Investment Banking Overview
Select Financial Services Segments
Investment Banking
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Industry Coverage
Product Group
Capital Markets
Sales & Trading
Equity Research
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Front Office
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Middle Office
Hedge Funds
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Private Equity
Venture Capital
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Growth Equity
Large-Cap Fund
Middle Market
Control Equity
Secondaries
Co-Investing
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Control Equity
Co-Investing
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Value, Growth, Blend
Long-only,
Long/Short, Shortonly
Fundamental,
Distressed, Macro,
Event-Driven,
Trading, Quant
Client Pitching
Valuation / Modeling
Deal Execution
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M&A
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Leveraged
Finance
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Equity & Debt
Solutions
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Investment Analysis
Portfolio Management
Trading
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Deal Origination
Valuation
Investment Analysis
Modeling
Portfolio Management
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Deal Origination
Valuation
Investment Analysis
Modeling
Portfolio Management
Portfolio Credit
Analysis
Pricing
Counterparty Risk
Ratings
P&L Reporting
Mark to Market
Cash Operations
Settlements
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Cash Management
Legal Entities
Tax Structuring
Investor Reporting
Fund Valuation
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Cash Management
Legal Entities
Tax Structuring
Fund Valuation
CFO/COO
Cash Management
Marketing
Legal
Investment Banking Overview
Investment Banks serve as intermediaries between
providers and users of capital
Chinese
Wall
Strategic advisory
Securities
underwriting
Users of capital
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Investment
Banking
Sales &
Trading
Research
Corporations
Governments
Municipalities
Providers of
Capital
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Private side
Public side
Individuals
Pension Funds
Insurance
Companies
Asset Managers
Corporate
Treasuries
Sovereign Wealth
Funds
Overview of Investment Banking
Capital Markets
Advisory
• Equity capital-raising
o Initial public offerings (IPOs)
o Follow-on offerings
o Equity-linked (convertible)
• Debt capital-raising
o High-grade or investment
grade
o High-yield
o Syndicated loans
o Tax-exempt
• Mergers & Acquisitions
o Buyside
o Sellside
o Spin-offs / Splitoffs / Carveouts
o Hostile defense
o Hostile takeovers / proxy
fights
o Joint Ventures
• Restructuring
• Ratings
What Does An Investment Banker Do?
Origination
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Client Relationship Management
o Ongoing dialogue on financial
markets, industry developments,
new products
o Long-term relationship as advisor
to Senior Management and
Boards
Idea Generation and Problem
Solving
o Strategic Alternatives
o Capital Raising
o Optimizing Capital Structure
o Risk Management, Dividend
Policy
Assessment Of Opportunities
Execution
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Financial Analysis
Communication
o Management, Board of Directors
o Internal Committees
Identify Potential Investors
Negotiation / Structuring Transactions
Due Diligence
Documentation
Investment Banking Groups
Capital Markets
• Equity Capital
Markets
• Debt Capital
Markets
• Tax-exempt
• Leveraged
Finance
• Securitized
Products
“Markets”
Industry Coverage
• Consumer &
Retail
• Healthcare
• Technology
• Media & Telecom
• Industrials
• Natural
Resources
• Real Estate
Product
• M&A
• Corporate
Finance
“Technical”
Investment Banking Competitive Landscape
Bulge
bracket
Middle
Market
Boutiqu
e
Low
Capabilities
High
Life of an Investment Banking Analyst
Overview of Investment Banking analyst programs
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Two-year program with opportunity for a 3rd year
6-8 week training
Mentorship programs
Networking opportunities
Summer internship program serves as primary feeder to full-time
analyst positions
Role of an Investment Banking Analyst
• Be a member of a deal team, executing day-to-day activities
surrounding live transactions
• Perform financial analysis and modeling
• Develop and prepare client presentation materials (pitches,
roadshows, board materials, etc.)
• Coordinate roadshows, and M&A processes
• Research and due diligence
Why Investment Banking?
Benefits
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“Everyday is different”
Exposure to senior management
Steep learning curve
Work with talented and motivated
people
Gain a strong background in
financial analysis
Help execute exciting, landmark
transactions
Networking
Exit opportunities
Challenges
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Long and unpredictable hours
Traveling
Demanding senior bankers
High stress/pressure environment
Typical Analyst Wish List
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Strong communication skills (written and oral)
Quantitative / technical skills
Teamwork and leadership skills
Motivation and strong work ethic
Self-confidence and positive attitude
Time management skills
Personality (sense of humor, enthusiasm and ability to adapt to
different situations)
• Knowledge of firm and industry
• Ability to work well under pressure
• Creativity
General Preparation
• Network with peers and alumni
• Internships
• Research - Do I want to do Investment Banking? What type of
firms?
