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SMU Finance Club Cox School of Business
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Club Purpose & Objectives
To inform and educate students about financial management To bridge the gap between theoretical topics learned in class and the reality of the financial world To introduce students to programs such as Alternative Assets, Boulevard Investment Group, Portfolio Practicum, and Spindletop Fund To serve as a gateway for admittance to desired programs To connect members with firms and guide internship placement To empower members to pursue their desired career path The purpose of the club is to meet the needs of the members. Therefore, we will be flexible in structure and direction, staying receptive to help individual members meet their goals. There’s a communication gap between the specialized programs and the general undergrad Cox curriculum.
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Semester at a Glance: Spring 2016
Bimonthly meetings on Wednesdays Monthly guest speakers from Investment Banking, Sales & Trading, Asset Management, Private Equity, Hedge Funds, Real Estate Monthly industry overview meeting Discussion of current events, trivia for prizes, career help Sunday evening newsletter Reception before exam week
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Feedback newsletter helpful or not? gmail group frequent use?
Finimize, other reading suggestions What would you like to see in meetings?
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Meeting 3: Investment Banking
Background Conceptual overview Groups Analyst role Banking as a career 6. AAMP 7. O&G primer 8. Q&A with Chris and Kim
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Investment Bank Capital Markets IBD Corporate finance S&T
Equity Research investment bankers traders and researchers
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Investment Banking Two core functions:
Raise capital: act as intermediary for entities that need capital (companies) and entities that supply capital (investors); the bank underwrites debt and equity offerings to fill this role Advisory: act as advisor to corporations performing M&A, restructuring, hostile takeover defense, among other strategic actions
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Glass Steagall Act (1933) Separated commercial banking from investment banking Investment banking: securities underwriting and corporate advisory Commercial banking: manage deposits (e.g. checking and savings accounts) from individuals (retail) and businesses (commercial) Repealed in 1999 during Clinton administration, leading to higher leverage and more risk-taking
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IBD Group Structure Analysts will be assigned to a specific group
Product: differentiated by transaction type; exposed to multiple industries, with a focus on execution Coverage: cover clients segmented by industry; exposed to multiple deal types, with a focus on client relationships and industry trends Note process of origination through execution myth: coverage groups are marketing, product groups actually doing the deal
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Product Groups M&A: buying, selling, consolidation of companies or assets Restructuring: advising distressed companies or their creditors Leveraged Finance: structure, execute high-yield debt financing Equity Capital Markets: structure, execute equity offerings Debt Capital Markets: structure, execute investment-grade debt financing M&A, LevFIn work similar to Private Equity Equity product offerings: IPOs, secondary offerings, futures, swaps, options
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Industry Groups Healthcare Financial Institutions Group (FIG) Energy
Tech, Media, and Telecom (TMT) Consumer and Retail (C&R) Real Estate Industrials Financial Sponsors Gaming and Lodging
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Group Hierarchy Analyst: 1-3 years Associate: 3-4 years
Vice President: 3-4 years Senior VP / Executive Director: 2-3 years Managing Director: produce deals or out Deals are done in small, lean teams of 4-6 bankers—one or two analysts, one associate, one VP, one MD Common for product and coverage groups to collaborate Work flows from the bottom up, received comments and approval up or out Analyst: you are human capital; firm expects a certain amount of work from you - Despite rigid hierarchy, your responsibilities don’t change suddenly; roles are not narrowly defined; change is gradual
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Analyst What does the job entail? long hours: 60-100+ hours a week
intensive, stimulating, fast-paced work lucrative compensation-> “street-level:” 85k base + signing + year-end Hours tend to be worse at independent advisory firms because more of hour glass structure
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Rationalization Why investment banking?
two-year analyst program considered a “boot camp” best general training possible in finance analyst will leave with attractive exit opportunities build a network for talented, smart, and driven peers
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Analyst: Day-to-Day
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Summer Analyst Recruiting
Phone interviews (1-3) First-round on campus interviews Superday Offer Begins as early as September
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A Career in Banking Investment banking is changing (see: global financial meltdown in 2008) and becoming more of a utility consequently, what a career in IB means is changing Dodd Frank Act (2010): costly compliance, higher capital requirements Pre-crisis vs. post-crisis IB career
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A Career in Banking: Pre-crisis
Old model undergraduate recruitment summer internship Analyst 2 years and leave Exit: MBA, buy-side, “into industry,” etc. Associate: MBA hires, A2A (not common) IB-PE relationship
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A Career in Banking: Post-crisis
New model Slowed markets (e.g. less IPOs) Banks becoming leaner, cutting staff Competition from Silicon Valley start-ups Analyst-to-Associate promotions more common 2-year IB stint becoming less important to buy side recruiting Banks taking better work-life initiatives Going forward PE firms develop own undergraduate recruiting and training Work-life balance improves
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Exit Opportunities Hedge Funds, Private Equity, VC Industry Start-ups
Graduate school Continue as Associate Anything else
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Breakdown of Investment Banks
Bulge Bracket: GS, MS, JPM, Barclays, CS, UBS, DB, Citi, BAML BS-driven Banks: Wells Fargo, HSBC, Societe Generale, Nomura Independent Advisories: Evercore, Lazard, Blackstone (PJT), Greenhill, Moelis, Rothschild Elite Boutiques: Centerview, Perella Weinburg, Allen & Co, Qatalyst Full-service MM: Jeffries, Holihan Lokey, Stifel, RBC, William Blair True Boutiques: regional with <100 employees
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Selected Reading Barbarians at the Gate – Borrough, Helyar
Young Money – Kevin Roose Monkey Business – John Rolfe Any from ‘Strategy, Lifestyle, Growth’ section
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Alternative Assets Management Program
Two courses Spring Junior year: investment banking Fall Senior year: hedge fund theory Resume book Strong alumni network see Spring 2016 FC Guide for details
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Oil & Gas Four segments Upstream Midstream Downstream
Oil Field Services
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Q&A
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