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Sponsors for Educational OpportunityInvestment Banking Overview SEO-U Webinar

Patrice Mitchell & Andrea M. ONealCo-Managers, Investment Banking Program1Hello-

My name is Patrice Mitchell and I co-manage the Investment Banking program with Andrea O-Neal. I would like to welcome all of you to the SEO-U Corporate Finance Webinar. The terms Investment Banking and corporate finance are relatively interchangeable on Wall Street. However, as some of my colleagues have alluded to in other webinars, SEO breaks its Investment Banking internship into three separate areas. Those areas are: S&T, Research and Corporate Finance. Todays webinar will focus on Corporate Finance and will cover:

The areas of Corporate Finance within an Investment BankRoles within Investment BankingAnalyst ResponsibilitiesAttributes of a Good analystBenefits of a position within Investment BankingDay in the LifeNext steps if youd like to pursue opportunities in Corporate Finance and Resources you can use to learn more

2The big ideaAfter you see this webinar you should know exactly what investment banking isYou should know why you want to do investment bankingYou should know why you are a good fit for investment bankingYou should know what you want to do as a SEO intern in investment bankingYou should know what resources you have to build industry knowledge and exposureYou should feel confidant going to an interview

23What is Investment Banking / Corporate Finance?Business of offering strategic and financial advisory services to corporate clientsUnderwriting - Raising capital for corporate clientsM&A - Assist in negotiating and structuring a merger or acquisition

3The Corporate finance department works to raise money for companies and other large organizations looking to expand or acquire new holdings. The two key functions people within Investment Banking provide are Underwriting and M&A.

Underwriting is the act of raising capital either through equity or debt for clientsBankers also assist in negotiating and structuring potential mergers & acquisitions4Capital MarketsInvestment Banking CoverageMergers & AcquisitionsThree areas of Corporate Finance

4Depending on the firm, there are either two or three basic areas encompassed under Corporate Finance umbrella. The three areas are Investment Banking Coverage, Mergers & Acquisitions and Capital Markets. At some firms, Coverage and M&A are not split, and the M&A specialists are engrained within their respective industry groups.

5Investment Banking CoverageThe coverage groups manage the relationship between the firm and its corporate clientsContinually generating new ideas presented in the form of pitchbooksIndustry Groups include:Technology, Media & Telecom (TMT)Consumer/HealthcareDiversified Industrials/TransportationNatural ResourcesFinancial Institutions (FIG)Real Estate, Lodging & GamingFinancial Sponsors

5The Investment Banking Coverage groups are the relationship managers between the investment bank and its clients. The coverage team fosters the relationship by generating new ideas and continuously meeting with clients, usually several times per year.

Industry groups include:

Technology, Media & TelecomFinancial Institutions

If you have a particular interest or special knowledge base, such as technology, you might want to consider a group such as TMT (Technology Media and Telecom).

Once the client decides it wants to do a deal, either to raise additional capital, or potentially assess possible strategic alternatives, the coverage team will bring in their product partners to assist in the deal process.6Capital MarketsEquity Capital MarketsRaises capital for companies by marketing and selling equity to retail and institutional investorsInitial Public Offering (IPO): the initial sale of stock by a private company to public investorsSecondary Offering: the sale of additional stock by a public company to the publicDebt Capital MarketsAddresses the capital needs of companies by tapping into the debt marketsAssesses clients assets and cash flows to structure liabilities to match (fixed vs. floating)Capital MarketsPublic & Private CompanyShares / BondsCashInstitutional & Retail Investors

6Whereas the coverage group's focus is on the client, Capital Markets focuses on the markets. In any capital raising, the coverage team will look to its product partners in Capital Markets to provide market insight to the client. Capital Markets is separated by asset class: debt & equity. Capital Markets will provide information about the current environment in the markets, the feasibility of the deal in question, comparable transactions and potential investor data. Capital Markets (cont.)Provides a very holistic and complete view of investment bankingOpportunity to see process from origination to execution and the end (aftermarket trading)Interact with every investment banking groupWork with Corporate Finance to secure the mandateSpeak with Research to understand the fundamentals of the company and offeringWork with Sales to set up meeting between company management and investorsDrive sales force to convert interest into actual demand / ordersAfter pricing, work with Traders to monitor trading7Sales & TradingResearchCorporate Finance

Why do I like capital markets? You get unrivaled exposure at such a young age to each and every group within investment banking. You work with your investment bankers to secure the mandate, you work with research to understand the fundamentals of the company, you work with sales to set up meeting and hopefully drive demand for the offering. You work with traders to monitor the performance of the offering in the aftermarket.

Because you interact with so many groups, teamwork is a huge part of capital markets. Qualities of capital markets professionals include intelligence, leadership, confidence and the ability to multi-task and perform under fire. As a summer analyst in capital markets, you may be the primary contact person for senior sales people and traders. As such, you have to exude confidence and people skills to perform under tense situations.

78Mergers & AcquisitionsWhy do companies acquire and merge with other companies?Source of growthSize, scale, productsRevenue synergiesCost synergiesTypes of M&A transactionsStrategic acquisitionsMergersLeveraged buyoutsHostile takeoversTakeover defenseJoint ventures

8If the client decides it would like to explore a possible acquisition, the bankers in IBC will look to its product partners in M&A. They tend to execute more than pitch, and because of this, they tend to work longer hours than the other bankers. They are also typically the modeling gurus at the firm given the complexity of some of the deals they work on.

Why do companies turn to M&A?M&A can provide a source of growth. Companies may have an excess amount of capital and want to deploy that capital to grow the business. Through M&A, companies expect to gain synergies with the combination of the two businesses.

Synergies come in two forms:

Revenue synergies are an additional amount of sales expected after a combination of two businesses. The boost in revenue typically is a result of a joint product portfolio that is both larger and a complement of one another. The revenue synergies could also be a result of access to new customers or entering a new channel to sell your product where you gain immediate credibility with your new association with an existing business.

Cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join. The savings in operating costs usually come in the form of laying off employees. Often this term is used in press releases to add a politically correct spin to bad news.

There are several types of M&A transactions.

Strategic acquisitions are the most common type of acquisition. These are acquisitions or where the acquiring company believe that there is general benefit between a combination of the two businesses.

Leveraged buyouts are acquisitions of a public or private company where the takeover is financed predominantly with debt and minimum equity investment. These companies are usually financial buyers as opposed to strategic buyers. Financial buyers are private equity firms or hedge funds whos focus is a financial return for their investors.

Hostile takeovers are attempted acquisition where management of the target company is opposed to the deal. Therefore, the bankers will attempt to take the deal directly to shareholders to bypass management and get the deal approved.9Questions?

Patrice Mitchellpmitchell@seo-usa.orgAndrea ONealaoneal@seo-usa.org

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