• Make sure your resume is clear, concise and error free
o Take advantage of resources available to you (alumni, Feld
Career Center, etc.)
o Everything is fair game
• Practice, practice, practice
The Interview
• Be prepared: know as much about the bank and position as possible
• Know yourself: what motivates you, your strengths and weaknesses
and be able to articulate those points
• Know EVERYTHING on your resume
• Be honest and demonstrate enthusiasm and motivation
• Read the Wall Street Journal EVERYDAY and use the Vault Guides
• Practice interviewing (mock interviews, preparing answers, etc.)
• Ask questions
Resources
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Vault Career Guides
Breaking Into Wall Street
Wall Street Prep
Wall Street Training
DealMaven
Wall Street Training
Corporate Banking
Select Bank Divisions
Corporate Banking
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Various Group
Structures
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Types of
Analysis
Performed
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Counterparty Credit
Loan Pricing / Terms
& Covenants
Negotiation
Industry
Sales Studies
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Cross Selling
Know the Client
Know Your Bank
Relationships Across
Both
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Series 79 (depends on
firm)
Interview Selling Points:
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Financial
Statement
Analysis
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Credit Analysis
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Law
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Qualifications
Varies significantly
from bank to bank:
One end of spectrum:
Corporate Bankers are
the Industry Coverage
Team
Other end of spectrum:
Corporate Bankers are
Credit Analysts
Wealth Management
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Managing money for:
High net worth
Retail
Corporate sponsored
retirement plans
including pensions,
401k plans, nonqualified plans, etc.
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Investment research
and screening
Analyze the research
Investment
recommendations
Tactical allocation
decisions and
rebalancing
Interact with
individuals,
executives,
investment
Series
7 & 66fund
&
committees,
Insurance
managers License
Chartered Financial
Analyst (“CFA”)
Chartered Retirement
Plan Specialist
(CRPS)
Certified Investment
Management Analyst
(CIMA)
Certified Financial
Planner (CFP)
Sales & Trading
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Research
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Sales: Calling investors
to suggest trade ideas
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Trading: Buying and
selling financial products
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with the goal of
achieving a gain
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Buy and sell financial
products on behalf of
clients
Stocks = Equity
Research
Bonds = Fixed Income
Research
Assigned to Various
Sectors
Energy, technology,
media, telecom,
consumer…
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Series 7 & 63
Chartered Financial
Analyst (“CFA”)
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Financial Modeling
Investment
recommendations
Earnings reviews
Participate on investor
calls
Company visits
Travel to industry
conferences
Chartered Financial
Analyst (“CFA”)
Corporate Banking: Deal Dynamics High Level
Client (Corporation)
e.g. Insurance Co.
Corporate & Investment
Bank (CIB)
Client Need
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Bank Line / Working Capital
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Liquidity Facility / Commercial Paper Backstop
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Letters of Credit (LCs or LOCs)
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Project Financing
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Structured Vehicle Funding
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Capital Markets Hedging Programs
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Corporate Banking Solutions
Revolving Credit Facility (RCF): “Revolver”
Revolving Credit Facility (RCF): “Revolver”
Letter of Credit Facility
Term Loans
RCFs & LCs etc.,
Trading Lines
“Revolvers” from bank’s perspective:
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Large, Long-Term (1-15 yrs) Commitments: Puts Balance Sheet of bank at Risk
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Typically serve as liquidity / back-up facilities and are priced to incentivize the client NOT to draw
Clients desire these facilities as well as their investors + rating agencies + other stakeholders
- expensive, like a credit card
Banks do not make a lot of money on undrawn revolver commitments: The bank gets paid to provide a
promise
Covenants
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Banks do not lend unconditionally
Long-term commitments are made under the condition that the borrower maintains a largely consistent risk profile
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So, legal protections are built in: Covenants
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Examples:
 Minimum Credit Rating of ‘ BBB ‘
 Maximum Debt-to-Capital Ratio of 35%
If client fails to meet these criteria, they are “in breach”
A client in breach of a covenant will have no legal right to draw funds from the bank
Corporate Banking: Deal Dynamics High Level
Client (Corporation)
e.g. Insurance Co.
