Investment Banking Recruiting 101

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Investment Banking Recruiting 101UCIB

December 3, 2012



How does the process work?

Some background on the recruiting process… Companies annually review applicants, internship and full-time offer and

acceptance rates per school, as well as retention rates for those that accept full-time offers

This analysis across schools determines the ratios of offers extended the followingyear

Why do most firms recruit juniors over freshmen/sophomores? Companies determine their analyst headcount needs one year ahead Sophomores must differentiate themselves with a “unique story”

Core schools versus non-core schools Core school efforts mean that companies recruit and interview on-campus, have a

set number of offers allocated (never ask a recruiter how many offers they cangive) and must abide by school offer deadlines

Non-Core school efforts mean that companies do not recruit or interview on-campus, but may post jobs through CCC and may interview in-house

Increases in applicants, offer and acceptance rates can vault a non-core school tocore school status over time



The IB Recruiting Process: Timeline

On campus

presentations

Begin early fallthrough early January

Informational

interviews andtargeted events

Begin late fall through

December (include in-house and diversityevents)

Resumes and

applicationprocess

Begin applyingthrough CCC now!

Most firms will be on-campus starting

January 22nd!

Interviews

OCR begins January

22nd and the bulk of

interviews willcontinue through

February



The IB Recruiting Process: Four Key Steps

On campus

presentations

Informational

interviews

and targeted

events

Resumes and

application

process

Interviews



How can you best prepare yourself for theprocess?

For companies of interest, attend all on-campus information sessions Don’t forget to sign in! Employers track student interest by their attendance at events

Collect the one-pager of contact information and NETWORK Focus on your actual areas of interest versus blind networking Do your research! Check out the career website ahead of time and talk to those

students that interned at the firms you are interested in Get to know UChicago recruiting team members – they make interview decisions

Utilize recruiters for resume tips, summer internship details and businesscontact information

Keep in touch! One-pagers are distributed for you to keep in contact with the team When following up with a contact you met at an event, include your resume Most team members that attend events are UChicago alums and want to keep in

touch Focus on Analyst and Associate level team members




On campus

presentations

Informational

interviews

and targeted

events

Resumes and

application

process

Interviews



Informational Interviews and othernetworking events

Don’t ask too few people…but don’t ask too many Tailor your conversations to those in areas where you have an actual

interest

Start with UChicago team members (those that attended the informationsession are a good start)

Be prepared! Know background on each company; its strengths and challenges

Do your best to learn and understand finance terms (see appendix)

Have questions ready While informal, the interviewer expects candidates to be prepared with excellent

questions and carry the conversation

Know your story… Why finance?

What area at the company interests you and why?

Why are you a good fit?



Avoid the Pitfalls…Be Proactive, Not Overbearing

Every point of contact leaves an impression Don’t forget that emails, phone calls and in-person

conversations are all methods to collect feedback Recruiting maintains feedback on all candidates

The more events you attend and the more positive, robust

feedback you gain, the more likely you will secure aninterview The goal is for the team to know who is on their interview

shortlist before applications are even received Secure one more contact…

ONLY if you have a successful phone conversation Now is the chance to refine your area of interest




On campus

presentations

Informational

interviews

and targeted

events

Resumes and

application

process

Interviews



Resume guidelines

Your resume is a written representation of yourself Remember everything on your resume is fair game during an interview. Do not write

anything about which you cannot speak in detail What’s important:

If you have a preferred name, try not to list two names and list only your preference List one address if you are applying to one region, two addresses if you are applying to a non-

traditional area where you are originally from (not NYC or Chicago)

List only ONE phone number GPA (3.0/3.2 or higher for juniors) (3.5 or higher for sophomores)

Emphasize double major (if applicable) UCIB Involvement

Indicate that you are involved in a selective program

List relevant coursework at Booth

Add “Skills and Interests” section and list any language fluency (do not list English as a fluency,unless applying internationally)

Emphasize commitment and leadership (in job/internship experience and RSO involvement)

Reviewers will look for quality over quantity; keep your resume to one page Let your resume show the reader “why” you want the internship




On campus

presentations

Informational

interviews

and targeted

events

Resumes and

application

process

Interviews



Overview of an Interview

You should focus on Researching the industry The role of an analyst The business of the company- if they are a public company, you

may want to consult the annual report or 10K

The firm’s culture. You can gather this information from eachcompany’s career webpage

Remember the interviewer is looking for enthusiasm for theindustry and for the specific firm

Understanding what the firm does (particularly with the group

you’re interviewing with), its competitors and how itdistinguishes itself is imperative for a successful interview. Itallows you to ask more sophisticated questions.



