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University of Florida

Gap Analysis

Reaching Top 10 Status

Finance Professional Speaker Series:

A Career in Corporate Finance

Corporate finance progressionCorporate finance progression

Big 6 consultingBig 6 consultingFullFull--time MBAtime MBAInvestment bankingInvestment bankingVenture capitalVenture capital

My backgroundMy background

Finance undergraduate from UF 1990Finance undergraduate from UF 1990UF MBA 1995UF MBA 1995Career in consulting, merchant banking, Career in consulting, merchant banking, investment banking, venture capitalinvestment banking, venture capitalDonDon’’t miss many Gator football or t miss many Gator football or basketball gamesbasketball games

My first real jobMy first real job……

Ernst & Young consultingErnst & Young consultingSpecialized Specialized –– capital markets/public debtcapital markets/public debtGood training, basic skills, introduction Good training, basic skills, introduction to corporate world, importance of clientsto corporate world, importance of clientsReturned to UF for inaugural three Returned to UF for inaugural three term/one year MBA in 1994term/one year MBA in 1994

No specific plan after MBANo specific plan after MBA

Specialized in finance during MBASpecialized in finance during MBAArnie HeggestadArnie Heggestad’’s class generated s class generated interest in venture capitalinterest in venture capitalChris JamesChris James’’ class generated interest in class generated interest in investment bankinginvestment bankingAccepted a position with a boutique Accepted a position with a boutique investment bankinvestment bank

Boutique?Boutique?

Small to middleSmall to middle--market deals: market deals: transaction values from $5 million to transaction values from $5 million to $100 million$100 millionUnder the radar of bulge bracket firmsUnder the radar of bulge bracket firmsFirmFirm’’s original specialty was financial s original specialty was financial institutions; expanded reachinstitutions; expanded reachGeneralists Generalists –– adviceadvice--focused, not focused, not productproduct--focusedfocused

Investment banking careerInvestment banking career

Stage 1: analystStage 1: analystMergers and acquisitions predominatelyMergers and acquisitions predominatelyNumbers and analysis: financials, Numbers and analysis: financials, projections, market compsprojections, market compsDeal work: assist in drafting Deal work: assist in drafting ““booksbooks”” and and participate in some meetingsparticipate in some meetingsOccasional mundane taskOccasional mundane task


Stage 2: senior analystStage 2: senior analystNumbers and analysis: cost savings Numbers and analysis: cost savings estimates, purchase price estimates in estimates, purchase price estimates in M&A scenariosM&A scenariosDeal work: more input for books and Deal work: more input for books and more participation in meetingsmore participation in meetingsValuations and fairness opinionsValuations and fairness opinions


Stage 3: partnerStage 3: partnerNegotiation Negotiation –– know the numbers and know the numbers and know the psychologyknow the psychologyPsychology Psychology –– whatwhat’’s driving the acquirors driving the acquirorClient developmentClient developmentEVP with management responsibilitiesEVP with management responsibilitiesDirector with vision/big picture inputDirector with vision/big picture input


Fee structuresFee structuresCompensation structuresCompensation structures


Most complex Most complex –– peer merger of 3 peer merger of 3 financial institutionsfinancial institutionsMost negotiation art Most negotiation art –– small acquisition small acquisition of satellite truck manufacturerof satellite truck manufacturerLed occasional IPOsLed occasional IPOsPrivate equity rounds for startPrivate equity rounds for start--ups; liked ups; liked handshands--on approachon approach

Logical progression: VCLogical progression: VC

Adding value at the board level Adding value at the board level –– visionvisionHandsHands--on involvementon involvementSuccess identifying startSuccess identifying start--ups for private ups for private equityequity

Management teamsManagement teamsConcept/technologyConcept/technologyPrasara/Time Warner dealPrasara/Time Warner deal

Venture capital careerVenture capital career

Stage 1: PrincipalStage 1: PrincipalSupervise first screen of business plansSupervise first screen of business plansSupervise analystsSupervise analysts’’ workworkPerform due diligencePerform due diligenceSponsor deals for presentation to Sponsor deals for presentation to partnerspartnersInvestment decisions; board seatsInvestment decisions; board seats


Stage 2: Managing DirectorStage 2: Managing DirectorInvestment committee/decisionsInvestment committee/decisionsBoard seats/portfolio company Board seats/portfolio company responsibilitiesresponsibilitiesFundraising; contact with fundFundraising; contact with fund’’s limited s limited investors; credibility and track recordinvestors; credibility and track record


Fee structuresFee structuresCompensation structuresCompensation structures

Venture capital updateVenture capital update

Sucks (technical term)Sucks (technical term)

VC updateVC update

Y2K Upgrades

Legacy System Upgrades

Web/Technology Adoption

Investment Climate

Under the guise of Y2K spending, IT departments replaced antiquated legacy systems and infrastructure.

The imperative: adopt the future now or risk obsolescence

99-00 VC commitments $138B99-00 VC disbursements $163BMore than previous 18 yrs combined!!!Increased IPO activityThe rise of the individual investor

Perhaps the largest concerted IT effort in history; spending estimates range from $300 to $600 billion*

*Source: Gartner

Four Factors Drove Unprecedented Growth and Investment Within the IT Sector – Leading to 2000

VC updateVC update

Y2K Upgrades

Legacy System Upgrades

Web/Technology Adoption

Investment Climate

Corporate focus on cost cutting; budget squeeze for IT departments

Benefits yet to materialize in many cases; adoption rates slowed

Slow/stop VC commitmentsSlow/stop VC disbursementsIPO window closedLousy market

Spending finished and, for the most part, not replaced – macro influence

*Source: Gartner

Those Four Factors Post-2000

VC updateVC update

Depressed valuationsDepressed valuationsLimited exits for portfolio companiesLimited exits for portfolio companiesNo followNo follow--on ability for some VCson ability for some VCsNegative returns for three yearsNegative returns for three yearsContentious board meetings, investors Contentious board meetings, investors vs. investors and investors vs. vs. investors and investors vs. managementmanagement

VC updateVC update

Definitely improvingDefinitely improvingGood deal flow again and reasonable Good deal flow again and reasonable valuationsvaluations2Q04 VC investments +19% vs. 2003 2Q04 VC investments +19% vs. 2003 ($5.6B)($5.6B)WeedWeed--out some of the VCsout some of the VCsReturns becoming positive againReturns becoming positive again

Corporate finance career influencesCorporate finance career influences

Regional, sophisticated corporate finance existsRegional, sophisticated corporate finance existsDeal is direct reflection of the individuals Deal is direct reflection of the individuals involved involved –– not just the name of the firmnot just the name of the firmSkill set development importantSkill set development important

Identify your strengths and hone those skillsIdentify your strengths and hone those skillsIdentify your weaknesses Identify your weaknesses –– important part of important part of progression; must fill gapsprogression; must fill gaps

Mentor just as important as (if not more Mentor just as important as (if not more important than) company nameimportant than) company nameStay in touch with UF WCOB and professorsStay in touch with UF WCOB and professors

presentation: a career in corporate finance - warrington ... · pdf filea career in corporate...

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