Wall Street 101: A Comprehensive Overview

of Finance and Vanderbilt Recruiting

Vanderbilt Finance Club
Brent Bainwol, Kyle Pezzi, and Josh Tashma

About Us

Changed name from Vanderbilt Investment Banking Club to Vanderbilt

Finance Club

Our goal is to facilitate comprehensive programming and individualized

mentorship in order to position Vanderbilt undergraduates to secure
internship and full-time opportunities on Wall Street

Todays presenters
Brent Bainwol Investment Banking Summer Analyst, Lazard (Houston)
Kyle Pezzi Investment Banking Summer Analyst, BofAML (New York)
Josh Tashma Investment Banking Summer Analyst, Morgan Stanley (New York)

Goal for Tonight

Provide comprehensive overview of sub-industries within finance

Description of each area of finance

What do analysts do?
Who would fit well in each area of finance?
Introduction to Vanderbilt recruiting

Useful for everyone here

Juniors & seniors: guide for determining which internships & jobs to focus on
Freshmen & sophomores: guide for finding area(s) of interest early, then can speak
with students & professionals in specific sub-industries of finance, pursue
internships, etc.

Short presentation followed by small group breakout

Card swipe in front for GME credit

What is Finance?

finance (n) the management of large amounts of money, especially by

governments or large companies

Financial services firms help corporate & government firms effectively use
money
Investment
Banking

Investment
Management

Sales &
Trading
Private Wealth
Management

Capital
Markets

Sell Side

Equity
Research

Private Equity &

Venture Capital

Buy Side

Buy-side vs. Sell-side

Confusing, but critical distinction

Buy-side: manage money for clients via investing

Investment management: investing in wide range of securities, etc.
Private equity & venture capital: alternative investing in private companies
Private wealth management: hybrid of buy-side & sell-side services (financial advice
for individuals & families)

Sell-side: financial services for clients

Investment banking: financial advisory services for clients

Capital markets: monitor capital markets & advise clients
Equity research: produce financial research for clients
Sales & trading: sell securities & make trades for clients

Used in other contexts

Example: investment banks offer buy-side M&A and sell-side M&A advisory
services totally different meaning

What is Investment Banking?

Investment banks provide complex financial advice to clients across a wide

range of industries
M&A advisory (buying & selling a company, divestitures, activism defense,
restructurings, joint ventures, separations, etc.)
Capital markets advisory (raising money via debt and equity issuances)
Day-to-day: lots of business development work, free to clients

Bulge bracket vs. boutique = big difference

Bulge bracket banks (i.e. Goldman Sachs, Credit Suisse, etc.) offer full array of
investment banking products to clients across all industries
Boutique banks (i.e. Evercore, Greenhill, etc.) specialize in products (i.e. M&A
advisory) and/or industries (i.e. healthcare, technology, etc.)

Strong presence in New York

Main secondary cities: Houston, Chicago, San Francisco

What Do Investment Banking

Analysts Do?

Perform wide variety of tasks to support the execution of investment

banking services
Compiling & analyzing financial and operational information on companies &
industries
Creating & updating financial models (i.e. leveraged buyouts, mergers, etc.)
Preparing marketing materials (i.e. creating company profiles for pitch books,
drafting confidential information memorandums, etc.)
Very random, miscellaneous tasks to support deals i.e. booking restaurants,
picking up printing, etc.

Popular, very competitive recruiting process as two years as an investment

banking analyst is arguably the best place to acquire the skills &
connections for a successful career in finance

Investment Banking Fit

Investment banking is not for everyone...

Fast-paced environment, Wall Street culture, usually suits everyday
Hours: 65-100 hours a week
Very unpredictable work schedule depending on dealflow and culture

Reasons to pursue investment banking

Strong, developed interest in M&A and capital raising
Willing to dedicate two years of life toward setting yourself up for a successful
career in finance (read: private equity)
Thrive in a team setting, enjoy problem solving, and work well under pressure
Track record of balancing heavy amounts of academics, extracurriculars, and work
Work hard, play hard investment bankers tend to be very social people
Love/hate relationship with BlackBerry products & outdated versions of Microsoft
Office

Investment Banking Recruiting

Targets / OCR

Semi-Targets / Vanderbilt Presence

What About Capital Markets?

