I.B. Overview


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I.B. Overview

  1. 1. Investment Banks: The Interplay between Investment Banking, S&T and Research October 2001 Confidential
  2. 2. Mike Stanek – Software Research Mike Stanek Managing Director Infrastructure Software Equity Research Coverage: BSQUARE Citrix Systems Click Software Gemstar Inktomi Liquid Audio Microsoft RealNetworks SeeBeyond Sybase Talarian TIBCO Vitria webMethods #4 Ranked #5 Ranked  1999 All-American Team 2000 All-American Team Mike Stanek joined Lehman Brothers Equity Research in 1996 as Senior Vice President for DeskTop Applications and the Internet. Before joining Lehman, Mike was a partner at the boutique investment bank of Wessels, Arnold, and Henderson. While at Wessels, Mike was recognized by both Institutional Investor magazine 'Best of the Boutiques' research survey and ranked #1 in software in the Red Herring 'Tech 250' investor poll. He began his career on Wall Street as a portfolio manager and analyst for Mutual of Omaha Capital Management. He received his BS in Economics and Finance from the University of Nebraska.   Recent transactions in which Mike has been involved include: $67 million Initial Public Offering July 2000 $39 million Initial Public Offering May 2000 $119 million Follow-on Offering December 1999 Mike Stanek $32 million Initial Public Offering June 2000 R
  3. 3. Dan Myers – Semiconductor Investment Banking Dan Myers works in Menlo Park in the Semiconductor Investment Banking practice. Prior to joining the Investment Banking Division, Dan was in research for 2 years at Lehman Brothers and 3 years at Morgan Stanley. In research, he covered semiconductor and related companies. Dan received his MBA, with Honors, from the Amos Tuck School of Business Administration at Dartmouth College in 1995. Dan also holds a degree in Computer and Systems Engineering from Rensselaer Polytechnic Institute. Prior to returning to business school, Dan worked in the semiconductor industry for more than twelve years. Dan Myers
  4. 4. Overview of an Investment Bank’s Divisions Firm Private Client Services Equities Division Investment Banking Division Fixed Income Division Equity Sales & Trading Equity Research Fixed Income Research Fixed Income Sales & Trading __________ (a) Not all investment banks have an asset management division. Asset Management (a)
  5. 5. The Life Cycle of a Company Time Private Early Stage Middle Stage Mature Investment Banking Financing and Advisory Products (a) __________ (a) Time frames are rough estimates for illustrative purposes. Will vary by industry and with economic cycles. VC Private Placement IPO Follow-on Equity Mergers & Acquisitions Warrants Convertible Bonds Stock Buy-Backs Divestitures (Spin-offs/Carve-out) Asset-backed Securitizations LBOs Fixed Income (Bonds) Private Public
  6. 6. Who Talks to Whom? Information Flow Between Investment Bank Divisions and Clients (a) __________ (a) Darker lines indicate the primary recipient of information flow from a particular position. Sales & Trading Capital Markets Group (Issuance) Client Client Asset Manager (i.e., Fidelity) Company (i.e., Microsoft) Investment Banking Research “ Chinese Wall”
  7. 7. Role of Research <ul><li>Equity Research </li></ul><ul><li>Global Economics Research </li></ul><ul><li>Provide a broad-base of fundamental, quantitative, strategic and tactical research on companies and the industries within which they compete </li></ul><ul><li>Forecast stock price performance and corporate financial results for companies designated within their coverage responsibility </li></ul><ul><li>Within the Investment Bank, equity research has two primary constituencies: equity capital markets (sales & trading) and investment banking </li></ul><ul><li>Provide global economic analysis for the Firm’s clients as well as the Firm’s employees in Investment Banking. Sales & Trading, and other Research departments </li></ul><ul><li>Analysis and forecasts across a wide range of economic data, in particular leading economic indicators </li></ul><ul><ul><li>Assess the likelihood, timing, and impact of Fed interest rate increases/cuts </li></ul></ul>Fixed Income Research <ul><li>Provide analytical research across a broad spectrum of corporate and Government bonds </li></ul><ul><li>Credit analysis of corporations, various Government entities, and sovereign states </li></ul><ul><li>Within the Investment Bank, fixed income research has two primary constituencies: fixed income capital markets (sales & trading) and investment banking </li></ul>
  8. 8. Role of Investment Banking <ul><li>Capital Raising </li></ul><ul><li>Strategic Advisory </li></ul><ul><li>Equity financing (VC, private placement, IPO, Follow-ons) </li></ul><ul><li>Fixed income financing (bonds, loans, asset-backed securitization) </li></ul><ul><li>Convertibles (traditional, zero coupon, proprietary products, etc.) </li></ul><ul><li>Refinancings </li></ul><ul><li>Warrants </li></ul><ul><li>Other derivative structures </li></ul><ul><li>Acquisitions (company or assets) </li></ul><ul><li>Sales (company or assets) </li></ul><ul><li>Divestitures (spin-offs, equity carve-outs) </li></ul><ul><li>Restructuring (financial, strategic) </li></ul><ul><li>Stock buy-backs </li></ul>
  9. 9. Role of Sales & Trading <ul><li>Equities </li></ul><ul><li>Fixed Income </li></ul><ul><li>Deliver execution and liquidity to institutional investors by providing a full array of cash, financing, derivative and research products across the equity spectrum </li></ul><ul><li>Sale of new and existing equity securities (IPOs, follow-ons, convertibles) </li></ul><ul><li>Provide investment banking clients with after-market trading support for new and existing equity securities </li></ul><ul><li>Trade clearance and settlement </li></ul><ul><li>Market-making across a wide range of fixed income products and markets </li></ul><ul><li>Sale of new and existing fixed income securities (corporate and government bonds, high yield, etc.) </li></ul><ul><li>Provide after-market trading support for new and existing fixed income securities </li></ul><ul><li>Financing and development of asset-backed securities </li></ul>
  10. 10. Investment Banking Division Overview Organization Chart Investment Banking Division Product Groups Industry Groups Equity Capital Markets & Syndicate Debt Capital Markets & Syndicate Private Equity Merchant Banking Venture Capital Industrial High Yield Private Placements Financial Sponsors Mergers & Acquisitions Real Estate Financial Institutions Health Care Technology Media/ Telecom Natural Resources Power Consumer / Retail Chemicals
  11. 11. Equities Division Overview Organization Chart Equities Division Equity Capital Markets & Syndicate Equity Research Equity Capital Convertible Bonds Syndicate Listed Products Portfolio Sales International & Emerging Markets Derivatives Equity Financing OTC Products Equity Strategy Convertible Research Industry / Company Coverage Equity Trading Equity Sales Derivatives Global Economics
  12. 12. Fixed Income Division Organization Chart Fixed Income Division Debt Capital Markets & Syndicate Debt Capital Markets High Yield Capital Markets Syndicate Sovereign Strategy Leverage Finance High Yield Money Market High Yield Global Economics Fixed Income Research Fixed Income Sales & Trading Foreign Exchange Corporate Bonds Derivatives Municipal & Public Finance Mortgage & Asset-Backed Corporate & Sovereign Bonds Governments Foreign Exchange