Sponsors forSponsors for EducationalOpportunity

Corporate Finance Overview SEO-U Webinar

Jonathan Shanjshan@seo-usa.org

What is Investment Banking /What is Investment Banking / Corporate Finance?

Business of offering strategic and financial advisory services to corporate clients

Underwriting - Raising capital for corporate clientsM&A - Assist in negotiating and structuring a merger or acquisition

1

Three areas of CorporateThree areas of Corporate Finance

Investment Banking Coverage

Mergers & Acquisitions

Capital Marketsp

2

Investment Banking CoverageInvestment Banking Coverage (IBC)

The coverage groups manage the relationship betweenThe coverage groups manage the relationship between the firm and its corporate clients

IBC fosters this relationship by continually generating new ideas presented in the form ofgenerating new ideas presented in the form of pitchbooks

Industry Groups include:T h l M di & T l (TMT)Technology, Media & Telecom (TMT)Consumer/HealthcareDiversified Industrials/TransportationNatural ResourcesFinancial Institutions (FIG)Real Estate Lodging & Gaming

3

Real Estate, Lodging & GamingFinancial Sponsors

C it l M k tCapital MarketsEquity Capital MarketsEquity Capital Markets

Raises capital for companies by marketing and selling equity to retail and institutional investorsInitial Public Offering (IPO): the initial sale of stock by a private company to public investorsSecondary Offering: the sale of additional stockSecondary Offering: the sale of additional stock by a public company to the public

Debt Capital MarketsAddresses the capital needs of companies by tapping into the debt marketsAssesses clients’ assets and cash flows to

4

structure liabilities to match (fixed vs. floating)

M & A i itiMergers & Acquisitions

Wh d i i d i h h i ?Why do companies acquire and merge with other companies?Source of growth

SizeS lScaleProducts

Revenue synergiesC t iCost synergies

Types of M&A transactionsStrategic acquisitionsMergersMergersLeveraged buyoutsHostile takeoversTakeover defense

5

Takeover defenseJoint ventures

R t M&A A ti itRecent M&A ActivityPurchase PriceTargetAcquirer

$46.4 billion

$44.6 billion

$21.9 billion$

$12.8 billion

$5.9 billion

6

$3.9 billion

Roles within InvestmentRoles within Investment Banking

Managing DirectorManages the relationship between the client and the bankNegotiates terms of the deal and fee structure

Vi P id tVice PresidentManages the deal/pitch processReviews all work before it goes to the MD

AssociateAssociateChecks the analyst(s)’ work

AnalystBuilds the financial modelBuilds the financial modelPerforms valuation analysesConstructs the pitchbook

Summer Analyst

7

yAssist the analyst

A l t R ibilitiAnalyst ResponsibilitiesPerforming financial valuation discounted cash flowPerforming financial valuation, discounted cash flow (DCF) and multiples-based analyses (comps)Building and using financial models

Financial models are tools constructed in MicrosoftFinancial models are tools constructed in Microsoft Excel used to forecast a Company’s operating performance

Preparing presentation materials and drafting registered documents for the SECdocuments for the SEC

Pitchbooks are presentations made to clients highlighting idea(s) to address company-specific needsDrafting sessions are meetings between the client, bankers and lawyers where the aim is to generate a “clean” document for the government and potential investors

8

investorsConducting industry and product research

Attributes of a Good Analyst /Attributes of a Good Analyst / Summer Analyst

Attention to detailStrong work ethicgQuick learnerAbility to communicate effectivelyUnderstanding of accounting principlesSolid quantitative, analytical and technical skillsF ili it ith Mi ft Offi t hFamiliarity with Microsoft Office – tech savvy

9

Benefits of a position withinBenefits of a position within Investment Banking

EExposureUnrivaled access to senior management of multinational and multibillion-dollar corporationscorporations

PrestigeAdvising corporate clients on financings and M&A opportunitiesand M&A opportunitiesParticipation on the “headline grabbing” deals

Transferable SkillsTransferable SkillsModelingValuation – Comps, DCFFi i l St t t A l i

10

Financial Statement AnalysisMultitasking, proven work ethic

D i th LifDay in the Life

9:00 a.m. – Rush out of the apartment to the subway station for a 30-minute commute. 9:30 a.m. – Quickly check e-mail, calendar and status of current projects10:00 a.m. – Quickly browse the Wall Street Journal, Yahoo! Finance and Bloomberg to get up to speed on market news10:30 a.m. – Start working on the ever-growing list of things to do. Review financial model for project #1 before sending it to other members of the deal team. Prepare comps for project #2. 1:10 p.m. – Grab lunch; sometimes an hour, most of the time you need to eat at your desk.1:30 p.m. – The associate on project #1 reviewed the analysis and provides constructive comments, which are “turned” (incorporated) into the model.2:30 p.m. – Conference call to discuss model for Project #1, which produces more issues/questions that need to be addressed. 3:30 p.m. – Start the pitchbook presentation for project #2 by putting together a “shell” ( tli )(outline).4:00 p.m. – Grab coffee with co-workers 4:15 p.m.– Get back to the office and get cranking on the revised model; Complete revisions and send to the deal team before 6:00 p.m. deadline. Send shell of presentation (Project #2 to associate)

11

to associate)5:30 p.m – Send out the revised model (after the associate review it)

D i th Lif ( t )Day in the Life (cont.)

6:00 p.m. – Start working on project #3; this one requires updating an old pitchbook for a different client with current market data7:30 p.m. – Dinner time. Order with a bunch of colleagues from online delivery service8:30 p.m. – Return to cubicle with a heavily, marked-up copy of the presentation for project #3 11:00 p.m. – After turning all the comments, send the revised version to associate who does a final review and sends it to Production.11:15 p.m. – Reopen the model for project #1, continue working on analysis 12 30 a m Finish p the comps for project #2 send them to the associate for re ie12:30 a.m. – Finish up the comps for project #2, send them to the associate for review.1:00 a.m. – Production calls to inform the analyst the books are done; “Flip the books” which means turn each pitch book to make sure all pages were printed correctly and are in the appropriate order1:30 a m The books are flipped and send them by car service to one of the attendees of1:30 a.m. – The books are flipped and send them by car service to one of the attendees of the meeting the following day. 2:15 a.m. – Stop working on model and comps when all previous comments are incorporated and issues are resolved; catch a cab to get home; rest for another busy day

12

N t StNext StepsRead the WSJ to keep up with current market newsRead the WSJ to keep up with current market newsWatch CNBC/FOX Business to gain additional perspectiveComplete Zoologic to improve your quantitative skillsComplete Zoologic to improve your quantitative skills

Introduction to Securities MarketsIntroduction to Corporate FinanceIntroduction to Analyzing Financial StatementsIntroduction to Analyzing Financial StatementsTime Value of MoneyIntroduction to Equity Valuation

Attend the Capital Markets Webinar (Mid July)p ( y)Practice Quick Math and Case Questions (Webinar in Late July)Enroll in Finance classes if available

13

Contact SEO alums for industry insight

RResourcesAdditional InformationAdditional Information

vault.comVault Career Guide to Investment Banking Vault Guide to the Top 50 Banking EmployersVault Guide to the Top 50 Banking Employers Vault Guide to Finance Interviews

Respective firm websitesResearch and EstimatesResearch and Estimates

Thomson One AnalyticsFirst Call

Financial NewsFinancial NewsWall Street JournalFinancial TimesBloomberg

14

BloombergReuters

Investment Banking in PopInvestment Banking in Pop Culture

15

Q ti ?Questions?

16