Investment Bank - Viewing M&A Advisory from the Service Operations Perspective

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sarang.bhutada@gmail.com - A view on investment banking - M&A Advisory - operations from the services
management perspective. Uses a DEA (Data Envelopment Analysis) and an AHP
Model to arrive at some conclusions. Contact for
further details.

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Investment Bank - Viewing M&A Advisory from the Service Operations Perspective

  1. 1. Service Operations in M&A Advisory function of Investment Banks Saurabh Ranadive Sarang Bhutada Service Operations – MS556
  2. 2. <ul><li>What is it? </li></ul><ul><li>An intermediary between the capital markets and corporations </li></ul><ul><li>Offers strategic advice and financial analysis on Mergers & Acquisitions, Divestitures, and Capital Structure </li></ul><ul><li>Offers Equity and Fixed Income Underwriting (e.g.. IPO’s, High Yield Offerings) </li></ul><ul><li>Provides asset management advice to high net worth individuals and institutions </li></ul><ul><li>Provides Sales and Trading of Equity, Bonds Derivatives </li></ul><ul><li>Offers research and advice on publicly listed stocks and bonds to institutional and individual investors </li></ul>Investment Banking Investment Banking <ul><ul><li>Financial Institutions </li></ul></ul><ul><ul><li>Industrials </li></ul></ul><ul><ul><li>Global firms </li></ul></ul>Equity Capital Markets Investment Grade Capital Markets Leveraged Finance Bond Finance M&A Advisory Derivatives <ul><ul><li>Common Stock </li></ul></ul><ul><ul><li>Convertibles </li></ul></ul><ul><ul><li>Private Placements </li></ul></ul><ul><ul><li>IPOs </li></ul></ul><ul><ul><li>Emerging Markets </li></ul></ul><ul><ul><li>Financial Institutions </li></ul></ul><ul><ul><li>Investment Grading </li></ul></ul><ul><ul><li>Liability Management </li></ul></ul><ul><ul><li>Bank Loan Markets </li></ul></ul><ul><ul><li>Leveraged Finance </li></ul></ul><ul><ul><li>Structure Management </li></ul></ul><ul><ul><li>Restructuring / Distressed Finance </li></ul></ul><ul><ul><li>Commercial Paper </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><li>Public / Private Partnerships </li></ul></ul><ul><ul><li>Bankruptcy Restructuring </li></ul></ul><ul><ul><li>Equity Derivatives </li></ul></ul><ul><ul><li>Municipal Derivatives </li></ul></ul><ul><ul><li>Swaps Marketing </li></ul></ul>Introduction <ul><ul><li>Valuations </li></ul></ul><ul><ul><li>Sales/ </li></ul></ul><ul><ul><li>Divestitures </li></ul></ul><ul><ul><li>Mergers </li></ul></ul><ul><ul><li>Leveraged Buy-outs </li></ul></ul>
  3. 3. <ul><li>What is typical of the M&A Advisory? </li></ul>Introduction
  4. 4. <ul><li>What does demand depend on? </li></ul><ul><li>Studies on reports by Nomura, Goldman Sachs revealed </li></ul><ul><li>Demand is ad-hoc, driven by business and economic cycles </li></ul><ul><li>Idle time of front-office employees is often utilized by training and scouting for deals </li></ul>Managing Demand
  5. 5. Facility Design <ul><li>Revenue per customer is typically very high for iBanks </li></ul><ul><li>Most banks work on only a handful of deals every year </li></ul><ul><li>The service facility thus assumes prime importance, not in terms of the attributes of layout, </li></ul><ul><li>but rather the quality of it </li></ul><ul><li>Prime location, in prime buildings in prime areas of the city </li></ul><ul><li>Interiors are expected to have symbolic meanings and are expected to influence </li></ul><ul><ul><li>Mood </li></ul></ul><ul><ul><li>Attitude </li></ul></ul><ul><ul><li>Comfort </li></ul></ul>
  6. 6. Service Design Client Investment Banking Coverage Officer Technology Support Accountants Associate Analysts Capital Markets Compliance Legal <ul><li>Typical M&A work is performed by a ‘deal team’ </li></ul><ul><li>Service Encounter takes place at many levels within the team </li></ul><ul><li>It is ensured that front office always has adequate capacity </li></ul>Technology affects all levels, aids the server in serving customer
  7. 7. Asset Portfolio strategy Executive Management Line of business IT organisation - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Target Identification Valuation Screening Regulatory checks Bid Financing strategies Analytics Market Research Negotiation Legal compliance Synergy Evaluation Advisory Deal Communication Operational Due Diligence Tax Audit Technology Due Deligence Transformation & Consulting Regulatory Compliance Strategic Integration Operational Management Integration Planning and Implementation Integration Execution Application Modernization Consolidation Outsourcing Divestment & Exit Synergy Review Post Close Business Review Operational Model Design Detailed Business Plans Reports and Dashboards
  8. 8. Critical Success Factors
  9. 9. <ul><li>What is the likely potential of this relationship? </li></ul><ul><li>What resources are required to fulfill this potential? </li></ul><ul><li>Where do the threats to this relationship come from? </li></ul><ul><li>Where does this relationship fit within the context of the company’s overall operations and resource allocation in that market? </li></ul><ul><li>Are the current efforts devoted to the relationship appropriate to this overall strategy? </li></ul><ul><li>Are we over-committed to this customer? </li></ul><ul><li>Finally, are our ways of dealing with this customer appropriate both to its needs and our strategy or are they based on habit or history? </li></ul>Client Relationship Future needs of raising Capital Low High
  10. 10. Bank Selection Criteria ** Source:Marketing and investment banking II: relationships and competitive advantage by Peter W. Turnbull and Theofanis Moustakatos
  11. 11. Critical Success Factors
  12. 12. <ul><li>+ </li></ul>Live Case <ul><li>Brokered by Nomura, Japan </li></ul>
  13. 13. <ul><li>Thank You! </li></ul>

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