IBD Masterclass - Technical Tools for Success part1 by Coaching Assembly

IBD Masterclass

10 November 2014

Table of content I.

How to tailor your application Understand your environment Overview of the recruitment process Fit and motivation

p.3

II.  Assessment centre – how to prepare

p.19

III.  Learn about the job and the industry

p.31

IV.  Technical Interviews

p.34

How to tailor your application

Understand your environment

Overview of a Bank Banks gather loads of different jobs and it is often hard to know where to look BANK

Investment Banking §  Assists individuals,

corporations, and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities

§  Also assist companies

involved in mergers and acquisitions and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services

Retail Banking §  Retail banking is when a

bank executes transactions directly with consumers, rather than corporations or other banks

§  Services offered include

Commercial Banking §  Provides services, such as

accepting deposits, giving business loans and basic investment products

§  Mostly deals with deposits

savings and transactional accounts, mortgages, personal loans, debit cards, and credit cards

and loans from corporations or large businesses, as opposed to individual members of the public (retail banking)

Wholesale Banking §  Services provided to large

corporate clients, mid-sized companies, real estate developers and investors, international trade finance businesses, institutional customers (such as pension funds and government entities/agencies), and services offered to other banks or other financial institutions

Overview of key jobs in Finance Advisory

Corporate

Financing

Finance

Direct Investment

Front Office

Markets

Research

Risk

Mergers and Acquisitions (“M&A”): to provide strategic advice to companies when they sell or buy an asset or when they get bought Equity Capital Market (“ECM”): to advise companies which go though IPO, clients involved in Block trade, capital raising, issue of new shares etc…

Debt Capital Market (“DCM”): to advise companies in new debt issue, refinancing or debt restructuring

Restructuring: to advise a company which faces liquidity issue or debt repayment issue

Leveraged finance: to provide debt financing to levered transaction Project finance: to provide financing to industrial projects (build a bridge, plant etc.)

Private Equity: consist in investing funds in private companies (acquisition of companies already private or taken private). Investment horizon are of c.3 to 10 years, depending on the assets and expected returns

Sales: to link the clients with financial markets, selling them financial products (vanilla or structured) related to their particular needs

Trader: 1) take a position on the financial markets on behalf of a client and 2) hedge the risk related to this position Structuring: create and price specific products answering the client’s particular needs

“Quants” – quantitative analysis: develop algorithms and programs to price financial products, manage risk, establish new trading strategy etc.

Equity research: analyse sectors and listed companies in order to produce regular research notes including valuation materials, key strategic insights about the sector or the company Market risk: to manage risk on a portfolio of assets and different positions taken on the financial markets

Credit risk: evaluate the risk of default from counter parties Operations: evaluate “human” risk such as fraud, rogue traders etc…

Key skills for Corporate Finance jobs Technical Skills Mergers & Acquisitions Restructuring

ECM

DCM

Leveraged Finance Private Equity

++ +++ ++

Soft Skills

+++ ++ +++

Comments Requires good understanding of major Corporate Finance Concepts + Strong interpersonal skills Strong technical skills and requires particularly strong negotiation skills Strong understanding of capital market and Corporate Financing needs + strong relationships with investor ecosystem Idem as ECM

++ ++ + +/ + + +

+++ ++ ++

Requires investor mind set and transactional spirit

Idem as Leveraged Finance Particularly technical if in Credit Hedge Funds 7

Financial institutions landscape – main players Private Equity Firms

§ Take private § Take majority stake in private companies

§ Debt financing § Invests at different stage and

Pension funds

Sovereign funds

§ Long term investment partners § Generally low cost of capital § Less aggressive players

§ Finance by government money § Less aggressive players

in different sectors

Kuwait Investment Authority (KIA) Hedge funds

§ Trading - long/ Short hedge funds

§ Credit investments

Other asset managers

§ Long term investment partners § Fund of funds § Less aggressive players

Banks and Audit firms

§ § § § §

Private Equity Trading for 3rd parties

Property trading Financing (IPO, debt etc…) Advisory (M&A, Restructuring, ECM, DCM, transaction services)

