VANDERBILT INVESTMENT BANKING Meeting 4: Researching Companies

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VANDERBILT INVESTMENT BANKING Meeting 4: Researching Companies

  1. 1. VANDERBILT INVESTMENT BANKING Meeting 4: Researching Companies
  2. 2. <ul><li>Lender Clients </li></ul><ul><li>Exchange cash for security interest in the capital structure of the debtor </li></ul><ul><li>Fixed Return </li></ul><ul><li>Levered Return </li></ul>Debtor Clients Invest cash in projects that produce a return Pays fixed return to creditors; Owners receive residual profits How an Investment Bank Operates <ul><li>Corporate Finance </li></ul><ul><li>Product Group </li></ul><ul><li>Industry Coverage </li></ul><ul><li>Strategic Advisory </li></ul><ul><li>Lending Bank </li></ul><ul><li>“ Balance Sheet” </li></ul><ul><li>Syndicated Finance </li></ul><ul><li>Deposits </li></ul><ul><li>Sales & Trading </li></ul><ul><li>Fixed Income </li></ul><ul><li>Equities </li></ul><ul><li>Proprietary </li></ul><ul><li>Research </li></ul><ul><li>Coverage </li></ul><ul><li>Economic </li></ul><ul><li>Strategic </li></ul><ul><li>Wealth Management </li></ul><ul><li>Institutional </li></ul><ul><li>Retail </li></ul><ul><li>“ Distribution” </li></ul>Investment Bank
  3. 3. Investment Bank Organization <ul><li>Corporate Finance </li></ul><ul><li>Product Group </li></ul><ul><li>Industry Coverage </li></ul><ul><li>Strategic Advisory </li></ul><ul><li>Lending Bank </li></ul><ul><li>“ Balance Sheet” </li></ul><ul><li>Syndicated Finance </li></ul><ul><li>Deposits </li></ul><ul><li>Sales & Trading </li></ul><ul><li>Fixed Income </li></ul><ul><li>Equities </li></ul><ul><li>Proprietary </li></ul><ul><li>Research </li></ul><ul><li>Coverage </li></ul><ul><li>Economic </li></ul><ul><li>Strategic </li></ul><ul><li>Wealth Management </li></ul><ul><li>Institutional </li></ul><ul><li>Retail </li></ul><ul><li>“ Distribution” </li></ul>Investment Bank
  4. 4. Company Research <ul><li>Your objectives </li></ul><ul><ul><li>to identify and target investment banks that offer the position you are seeking </li></ul></ul><ul><ul><li>to weave into your story the reasons why you are the right person for a particular company </li></ul></ul><ul><ul><li>to speak intelligently on the strengths, recent deals, etc. of a target bank </li></ul></ul><ul><ul><li>to eventually speak intelligently on the activities of a target group within the firm </li></ul></ul><ul><ul><li>to identify topics for on going dialogues with investment bankers </li></ul></ul>
  5. 5. Company Research <ul><li>Your tools </li></ul><ul><ul><li>Owen’s Library </li></ul></ul><ul><ul><li>Hoovers.com </li></ul></ul><ul><ul><ul><li>up-to-date news </li></ul></ul></ul><ul><ul><ul><li>Deal announcements </li></ul></ul></ul><ul><ul><ul><li>corporate filings </li></ul></ul></ul><ul><ul><li>Others </li></ul></ul><ul><ul><ul><li>Vault.com </li></ul></ul></ul><ul><ul><ul><li>Bloomberg Terminal </li></ul></ul></ul><ul><ul><ul><li>WetFeet.com </li></ul></ul></ul><ul><ul><ul><li>Yahoo Finance </li></ul></ul></ul><ul><ul><ul><li>Wall Street Journal </li></ul></ul></ul><ul><ul><ul><li>New York Times Deal Book </li></ul></ul></ul>
  6. 6. How to Begin <ul><li>Begin researching target companies </li></ul><ul><ul><li>Organization design </li></ul></ul><ul><ul><ul><li>balance sheet? </li></ul></ul></ul><ul><ul><ul><li>functional structure </li></ul></ul></ul><ul><ul><ul><li>product/industry groups </li></ul></ul></ul><ul><ul><li>Clients </li></ul></ul><ul><ul><ul><li>Size </li></ul></ul></ul><ul><ul><ul><li>Type of deals </li></ul></ul></ul><ul><ul><li>Strengths / Weaknesses </li></ul></ul><ul><ul><ul><li>Geographic presence </li></ul></ul></ul><ul><ul><ul><li>Top groups </li></ul></ul></ul><ul><ul><ul><li>Lending? </li></ul></ul></ul><ul><ul><li>Identifying recent alumni </li></ul></ul><ul><ul><li>Culture </li></ul></ul>