Preparing for the Interview

Informational interviews throughout the recruiting process are greatopportunities to learn more about the company and to perfect your interviewskills before the “real thing” Utilize the one-pagers during the recruiting information sessions to schedule

phone conversations Schedule these calls on your own. It is not the recruiter’s responsibility to arrange

calls for you

Perfect your “elevator pitch” One of the first questions an interviewer asks is, “Tell me about yourself ”

Practice behavioral and technical questions, as well as brainteasers Research the “STAR” (Situation, Task, Action, Result) behavioral method and

practice answering questions as they relate to your resume and experiences

TheVau lt Ca reer Guide for Investm ent ank ing

provides a wealth ofknowledge on technical questions and brainteasers

Day of… Dress professionally (suits for men and women), bring extra copies of your

resume, a pen and pad of paper and if needed, a bottle of water and tissues



The first 30 seconds…

The first 30 seconds are critical for the first impression. Thesefirst few seconds will dictate the rest of your interviewexperience Develop a firm handshake and remember the interviewer’s name Make strong eye contact

Wear a confident smile that conveys your interest and excitement Let the interviewer take the lead

They will indicate whether they want to make small talkbefore/after the interview

Generally, wait for the interviewer to ask you to be seated and keep

your jacket on, even if the interviewer takes his/her jacket off Most importantly, RELAX and be natural – interviewers can

sense nervousness and tension



The next 25 minutes…

The interviewer will ask questions – speak calmly,professionally and intelligently and enunciate!

Remember the interviewer is asking questions to check off alist of attributes you should meet, including, technical ability,attitude, commitment, initiative, efficiency, attention to detail,

communication, teamwork, ethics and integrity Keep this in mind as you are preparing for your interviews. Do

your practice interview answers present you in a positive light? Doyou fulfill the attributes the interviewer is looking for?

If you do not know the answer to a question, admit it – you

are not expected to know everything Interviewers are impressed to see students follow up with the

correct answer to a question they were unable to answer duringtheir interview



Questions to expect Tell me about yourself (walk me through your resume)

Why did you choose your school/your major? Why do you want to be in this role/firm/industry? (Most important question you will be asked)

Are you interested in a specific group? (i.e.: product vs. industry)

Tell me about a time you were a leader/worked on a team?

What do you consider your greatest weakness?

If I asked your friends about you what would they say?

What other banks/firms are you interviewing with?

Depending on your year and experience, you will be asked a few finance-related questions Tell me three macro events that you’ve been following.

Do you follow a stock/industry? If so, why and how is it currently doing?

What are the three financial statements and how do they work together?

Why would a company issue debt to raise money? What about equity?

How do you value a company?

If interest rates go down, what happens to bond prices?

For sophomores: What sets you apart from your peers?



The last 5 minutes The interviewer has now had enough time to discern you as a candidate

and will now ask you for questions – if you are a borderline candidate,this is your final chance to push your way above the competition

Ensure you prepare good questions for the interviewer: Tying questions back to your own research shows your preparation

Ask questions about company culture (use each companies career websitefor further perspective); helps discern your own personal cultural fit

Use current events in the industry or the company to frame your questions(try not to skew too negative, particularly when asking about thecompany’s current events)

Remember, let the interviewer take the lead. Never end the interviewearly or look at your watch

Before you leave, reiterate your interest in the role and the firm. Providethe interviewer with your “why” answer again

Shake hands, thank the interviewer, ask for their card or email addressand ensure to send a thank you note



What to expect next Some background…

You are typically interviewing against other candidates for the same role While not all interviewers will meet all of the candidates interviewing on a

particular day, they will typically meet an array of students

Immediately following the interview… Interviewers will gather with the recruiter to review each candidate interviewed They will provide a “Yes”, “No”, or “Maybe” rating

“Maybe” ratings will sometimes be put on “Hold” until other candidates are reviewed Feedback is collected and offer decisions are reviewed by recruiting team Offers are typically extended within a week of an interview

Remember to follow-up with a thank-you to your interviewer Make each thank you unique, as they are sometimes compared by the interviewers

during the debrief

Follow-up with the recruiter if you don’t hear back in the specified timeframe



What can you do now to prepare? Begin researching companies of interest and APPLY

Most Investment Banks will post their internship positions in the next week or two Use their career websites to find more about their respective firm cultures and

internship opportunities and deadlines If you find positions posted on a company website, make sure you apply. Many companies

(even if they recruit on-campus) will require that you apply in both places

Check CCC to determine if/when these companies will be on-campus

Use your network Utilize the one-pagers provided to you at information sessions to reach out Check LinkedIn for additional contacts at your companies of interest

Practice your interview answers Research the STAR behavioral method and research technical questions Practice, practice, practice- in front of the mirror, with a friend, or set up time with

Career Advising, especially Booth’s interviewers, who previously worked in IB Read the Wall Street Journal or Financial Times everyday!

