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Investment Banking Overview - PowerPoint PPT Presentation

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Investment Banking Overview. Investment Banking. Hedge Funds. Private Equity. Venture Capital. Value, Growth, Blend Long-only, Long/Short, Short-only Fundamental, Distressed, Macro, Event-Driven, Trading, Quant. Growth Equity Large-Cap Fund Middle Market Control Equity Secondaries

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Investment Banking

Hedge Funds

Private Equity

Venture Capital

  • Value, Growth, Blend

  • Long-only, Long/Short, Short-only

  • Fundamental, Distressed, Macro, Event-Driven, Trading, Quant

  • Growth Equity

  • Large-Cap Fund

  • Middle Market

  • Control Equity

  • Secondaries

  • Co-Investing

  • Control Equity

  • Co-Investing

Select Financial Services Segments

Front Office

  • Client Pitching

  • Valuation / Modeling

  • Deal Execution

    • M&A

    • Leveraged Finance

    • Equity & Debt Solutions

  • Investment Analysis

  • Portfolio Management

  • Trading

  • Deal Origination

  • Valuation

  • Investment Analysis Modeling

  • Portfolio Management

  • Deal Origination

  • Valuation

  • Investment Analysis Modeling

  • Portfolio Management

Industry Coverage

Product Group

Capital Markets

Sales & Trading

Equity Research

Middle Office

  • Portfolio Credit Analysis

  • Pricing

  • Counterparty Risk

  • Ratings

  • P&L Reporting

  • Mark to Market

  • Cash Operations

  • Settlements


  • Cash Management

  • Marketing

  • Legal

  • Cash Management

  • Legal Entities

  • Tax Structuring

  • Investor Reporting

  • Fund Valuation

  • Cash Management

  • Legal Entities

  • Tax Structuring

  • Fund Valuation

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Investment Banks serve as intermediaries between providers and users of capital

Chinese Wall

Strategic advisory

Securities underwriting

Sales & Trading

Investment Banking

Users of capital

Providers of Capital


  • Corporations

  • Governments

  • Municipalities

  • Individuals

  • Pension Funds

  • Insurance Companies

  • Asset Managers

  • Corporate Treasuries

  • Sovereign Wealth Funds

Private side

Public side

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Overview of Investment Banking and users of capital

Capital Markets


  • Equity capital-raising

    • Initial public offerings (IPOs)

    • Follow-on offerings

    • Equity-linked (convertible)

  • Debt capital-raising

    • High-grade or investment grade

    • High-yield

    • Syndicated loans

    • Tax-exempt

  • Mergers & Acquisitions

    • Buyside

    • Sellside

    • Spin-offs / Splitoffs / Carve-outs

    • Hostile defense

    • Hostile takeovers / proxy fights

    • Joint Ventures

  • Restructuring

  • Ratings

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What Does An Investment Banker Do? and users of capital



  • Client Relationship Management

    • Ongoing dialogue on financial markets, industry developments, new products

    • Long-term relationship as advisor to Senior Management and Boards

  • Idea Generation and Problem Solving

    • Strategic Alternatives

    • Capital Raising

    • Optimizing Capital Structure

    • Risk Management, Dividend Policy

  • Assessment Of Opportunities

  • Financial Analysis

  • Communication

    • Management, Board of Directors

    • Internal Committees

  • Identify Potential Investors

  • Negotiation / Structuring Transactions

  • Due Diligence

  • Documentation

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Investment Banking Groups and users of capital

Capital Markets

Industry Coverage


  • Equity Capital Markets

  • Debt Capital Markets

  • Tax-exempt

  • Leveraged Finance

  • Securitized Products

  • Consumer & Retail

  • Healthcare

  • Technology

  • Media & Telecom

  • Industrials

  • Natural Resources

  • Real Estate

  • M&A

  • Corporate Finance



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Investment Banking Competitive Landscape and users of capital

Bulge bracket

Middle Market





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Overview of Investment Banking analyst programs and users of capital

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

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Role of an Investment Banking Analyst and users of capital

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

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Why Investment Banking? and users of capital



  • “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

  • Long and unpredictable hours

  • Traveling

  • Demanding senior bankers

  • High stress/pressure environment

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Typical Analyst Wish List and users of capital

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


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General Preparation and users of capital

Network with peers and alumni


Research - Do I want to do Investment Banking? What type of firms?