Corporate & Investment
Bank (CIB)
Client Need
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Revolving Credit Facility (RCF): “Revolver”
Revolving Credit Facility (RCF): “Revolver”
Letter of Credit Facility
Term Loans
RCFs & LCs etc.,
Trading Lines
“Revolvers” from bank’s perspective:
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Large, Long-Term (1-15 yrs) Commitments: Puts Balance Sheet of bank at Risk
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Typically serve as liquidity / back-up facilities and are priced to incentivize the client NOT to draw
Client’s desire these facilities as well as their investors + rating agencies + other stakeholders
- expensive, like a credit card
Banks do not make a lot of money on undrawn revolver commitment: The bank gets paid to simply provide a
In periods of stress, these facilities go from having relatively relaxed surveillance profiles → to receiving intense
attention
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Bank Line / Working Capital
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Liquidity Facility / Commercial Paper Backstop
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Letters of Credit
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Project Financing
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Structured Vehicle Funding
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Capital Markets Hedging Programs
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Corporate Banking Solutions
They are LARGE commitments and represent “money out the door” when the client draws
American International Group (AIG)
promise
So, banks usually commit the largest amounts with the most favorable terms (pricing + covenants), to their best clients
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Clients in turn recognize this strategic partnership and open their doors to more business:
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Sales & Trading, Debt Capital Markets, Equity Capital Markets, Foreign Exchange & Cash Management, M&A Advisory etc.,
Corporate Banking: Revolving Credit Facility
Example - Syndicated RCF:
Lead Bank
(“Agent Bank” or
“Lead Arranger”)
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Corporate Banker
Discuss Client Needs (Size and purpose of RCF)
Discuss Market Appetite for lending: Bank Group +
Allocations
Determine Target Terms: Pricing, Covenants, Tenor
(length)
XYZ Client
(Corporation)
Treasurer (sometimes CFO)
“Launch Deal”
2010
Banks Group
XYZ Company
US$3.0bn
Revolving Credit
Facility
Lead Arranger
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HSBC
JP Morgan
Citigroup
BAML
UBS
+ others…
Post DD
Negotiations:
Due Diligence (DD)
Meeting / Call
Agent/Lead Bank
largely responsible for
negotiating on behalf
of banks group
Allocations
$350
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$350
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$250
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$250
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$150
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$650
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1st Tier
2nd Tier
What to Expect
The Job
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Long Hours (less hours than Investment Banking)
Life will revolve around deals
Good salary + bonus package (less than Investment Banking)
A lot of phone time / meetings with clients, other banks, lawyers, & internal colleagues
Credit analysis
o Financial Statement Analysis / Modeling
o Industry Studies
Must know your clients better than the competition
o Investor Calls / Presentations
o Company press releases as well as reports in the media
o 10-Ks, transcripts, sell-side research etc.,
Broad product experience / limited understanding of each product
Competitive / High Pressure Environment
o Can be said about any position at a bank. Especially front office but also middle and back.
Middle Market Financing Positioning
Investment Banking Middle Market Financing Corporate Banking
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Provide similar but expanded
services to corporate and
institutional clients:
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Capital raising in the form
of syndicated loans, public
and private issues of debt
and equity
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Specialized services such
as M&A and ratings
advisory, industry and
competitive analyses and
market-making in complex
instruments
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Sales, trading and research
of publicly traded issues
and currencies
Product groups specialize in a
certain service or instrument,
such as M&A, bonds, equity
Industry groups cover all client
firms which operate in a certain
field (i.e. healthcare, gaming,
energy, media)
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Focus on supporting
middle market
clients by providing
corp. loans for
acquisitions, recaps,
refinances & other
corp. needs
Business largely
driven by private
equity activity
Firms focused
underwriting fees
and greater interest
rate spreads
Many MM firms also
have advisory &
capital market
services, but not
broader corporate
banking services
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Responsibilities include:
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Issuing loans (vs. bonds,
high yield)
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Taxes strategy
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Treasury management
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FX management
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Cash management
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Project financing
Traditional “Corporate Banking”
offered by large banks with
diverse product offerings
Focus on relationship with
company as cross-selling of
products
There is often an overlap between
corporate banking and IB capital
markets when capital markets
expertise is utilized to issue
equity or debt
Middle Market Financing Overview
Landscape Overview
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More fragmented market led by pure commercial banks and finance companies, specialty funds, hedge funds and
mezzanine funds
Focus on smaller and medium sized leveraged loans ($250MM or less) and mezzanine debt (typically $100MM or smaller)
for companies with less than $500MM in revenues and EBITDA between $10MM and $75MM
Private investors driven with focus on club deals (deals with only 2 – 6 lenders & no broader syndication) and investment
returns, given the companies smaller sizes and increased risk profile
Underwriters emphasize senior loan club transactions, smaller scale loan syndications and portfolio lending/investment
Pure commercial banks and financial companies dominate senior loan market
Specialty funds, hedge funds and mezzanine funds dominate junior capital market
Middle Market New Issue Volume (<$50MM EBITDA)
Deal Financing Timeline Example
Career Considerations
Analyst Role / Responsibilities
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Financial analysis and financial modeling
Company valuation
Comparable analysis
Preparation internal credit / approval memos
Industry and company research
Developing client presentations
Marketing material (i.e. Teaser, Confidential Information
Memorandum)
Updating all internal databases and systems
Administrative tasks (set up calls, fax, FedEx, etc.)
