Investment Banking Overview Select Financial Services Segments

Investment Banking Overview

Select Financial Services Segments Investment Banking Hedge Funds a. b. c. d. e. Industry Coverage Product Group Capital Markets Sales & Trading Equity Research a. b. c. Client Pitching Valuation / Modeling Deal Execution a. M&A b. Leveraged Finance c. Equity & Debt Solutions a. b. c. Portfolio Credit Analysis Pricing Counterparty Risk Ratings P&L Reporting Mark to Market Cash Operations Settlements a. b. c. d. Front Office a. Middle Office b. c. d. e. f. g. h. Private Equity Venture Capital a. b. c. d. e. f. Growth Equity Large-Cap Fund Middle Market Control Equity Secondaries Co-Investing a. b. Control Equity Co-Investing Investment Analysis Portfolio Management Trading a. b. c. Deal Origination Valuation Investment Analysis Modeling Portfolio Management a. b. c. d. c. Value, Growth, Blend Long-only, Long/Short, Shortonly Fundamental, Distressed, Macro, Event-Driven, Trading, Quant d. Deal Origination Valuation Investment Analysis Modeling Portfolio Management a. b. c. d. e. Cash Management Legal Entities Tax Structuring Investor Reporting Fund Valuation a. b. c. d. Cash Management Legal Entities Tax Structuring Fund Valuation CFO/COO Cash Management Marketing Legal

Investment Banking Overview

Investment Banks serve as intermediaries between providers and users of capital Chinese Wall Strategic advisory Securities underwriting Users of capital Investment Banking Sales & Trading Research a. Corporations b. Governments c. Municipalities Private side Public side Providers of Capital a. Individuals b. Pension Funds c. Insurance Companies d. Asset Managers e. Corporate Treasuries f. Sovereign Wealth Funds

Overview of Investment Banking Capital Markets Advisory a. Equity capital-raising a. Initial public offerings (IPOs) b. Follow-on offerings c. Equity-linked (convertible) b. Debt capital-raising a. High-grade or investment grade b. High-yield c. Syndicated loans d. Tax-exempt a. Mergers & Acquisitions a. Buyside b. Sellside c. Spin-offs / Splitoffs / Carveouts d. Hostile defense e. Hostile takeovers / proxy fights f. Joint Ventures b. Restructuring c. Ratings

What Does An Investment Banker Do? Origination Execution a. Client Relationship Management a. Ongoing dialogue on financial markets, industry developments, new products b. Long-term relationship as advisor to Senior Management and Boards b. Idea Generation and Problem Solving a. Strategic Alternatives b. Capital Raising c. Optimizing Capital Structure d. Risk Management, Dividend Policy c. Assessment Of Opportunities a. Financial Analysis b. Communication a. Management, Board of Directors b. Internal Committees c. Identify Potential Investors d. Negotiation / Structuring Transactions e. Due Diligence f. Documentation

Investment Banking Groups Capital Markets a. Equity Capital Markets b. Debt Capital Markets c. Tax-exempt d. Leveraged Finance e. Securitized Products “Markets” Industry Coverage a. Consumer & Retail b. Healthcare c. Technology d. Media & Telecom e. Industrials f. Natural Resources g. Real Estate Product a. M&A b. Corporate Finance “Technical”

Investment Banking Competitive Landscape Bulge bracket Middle Market Boutique Low Capabilities High

Life of an Investment Banking Analyst

Overview of Investment Banking analyst programs a. b. c. d. e. Two-year program with opportunity for a 3 rd year 6 -8 week training Mentorship programs Networking opportunities Summer internship program serves as primary feeder to full-time analyst positions

Role of an Investment Banking Analyst a. Be a member of a deal team, executing day-to-day activities surrounding live transactions b. Perform financial analysis and modeling c. Develop and prepare client presentation materials (pitches, roadshows, board materials, etc. ) d. Coordinate roadshows, and M&A processes e. Research and due diligence

Why Investment Banking? Benefits a. b. c. d. e. f. g. h. “Everyday is different” Exposure to senior management Steep learning curve Work with talented and motivated people Gain a strong background in financial analysis Help execute exciting, landmark transactions Networking Exit opportunities Challenges a. b. c. d. Long and unpredictable hours Traveling Demanding senior bankers High stress/pressure environment

Typical Analyst Wish List a. b. c. d. e. f. g. Strong communication skills (written and oral) Quantitative / technical skills Teamwork and leadership skills Motivation and strong work ethic Self-confidence and positive attitude Time management skills Personality (sense of humor, enthusiasm and ability to adapt to different situations) h. Knowledge of firm and industry i. Ability to work well under pressure j. Creativity

