i.b. overview
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Investment Banks: The Interplay between Investment Banking, S&T and Research
Confidential
October 2001
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Mike Stanek – Software Research
Mike StanekManaging DirectorInfrastructure SoftwareEquity Research Coverage:BSQUARECitrix SystemsClick SoftwareGemstarInktomiLiquid AudioMicrosoftRealNetworksSeeBeyond SybaseTalarianTIBCOVitriawebMethods
#4 Ranked
#5 Ranked
1999 All-American Team2000 All-American Team
Mike Stanek joined Lehman Brothers Equity Research in 1996 as Senior Vice President for DeskTop Applications and the Internet. Before joining Lehman, Mike was a partner at the boutique investment bank of Wessels, Arnold, and Henderson. While at Wessels, Mike was recognized by both Institutional Investor magazine 'Best of the Boutiques' research survey and ranked #1 in software in the Red Herring 'Tech 250' investor poll. He began his career on Wall Street as a portfolio manager and analyst for Mutual of Omaha Capital Management. He received his BS in Economics and Finance from the University of Nebraska.
Recent transactions in which Mike has been involved include:
$67 millionInitial Public Offering
July 2000
$39 millionInitial Public Offering
May 2000
$119 millionFollow-on Offering
December 1999
Mike Stanek
$32 millionInitial Public Offering
June 2000
R
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Dan Myers – Semiconductor Investment Banking
Dan Myers works in Menlo Park in the Semiconductor Investment Banking practice. Prior to joining the Investment Banking Division, Dan was in research for 2 years at Lehman Brothers and 3 years at Morgan Stanley. In research, he covered semiconductor and related companies. Dan received his MBA, with Honors, from the Amos Tuck School of Business Administration at Dartmouth College in 1995. Dan also holds a degree in Computer and Systems Engineering from Rensselaer Polytechnic Institute. Prior to returning to business school, Dan worked in the semiconductor industry for more than twelve years.
Dan Myers
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Overview of an Investment Bank’s Divisions
Firm
PrivateClient
Services
EquitiesDivision
InvestmentBankingDivision
FixedIncome Division
Equity Sales & Trading
Equity ResearchFixed Income
ResearchFixed Income
Sales & Trading
__________(a) Not all investment banks have an asset management division.
Asset Management (a)
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The Life Cycle of a Company
Time Private Early Stage Middle Stage Mature
Investment Banking Financing and Advisory Products(a)
__________(a) Time frames are rough estimates for illustrative purposes. Will vary by industry and with economic cycles.
VC
PrivatePlacement
IPOFollow-on Equity
Mergers & Acquisitions
Warrants
Convertible Bonds
Stock Buy-Backs
Divestitures (Spin-offs/Carve-out)
Asset-backed Securitizations
LBOs
Fixed Income (Bonds)
Private Public
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Who Talks to Whom?Information Flow Between Investment Bank Divisions and Clients(a)
__________(a) Darker lines indicate the primary recipient of information flow from a particular position.
Sales & Trading
Capital Markets Group(Issuance)
Client
Client
Asset Manager(i.e., Fidelity)
Company(i.e., Microsoft)
Investment Banking
Research
“Chinese Wall”
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Role of ResearchEquity
Research Global Economics
Research
Provide a broad-base of fundamental, quantitative, strategic and tactical research on companies and the industries within which they compete
Forecast stock price performance and corporate financial results for companies designated within their coverage responsibility
Within the Investment Bank, equity research has two primary constituencies: equity capital markets (sales & trading) and investment banking
Provide global economic analysis for the Firm’s clients as well as the Firm’s employees in Investment Banking. Sales & Trading, and other Research departments
Analysis and forecasts across a wide range of economic data, in particular leading economic indicators
– Assess the likelihood, timing, and impact of Fed interest rate increases/cuts
Fixed IncomeResearch
Provide analytical research across a broad spectrum of corporate and Government bonds
Credit analysis of corporations, various Government entities, and sovereign states
Within the Investment Bank, fixed income research has two primary constituencies: fixed income capital markets (sales & trading) and investment banking
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Role of Investment Banking
Capital Raising Strategic Advisory
Equity financing (VC, private placement, IPO, Follow-ons)
Fixed income financing (bonds, loans, asset-backed securitization)
Convertibles (traditional, zero coupon, proprietary products, etc.)
Refinancings Warrants Other derivative structures
Acquisitions (company or assets) Sales (company or assets) Divestitures (spin-offs, equity carve-
outs) Restructuring (financial, strategic) Stock buy-backs
9
Role of Sales & Trading
Equities Fixed Income
Deliver execution and liquidity to institutional investors by providing a full array of cash, financing, derivative and research products across the equity spectrum
Sale of new and existing equity securities (IPOs, follow-ons, convertibles)
Provide investment banking clients with after-market trading support for new and existing equity securities
Trade clearance and settlement
Market-making across a wide range of fixed income products and markets
Sale of new and existing fixed income securities (corporate and government bonds, high yield, etc.)
Provide after-market trading support for new and existing fixed income securities
Financing and development of asset-backed securities
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Investment Banking Division OverviewOrganization Chart
Investment Banking Division
Product Groups Industry Groups
Equity Capital Markets & Syndicate
Debt Capital Markets & Syndicate
Private Equity
Merchant Banking
Venture Capital
Industrial
High YieldPrivate
PlacementsFinancial Sponsors
Mergers & Acquisitions
Real EstateFinancial
InstitutionsHealth CareTechnology
Media/Telecom
Natural Resources
PowerConsumer /
RetailChemicals
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Equities Division OverviewOrganization Chart
Equities Division
Equity Capital Markets & Syndicate
Equity Research
Equity Capital
Convertible Bonds
Syndicate
Listed Products
Portfolio Sales
International & Emerging Markets
Derivatives
Equity Financing
OTC Products Equity Strategy
Convertible Research
Industry / Company Coverage
Equity TradingEquity Sales
DerivativesGlobal
Economics
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Fixed Income DivisionOrganization Chart
Fixed Income Division
Debt Capital Markets & Syndicate
Debt Capital Markets
High Yield Capital Markets
SyndicateSovereign Strategy
Leverage Finance
High YieldMoney Market
High YieldGlobal
Economics
Fixed Income Research
Fixed Income Sales & Trading
Foreign Exchange
Corporate Bonds
DerivativesMunicipal &
Public FinanceMortgage &
Asset-Backed
Corporate & Sovereign
BondsGovernments
Foreign Exchange
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