Investment Banking Overview

Select Financial Services Segments

Investment Banking Hedge Funds Private Equity Venture Capital
Industry Coverage Value, Growth, Blend Growth Equity Control Equity
Product Group Long-only, Large-Cap Fund Co-Investing
Capital Markets Long/Short, Short- Middle Market
Sales & Trading only Control Equity
Equity Research Fundamental, Secondaries
Distressed, Macro, Co-Investing
Event-Driven,
Trading, Quant

Client Pitching Investment Analysis Deal Origination Deal Origination

Valuation / Modeling Portfolio Management Valuation Valuation
Deal Execution Trading Investment Analysis Investment Analysis
o M&A Modeling Modeling
Front Office o Leveraged Portfolio Management Portfolio Management
Finance
o Equity & Debt
Solutions

Portfolio Credit CFO/COO Cash Management Cash Management

Analysis Cash Management Legal Entities Legal Entities
Pricing Marketing Tax Structuring Tax Structuring
Counterparty Risk Legal Investor Reporting Fund Valuation
Ratings Fund Valuation
P&L Reporting
Middle Office Mark to Market
Cash Operations
Settlements
Investment Banking Overview
Investment Banks serve as intermediaries between
providers and users of capital
Chinese
Wall

Strategic advisory
Securities
underwriting Sales &
Trading
Investment Providers of
Users of capital
Banking Capital
Corporations Research Individuals
Governments Pension Funds
Municipalities Insurance
Companies
Asset Managers
Corporate
Treasuries
Sovereign Wealth
Funds
Private side Public side
Overview of Investment Banking

Capital Markets Advisory

Equity capital-raising Mergers & Acquisitions
o Initial public offerings (IPOs) o Buyside
o Follow-on offerings o Sellside
o Equity-linked (convertible) o Spin-offs / Splitoffs / Carve-
Debt capital-raising outs
o High-grade or investment o Hostile defense
grade o Hostile takeovers / proxy
o High-yield fights
o Syndicated loans o Joint Ventures
o Tax-exempt Restructuring
Ratings
What Does An Investment Banker Do?

Origination Execution
Client Relationship Management Financial Analysis
o Ongoing dialogue on financial Communication
markets, industry developments, o Management, Board of Directors
new products o Internal Committees
o Long-term relationship as advisor Identify Potential Investors
to Senior Management and Negotiation / Structuring Transactions
Boards Due Diligence
Idea Generation and Problem Documentation
Solving
o Strategic Alternatives
o Capital Raising
o Optimizing Capital Structure
o Risk Management, Dividend
Policy
Assessment Of Opportunities
Investment Banking Groups

Capital Markets Industry Coverage Product

Equity Capital Consumer & M&A
Markets Retail Corporate
Debt Capital Healthcare Finance
Markets Technology
Tax-exempt Media & Telecom
Leveraged Industrials
Finance Natural
Securitized Resources
Products Real Estate

Markets 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

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 Challenges
Everyday is different Long and unpredictable hours
Exposure to senior management Traveling
Steep learning curve Demanding senior bankers
Work with talented and motivated High stress/pressure environment
people
Gain a strong background in
financial analysis
Help execute exciting, landmark
transactions
Networking
Exit opportunities
Typical Analyst Wish List

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

Vault Career Guides

Breaking Into Wall Street
Wall Street Prep
Wall Street Training
DealMaven
Wall Street Training
Corporate Banking
 Select Bank Divisions
Corporate Banking Wealth Management Sales & Trading Research
Varies significantly Managing money for: Sales: Calling investors Stocks = Equity
from bank to bank: High net worth to suggest trade ideas Research
One end of spectrum: Retail Trading: Buying and Bonds = Fixed Income
Corporate Bankers are Corporate sponsored selling financial products Research
Various Group the Industry Coverage retirement plans with the goal of Assigned to Various
Structures Team including pensions, achieving a gain Sectors
Other end of spectrum: 401k plans, non- Energy, technology,
Corporate Bankers are qualified plans, etc. media, telecom,
Credit Analysts consumer

