a normal client dialogue, investment bankers will show clients strategic ideas that may or may not be obvious to their client CEOs often use their bankers to approach potential counterparties on an informal basis Investment bankers typically handle negotiations and most other aspects of the M&A process, allowing management to focus on running their business – Valuation – Process management – Fairness opinion – Structuring – Purchase/Sale documentation – “Whatever else it takes”
8
Strategic Advisory – M&A
?
Purchasing other companies – Friendly Mergers – Hostile Takeovers – Leveraged Buyouts ? Selling companies – Selling entire companies – Spin-off of subsidiaries ? Defending Company Buyouts – Poison Pill
9
Life of an M&A Transaction
The Pitch The Mandate: Deal is Live Announcement Closing: It’s Official!
?
Specific pitch ideas Beauty contests
? Preparation
?
? Solicitation of preliminary bids
? Solicitation of binding bids
? Preparation for announcement – Press release – Q&A script
? Week of announcement ? Negotiations – Market reaction – Roadshow? ? Contract Signing ? Banker’s work is largely done once the deal is made public
10
? Between announcement & closing – SH vote – Other regulatory approvals ? Closing – Lucites – Dinner
Valuation: The Foundation of Every Deal
Primary Valuation Techniques ? Discounted Cash Flow Analysis
? ? ?
? How is my client trading relative to peers? – WHY is it trading this way?
? Growth? Margins? ? “Hot” market versus fundamentals
Public Market Analysis (Comparable Companies) Private Market Analysis (Precedent Transactions) LBO Analysis
– HOW can the company improve its valuation? ? Does an acquisition make sense? ? What is an appropriate price?
Secondary Valuation Techniques ? Pro Forma Consequences Analysis
– – –
? ?
? Is cash or stock a better choice?
Accretion/dilution Capital Structure EPS Growth Rates
? What is appropriate leverage?
? How would the market value the company in a public offering? ? How long will a company take to pay back debt holders? ? Do cash flows support an LBO?
Relative Contribution Analysis
Liquidation Analysis
11
Valuation and the Associate
The associate is responsible to ensure numbers are accurate and assumptions are realistic.
Valuation is NOT . . .
?
Valuation is . . .
?
A single, quantitatively derived answer ? A precise number ? A static number
Lots of number crunching ? More art than science ? Heavily dependent on judgment
12
Raise Capital for Clients
?
One of the most common functions of investment bankers is to assist companies in raising capital ? Investment banks are the intermediaries between users of capital and providers of capital ? Equity – IPO – Secondary Offering – Preferred Stock ? Debt – Investment Grade – High Yield Debt – Structured & New Product Financing
13
Capital Raising Assignment
The associate manages the flow of information and therefore must be organized and anticipate everything.
Pitching
Pre-Filing Preparation
Marketing
Pricing / Closing
Post-deal follow-up
14
What will you Do ?
? ?
?
? ?
Origination & Coverage: Getting deals on the table, relationship management etc. Research: Assist various departments by analyzing companies' positions in relation to their competitors and making recommendations about various companies' stocks. Corporate Finance: Provide varied financial and business advice in pricing and purchasing securities (stocks and bonds) for an initial public offering (IPO), a secondary offering, or a debt issuance. Financial Structuring Mergers & Acquisitions Sales and Trading
Job Prospects
? ? ? ?
? ?
?
? ?
Two things you need to know about jobs in I-banking. One, these jobs pay a lot, with year-end bonuses that can match your salary. Two, bonus or no bonus, you are going to work very, very hard. That said, investment banking is one of the best ways a young person can learn about finance and make a lot of money right out of school The fight for recruitment is overwhelmingly competitive You will typically join as an Associate level, rising to AVP, VP, Director and MD (designations vary) Your work life balance is not exactly balanced You will have to decide when to stop As an i-banker you can get jobs everywhere!!!!!
Keys to Success as an Associate
Goals ? Develop credibility early with team, especially analysts ? Leadership: Delegating authority ? Time management skills: Balance multiple projects Pitfalls ? Presenting materials with mistakes or typos ? Waiting to get involved ? Failure to anticipate ? Not leveraging firm’s resources appropriately ? Getting lost in the detail and missing the big picture ? Insubstantial interaction with clients ? Does not properly delegate work ? Losing confidence under pressure ? Lack of attention to detail ? Lack of follow through ? Lack of involvement in recruiting and training activities
? Understand the transaction and communicate both up and down
? Develop a rapport with the analysts and communicate the big picture ? Manage expectations and define responsibilities ? Get your hands dirty ? Don’t be afraid to ask questions ? Proactive client interaction ? Educate senior bankers and exceed expectations
18
Personal success factors:-
1. Never forget your roots. 2. Always stay grounded (with my weight, its easy) 3. Operate at the next level 4. Networking or no working 5. ALWAYS WORK IN GOOD FAITH….WITHOUT NEGLIGENCE
Thank you
doc_908170171.ppt