Career / Role Benefits
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Career Options – Firm Types
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Commercial banks
Finance companies / specialty funds
Hedge funds and mezzanine funds
Banking-like training programs
Greater access to superiors & senior management
Truly understand corporate growth, financial analysis &
capitalization
Develop strong knowledge of many industries
Analysts tend to wear more hats than in larger banks
Quality of life: Hours, flexibility, goals & expectations
Defined career paths & competitive compensation
Opportunity to change career path both internal / externally
Introduction to numerous business owners
Environment – Work / Life Balance
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10-12 hour days, weekend work depending on firm
Medium/High stress levels: Pressure to perform,
competitive environment & demanding superiors with little
room for error
Multiple deals / companies / projects at one time
Work frequently with others in deal teams of 2 – 4 people
within your group
Frequent “fire-drill” deadlines for client driven approvals
Frequent meetings & conference calls throughout the day
Representative Companies
Large Commercial Banks
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Super-Regional Banks
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Citibank
Bank of America
Wells Fargo / Wachovia
Foreign Banks
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CIBC
Toronto Dominion
Royal Bank of Canada
Bank of Montreal / Harris
Societe Generale
HSBC
National Australia Bank
ANZ Banking Group
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Royal Bank of Scotland
Macquarie Group
Sumitomo
Comerica
Union Bank of California
Bank of New York Mellon
Key Bank
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SunTrust
Fifth Third
PNC
Finance Companies / Funds
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GE Capital
CIT Group
Churchill Financial
Madison Capital
Capital Source
Freeport Financial
Denali Capital
Newstar Financial
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Orchard/First Source
Jefferies Finance
American Capital
Golub
Cerberus
Orix
Ares Capital
Next Steps…
Take advantage of ALL Feld Career Center
services, job postings and info sessions
NETWORK: Utilize the BU Alumni network
and all family & friend contacts
Practice your interviewing skills and have
all “book” knowledge down cold
Have a story about who you are, where you
have been and where you are going
Utilize all resources including the Vault
Guide, publications (WSJ, etc.), websites
(LinkedIn, eFinancialCareers, etc.)
Search yourself: Make sure this is the field
for you BEFORE going through the process
Commit: Once you decide to go for any
finance job, give it your all – or it will show
otherwise
Get the
JOB!
Questions
Appendix
Thoughts… How to Make it Happen
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Get any available on campus interviews – practice makes perfect
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Talk to the career center about firms that will be recruiting as well as firms that used to recruit
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Begin emailing junior BU alums at the firm as soon as possible and well ahead of interview
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After exchanging emails, ask for a few minutes on the phone
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PROOF READ your emails. If there is a typo or a grammar error, it can kill your momentum
Be sensitive to the interviewers time constraints. Do not insists on times / topics / sending your resume
 Remember: Alums are BUSY and they are doing you a big FAVOR by talking
Make sure you have a story about who you are and why you want the position / company / industry you are applying
for
Specialize your resume
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Today’s job market is extremely tough: Employers are looking for the perfect candidate
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It is a numbers game but make sure you target positions for which you are a good fit
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Make sure your resume is FLAWLESS; bad formatting, a strange layout or something that is hard to read can easily
give someone a bad impression and/or cause them to overlook your talents
If you don’t have a 4.0 GPA or all of the relevant course work, guess what? - It is OK!
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Will cost you initially but can be recovered from
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Get the best job you can
Work hard and be the best
STAY in TOUCH with people
Always be aware of and open to new opportunities
Corporate Banking: Some more detail
Career Options
• Large Corporate & Investment Banks:
o Citigroup, JP Morgan, Bank of
America Merrill Lynch, Barclays,
Goldman Sachs, Morgan Stanley,
UBS, Credit Suisse…
• Middle Market Financing:
o Commercial Banks, Hedge
Funds, Specialty / Finance
Companies
Typical Entry Point (for Large CIBs)
• Out of undergrad (Analyst Program)
• From Business School (Associate
Level)
• After 2+ years at a Rating Agency
o Or other relevant field