General Preparation a. Network with peers and alumni b. Internships c. Research - Do I want to do Investment Banking? What type of firms? d. Make sure your resume is clear, concise and error free a. Take advantage of resources available to you (alumni, Feld Career Center, etc. ) b. Everything is fair game e. Practice, practice

The Interview a. Be prepared: know as much about the bank and position as possible b. Know yourself: what motivates you, your strengths and weaknesses and be able to articulate those points c. Know EVERYTHING on your resume d. Be honest and demonstrate enthusiasm and motivation e. Read the Wall Street Journal EVERYDAY and use the Vault Guides f. Practice interviewing (mock interviews, preparing answers, etc. ) g. Ask questions

Resources a. b. c. d. e. f. Vault Career Guides Breaking Into Wall Street Prep Wall Street Training Deal. Maven Wall Street Training

Corporate Banking

Select Bank Divisions Corporate Banking a. b. Various Group Structures c. a. b. Types of Analysis Performed c. Varies significantly from bank to bank: One end of spectrum: Corporate Bankers are the Industry Coverage Team Other end of spectrum: Corporate Bankers are Credit Analysts Counterparty Credit Loan Pricing / Terms & Covenants Negotiation Industry Studies Sales a. b. c. d. Cross Selling Know the Client Know Your Bank Relationships Across Both a. Series 79 (depends on firm) Interview Selling Points: a. Financial Statement Analysis b. Credit Analysis c. Law b. Qualifications Wealth Management a. b. c. d. e. Managing money for: High net worth Retail Corporate sponsored retirement plans including pensions, 401 k plans, nonqualified plans, etc. Investment research and screening Analyze the research Investment recommendations Tactical allocation decisions and rebalancing Interact with individuals, executives, investment Series 7 & 66 & committees, fund Insurance managers License Chartered Financial Analyst (“CFA”) Chartered Retirement Plan Specialist (CRPS) Certified Investment Management Analyst (CIMA) Certified Financial Planner (CFP) Sales & Trading a. b. a. Research a. Sales: Calling investors to suggest trade ideas b. Trading: Buying and selling financial products c. with the goal of achieving a gain d. Buy and sell financial products on behalf of clients a. b. c. d. e. f. a. b. Series 7 & 63 Chartered Financial Analyst (“CFA”) a. Stocks = Equity Research Bonds = Fixed Income Research Assigned to Various Sectors Energy, technology, media, telecom, consumer… Financial Modeling Investment recommendations Earnings reviews Participate on investor calls Company visits Travel to industry conferences Chartered Financial Analyst (“CFA”)

Corporate Banking: Deal Dynamics High Level Client (Corporation) e. g. Insurance Co. Corporate & Investment Bank (CIB) Client Need a. b. c. d. e. f. a. Bank Line / Working Capital a. Liquidity Facility / Commercial Paper Backstop b. Letters of Credit (LCs or LOCs) c. Project Financing d. Structured Vehicle Funding e. Capital Markets Hedging Programs f. Corporate Banking Solutions Revolving Credit Facility (RCF): “Revolver” Letter of Credit Facility Term Loans RCFs & LCs etc. , Trading Lines “Revolvers” from bank’s perspective: a. Large, Long-Term (1 -15 yrs) Commitments: Puts Balance Sheet of bank at Risk a. Typically serve as liquidity / back-up facilities and are priced to incentivize the client NOT to draw b. Clients desire these facilities as well as their investors + rating agencies + other stakeholders a. - expensive, like a credit card c. Banks do not make a lot of money on undrawn revolver commitments: The bank gets paid to provide a promise

Covenants a. b. Banks do not lend unconditionally Long-term commitments are made under the condition that the borrower maintains a largely consistent risk profile a. So, legal protections are built in: Covenants a. Examples: a. Minimum Credit Rating of ‘ BBB ‘ b. Maximum Debt-to-Capital Ratio of 35% b. c. If client fails to meet these criteria, they are “in breach” A client in breach of a covenant will have no legal right to draw funds from the bank

