Global Investment Banking Michel Fleuriet • Overview:Document Transcript
Global Investment Banking Michel Fleuriet
• Overview: This course is about the professional practices of investment banks.
The business of an investment bank is doing deals. This involves raising capital
(debt, equity) for clients and advising on M&A transactions. In addition
investment banks sell securities to institutional investors. They also trade for their
own account. Many banks are finally involved in managing third-party assets. We
start with the trends in the industry, the strategy of investment banks, and the
various business models of Exchanges. The course analyses the professional
objectives and behavior in the various departments of an investment bank:
departments of research, equity capital market, debt capital market, M&A and
asset management. Other topics include the personal strategy of an investment
banker (objectives, ethics and compliances). Throughout the course we will try to
compare the North American practices with European practices, with references
at times to a developing market (Brazil).
• Course Objectives:
Provide students with a fundamental understanding of the role of Investment
Banks and how they operate.
Provide a framework for analysis of the various businesses of an investment bank.
Give a framework of reference for future professionals in the investment banking
• Prerequisites: the course is open to 2nd year finance majors. I will ask you to
indicate which finance electives you have taken or are taking, so I could check if
you could take this course.
• Course materials: Bulk Pack and indication on additional readings will be
provided in due course.
• Course mechanics: Lecture format with a few cases (there should me more cases
• Workload: The readings, cases should take 12 to 15 hours a week.
• Grades: Case write-ups count 50%; the final exam counts 50%. The final exam
will have four essay questions.
• Tentative outline of topics for each of 13 lectures, where each lecture is 80
Lecture 1 The businesses of investment banking
Investment banks’ role and function and the trends in investment banking. Where does
the industry come from (history of investment banking in Europe, in the US)?
The players: lines of businesses, industry segregation (there are many types of investment
banks, from the purely advisory boutique specialized in M&A to the full-service
brokerage and investment bank. How the boutiques can strive alongside global banks?)
The spread of universal bank model in Europe: is investment banking soluble in
Trends in investment banking: competitive situation, risks and scandals.
Lecture 2 The strategy of an investment bank
How are investment banks organized, and how are they evolving?
The strategic evolution of the investment banks. The underlying dynamics of each
businesses.(What really drives it? What creates a competitive advantage? How to sustain
that competitive advantage?)
Case study of Merrill Lynch.
Lecture 3 The Marketplace
The strategic evolution of the exchanges. We compare two business models: the
American and the European models; competition between exchanges, listing or not listing
an exchange, the new world of electronic trading, market-making vs. electronic matching,
the winners and the losers.
Lecture 4 Research
The players and their role: sell side and buy side equity research, the evolving role of
Equity Research in investment banks. The dual loyalties of analysts: ethics and conflicts
Stock price and equity research: Theory and practice of valuation from the point of view
of research departments.
Lecture 5 The Equity Business
The players and their role: corporate issuer, potential investors, investment banks,
Sourcing a deal i.e. getting the mandate; factors influencing the capital structure
Executing a deal: pricing techniques, risk for the underwriter and fees, delivery to the
customer, due diligence.
Lecture 6 Sources of financing for the developing world’s corporations
The players and their role: How can investment banks help?
Sourcing a deal
Executing a deal
Example of Brazil
Lecture 7 The Debt Business
The players and their role: marketers, traders, structurers.
Sourcing a deal: from the issuer side (underwriting fixed income securities) and from the
investor side (creating an adapted investment product).
Executing a deal: pricing techniques, risk for the underwriter, delivery to the customer
(institutional sales, syndicate, fees), due diligence.
Lecture 8 Valuation of companies
The basics: Are stock pricing and company valuation part of the same process?
The players and their role: valuation techniques used by investment banks; credibility of
Executing a deal: the work of a corporate finance team in corporate valuation
Lecture 9 Mergers and acquisitions in a global context
The players and their role: the trends in the U.S. and in Europe
Sourcing a deal: the buy side, the sell side
Executing a deal: the role of investment banks in structuring M&A transactions, due
Case study: the international consolidation in the steel industry: Arcelor.
Lecture 10 M&A and international alliances
The players and their role: the trends in the U.S. and in Europe (international mergers of
Sourcing a deal: alliance, consensus and divergences.
Executing a deal: the role of investment banks in structuring alliances, due diligence.
Case study: the acquisition of the Japanese company Nissan by the French carmaker
Lecture 11 Asset Management
The players and their role: managers of assets, marketers
Sourcing a deal: the different types of investors, required rate of return, risk level
Executing a deal: Investment Performance Evaluation, conflict of interest and ethical
Lecture 12 Ethics and compliance
The basics: why are the values and culture of the bank so important for success?
Differences in corporate governance between corporate clients and investors (in the US,
in Europe and in Brazil). Is corporate governance likely to converge on the Anglo-Saxon
The players and their role: managing for high levels of professional conduct.
Ethics and compliance when sourcing a deal and executing a deal.
Lecture 13 The strategy of investments bankers
The basics: career strategies (calling, job or livelihood?).
The players and their roles: internal clients and real clients, relationship strategies for
The challenges of managing.
Important note: this tentative outline is not a contract. It is there to give you an idea
of what we will cover. But, you know, I may change my mind!