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B A N K I N G A T M I C H I G A N www.bankingatmichigan.org Decoding the recruitment process BANKING AT MICHIGAN: Investment Demystified Banking 1 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N LOGISTICS 5 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N INVESTMENT BANKING OVERVIEW 8 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N What are Investment ? What areInvestment ● ● ● ● Investment banks work with legal, audit and management functionsa of Investment banks help clients ) Investments banks provide cycles private and governmental entities Trusted advisors and financiers advisory services raise capital to adiverse client base 9 - at at the most pivotal ofpoints theirlife (through (throughdebt or ) (e.g. (e.g. Mergers & Acquisitionsor B ANKING A T - M both public, ICHIGAN Website B A N K I N G A T M I C H I G A N Investment Banks Investment BOUTIQUE/INDEPENDENT ADVISORY MIDDLE MARKET 10 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Investment Banks Investment REGIONAL INDUSTRY SPECIFIC 11 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Analyst Experience at Boutique vs vs Bulge at Boutique ExperienceAnalyst ● ● ● ● model with associate process and often get to run the Get exposure through entire deal an associate, VP, director, and MD dealSmall teams with 1 Typically only advisory focused Typically offers generalist program Boutique - 2 analysts, 12 ● ● ● ● groups analysts from other industry/product and will sometimes work with Get exposure to large, complex deals Deal teams vary in size, usually larger including access to balance sheet Offer a wide variety of services Placed in a group right away B ANKING Bulge A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Structure of an Investment of anInvestment Structure Users of Capital CAPITAL MARKETS : : INVESTMENT DIVISIONBANKING DEBT CAPITAL MARKETS INDUSTRY GROUPS PRODUCT GROUPS 13

CHINESE WALL B ANKING A RESEARCH TRADING T PUBLIC SALES M ICHIGAN

Website Providers of Capital of Providers B A N K I N G A T M I C H I G A N What are Investment Banks? What areInvestment ● ● ● Coverage Products Investment banks are ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ Natural Resources ConsumerRetail FIG (Financial Institutions) Real Estate Healthcare (Technology,TMT Media Telecom) & Equity/Debt Capital Markets Restructuring /Debt Advisory Leveraged (LevFin) M&A typically split into 14 Product B ANKING and and Coverage A T M ICHIGAN groups Website B A N K I N G A T M I C H I G A N Equity Capital MarketsCapital (ECM) Equity ● ● ● merger models merger and LBOs a accounting,focus onof DCF, equity, and rather than Recruiting: and trading” Sometimes referred to as a “cross between investment banking and sales swaps, options,futures, and shares Group responsible advisingfor clients on equity related products such as ○ ○ ○ ○ howindices are performing) Demonstrate interest in markets (know equity trends, recent IPOs, and Roadshows Equity Private Placements IPOs expect expect similarinterviews to anyother IBD group butwith more 15 - common services common services include: B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Debt Capital MarketsCapital (DCM) Debt ● ● such as , yield etc curves, Recruiting: followthe bond markets and know debt related information swaps (usually investment grade) instruments such as corporate bonds, government bonds, credit default Group that helps and governments raise money via debt ○ ○ ○ Connect clientsdebt ofwith globalpool Refinance/restructure debt existing Raise debt acquisitionforother or project 16 - Bankers help: Bankers B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Leveraged Finance (LevFin) Finance Leveraged ● ● ● cash Companies use debt because it istypically cheaper to use than equity or and financial sponsors.” executes bank and yield bondhigh corporate financings forclients “The highyield debt recapitalisations, and asset purchases, M&A, and refinancing by raising LevFin departments on acquisitionswork (leveraged ), ○ ○ lotdebt of is needed, itunder falls the leveraged finance umbrella. : Acquirers oftento pay borrow acquisitions.When a leveraged . Leveraged buyouts:Financial need sponsors to raise debt to fund a Leveraged Leveraged Finance Capital Markets 17 team team originates, structures and B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Restructuring ● ● Bankers help Bankers process forced intobankruptcy and will hirea restructuring banker to help with the When a company can meet no longerits payment liabilities it will elect or be ○ ○ ○ ○ ○ Advise management reorganization strategy on Negotiate obligations Sell assets to pay creditors to reemerge as a healthy organization its debt by contacting creditors to renegotiate loan terms in an attempt Chapter 11 Bankruptcy reorganization and needs its assets to sell off to pay back creditors Chapter 7 Bankruptcy : “Liquidation” : “Rehabilitation” 18 - the company is past a state of - B company company tries to reorganize ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Corporate Derivatives Corporate ● ● exposures exposures Helps and address financial sponsors macro market What is a ? ○ ○ ○ ○ Works closely closely Works with LevFin,IGCM and M&A teams + industry groups Derivatives can be used to either used commonly derivatives Futures contracts, contracts, forward and options swaps are currencies, interest rates) Financial contract whose value is based an onunderlyingsecurity (e.g. ■ ■ Assume risk Mitigate risk – e.g. e.g. interest rates exchange (IR), foreign (FX) and with the expectation of commensurate reward ( reward commensurate of expectation the with ( hedging ), or 19 B ANKING A T M ICHIGAN Website ) B A N K I N G A T M I C H I G A N M&A ● ● ● ● JPM JPM where coverage bankers do notany do M&A work) Some banks (i.e. Sachs Goldman bake M&A intotheir coverage groups vs. and equity issuances ECM (help / fromDCM / other product groups) Bulge Brackets may also tap into balance sheet to finance throughdebt tactics/negotiations Provide advice valuation,on transaction structures and deal Will either “sellbe onside” working or “” M&A ○ ○ help them sell itorfinance it Buy Side Mandate: Client wants to buyacompany, and the bankers Mandate: Client wants to sell