Bulge Bracket vs. Boutiques BULGE BRACKET

BOUTIQUES

The hierarchy 1

MANAGING DIRECTORS

DIRECTORS

VICE PRESIDENTS

ASSOCIATES

ANALYSTS

INTERNS

Sources deals/ Relationship with client

Sources deals/ Runs process

Manages task force and junior bankers/ Runs process

Financial analysis/ Admin

Financial analysis/ Admin/ Research

Supports team

Resume prep sheet

Resume – Prep Sheet CV LAYOUT

§  Layout

§

§  §  §  §  §  §

Ø  Clear presentation Ø  Short and structured Ø  Most recent events first Sections that must be present on your CV Ø  Education Ø  Professional Experience Ø  Languages and IT Skills Ø  Activities and Interests Content – think about Ø  What makes your CV different? Ø  Can you quantify what you have said Ø  Be honest! Ø  Is your spelling and grammar correct? Layout should be logical but content is more important What differentiates you? Be concise – don’t repeat the job description Use power verbs: Ø  Delivered, demonstrated, resolved etc. Ø  Don’t overestimate, don’t underestimate Speak the language of business: Ø  Metrics: provide quantifiable evidence of your past achievements Link past skills / experiences with future career Show: Ø  Ability to balance career w/ extracurricular activities, leadership, resilience, determination Ø  International experience, achievement

Resume – Prep Sheet CV – DO’s & DON’TS §  Check how an employer wants to receive your application e.g. don’t email if they want an online application §  Find out correct address / contact at the firm §  Do proofread – this is a detailed-oriented business! §  Do think at the reader and how they would perceive you §  Do constantly ask yourself, “Does this phrase add value / differentiate me from 1,000 other applicants?”

COMMON MISTAKES

§  Typos and grammatical errors: §  §  §  §

Ø  Show that you did not spend enough time on your CV Formatting issues Listing every small job you ever had during your studies Describing your courses in too much detail in the education section: Sharing confidential information

Resume – Prep Sheet WHAT INVESTMENT BANKERS LOOK FOR IN A RESUME

§  Quantitative & analytical ability §  §  §  §

Ø  Bankers want to know that you can solve quantitative problems Initiative & motivation Ø  Bankers want to know whether you have the initiative, motivation and energy to deliver strong results Communication skills Ø  Ability to write and speak efficiently suggests that you will be successful working with clients and colleagues Teamwork & leadership skills Ø  Bankers work in teams Interest in finance Ø  Bankers want to know that you know exactly what you are getting yourself into and that you have a legitimate interest in a finance career

HOW TO IMPROVE YOUR RESUME

§  Find a way to stand out §  Show your knowledge of the finance industry §  Highlight your relevant interests

! ! ! !

Returns analysis under several restructuring and exit sale scenarios Built a 5 year business plan (standalone and growth) Created a dynamic LBO financing model Preparation of the sell-side documentation (teaser, information memorandum, management presentation)

Revel AC – Advising a casino and entertainment resort operator on the restructuring of $1.5 billion of debt (Closed) ! Performed a formal valuation of the Reorganized Company for Plan and Disclosure Statement, using publicly traded comparables, precedent transactions and discounted cash flow analyses ! Analyzed the Atlantic City gaming market prospective for subsequent M&A process

CV Template

BNP PARIBAS CORPORATE & INVESTMENT BANKING

New York

Analyst Intern - M&A ! Assisted with financial modeling and industry- and company-specific research

Sep. – Dec. 2010

MESSIER MARIS & ASSOCIÉS

New York

Analyst Intern - M&A ! Assisted with the sale of Marc Simoncini’s stake in Meetic S.A. ! Involved in preparing pitchbooks, market updates and other client-related materials

Aug. – Sep. 2010

LAZARD PRIVATE EQUITY ARM - FPG / LFPI

Paris

Analyst Intern - LBO & Mezzanine, €1.9 bn assets under management ! Worked on the acquisition of Cliniques Privées Associées by Vivalto Santé - Entered last round ! Drafted and presented memoranda to the investment committee ! Led market and competitive analyses and performed detailed financial modeling ! Conducted commercial due-diligence on potential investment opportunities

Jul.– Dec. 2009

BNP PARIBAS CORPORATE & INVESTMENT BANKING

Paris

Analyst Intern - Multinational European & Asian Coverage ! Participated in preparing pitch-books for client and management meetings ! Credit, deal pipe analyses and data monitoring

Sep. – Dec. 2008

EDUCATION ESSEC Business School MSc in Management - Grande Ecole Program - Major in Finance

Paris 2007 – 2011

Collège Stanislas, Paris & Saint François de Sales, Evreux Intensive two year course preparing for the French Business-School entrance examination

2005 – 2007

PERSONAL ! ! ! !

