8/7/2019 25-city_guide

1/2

TheGateway

guide tothe City

gatewaythe Career Gateways Limited. All rights reserved MMVIIITHIS DOCUMENT MAY NOT BE REPRODUCED WITHOUT PERMISSION

Strategy

Process

Consulting

Technology

Outsourcing

Investment banking

(corporate fnance)

Corporateadvisory

(sectorcoverage)

Sectore.g. consumer

Mergers andacquisitions

acquisitions,

divestitures,

restructuring,

spin-outsSectore.g. technology,

media, telecom-

munications

Equity

initial public

oerings,

ollow-on oerings

Sectore.g. healthcare

Sector

e.g. industrials

Debt

loans and bonds,leveraged fnance,

securitisation

Sectore.g. fnancial

institutions

group

Corporate

broking

Secondary markets

EquityFixed incomecurrency andcommodities

Sales

Trading

Structuring

Research

Structured

products(derivative

solutions)

Merchant banking(principal nance)

Proprietary trading

Middle ofcerisk, compliance, product control

Back ofceoperations and technology

Retail banks

Retailfnanceservices

Mutual undslong only

Hedge undsrelative value

event driven

directional

Alternativeinvestment

Private equityLeveraged buyout

mid-market growth

venture capital

Companies

Sectore.g. consumer

Sectore.g. TMT

Sectore.g. healthcare

Sectore.g. industrials

Sectore.g. banking

Accountancyaudit, tax

Lawcorporate, litigation

Other advisoryrecruitment, PR

Sell sideInvestment bank (wholesale fnancial services)

Corporate +

consulting

Buy sideSources o fnance/buyers o securities

What is the City?

The City used to reer to the mer-chant banks, stock brokers and insur-ance companies that had their head-quarters in the so-called square mile

roughly equivalent to the old walledcity o London.

Now the City means the plethora ofnancial institutions that have spreadthemselves out across London romMayair in the West End to CanaryWhar in the east.

And it does not just reer to invest-ment banks, but also to the asset man-agers, hedge unds, private equityhouses, accountants, lawyers, PR peo-ple, headhunters and other brokers andadvisers who all work together to pro-vide the great uel o the world economy fnance.

The diagram on the right explains

how this intricate web o organisationswork together the role they each playand how they make money. Each oneoers a career option or you as an in-tern or as a graduate hire.

It will require specialist knowledgeto get ahead o the masses who will in-terview with them or an internship or aull-time position. Thereore it is never

8/7/2019 25-city_guide

2/2

too early to amiliarise yoursel with their re-spective roles in the economy so you can beready when the time comes to apply.

Corporates

Corporates means companies that actual-ly make stu or sell services to customers. Thelargest companies in the UK include HSBC,BP, Shell, Vodaone and GlaxoSmithKline.

To make their product or sell their servicethey organise themselves into a host o sepa-rate but inter-connected departments, suchas research and development, procurement,manuacturing, sales, marketing, logistics,fnance, HR, etc.

To expand, they can grow organically,which oten requires expansion capital, ortake over rivals, customer companies or sup-plier companies, which requires acquisitionfnance.

Either way, companies need fnancial capi-tal and associated advice and hence they turnto the other players in the City or help.

Accountancy

To support any transaction, as well as tosimply comply with the law, companies mustprepare accounts either reporting historical-ly or orecasting into the uture. Usually theseaccounts must be audited and warranted asaccurate. Accounting frms like Pricewater-houseCoopers, Ernst & Young, KPMG andDeloitte provide such services.

A huge cost and consideration or compa-nies is tax and so the accountancy frms willalso help companies minimise (legally) the taxthey pay.

Like their legal brethren, accountancy frmswill support their clients on a continuous basisas accurate accounting and budgeting under-

pins everything a business does.

Law

In strict terms, a law frm is a type o consul-tancy in that it advises companies about legalissues. It does not produce a product per se itsells its time and advice.

Whereas an investment bank will advise acompany on the fnancing aspects o a transac-tion, a law frm will advise on its legal aspects,ensuring it complies with legislation, the Citycode and the Stock Exchange rules. And ithings ever turn nasty, a law frm will providean attack with litigation or deend against it.

They support their clients on an on-goingbasis with advice on every aspect o their rela-tionships with customers, suppliers, investors,fnanciers and sta.

In the City, the legal world is dominated bythe so-called Magic Circle frms Linklaters,Cliord Chance, Allen & Overy, Freshfeldsand Slaughter & May.

Consultancies

The business badge o consultancy couldmean anything rom a one-man band to themultinational Accenture. The term reers toany business that earns money by advisinganother one.

A consultancy makes its money by chargingout its time and expert advice.

The big consultancies like KPMG, Ernst& Young, PricewaterhouseCoopers, Deloitte

and Accenture provide services across everyindustrial sector and every commercial disci-pline. The elite consultancies like McKinsey,Boston Consulting Group and Bain confnethemselves to strategy.

Some consultancies specialise in providingadvice in a defned sphere, such as inormationtechnology (e.g. IBM) or sector, such as oil andgas (e.g. Wood Mackenzie).

Investment banks

The term investment banking used to reerto institutions that acted purely in an advisory,intermediary or underwriting capacity not

investing or trading their own capital, unlikemerchant banks who did.

Now investment banking is an umbrellaterm that reers to the host o advisory, whole-sale money market, trading, research, assetmanagement, stock lending, custodial andother services that are provided by the super-market-size giants like Citigroup, JP Morgan,Deutsche Bank, UBS, Credit Suisse, Morgan

Stanley and Goldman Sachs.

Asset managers

Conventional asset managers look ater thewealth capital o companies, pension unds,insurance companies and individuals. Theytend to invest in stocks or bonds and staylong i.e. they buy securities, hold them orthe long term and hope they will go up. To at-tract money rom the public they advertise, butin return are heavily regulated.

Famous asset managers include Fidelity,Jupiter and New Star.

Hedge unds

Hedge unds are a special type o assetmanager who are not allowed to advertise ormoney to invest. Instead they attract pools oprivate capital. In return, they are largely un-regulated and can go short (i.e. sell stocksthey have borrowed in the hope that theirvalue alls), use leverage (i.e. invest borrowedmoney) and derivatives (utures and options)to add extra risk/reward or to hedge.

The names o hedge unds are less well-known. Ones to look out or are GLG, ThamesRiver Capital and Olivant.

Private equity

Like hedge unds, private equity unds sitoutside the boundaries o traditional fnance.Instead o buying minority positions in publiccompanies like conventional asset managers,private equity investors seek to buy out com-panies whole, taking them o the public stockmarket and back into private ownership.

Outside the scrutiny o the public market,the company can be subjected to changes

which might take longer to show results, orcan be fnanced in a dierent way, oten bydisplacing expensive equity fnance withcheaper debt fnance.

In the past ew years, private equity housessuch as KKR and Blackstone have hit theheadlines by taking over some huge compa-nies beore going public themselves, whichseems to us at The Gateway as a bit ironic.

gatewaythe Career Gateways Limited. All rights reserved MMVIIITHIS DOCUMENT MAY NOT BE REPRODUCED WITHOUT PERMISSION