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VANDERBILT INVESTMENT BANKING Meeting 4: Researching Companies

VANDERBILT INVESTMENT BANKING Meeting 4: Researching Companies. Investment Bank. Corporate Finance Product Group Industry Coverage Strategic Advisory. Lending Bank “Balance Sheet” Syndicated Finance Deposits. Sales & Trading Fixed Income Equities Proprietary. Research

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VANDERBILT INVESTMENT BANKING Meeting 4: Researching Companies

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  1. VANDERBILT INVESTMENT BANKINGMeeting 4: Researching Companies

  2. Investment Bank • Corporate Finance • Product Group • Industry Coverage • Strategic Advisory • Lending Bank • “Balance Sheet” • Syndicated Finance • Deposits • Sales & Trading • Fixed Income • Equities • Proprietary • Research • Coverage • Economic • Strategic • Wealth Management • Institutional • Retail • “Distribution” How an Investment Bank Operates • Lender Clients • Exchange cash for security interest in the capital structure of the debtor • Fixed Return • Levered Return Debtor Clients Invest cash in projects that produce a return Pays fixed return to creditors; Owners receive residual profits

  3. Investment Bank Organization Investment Bank • Corporate Finance • Product Group • Industry Coverage • Strategic Advisory • Lending Bank • “Balance Sheet” • Syndicated Finance • Deposits • Sales & Trading • Fixed Income • Equities • Proprietary • Research • Coverage • Economic • Strategic • Wealth Management • Institutional • Retail • “Distribution”

  4. Company Research • Your objectives • to identify and target investment banks that offer the position you are seeking • to weave into your story the reasons why you are the right person for a particular company • to speak intelligently on the strengths, recent deals, etc. of a target bank • to eventually speak intelligently on the activities of a target group within the firm • to identify topics for on going dialogues with investment bankers

  5. Company Research • Your tools • Owen’s Library • Hoovers.com • up-to-date news • Deal announcements • corporate filings • Others • Vault.com • Bloomberg Terminal • WetFeet.com • Yahoo Finance • Wall Street Journal • New York Times Deal Book

  6. How to Begin • Begin researching target companies • Organization design • balance sheet? • functional structure • product/industry groups • Clients • Size • Type of deals • Strengths / Weaknesses • Geographic presence • Top groups • Lending? • Identifying recent alumni • Culture

  7. Structure Non-Universal • More conflicts of interest • Gives monopoly power to banks • Examples: Goldman Sachs, Merrill Lynch, Morgan Stanley • Combines Commercial & I-Banking • Extended Balance Sheet • Allows bank to take on more risk • Greater economic efficiency • Examples: Citigroup, JP Morgan, Banc of America Universal vs.

  8. Structure (cont.) Boutique • Concentrated in M&A, Corporate Finance, or Restructuring • Small deal teams (2-4 people) • Goes for niche markets • More responsibility • Less-comprehensive training (learn on the job) • Examples: Lazard, Evercore, Greenhill • Combines Corporate Finance, Sales & Trading, Research, and many times Asset Management under one roof • Large deal teams (5+) • Less responsibility • More in depth training • Examples: Goldman Sachs, UBS Investment Bank, JP Morgan Full-service vs.

  9. Product/Industry Groups • Organized by industry groups, product groups, or both? • Recent deals (value, multiples, background) • Target groups • where is the action? • what industries do you like? • generalist program

  10. Clients • Large, Middle, or Small-market clients? • Large: $500 Million+ Deals • Fortune 500, Governments • Middle: $50-$500 Million Deals • Companies in Russell 2000 index • Small: $10-$50 Million Deals • Mom & Pops Stores

  11. Culture • Varies slightly from firm to firm • Larger banks will have different ‘cliques’ • Research by networking, going to info sessions, and doing the dinners/open bars

  12. Ongoing Activities • Continue researching target companies • new developments, new deals • Look for opportunities for continued dialogues with Bankers

  13. Rankings • 1st Tier (Bulge Bracket) • Goldman Sachs • Morgan Stanley • Citigroup • JP Morgan • Merrill Lynch • 2nd Tier • Lehman Brothers • UBS Investment Bank • Credit Suisse First Boston • Deutsche Bank • Banc of America • 3rd Tier • Bear Stearns • Jeffries & Co. • Wachovia Securities • SG Cowen • CIBC World Markets

  14. Q&A/DISCUSSION

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