VANDERBILT INVESTMENT VANDERBILT INVESTMENT BANKINGBANKINGMeeting 4: Researching Companies

Lender Clients

Exchange cash for security interest in the capital structure of the debtor

• Fixed Return• Levered Return

Debtor Clients

Invest cash in projects that produce a return

Pays fixed return to creditors; Owners receive residual profits

How an Investment Bank Operates

Corporate Finance

• Product Group• Industry Coverage• Strategic Advisory

Lending Bank

• “Balance Sheet”• Syndicated Finance• Deposits

Sales & Trading

• Fixed Income• Equities• Proprietary

Research

• Coverage• Economic• Strategic

Wealth Management

• Institutional• Retail• “Distribution”

Investment Bank

Investment Bank Organization

Corporate Finance

• Product Group• Industry Coverage• Strategic Advisory

Lending Bank

• “Balance Sheet”• Syndicated Finance• Deposits

Sales & Trading

• Fixed Income• Equities• Proprietary

Research

• Coverage• Economic• Strategic

Wealth Management

• Institutional• Retail• “Distribution”

Investment Bank

Company Research

Your objectives to identify and target investment banks that offer the

position you are seeking to weave into your story the reasons why you are the

right person for a particular company to speak intelligently on the strengths, recent deals, etc.

of a target bank to eventually speak intelligently on the activities of a

target group within the firm to identify topics for on going dialogues with investment

bankers

Company Research

Your tools Owen’s Library Hoovers.com

up-to-date news Deal announcements corporate filings

Others Vault.com Bloomberg Terminal WetFeet.com Yahoo Finance Wall Street Journal New York Times Deal Book

How to Begin

Begin researching target companies Organization design

balance sheet? functional structure product/industry groups

Clients Size Type of deals

Strengths / Weaknesses Geographic presence Top groups Lending?

Identifying recent alumni Culture

Structure

Universal vs. Non-Universal• Combines Commercial & I-Banking

• Extended Balance Sheet

• Allows bank to take on more risk

• Greater economic efficiency

• Examples: Citigroup, JP Morgan, Banc of America

• More conflicts of interest• Gives monopoly power to banks• Examples: Goldman Sachs, Merrill Lynch, Morgan Stanley

Structure (cont.)

Full-service vs.

Boutique• Concentrated in M&A, Corporate Finance, or Restructuring• Small deal teams (2-4 people)• Goes for niche markets• More responsibility• Less-comprehensive training (learn on the job)• Examples: Lazard, Evercore, Greenhill

• Combines Corporate Finance, Sales & Trading, Research, and many times Asset Management under one roof

• Large deal teams (5+)

• Less responsibility

• More in depth training

• Examples: Goldman Sachs, UBS Investment Bank, JP Morgan

Product/Industry Groups

Organized by industry groups, product groups, or both? Recent deals (value, multiples, background) Target groups

where is the action? what industries do you like? generalist program

Clients

Large, Middle, or Small-market clients? Large: $500 Million+ Deals

Fortune 500, Governments

Middle: $50-$500 Million Deals Companies in Russell 2000 index

Small: $10-$50 Million Deals Mom & Pops Stores

Culture

Varies slightly from firm to firm Larger banks will have different ‘cliques’ Research by networking, going to info

sessions, and doing the dinners/open bars

Ongoing Activities

Continue researching target companies new developments, new deals

Look for opportunities for continued dialogues with Bankers

Rankings 1st Tier (Bulge Bracket)

1. Goldman Sachs2. Morgan Stanley3. Citigroup4. JP Morgan5. Merrill Lynch

2nd Tier1. Lehman Brothers2. UBS Investment Bank3. Credit Suisse First Boston4. Deutsche Bank5. Banc of America

3rd Tier1. Bear Stearns2. Jeffries & Co.3. Wachovia Securities4. SG Cowen5. CIBC World Markets

Q&A/DISCUSSION