French national Languages: French (native), English (fluent), German (intermediate) IT: Excel, Word, PowerPoint, Capital IQ, Bloomberg, MergerMarket, ThomsonOne, Factiva, Debtwire, Loan Connector, Markit, Prequin Interests include sailing, travelling REFERENCE AVAILABLE UPON REQUEST

Overview of the recruitment process

Typical recruitment process (1/2) Step

Online applications

What Focus on CV and relevant experience/ skills for the job

It is absolutely crucial to have a CV “financeready”

Verbal and numerical online test

You will need to practice these tests. It is not rocket science, but you need to practice

You may have to take other test Usually this is a “HR” type of interview

There will usually be a focus on your motivations and the fit with the company

Interviews with members of the operating team

Members of the team will focus on 2 things: i) the fit with the team and ii) your ability to do the job. Practice technical questions!

Online tests

First round interview

Other rounds

Comments

Offer

Whatever happens, you should accept. If it is not your dream job, accept and look for another position. You can drop an offer you signed! 17

Typical recruitment process (2/2) What’s measured

Form online

Background │ CV │ Profile

Online numerical tests

Analytical │ Response to stressful situation

Human resource interview

Fit │ Motivation │ General knowledge of the job

Interview with professional – round I

Fit │ Motivation │ Technical skills (high)

Interview with professional – round II

Fit │ Motivation │ Technical skills (low)

Facing professionals

Online

Phase

Bulge bracket

Boutique

Fit and Motivation

Why you should consider investment banking You need to come up with your own, personal reasons, it will give much more weight to your story Interaction with Senior Management Develop a strong and diversified skillset

Working with talented and challenging peers

Why Investment Banking? Responsibilities

Eager to learn Industry and/or product expertise

What IBD and PE shops are looking for While it is paramount to demonstrate individual aptitude, you also need to show that you understand what these institutions are looking for Demonstrate excellence People who did their homework

Positive attitude

What are they looking for? Proactivity

Professionalism

Commitment

Interview tip: build your own story Don’t fall in the trap of being like anyone else Your main challenge: say what they want to hear but be genuine and different Walk me through your CV = Tell me YOUR own story On your CV

How you need to explain things

Who you are

§  You need to articulate your experience to form

Eager to learn and open

a coherent story

Professional experience

§  It is OK to say that you worked somewhere but didn’t see yourself pursuing in a specific direction

§  ALWAYS remain positive, you need to show Education

that you learnt, which will show you ability to learn in the future

§  Be specific, it is always better to speak through specific experience, it will give a much more genuine feel to your story

§  Be sure to be able to back everything on your CV with concrete examples

Extra curricular activities

§  Use you extra-curricular activities to create a more personal/ informal bound with the recruiter

Motivated and positive Hard worker and flexible Multi tasking Team player Handle stress Detail oriented Quantitative 22

Interview basics This is probably common sense, but think about it before entering an interview ü  Body language, composure, volume ü  Always look the interviewer in the eye ü  When you are in a two-on-one interview, make sure you address your answers to both interviewers ü  Relax and try to learn from the interview

Assessment Centre â&#x20AC;&#x201C; How To Prepare

What type of candidate are you? It’s extremely important to understand who you are so you can adapt your behaviour Too Laid Back

How to prepare §  Research the industry in general – hot topics and thought leaders

§  Research the specific organisation – activities, priorities and results

§  Research key players – CEO and other C level players

§  Identify what types of behavior the organisation seems to be looking for

Too Direct

§  Create a game plan to ensure you demonstrate a full range of those behaviours

§  Practice your approach and get feedback from people who know what they are talking about

§  Take their feedback on board and adjust your approach accordingly

How to stand out from the crowd? Give your ideas and lead discussions

LISTENING

BE SUPPORTIVE

§  Show that you are really listening to the

§  Don’t be afraid to support the ideas of

ideas of others

others, or build on them

MAKE SURE TO ALLOW EVERYBODY TO PARTICIPATE

SHOW SOME LEADERSHIP SKILLS – DON’T BE A DICTATOR

§  Bring in the quieter members of the team

§  Maybe even chair the discussion for a while

and ask for their ideas too

and focus on the process of the discussion as well as contributing to the content 26

Be over competitive? Or not? You will work in team, nobody like stubborn or bossy persons §  Your goal is not to show that you can dominate people