Barron’s is also a great publication that provides a concise review of business related storiesfrom the week prior and a look ahead at the upcoming week



Appendix: IB key terms and definitions Accretion/Dilution

Analysis that determines the change in a company's projected EPS due to a potential M&A or capital markets transaction. Analysis can

be completed “Bottoms-up” by adjusting EPS estimates or “Top-down” by projecting full company statements. A transaction is“Accretive” when there is a positive change in EPS and “Dilutive” when there is a negative change.

Accrued Interest The interest earned on a loan or note between tow interest payment dates.

Acquisition The act of one corporation acquiring control of another corporation

Agent The bank responsible for administering a project financing

Arranger

A bank or other financial institution responsible for originating and syndication a loan transaction. The arranger typically has a seniorrole, is often the agent and usually participates in the transaction at the most senior level. (It holds the largest share of the loan).

Bank Syndicate A group of banks that have banded together to underwrite and sell a specific issues of securities

Best Efforts Banks selling an entire new security issue by a certain date. They agree to make their best effort to sell an issue to the public. Instead of

buying and reselling an issue (called an underwrite), the banks leave the risk with the issuer by maintaining an option to buy and theauthority to sell.

Book runner The bank that extends invitations for syndication and is responsible for determining the composition of the lending group and the final

hold positions Bridge Financing

Interim or temporary financing

Buy-side Investor end of capital markets transaction M&A process when an Investment Bank is working with a potential buyer



Appendix (cont): IB key terms and definitions Capital

Money put into a business by its shareholders

Capital Asset Pricing Model (CAPM) Economic model for valuing stocks by relating risk and expected return. Based on idea that investors demand additional expected return

(called the risk premium) if asked to accept additional risk

Capital Expenditures Money spent to acquire or upgrade physical assets such as buildings or machinery

Capital gain The amount by which an asset’s selling price exceeds its initial purchase price. A realized capital gain is an investment that has been sold

for a profit. An unrealized capital gain is an investment that hasn’t yet been sold.

Capital Markets

The market on which financial instruments (as opposed to commodities) are bought and sold. Comps or Comparables

Analysis that uses ratios to compare company trading performance (trading comps) or previous M&A and capital market transactions(transaction comps). Often used as a part of valuation analysis.

Cost of Capital The opportunity cost of an investment. The rate of return that a company would otherwise be able to earn at the same risk level as the

investment that has been selected. For example, when an investor purchases stock in a company, he/she expects to see a return on thatinvestment. Since the individual expects to get back more than his/her initial investment, the cost of capital is equal to this return thatthe investor receives, or the money that the company misses out on by selling its stock.

Covenant

An agreement by a borrower to undertake (a positive covenant) or not undertake (a negative covenant) a specific action. Breaching acovenant is considered an event of default.

Discounted Cash Flow (DCF) A method of valuing companies by forecasting the cash flows expected from a company in the future and discounting them back to

today



Appendix (cont): IB key terms and definitions Debt Capital Markets (DCM)

The area of an investment bank responsible for the issuance and pricing of bonds and other debt securities

Markets where capital funds (debt) are traded Divestiture

When a company sells off a subsidiary or assets of the business to a buyer which acquires the subsidiary or assets. This differs from aspin-off arrangement where a company establishes a subsidiary as a new and separate business and distributes shares in the newcompany to its shareholders

Discount Rate The interest rate used in discounting future cash flows. Used during CAPM, it’s intended to approximate the level of risk to cash flows.

Earnings per share (EPS) Total earnings divided by the number of shares outstanding

EBITDA Earnings before interest, taxes, depreciation and amortization. Measure of a company’s operating cash flow based on data from the

income statement

Enterprise Value Measure of what the market believes a company’s ongoing operations are worth Company’s market cap – (cash + cash equivalents + preferred stock + debt) = EV You might use this as a potential acquirer in a takeover attempt

Form 10K or Annual Report Sent to public company or mutual fund’s shareholders at the end of each fiscal year and reports financial result for the year.