Make sure your resume is clear, concise and error free

Take advantage of resources available to you (alumni, Feld Career Center, etc.)

Everything is fair game

Practice, practice, practice

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The Interview and users of capital

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

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Resources and users of capital

Vault Career Guides

Breaking Into Wall Street

Wall Street Prep

Wall Street Training


Wall Street Training

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Corporate Banking and users of capital

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Select Bank Divisions and users of capital

Corporate Banking

Wealth Management

Sales & Trading


  • 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

  • Managing money for:

  • High net worth

  • Retail

  • Corporate sponsored retirement plans including pensions, 401k plans, non-qualified plans, etc.

  • Stocks = Equity Research

  • Bonds = Fixed Income Research

  • Assigned to Various Sectors

  • Energy, technology, media, telecom, consumer…

Various Group Structures

  • Counterparty Credit

  • Loan Pricing / Terms & Covenants Negotiation

  • Industry Studies

  • Investment research and screening

  • Analyze the research

  • Investment recommendations

  • Tactical allocation decisions and rebalancing

  • Interact with individuals, executives, investment committees, fund managers

  • Buy and sell financial products on behalf of clients

  • Financial Modeling

  • Investment recommendations

  • Earnings reviews

  • Participate on investor calls

  • Company visits

  • Travel to industry conferences

Types of Analysis Performed

Sales: Calling investors to suggest trade ideas

Trading: Buying and selling financial products with the goal of achieving a gain


  • Cross Selling

  • Know the Client

  • Know Your Bank

  • Relationships Across Both


  • Series 79 (depends on firm)

  • Interview Selling Points:

    • Financial Statement Analysis

    • Credit Analysis

    • Law

  • Series 7 & 66 & Insurance License

  • Chartered Financial Analyst (“CFA”)

  • Chartered Retirement Plan Specialist (CRPS)

  • Certified Investment Management Analyst (CIMA)

  • Certified Financial Planner (CFP)

  • Series 7 & 63

  • Chartered Financial Analyst (“CFA”)

  • Chartered Financial Analyst (“CFA”)

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Corporate Banking: Deal Dynamics High Level and users of capital

Corporate & Investment Bank (CIB)

Client (Corporation)

e.g. Insurance Co.

Client Need

Corporate Banking Solutions

  • Bank Line / Working Capital

  • Liquidity Facility / Commercial Paper Backstop

  • Letters of Credit (LCs or LOCs)

  • Project Financing

  • Structured Vehicle Funding

  • Capital Markets Hedging Programs

  • 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:

    • 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

      • Banks do not make a lot of money on undrawn revolver commitments: The bank gets paid to provide a

  • - expensive, like a credit card


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Covenants and users of capital

  • Banks do not lend unconditionally

  • Long-term commitments are made under the condition that the borrower maintains a largely consistent risk profile

    • So, legal protections are built in: Covenants

      • 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

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Corporate Banking: Deal Dynamics High Level and users of capital

Corporate & Investment Bank (CIB)

Client (Corporation)

e.g. Insurance Co.

Client Need

Corporate Banking Solutions

  • Bank Line / Working Capital

  • Liquidity Facility / Commercial Paper Backstop

  • Letters of Credit

  • Project Financing

  • Structured Vehicle Funding

  • Capital Markets Hedging Programs

  • 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:

    • 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

      • Client’s desire these facilities as well as their investors + rating agencies + other stakeholders

      • 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

      • They are LARGE commitments and represent “money out the door” when the client draws

      • American International Group (AIG)

  • So, banks usually commit the largest amounts with the most favorable terms (pricing + covenants), to their best clients

    • 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.,

  • - expensive, like a credit card


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Corporate Banking: Revolving Credit Facility and users of capital

Example - Syndicated RCF:

Lead Bank

(“Agent Bank” or

“Lead Arranger”)

XYZ Client (Corporation)

  • Discuss Client Needs (Size and purpose of RCF)