Corporate Banking: Deal Dynamics High Level Client (Corporation) e. g. Insurance Co. Corporate & Investment Bank (CIB) Client Need a. b. c. d. e. f. a. Bank Line / Working Capital a. Liquidity Facility / Commercial Paper Backstop b. Letters of Credit c. Project Financing d. Structured Vehicle Funding e. Capital Markets Hedging Programs f. Corporate Banking Solutions Revolving Credit Facility (RCF): “Revolver” Letter of Credit Facility Term Loans RCFs & LCs etc. , Trading Lines “Revolvers” from bank’s perspective: a. Large, Long-Term (1 -15 yrs) Commitments: Puts Balance Sheet of bank at Risk a. Typically serve as liquidity / back-up facilities and are priced to incentivize the client NOT to draw b. Client’s desire these facilities as well as their investors + rating agencies + other stakeholders a. - expensive, like provide card c. Banks do not make a lot of money on undrawn revolver commitment: The bank gets paid to simplya credit a b. In periods of stress, these facilities go from having relatively relaxed surveillance profiles → to receiving intense attention a. They are LARGE commitments and represent “money out the door” when the client draws b. American International Group (AIG) promise So, banks usually commit the largest amounts with the most favorable terms (pricing + covenants), to their best clients a. Clients in turn recognize this strategic partnership and open their doors to more business: a. Sales & Trading, Debt Capital Markets, Equity Capital Markets, Foreign Exchange & Cash Management, M&A Advisory etc. ,

Corporate Banking: Revolving Credit Facility Example - Syndicated RCF: Lead Bank (“Agent Bank” or “Lead Arranger”) a. b. c. Corporate Banker Discuss Client Needs (Size and purpose of RCF) Discuss Market Appetite for lending: Bank Group + Allocations Determine Target Terms: Pricing, Covenants, Tenor (length) XYZ Client (Corporation) Treasurer (sometimes CFO) “Launch Deal” 2010 Banks Group XYZ Company US$3. 0 bn Revolving Credit Facility Lead Arranger a. b. c. d. e. f. HSBC JP Morgan Citigroup BAML UBS + others… Post DD Negotiations: Due Diligence (DD) Meeting / Call Agent/Lead Bank largely responsible for negotiating on behalf of banks group Allocations $350 m $250 m $150 m $650 m 1 st Tier 2 nd Tier

What to Expect The Job a. b. c. d. e. Long Hours (less hours than Investment Banking) Life will revolve around deals Good salary + bonus package (less than Investment Banking) A lot of phone time / meetings with clients, other banks, lawyers, & internal colleagues Credit analysis a. Financial Statement Analysis / Modeling b. Industry Studies f. Must know your clients better than the competition a. Investor Calls / Presentations b. Company press releases as well as reports in the media c. 10 -Ks, transcripts, sell-side research etc. , g. Broad product experience / limited understanding of each product h. Competitive / High Pressure Environment a. Can be said about any position at a bank. Especially front office but also middle and back.

Middle Market Financing Positioning Investment Banking Middle Market Financing Corporate Banking a. b. c. Provide similar but expanded services to corporate and institutional clients: a. Capital raising in the form of syndicated loans, public and private issues of debt and equity b. Specialized services such as M&A and ratings advisory, industry and competitive analyses and market-making in complex instruments c. Sales, trading and research of publicly traded issues and currencies Product groups specialize in a certain service or instrument, such as M&A, bonds, equity Industry groups cover all client firms which operate in a certain field (i. e. healthcare, gaming, energy, media) a. a. b. c. d. Focus on supporting middle market clients by providing corp. loans for acquisitions, recaps, refinances & other corp. needs Business largely driven by private equity activity Firms focused underwriting fees and greater interest rate spreads Many MM firms also have advisory & capital market services, but not broader corporate banking services b. c. d. Responsibilities include: a. Issuing loans (vs. bonds, high yield) b. Taxes strategy c. Treasury management d. FX management e. Cash management f. Project financing Traditional “Corporate Banking” offered by large banks with diverse product offerings Focus on relationship with company as cross-selling of products There is often an overlap between corporate banking and IB capital markets when capital markets expertise is utilized to issue equity or debt

Middle Market Financing Overview Landscape Overview a. b. c. d. e. f. More fragmented market led by pure commercial banks and finance companies, specialty funds, hedge funds and mezzanine funds Focus on smaller and medium sized leveraged loans ($250 MM or less) and mezzanine debt (typically $100 MM or smaller) for companies with less than $500 MM in revenues and EBITDA between $10 MM and $75 MM Private investors driven with focus on club deals (deals with only 2 – 6 lenders & no broader syndication) and investment returns, given the companies smaller sizes and increased risk profile Underwriters emphasize senior loan club transactions, smaller scale loan syndications and portfolio lending/investment Pure commercial banks and financial companies dominate senior loan market Specialty funds, hedge funds and mezzanine funds dominate junior capital market Middle Market New Issue Volume (<$50 MM EBITDA) Deal Financing Timeline Example