their company and make money 20 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Are you confused yet?! confused Are you ● ● ● ● Financial Institutions Group (Coverage Group) Financial Sponsors (Coverage Group) Debt Capital Markets “DCM” (Product Group) Leveraged Finance “LevFin” (Product Group) ○ ○ ○ ○ and and sometimes “FinTech” companies commercial banks, companies, asset management firms, Industry that groupwith works “financial institutions”such as help with their LBOs, and work with their portfoliocompanies Industry that groupwith works private equity to pitch firms new ideas, Markets based that group focuses oninvestment grade debt highyield Focus onbonds and leveraged loans 21 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N What does an Investment Banking analyst do? analyst Banking an Investment What does ● ● ~60 to 100+ hour work weeks ~60weeks to100+work (variable hour by Bank / Industry / Group Culture) workstreams 4 major ○ ○ ○ ○ & Analysis (Excel)Analysis & Modeling Financial (Powerpoint)Decks Pitch Diligence Due Research ■ ■ ■ ■ Great technical experience once you gain trust as an intern / analyst / intern an as trust gain you once experiencetechnical Great decks creating spent time will be your of portion Large Acquisition a in sellers and buyer between communications ManageEx. Reports Equity Research , Terminal, Bloomberg 22 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Examples of Public Side of Investment Banks Investment Side of of Public Examples ● ● ● Research Securities / Do notfeel IB is the optiononly ○ ○ ○ ○ they cover. reports the general investingpublic. They communicate via formally Give reports salesforce to firm’s/ traders, institutionalinvestors and order to provide insightfulinvestment ideas Equity research analysts closely analyze smallin groupsof etc. Clients: Asset managers, funds, banks, , corporations, asset classes helping them raise money, invest, and transfer risk across different Provide clients leading market insight,risk management and execution, that place "Buy," "Sell," or "Hold" ratingsthe on companies 24 B ANKING A T M ICHIGAN research research Website B A N K I N G A T M I C H I G A N Why start a career in Investment Banking? Why a careerinInvestment start ● ● ● industries) Or maybe you haveno idea (broad exposure that translates to other Maybe you want to pursue a... You need to findthe reason right for ○ ○ ○ Career Career in… Long Long ■ ■ ■ ■ ■ Technology / Startups (Google, Uber, Slack) Uber, (Google,Startups / Technology Sports) Salesforce, Disney, (Microsoft, Finance Corporate Sigma) Two Bridgewater,(Citadel, Fund Hedge Sequoia) Partners,Capital (InsightVentureVenture ASP) GTCR,KKR, (TPG,Credit Equity/Private Private - - term career career term finance, in but not necessarily investment banking career term investmentin banking 25 you B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N BREAKING INTO INVESTMENT BANKING 26 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Four Phases ofRecruitment Four ● ● ● ● Interviews this) Preparation (Winter Break sophomore year is a good timeto start at looking Networking Research ○ ○ ○ ○ ○ Prepare Prepare behavioral for questions regarding experiences, leadership, etc Review and master BIWS and other technical interview guides you Opportunity to learn aboutyou forthe and firm them toget forto know Have conversations with bankers that firms from are recruiting and firms, the transactionstypes of facilitatefirms Understand what investment banking is,cultural differences between ■ Follow up / cold email bankers after initial introduction at corporate presentation 27 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Due to Due to changing the environment, this is very unpredictablerapidly and evolving General Timeline ● ● ● Fall of Junior Year Junior Fall of Summer January throughsophomore year April of ○ ○ ○ ○ ○ On may Firmscontinue recruitment Interviews begin latter the ofsummer half(June Some may firmsbegin on On - - campus campus interviews throughCDO campus presentations networking sessions& - campus campus interviews as early as March 28 B ANKING - August) A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Due to Due to changing the environment, this is very unpredictablerapidly and evolving Early AccessProgramsTimeline ● ● technicals technicals and instead so willmore weight givetoyour behaviorals Due to the early nature, willsome firmsnot expect you tobe fully versed in January throughsophomore year April of ○ ○ ○ ○ Superdays Superdays can February range from to April Some may firmsbegin on On semester applications*Note: some program open theduring tailend first of - campus campus presentations networking sessions& - campus campus interviews as early as February 29 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N Info Sessions / Networking Events /Networking Info Sessions ● ● Things toThings keep mind:in These events are what you make of them ○ ○ ○ ○ ○ ○ ○ Do ask “businessfor cards” and send followup emails engaged ups or others questionsDo ask to yourfollow which showsyou’re Do ask questions that showyou’ve put thoughtintothem Do be yourself Don’t the hog spotlight― it’s very noticable and typically negative Don’t feel a need to trytoohard people and its culture They are intended to give an youopportunity to learn about itsa firm, ■ These These will later be used as an entry point for networking calls 30 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N WRAPPING UP 31 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N General Advice ● ● Sophomores Freshmen ○ ○ ○ ○ ○ ○ Tailor your resume, resume, Tailor your story, and general preparation interviews for campus Begin tonetwork/have conversations with bankers that came on presentations If banks are to campus coming to recruit, attend their corporate Get involvedcampus on updates Explore your interest in finance, signup to receive news /industry year first Enjoy on your campus and do not stress about recruitment ■ ■ “Active” “Active” vs. “passive” involvement in organizations Balance social and professional / career focused clubs and organizations 32 B ANKING A T M ICHIGAN Website B A N K I N G A T M I C H I G A N This This page is intentionally left blank BANKING AT MICHIGAN 35 B ANKING A T M ICHIGAN Website