Goodwill Intangible asset that provides a competitive advantage, such as brand, reputation, or high employee morale. In an acquisition, goodwill

appears on the balance sheet of the acquirer in the amount by which the purchase price exceeds the net tangible assets of the acquiredcompany.

IB Risk Group Manages exposure to clients, while protecting the firm’s balance sheet Minimizes unexpected results by understanding and managing risk effectively



Appendix (cont): IB key terms and definitions Information Memorandum

Document that describes a potential M&A or capital markets transaction including project description and financing details that is used

during the marketing and due diligence phase of a transaction Initial Public Offering (IPO)

Company’s first issuance of shares to the market

Investment Bank Intermediaries between providers and users of capital Providers of capital: mutual funds, 401k funds, VC, private equity, corporations, governments, individuals Users of capital: corporations (public and private), governments, public sector organizations, multilateral institutions (World Bank, IMF)

Investment Banking Provides strategic advice and capital raising to a wide range of clients

Product Groups: M&A, Debt Capital Markets, Equity Capital Markets Industry Groups: Real Estate, Technology/Media/Telecom, Diversified Industries, Financial Sponsors, Financial Institutions,

Consumer/Retail, Natural Resources, Healthcare

League tables Tables that rank investment banks based on underwriting volume in numerous categories, such as stocks, bonds, high yield debt, etc.

High rankings in league tables are key sell ing points used by investment banks when trying to land a client engagement.

Leveraged Buy-out (LBO) Using debt in the form of junk bonds or bank loans to take over a company

Mergers & Acquisitions (M&A) Department of the investment bank providing transaction advice and execution to large corporates

Market capitalization The values of shares in a public company at a point in time. Calculated by the number of shares issued multiplied by their current

market price

Pitchbook The book of exhibits, graphs and initial recommendations presented by bankers to a prospective client when trying got land an

engagement or mandate



Appendix (cont): IB key terms and definitions Price/Earnings Ratio

Indicates the investor confidence. Calculated by the current share price divided by the most recent figure for the earnings per share. The

higher the figure, the more confident the investor. Prospectus

A report issued by a company (filed with and approved by the SEC) that wishes to sell securities to investors. Discloses the company’sfinancial position, business description and risk factors.

Research Group Make educated investing decisions in a company’s security for client-driven market transactions Provide independent analysis of market trends and opportunities Provide S&T with market insight to deliver to clients

Return on Equity

Ratio of a firm's profits to the value of its equity. Commonly used measure of how well an investment bank is doing, because itmeasures how efficiently and profitably the firm is using its capital

Rights issue Selling new shares to existing shareholders to raise capital

Roadshow Series of presentations to investors that a company undergoing an IPO hosts in the weeks preceding the offering. The company and its

investment bank will travel to major cities and present an overview of the IPO to analysts and mutual fund managers.

Sales & Trading Work with providers of capital Sales: Distribution of the firm’s products, direct contact and relationship manager to investor clients, sales coverage organized by

product, industry and region to deliver firm’s financial markets capabilities in a relevant manner Trading: execute transactions and manage risk for stock and derivative financial market positions, trade for client’s own account

Securities and Exchange Commission (SEC) US government agency that supervises the exchange of securities to protect investors against malpractice



Appendix (cont): IB key terms and definitions Sell-side

Issuing end of a capital markets transaction M&A process when an investment bank is working with a potential seller

Terminal value

Value of any item at the end of a specified time period. Includes, maturity value of a bond and the value of a fully depreciated asset.

Tombstone

Advertisements that appear in publications like the FT or WSJ announcing the issuance of a newsecurity. Ad is placed by the investment bank to publicize the completion of a major deal

Underwriting Function performed by investment banks when they help companies issue securities to investors.

Technically the investment bank buys the securities from the company and immediately resells thesecurities to investors for a slightly higher prices, making money on the spread

Weighted Average Cost of Capital (WACC)

Average representing the expected return on all of a company’s securities. Each source of capital isassigned a required rate of return and these rates off return are weighted in proportion to the shareeach source of capital contributes to the company’s capital structure. The resulting rate is what the

firm would use as a minimum for evaluation a capital project or investment. Working Capital

Current assets – current liabilities = WC

Measures how much in liquid assts a company has available to build its business

Documents

Investment Banking Recruiting 101