Counterparty Credit Investment research Buy and sell financial Financial Modeling
Loan Pricing / Terms and screening products on behalf of Investment
& Covenants Analyze the research clients recommendations
Types of Negotiation Investment Earnings reviews
Industry
Sales Studies recommendations Participate on investor
Analysis Tactical allocation calls
Performed Cross Selling decisions and Company visits
Know the Client rebalancing Travel to industry
Know Your Bank Interact with conferences
Relationships Across individuals,
Both executives,
investment
Series 79 (depends on Series 7 & 66fund
committees, & Series 7 & 63 Chartered Financial
firm) Insurance
managers License Chartered Financial Analyst (CFA)
Interview Selling Points: Chartered Financial Analyst (CFA)
o Financial Analyst (CFA)
Qualifications Statement Chartered Retirement
Analysis Plan Specialist
o Credit Analysis (CRPS)
o Law Certified Investment
Management Analyst
(CIMA)
Certified Financial
Planner (CFP)
Corporate Banking: Deal Dynamics High Level
Client (Corporation) Corporate & Investment
e.g. Insurance Co. Bank (CIB)

Client Need Corporate Banking Solutions

Bank Line / Working Capital Revolving Credit Facility (RCF): Revolver

Liquidity Facility / Commercial Paper Backstop Revolving Credit Facility (RCF): Revolver
Letters of Credit (LCs or LOCs) Letter of Credit Facility
Project Financing Term Loans
Structured Vehicle Funding RCFs & LCs etc.,
Capital Markets Hedging Programs Trading Lines

Revolvers from banks perspective:

o Large, Long-Term (1-15 yrs) Commitments: Puts Balance Sheet of bank at Risk
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
Banks do not lend unconditionally
Long-term commitments are made under the condition that the borrower maintains a largely consistent risk profile
o So, legal protections are built in: Covenants
Examples:
Minimum Credit Rating of BBB
Maximum Debt-to-Capital Ratio of 35%
o If client fails to meet these criteria, they are in breach
o 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) Corporate & Investment
e.g. Insurance Co. Bank (CIB)

Client Need Corporate Banking Solutions

Bank Line / Working Capital Revolving Credit Facility (RCF): Revolver

Liquidity Facility / Commercial Paper Backstop Revolving Credit Facility (RCF): Revolver
Letters of Credit Letter of Credit Facility
Project Financing Term Loans
Structured Vehicle Funding RCFs & LCs etc.,
Capital Markets Hedging Programs Trading Lines

Revolvers from banks perspective:

o Large, Long-Term (1-15 yrs) Commitments: Puts Balance Sheet of bank at Risk
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 commitment: The bank gets paid to simply provide a
o In periods of stress, these facilities go from having relatively relaxed surveillance profiles to receiving intense
attention
They are LARGE commitments and represent money out the door when the client draws promise
American International Group (AIG)
So, banks usually commit the largest amounts with the most favorable terms (pricing + covenants), to their best clients
o Clients in turn recognize this strategic partnership and open their doors to more business:
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 Discuss Client Needs (Size and purpose of RCF)

XYZ Client
(Agent Bank or Discuss Market Appetite for lending: Bank Group +
(Corporation)
Lead Arranger) Allocations
Determine Target Terms: Pricing, Covenants, Tenor
(length)
Corporate Banker Treasurer (sometimes CFO)

Launch Deal

2010

XYZ Company Banks Group Allocations

Post DD $350
US$3.0bn HSBC Negotiations: m
$350 1st Tier
Revolving Credit JP Morgan
Facility Citigroup Due Diligence (DD) m
$250
Agent/Lead Bank
BAML Meeting / Call
largely responsible for m
$250 2nd Tier
Lead Arranger UBS negotiating on behalf m
$150
+ others of banks group m
$650
m
What to Expect
The Job
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