Thought leadership and creativity – originate your own ideas

Team leadership – influence the discussion process, clarify objectives, make sure everyone has time to speak

§  You should be able to formulate your own ideas and analysis on specific issues and problems

§  You should be able to drive discussions

and get the best out of your team members – remember that you may not have the answer, your team member could

§  You should create consensus. It does not Personal leadership – knowing when to speak, listen and ask others for their ideas

mean you need to look for a half way consensus – you should find a better 3rd option

§  It’s a game, so have fun and play CoachingAssembly. All rights reserved. Any unauthorised copying, duplication, reproduction, re-selling, distribution or other commercial use will constitute an infringement of copyright

Prepare and answer in a case study While working on a case study, you need to make sure to think about the entire deal ecosystem/ environment What sort of questions to you need to ask?

How can you answer?

What is the deal about? IPO, Merger, Partnership, Fund Raising…?

What are the resources? Equity, cash, debt others…?

What is the best solution? Type of deals and how to go forward

Who are the different stakeholders? Equity holders, external investors, debt providers, employees…?

What are the different options? Sale, acquisition, capital raise…?

Is it feasible? Strategically, financially etc…

Who are the different stakeholders? Equity holders, external investors, debt providers, employees…? What is the issue? Lack of cash, expansion, diversification, size down…?

What is your rationale? Why do you intend to pursue a route more than another one?

What are the risks? Execution risks, interlopers risks etc…

Example of a M&A deal (pitch) In the example of an M&A deal, what should you cover? What is the issue/ current situation? Company wants to diversify? Management wants to sell? Stakeholders Who is involved? Who will be concern?

Equity/ Debt providers

Current clients or suppliers

Others Management, Governmentâ&#x20AC;Ś?

What is the right option?

Financial aspects

Strategic aspects

Risk aspects

Why are we the best for this sort of situation

Team

Experience

Different available options What are the different routes which can be explored?

What to do when you don’t know? ü  Ask questions ü  Be interested and motivated to find the answer with the recruiter ü  You do not need to know everything, you need to show that you are open minded and eager to learn ü  Remember that, on the job, there will be things you don’t know – you need to imagine yourself as not knowing something on the job, how would you react? ü  Remain composed and balance – it’s ok to take sometime to think

O  Do not say “I don’t know” or “I did not study this in class” O  Freak out

Learn about the job and the industry

Different deal situation Type of situations

Type of deals IPO

Buy-side Acquisition

A deal or live situation Sell-side

Merger

Restructuring Company Sale A pitch

Board

Others

Financing - Equity

Financing - Debt

What you will do as a junior analyst Company profiles

What? Business overview Key financials Key stakeholders Share price performance

LBO model

Why? Calculation of returns What sort of capital structure? What sort of growth prospect?

DCF

Process

Why? Intrinsic value of the business What WACC for the business

Internal Working Group List Organize work streams External

Teaser and Information Memorandum

Merger Model

When? When you want to sell a business When you want to buy a business and propose the opportunity What?

Multiples What?

Why? Accretion/ dilution Financial impacts ROI Impacts on ownership

Full company overview

Organize Due Diligence phase with different advisors on the deal Organize calls and meetings with different stakeholders

Transaction multiples Trading multiples

Client Financial and strategic analysis

Why? How does the business compare to other similar businesses?

Technical Interviews

Key subjects Be prepared. Donâ&#x20AC;&#x2122;t read a book the day before an interview as you will be expected to understand things rather than learn them by heart Basic Accounting Restructuring and Capital Structure

Discounted Cash Flows

Technical Interview Preparation Trading Multiples

Leveraged Buyout

Transaction Multiples

Contacts Video, interview questions lists and guides Online Preparation Materials

Free CV Template

http://www.coachingassembly.com/prepare/ We provide you with an empty CV template to help you format your CV the â&#x20AC;&#x153;Investment Bankingâ&#x20AC;? way http://www.coachingassembly.com/resume-cv-template/

Thomas Viguier email: thomas.viguier@coachingassembly.com tel: +44 74 53 62 38 17 Guillaume Tardy-Joubert email: guillaume.tardy-joubert@coachingassembly.com tel: +44 74 56 88 60 80 CoachingAssembly. All rights reserved. Any unauthorised copying, duplication, reproduction, re-selling, distribution or other commercial use will constitute an infringement of copyright