Career Considerations Analyst Role / Responsibilities a. b. c. d. e. f. g. h. i. Financial analysis and financial modeling Company valuation Comparable analysis Preparation internal credit / approval memos Industry and company research Developing client presentations Marketing material (i. e. Teaser, Confidential Information Memorandum) Updating all internal databases and systems Administrative tasks (set up calls, fax, Fed. Ex, etc. ) Career / Role Benefits a. b. c. d. e. f. g. h. i. Career Options – Firm Types a. b. c. Commercial banks Finance companies / specialty funds Hedge funds and mezzanine funds Banking-like training programs Greater access to superiors & senior management Truly understand corporate growth, financial analysis & capitalization Develop strong knowledge of many industries Analysts tend to wear more hats than in larger banks Quality of life: Hours, flexibility, goals & expectations Defined career paths & competitive compensation Opportunity to change career path both internal / externally Introduction to numerous business owners Environment – Work / Life Balance a. b. c. d. e. f. 10 -12 hour days, weekend work depending on firm Medium/High stress levels: Pressure to perform, competitive environment & demanding superiors with little room for error Multiple deals / companies / projects at one time Work frequently with others in deal teams of 2 – 4 people within your group Frequent “fire-drill” deadlines for client driven approvals Frequent meetings & conference calls throughout the day

Representative Companies Large Commercial Banks a. b. c. Super-Regional Banks a. b. c. d. Citibank Bank of America Wells Fargo / Wachovia Foreign Banks a. b. c. d. e. f. g. h. CIBC Toronto Dominion Royal Bank of Canada Bank of Montreal / Harris Societe Generale HSBC National Australia Bank ANZ Banking Group a. b. c. Royal Bank of Scotland Macquarie Group Sumitomo Comerica Union Bank of California Bank of New York Mellon Key Bank a. b. c. Sun. Trust Fifth Third PNC Finance Companies / Funds a. b. c. d. e. f. g. h. GE Capital CIT Group Churchill Financial Madison Capital Source Freeport Financial Denali Capital Newstar Financial a. b. c. d. e. f. g. Orchard/First Source Jefferies Finance American Capital Golub Cerberus Orix Ares Capital

Next Steps… Take advantage of ALL Feld Career Center services, job postings and info sessions NETWORK: Utilize the BU Alumni network and all family & friend contacts Practice your interviewing skills and have all “book” knowledge down cold Have a story about who you are, where you have been and where you are going Utilize all resources including the Vault Guide, publications (WSJ, etc. ), websites (Linked. In, e. Financial. Careers, etc. ) Search yourself: Make sure this is the field for you BEFORE going through the process Commit: Once you decide to go for any finance job, give it your all – or it will show otherwise Get the JOB!

Questions

Appendix

Thoughts… How to Make it Happen a. Get any available on campus interviews – practice makes perfect a. Talk to the career center about firms that will be recruiting as well as firms that used to recruit b. Begin emailing junior BU alums at the firm as soon as possible and well ahead of interview c. After exchanging emails, ask for a few minutes on the phone a. PROOF READ your emails. If there is a typo or a grammar error, it can kill your momentum b. Be sensitive to the interviewers time constraints. Do not insists on times / topics / sending your resume a. Remember: Alums are BUSY and they are doing you a big FAVOR by talking Make sure you have a story about who you are and why you want the position / company / industry you are applying for Specialize your resume a. Today’s job market is extremely tough: Employers are looking for the perfect candidate b. It is a numbers game but make sure you target positions for which you are a good fit c. Make sure your resume is FLAWLESS; bad formatting, a strange layout or something that is hard to read can easily give someone a bad impression and/or cause them to overlook your talents If you don’t have a 4. 0 GPA or all of the relevant course work, guess what? - It is OK! a. Will cost you initially but can be recovered from d. b. c. a. b. c. d. Get the best job you can Work hard and be the best STAY in TOUCH with people Always be aware of and open to new opportunities

Corporate Banking: Some more detail Career Options a. Large Corporate & Investment Banks: a. Citigroup, JP Morgan, Bank of America Merrill Lynch, Barclays, Goldman Sachs, Morgan Stanley, UBS, Credit Suisse… b. Middle Market Financing: a. Commercial Banks, Hedge Funds, Specialty / Finance Companies Typical Entry Point (for Large CIBs) a. Out of undergrad (Analyst Program) b. From Business School (Associate Level) c. After 2+ years at a Rating Agency a. Or other relevant field