  • Discuss Market Appetite for lending: Bank Group + Allocations

  • Determine Target Terms: Pricing, Covenants, Tenor (length)

Corporate Banker

Treasurer (sometimes CFO)

“Launch Deal”


XYZ Company


Revolving Credit Facility

Lead Arranger

Banks Group


Post DD


Agent/Lead Bank largely responsible for negotiating on behalf of banks group

Due Diligence (DD) Meeting / Call

  • HSBC

  • JP Morgan

  • Citigroup

  • BAML

  • UBS

  • + others…


1st Tier



2nd Tier




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What to Expect and users of capital

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

    • Financial Statement Analysis / Modeling

    • Industry Studies

  • Must know your clients better than the competition

    • Investor Calls / Presentations

    • Company press releases as well as reports in the media

    • 10-Ks, transcripts, sell-side research etc.,

  • Broad product experience / limited understanding of each product

  • Competitive / High Pressure Environment

    • Can be said about any position at a bank. Especially front office but also middle and back.

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Middle Market Financing Positioning and users of capital

Investment Banking Middle Market Financing Corporate Banking

  • Provide similar but expanded services to corporate and institutional clients:

    • Capital raising in the form of syndicated loans, public and private issues of debt and equity

    • Specialized services such as M&A and ratings advisory, industry and competitive analyses and market-making in complex instruments

    • 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)

  • Responsibilities include:

    • Issuing loans (vs. bonds, high yield)

    • Taxes strategy

    • Treasury management

    • FX management

    • Cash management

    • 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

  • 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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Landscape Overview and users of capital

  • 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 Financing Overview

Middle Market New Issue Volume (<$50MM EBITDA)

Deal Financing Timeline Example

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Analyst Role / Responsibilities and users of capital

Career / Role Benefits

  • 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.)

  • 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

Career Considerations

Career Options – Firm Types

Environment – Work / Life Balance

  • Commercial banks

  • Finance companies / specialty funds

  • Hedge funds and mezzanine funds

  • 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

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Large Commercial Banks and users of capital

Super-Regional Banks

Representative Companies

  • Citibank

  • Bank of America

  • Wells Fargo / Wachovia

  • Comerica

  • Union Bank of California

  • Bank of New York Mellon

  • Key Bank

  • SunTrust

  • Fifth Third

  • PNC

Foreign Banks

Finance Companies / Funds

  • CIBC

  • Toronto Dominion

  • Royal Bank of Canada

  • Bank of Montreal / Harris

  • Societe Generale

  • HSBC

  • National Australia Bank

  • ANZ Banking Group

  • Royal Bank of Scotland

  • Macquarie Group

  • Sumitomo

  • GE Capital

  • CIT Group

  • Churchill Financial

  • Madison Capital

  • Capital Source

  • Freeport Financial

  • Denali Capital

  • Newstar Financial

  • Orchard/First Source

  • Jefferies Finance

  • American Capital

  • Golub

  • Cerberus

  • Orix

  • Ares Capital

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Next Steps… and users of capital

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

Get the JOB!

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

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Questions and users of capital

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Appendix and users of capital

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Thoughts… How to Make it Happen and users of capital

  • Get any available on campus interviews – practice makes perfect

    • Talk to the career center about firms that will be recruiting as well as firms that used to recruit

    • Begin emailing junior BU alums at the firm as soon as possible and well ahead of interview

    • 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

    • 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

    • Today’s job market is extremely tough: Employers are looking for the perfect candidate

    • It is a numbers game but make sure you target positions for which you are a good fit

    • 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!

    • 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

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Corporate Banking: Some more detail and users of capital

Career Options

Typical Entry Point (for Large CIBs)

  • Large Corporate & Investment Banks:

    • Citigroup, JP Morgan, Bank of America Merrill Lynch, Barclays, Goldman Sachs, Morgan Stanley, UBS, Credit Suisse…

  • Middle Market Financing:

    • Commercial Banks, Hedge Funds, Specialty / Finance Companies

  • Out of undergrad (Analyst Program)

  • From Business School (Associate Level)

  • After 2+ years at a Rating Agency

    • Or other relevant field