1.

IBD / ECM - ECM = Chinese Wall Liaison b/w industry group and S/T desk Liaison b/w markets and IBD

IBD valuation / model

2. HF 3. Private Equity 4. Leveraged Finance - Funding a company with more debt than would be considered normal for that company/industry - Usually use LF to achieve a temp. objective: o MAKE ACQUISITION o Buy-Out o Repurchase shares o Fund one-time dividend
Structure and execute leveraged debt financings for corporate and private equity clients and then seek to source investors for those debt financings. So let s say that a chemicals company is looking to acquire another company, and they want to explore financing options. Ideally, they are an existing client and we have a fairly regular dialogue in this scenario, we would present different alternatives to them, focusing on different types of debt they might raise bank debt, high-yield debt, etc. and then show how each alternative would impact their existing capital structure and operations. If they ultimately decide to actually go through with the deal and raise debt, we would market the offering to debt investors and help them raise the capital. It s similar to the IPO process, but deals can be done faster as leveraged debt offerings are typically initially sold to large institutional investors, known as qualified institutional buyers.

5. Syndicate - Halfway b/w sales and ECM - Talk to sales who pitch equity offerings //Talk to Traders //Talk to bankers 6. ECM (=Structuring & Origination) - Syndication / Private Placement / Equity Origination / Convertible Offerings Equity Origination o Update slides with market data (for pitches) o Create case studies on recent equity offerings o Draft up selling pts for equity issues (=shares) about to launch o Make ownership diagrams (show how composition of institutional investors in stocks changed over time) Convertible Team

o Work with derivatives // produce deriavative structures for client o Develop valuations of convertibles

Investment Banking

Advising clients on raising capital

Capital Market Product Knowledge - Potential pricing for the product - Provide market updates - Capital raising process about the prouct - Advise IBD on financing alternatives (diff. products) o E.g. Company doing acquisition need to finance the acquisition (loan/bond/equity/convert) need ppl specialize in the products o IBD (industry) need to work with DCM to structure appropriate bond package sales guys find investors traders manage liquidity on 2nd market IBD Industry Knowledge - Pitch products to companies - Know needs of companies

IBD / ECM in IPO process

- Source the deal (sector): Find client. Convince client that an IPO (by your bank) is a good idea. Involves pitchbooks, golf, and booze. - Take the deal to committee (sector): Make sure your bank is willing to take the risk (underwriting is risky). - Negotiate fees (sector): Set an underwriting/bookrunning fee (~7%). Set the "economics" (the fraction of fees paid to each bank on the deal), haggle over how expenses will be shared, and set provisions such as the Green Shoe (an over-allotment option that helps the underwriter to stabilize the stock price following the IPO). - Set a target valuation and range (sector): Come up with a valuation using dcf, benchmarking, and public peers. The client wants a high range, the bank wants a low range. - Refine roadshow presentation (sector and ECM): Help management put forth the best possible pitch to institutional investors. Involves re-tooling powerpoint presentations and coaching management.

- Create prospectus (sector and lawyers): Write up a huge document about the business, its management, its market, the risks involved, and a million other things. - Due diligence (sector and lawyers): Make sure the company is legit. Make sure those "factories in Taiwan" actually exist. - Create internal offering memoranda (sector or ECM): Turn the information in the prospectus (if there's extra, don't let the SEC find out) into the banking equivalent of Cliff Notes for the sales/salestraders in S&T so that they can stabilize the offering when it finally hits the market (days/weeks later). - Roadshow (sector and ECM): Fly around for two weeks with the client, making the same presentation 3 times per day to various institutional investors. Sector bankers prep the client for tough questions and occasionally answer the really ridiculous ones. Sector bankers schmooze the investors and introduce the client. ECM (someone at the VP+ level) provides frequent market updates. ECM "builds the book" -- they take orders from the investors. - Pricing (ECM): The team in syndicate (a cap markets function) arrives at a final price for the IPO shares based on the order book.

http://www.mergersandinquisitions.com/equity-capital-markets/

DCM Issue debt for clients (diff. grades, e.g. investment-grade //high-yield) sales sell to investors o High-yield debt riskier companies / LBO / dividend recaps o Customers ask DCM want to raise financing to do X what
Customer: We want to raise financing to do X what type of debt do you recommend, what terms (interest rate, term to maturity, covenants, etc.) could we get, and will investors buy it? Then we would help them issue the debt and get the best terms possible, and the sales force would sell it to investors.

Drafting term sheets/ Sales force memos (SFM for sales when pitching) o E.g. sales force need to get update on a certain debt issuance to pitch to investors DCM fill them with detail

Come to us via Sales to ask more about the borrower (bc no time to do due diligence themselves) Construct case studies of recent debt transaction
updating credentials and conducting post-deal analysis for your clients. Bank talk to sector peers (e.g. chem companies) simply because it led the most recent transaction for a company in that sector.

We ll also monitor where the bonds are being quoted atand in discussion with syndication, each client will get proposed pricing for a variety of termsto maturity each week.

You could still find yourself doing roadshows and doing everything else associated with IPOs as well the difference is that many borrowers issue frequently, you don t need to do as much work educating investors. But if it s a company that hasn t issued debt in some time or if they ve just completed an acquisition, we have to spend time re-educating investors.

bought deal, the bank acts as a principal and buys the debt first before reselling it to investors, thereby taking on much of the risk It depends on the market in bad times, we might spend 75% of our time pitching because very few deals are happening. When the economy is in better shape, it s more like a 50/50 split between pitching and deal execution. Keep in mind that when there s growth, clients also ask for more pitches.

There s more work involved when a client wants a pitch for a one-time event like anacquisition or capital restructuring there, we do a lot more custom work and must work with bankers to come up with suggested financing plans.

investment bankers maintain relationships with the CEO and Board of Directors, whereas DCM covers theTreasurer to CFO of the company.

(treasury day-to-day funding at companies //CEO corporate strategy)

debt issuance, the industry analyst would provide the industry / market analysisfor the sales force memo and we would focus on the quantitative /credit work. DCM handles more of the credit analysis and answers questions such as, How much debt can they raise, and with what terms? What will the cost of the debt

be, and are there any ratings agency concerns? Will the market buy into this, and should we be worried about the covenants?

Leveraged Finance vs. DCM LF deal with high-yield debt (riskier) DCM mostly investment grade debt