  7. 7. Structure <ul><li>Universal vs. </li></ul>Non-Universal <ul><li>Combines Commercial & I-Banking </li></ul><ul><li>Extended Balance Sheet </li></ul><ul><li>Allows bank to take on more risk </li></ul><ul><li>Greater economic efficiency </li></ul><ul><li>Examples: Citigroup, JP Morgan, Banc of America </li></ul><ul><li>More conflicts of interest </li></ul><ul><li>Gives monopoly power to banks </li></ul><ul><li>Examples: Goldman Sachs, Merrill Lynch, Morgan Stanley </li></ul>
  8. 8. Structure (cont.) <ul><li>Full-service vs. </li></ul>Boutique <ul><li>Concentrated in M&A, Corporate Finance, or Restructuring </li></ul><ul><li>Small deal teams (2-4 people) </li></ul><ul><li>Goes for niche markets </li></ul><ul><li>More responsibility </li></ul><ul><li>Less-comprehensive training (learn on the job) </li></ul><ul><li>Examples: Lazard, Evercore, Greenhill </li></ul><ul><li>Combines Corporate Finance, Sales & Trading, Research, and many times Asset Management under one roof </li></ul><ul><li>Large deal teams (5+) </li></ul><ul><li>Less responsibility </li></ul><ul><li>More in depth training </li></ul><ul><li>Examples: Goldman Sachs, UBS Investment Bank, JP Morgan </li></ul>
  9. 9. Product/Industry Groups <ul><ul><li>Organized by industry groups, product groups, or both? </li></ul></ul><ul><ul><li>Recent deals (value, multiples, background) </li></ul></ul><ul><ul><li>Target groups </li></ul></ul><ul><ul><ul><li>where is the action? </li></ul></ul></ul><ul><ul><ul><li>what industries do you like? </li></ul></ul></ul><ul><ul><ul><li>generalist program </li></ul></ul></ul>
  10. 10. Clients <ul><li>Large, Middle, or Small-market clients? </li></ul><ul><li>Large: $500 Million+ Deals </li></ul><ul><ul><li>Fortune 500, Governments </li></ul></ul><ul><li>Middle: $50-$500 Million Deals </li></ul><ul><ul><li>Companies in Russell 2000 index </li></ul></ul><ul><li>Small: $10-$50 Million Deals </li></ul><ul><ul><li>Mom & Pops Stores </li></ul></ul>
  11. 11. Culture <ul><li>Varies slightly from firm to firm </li></ul><ul><li>Larger banks will have different ‘cliques’ </li></ul><ul><li>Research by networking, going to info sessions, and doing the dinners/open bars </li></ul>
  12. 12. Ongoing Activities <ul><li>Continue researching target companies </li></ul><ul><ul><li>new developments, new deals </li></ul></ul><ul><li>Look for opportunities for continued dialogues with Bankers </li></ul>
  13. 13. Rankings <ul><li>1 st Tier (Bulge Bracket) </li></ul><ul><ul><li>Goldman Sachs </li></ul></ul><ul><ul><li>Morgan Stanley </li></ul></ul><ul><ul><li>Citigroup </li></ul></ul><ul><ul><li>JP Morgan </li></ul></ul><ul><ul><li>Merrill Lynch </li></ul></ul><ul><li>2 nd Tier </li></ul><ul><ul><li>Lehman Brothers </li></ul></ul><ul><ul><li>UBS Investment Bank </li></ul></ul><ul><ul><li>Credit Suisse First Boston </li></ul></ul><ul><ul><li>Deutsche Bank </li></ul></ul><ul><ul><li>Banc of America </li></ul></ul><ul><li>3 rd Tier </li></ul><ul><ul><li>Bear Stearns </li></ul></ul><ul><ul><li>Jeffries & Co. </li></ul></ul><ul><ul><li>Wachovia Securities </li></ul></ul><ul><ul><li>SG Cowen </li></ul></ul><ul><ul><li>CIBC World Markets </li></ul></ul>
  14. 15. Q&A/DISCUSSION

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