Provide similar but expanded Responsibilities include:

services to corporate and Focus on supporting o Issuing loans (vs. bonds,
institutional clients: middle market high yield)
o Capital raising in the form clients by providing o Taxes strategy
of syndicated loans, public corp. loans for o Treasury management
and private issues of debt acquisitions, recaps, o FX management
and equity refinances & other o Cash management
o Specialized services such corp. needs o Project financing
as M&A and ratings Business largely Traditional Corporate Banking
advisory, industry and driven by private offered by large banks with
competitive analyses and equity activity diverse product offerings
market-making in complex Firms focused Focus on relationship with
instruments underwriting fees company as cross-selling of
o Sales, trading and research and greater interest products
of publicly traded issues rate spreads There is often an overlap between
and currencies Many MM firms also corporate banking and IB capital
Product groups specialize in a have advisory & markets when capital markets
certain service or instrument, capital market expertise is utilized to issue
such as M&A, bonds, equity services, but not equity or debt
Industry groups cover all client broader corporate
firms which operate in a certain banking services
field (i.e. healthcare, gaming,
energy, media)
Middle Market Financing Overview
Landscape Overview
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 Career / Role Benefits
Financial analysis and financial modeling Banking-like training programs
Company valuation Greater access to superiors & senior management
Comparable analysis Truly understand corporate growth, financial analysis &
Preparation internal credit / approval memos capitalization
Industry and company research Develop strong knowledge of many industries
Developing client presentations Analysts tend to wear more hats than in larger banks
Marketing material (i.e. Teaser, Confidential Information Quality of life: Hours, flexibility, goals & expectations
Memorandum) Defined career paths & competitive compensation
Updating all internal databases and systems Opportunity to change career path both internal / externally
Administrative tasks (set up calls, fax, FedEx, etc.) Introduction to numerous business owners

Career Options Firm Types Environment Work / Life Balance

Commercial banks 10-12 hour days, weekend work depending on firm
Finance companies / specialty funds Medium/High stress levels: Pressure to perform,
Hedge funds and mezzanine funds 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 Super-Regional Banks
Citibank Comerica
Bank of America Union Bank of California SunTrust
Wells Fargo / Wachovia Bank of New York Mellon Fifth Third
Key Bank PNC

Foreign Banks Finance Companies / Funds

CIBC Royal Bank of Scotland GE Capital Orchard/First Source
Toronto Dominion Macquarie Group CIT Group Jefferies Finance
Royal Bank of Canada Sumitomo Churchill Financial American Capital
Bank of Montreal / Harris Madison Capital Golub
Societe Generale Capital Source Cerberus
HSBC Freeport Financial Orix
National Australia Bank Denali Capital Ares Capital
ANZ Banking Group Newstar Financial
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

Get the
have been and where you are going
JOB!
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
Questions
Appendix
Thoughts How to Make it Happen
Get any available on campus interviews practice makes perfect
o Talk to the career center about firms that will be recruiting as well as firms that used to recruit
o Begin emailing junior BU alums at the firm as soon as possible and well ahead of interview
o After exchanging emails, ask for a few minutes on the phone
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
o 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
o Todays job market is extremely tough: Employers are looking for the perfect candidate
o It is a numbers game but make sure you target positions for which you are a good fit
o 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 dont have a 4.0 GPA or all of the relevant course work, guess what? - It is OK!
o Will cost you initially but can be recovered from
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 Typical Entry Point (for Large CIBs)
Large Corporate & Investment Banks: Out of undergrad (Analyst Program)
o Citigroup, JP Morgan, Bank of From Business School (Associate
America Merrill Lynch, Barclays, Level)
Goldman Sachs, Morgan Stanley, After 2+ years at a Rating Agency
UBS, Credit Suisse o Or other relevant field
Middle Market Financing:
o Commercial Banks, Hedge
Funds, Specialty / Finance
Companies