Investment Banking Overview

1. Investment Banking Overview “At a certain point, money is meaningless. It ceases to be the goal. The game is what counts.” – Aristotle Onassis

2. What Is Investment Banking? • A segment within the financial services industry • A network of intermediaries that assists clients who need capital and those looking to invest capital • Commonly referred to in terms of “buy side” and “sell side” lines of business

3. The Largest Firms By Advisory Fees • J P Morgan • B of A Merrill Lynch • Goldman Sachs • Morgan Stanley • Citigroup • Deutsche Bank • Credit Suisse • Barclays • Wells Fargo • RBC Capital Markets

4. Sample of Largest Firms By Assets Managed • Blackrock • UBS • Allianz • Vanguard • State Street • PIMCO • Fidelity • AXA Group • J P Morgan • Credit Suisse

5. What Is The “Sell Side?” • Involves trading or the promotion of securities – research develops investment ideas, sales teams pitch the ideas, buy side clients execute the ideas through traders • Primary roles include: • Facilitation of transactions – serve as resource for particular, unique transactions • Market making – buy and sell stock on a regular basis at a publicly quoted price • Underwriting of securities – raise capital for clients from investors through public offerings • Equity and debt research (equity research analysis) – develop opinion on value, risk, and volatility of a covered security for communication to clients

6. What Is The “Buy Side?” • Involves clients looking to purchase (“buy”) investment securities or services. You can also have buy-side equity analysts…but they would work exclusively for the buy side entity • Buy side entities/clients include: • Private equity funds • Mutual funds • Life insurance companies • Hedge funds

7. The Largest Investment Banks Provide A Wide Range Of Services • Mergers and acquisitions advice • Hostile takeover advice • Sale of company or certain division/assets • Represent potential acquirers • Restructuring advice • Access to debt and capital markets • Create demand for client’s to be issued securities • Create specialized securities / derivatives • Synergies with their commercial bank

8. Access To Capital Markets Is Primary To Their Mission Debt Capital Markets Equity Capital Markets Equity derivatives Equity instruments sales & trading Equity research • Fixed income derivatives • Debt instruments sales & trading • Syndicated loans • Fixed income research

9. Many Investment Banks Also Offer Access To Commercial Banking Services • Treasury / cash management services • Operating lines of credit • Lease financing • Letters of credit

10. Functional Areas May Be Thought Of In Broad Terms • Investment banking • Corporate Finance Coverage / Industry Groups - advise clients • Corporate Finance Product Groups – help execute transactions • Financing solutions • Capital Markets Product Groups – raise capital for clients • Secondary markets • Sales & Trading (equities, commodities, FX, etc) • Research • Proprietary trading & risk management

11. Industry Groups Are Different Than Product Groups • Industry Groups • Manage specific transactions for clients • Cover all clients within a specific industry • Generate acquisition ideas, evaluate share buyback programs, assist with optimal capital structure • Product Groups • Specialize in a particular service or instrument • Secondary markets • Sales & Trading (equities, commodities, FX, etc) • Research • Proprietary trading & risk management

12. In Summary… • Investment banks are in business to connect clients that need capital with those entities looking to provide capital • The industry thinks of itself in terms of buy side and sell side responsibilities • Opportunities exist in product areas, industry groups, and support functions

13. Investment Banking Interview Preparation “Tell me why you would make a great investment banker…”

14. Your Interview Preparation Should Include… • A great resume’ • A thorough understanding of what is investment banking • Confidence in what the particular job responsibilities will be • Why investment banking is the right career choice for you • Why this firm is the right fit • A solid grip on technical areas • Practicing your passion

15. A great resume’ communicates… • Transparent decision making • Your value • Your desire • Relevant experience • Technical abilities

16. Investment Banking Covers Many Areas • Buy side vs sell side • Industry vs product vs support groups • Equities vs debt vs commodities vs FX • Regional vs global banks

17. What Functional Area Is Of Most Interest? • Investment banking • Product / industry groups • Financing solutions • Secondary markets • Sales & trading • Research • Proprietary trading • Support areas • Treasury • Risk management

18. Investment Banking Is The Right Career Choice Because… • Be able to explain the origin of your interest • You’ve taken steps to prepare for a banking job • You understand the industry and role you’d play • There are areas of work in the past that were exciting to you and you’ll see them again in banking • There are aspects of work in the past in which you have excelled and you’ll see them again in banking • It excites you!

19. A Particular Bank Is The Right Choice Because… • You understand their culture and you’re a fit • They have a particular area of strength that is of interest to you • Their associate program holds some unique quality of value to you

20. You Must Have ASolid Grip On Technical Items • Thorough understanding of financial statements and how they work together • Balance sheet, income statement, statement of cash flows • Equity vs enterprise value • Equity value + net debt + pfd stock + minority int = Enterprise value • Time value of money • Present value • Future value • Valuation methodologies • Discounted cash flows • Public company comparables • Acquisition comparables • LBO analysis

21. You Must Also Demonstrate Your Passion • Are you “living” finance outside of the classroom? • Be knowledgeable of current deals in process • Know key rates (10 year Treasury, Libor) • Understand domestic and international political environments • Be familiar with stock market and key commodity trends (S&P 500, Nasdaq 100, gold, oil) • Know approximate exchange rates for key trade currencies (US dollar, British pound, Euro, Yen, etc.) • Study financing spreads and levels (new bond issues pricing, debt spreads over Libor, etc.)

22. Anticipating Questions Is Key To Success • What is investment banking? • Why investment banking? • Why would you be valuable to the firm? • What product or industry group is of interest to you? • What would your responsibilities be in your role? • What do you like to do in your spare time? • Where do you need to improve the most?

23. Anticipating Questions Is Key To Success • Do you invest money now? • When have you failed? • When have you led a team? • Talk about an ethical dilemma you have faced. • Discuss a recent merger or acquisition. • Where is the NASDAQ trading today? • Define EBITDA and what it represents? • Discuss the shape of a WACC curve and what the curve represents.

24. Be Yourself, But Demonstrate Your Desire • Show positive, constructive energy • Show the steps you have taken to prepare for this career • Demonstrate your grasp of key financial concepts • Highlight your passion…are you “living” finance now?