A Career in Investment Banking

1. A Career in Investment Banking Lafayette College Easton, PA November 8, 2013

2. Career Path / Education

3. Investment Banking Job Description • Buying other companies (or merger) Assist Companies (the client) in: • Selling businesses • Raising money (stock and bond offerings)

4. Investment Banking Clients Pay Fees for Products and Services • Financial advisory (Buy / selling companies; M&A) • Source idea (pitch) • Negotiate transaction (execute) • Valuation analysis (fairness opinion) • Underwriting / Capital Markets (Raising money) • Assume the risk of distributing securities to investors • Structure the security • Market and sell to investors • Valuation

5. Underwriting / Capital Markets Issuer Options: • Borrow (Bond) • Sell ownership (Stock) • Hybrid (Convertible Bond) Objective: Raise $ Cash $ Cash $ Company XYZ Investment Bank Investor Security Security • Coordinates between Issuer and Investor • Determine appropriate size / price • Owner of security

6. How a Security is Priced Traders Issuer Investment Banker Capital Markets Salesforce Investor • HIGH price • Underwriting Commission • LOW Price • Sales commission Research Analyst Investment Bank Determines Market-Clearing Price

7. Investment Banking Careers • Corporate Finance Investment Banker • Trading Trader • Sales Bond / Equity Salesperson • Research Research Analyst (FI and Equity) • Product Specialist Capital Markets

8. Career Path / Education Requirements Investment Banking Entry Level Position Go to Business School? College Financial Analyst Earn MBA Yes • Business Degree • Finance • Accounting • Mathematics • Liberal Arts • English • History • Economics • Crunch numbers • Long hours • Great learning experience • Program lasts 2–3 years Career Choices: • Return to investment bank as Associate • Private Equity • Hedge Fund • Economist • Strategic Planning • Accounting No • Select group promoted from Analyst to Associate • Other finance jobs, eg, hedge fund, private equity

9. The Path to Success • Highly analytical • Comfortable with math • Make the complex simple • Marketing / sales • Idea generation / “break new ground” • Make the simple interesting • Attention to detail • Pitch books • Prospectuses • Persistence / teamwork • Maintain client relationships • One out of ten pitches may land an assignment • Competitive "fire"

10. Rewards of the Job • Creativity is encouraged • Every day and every deal is different • Meet interesting people • You see the results of your work in the newspaper • Travel

11. Challenges of the Job • The client is always right • The client has many “friends” • Long hours • “Roadmaps” don't apply • Answers / agenda often not obvious • Travel

12. Companies That Provide Investment Banking Traditional Investment Banks Universal Banks Include Other Banking Services and Other Businesses (Credit Cards)

13. BMO Target Market Fee Share by Firm, TTM: % of Market, Companies with EV $200MM – $5Bn (incl. Loan Syndications) 42.58% Companies with EV $200MM – $5Bn Total IB Fees, TTM = $17,818MM Firms outside of the top 9 competed for $6.3Bn remaining IB fee wallet in F13; ~2x size of Canadian market Source: Dealogic, US IB Fees incl. Loan Synd (DCM, ECM, M&A, LOAN); TTM as of October 30, 2013 1. DCM excludes investment grade issuance

14. My Lessons Learned • Understand before being understood • Make the complex simple; and make the simple interesting • Consider the source • Ask the second question • Sleep on it • Lead by example, not by cloning • Don’t oversell familiarity • Engage in face to face • Everyone’s allowed to have a bad day • Think different

15. Appendix

16. Issuing Common Stock (Ownership)Today Ownership of Company Earnings of Company Sell Ownership Earnings

17. Issuing Debt (Bond)Today Ownership of Company Earnings of Company Ownership Pay Interest

18. Borrow Versus Sell Ownership Comparison

19. DECS: Debt Exchangeable into Common Stock U.S. West Investor Interest Choice to Exchange Interest for Stock Owns FSA Insurance