Usually lumped in with investment banking, but different job focus

Closely monitor debt and equity capital markets & support investment banking
transactions

Most capital markets advisory services are run out of product groups within
bulge bracket investment banking divisions (i.e. Leveraged Finance Group
at BofAML, Equity Capital Markets Group at Goldman, etc.)
Analysts either directly recruited to ECM/DCM or placed in ECM/DCM as a result
of group placement process

Some investment banks have a separate division for capital markets (i.e.
Morgan Stanley) or mainly focus on capital markets (i.e. RBC)

What is Equity Research?

Very small industry, difficult to break into (no OCR, limited Vanderbilt
presence)

Publish unbiased equity research reports on companies across all industries

and sell research to investors
Research reports often supported with financial models
Consensus estimates = median research report estimates for a company
At investment banks, the ER department can assist with IPO execution through
providing a neutral perspective

Bulge bracket banks have ER departments, then boutiques also publish

research with varying reputations (top boutiques include Evercore,
Bernstein, etc.)

Analyst responsibilities include analyzing industry data, building financial

models, writing original content, and formatting research reports

What is Sales & Trading?

Sales: suggest trade ideas to clients

(HNWIs & institutional investors) with
the goal of bringing orders for securities
to trading desks

Trading: execute purchase and sale of

securities on behalf of clients and earn a
commission
Roughly split into equities trading and fixed
income trading
Agency trading (for clients) is different than
proprietary trading (trade firms own
capital, like a hedge fund but without
investors)

Typically portrayed as Wall Street in

movies

What Do Sales & Trading Analysts

Do?

Depends on sales vs. trading

Sales: develop client base and build long-term client relationships, create & present
investment ideas from own opinions & firm research, sell and cross-sell firm
products
Trading: develop & execute trading ideas and analysis, support all aspects of the
market-making trade execution process from providing research analytics on trades
to relative value analysis, and manage firms residual risk positions

Internship experience slightly different: cannot make trades or offer

investment advice without proper certification (lots of shadowing &
networking)

Sales & Trading Fit

Like investment banking, most people would hate working in sales &
trading

Super fast-paced environment: trades executed quickly, so theres periods of

rapid activity followed by rest (compared to investment banking transactions
take months and possibly years to complete)

Must be able to think well on your feet, perform under pressure, and be
super fast with math

Very distinct personalities from investment banking

Sales & Trading Recruiting

Targets / OCR

Semi-Targets / Vanderbilt Presence

Proprietary Trading Recruiting

Current DoreWays Listings

Private Wealth Management

Hybrid of working on sell-side and buy-side

Invest money on behalf of clients (usually individuals and families)
Provide financial advisory services including investment advice & financial
planning

Leading financial services firms have local branches with financial advisers
Each financial advisor has their own clientele and individually manage long-term
client relationships with resources & reputation of firm

Relatively easy to get an internship, but not a typical entry level position
Branches typically hire rising sophomores and juniors to shadow & assist financial
advisers (prepare marketing materials, research potential investments, source
clients, etc.)
Usually financial advisers do something else before entering PWM
Entry level positions exist within groups of financial advisers who work together
with the same clients

Largest U.S. PWM Franchises

Investment Management

Manage funds compromised of investors capital through investing in

various financial assets: using money to make more money
Offer investors with more diversification & investing options than they would have
by themselves
Invest in stocks, bonds, real estate, etc.
Clients are typically HNWIs, governments, institutional investors, etc.
Different approaches for investment vehicles: mutual funds, hedge funds, etc.
Wide variety of investing philosophies: value investing, activism, etc.

Depending on niche within investment management, less common for

undergraduates to go straight to the buy-side

What do Investment Management

Analysts Do?

Generating actionable investment ideas

In-depth due diligence and primary research from Company filings and site
meetings

Build financial models and participate in management and sell-side calls

and meetings

Portfolio construction

Industry coverage

Investment Management Fit

Most people pursue investment management to utilize skills from

investment banking and transition away from the longer hours & worse
lifestyle
Opportunity for tremendous financial reward if good at idea generation
Fit less relevant if you can make the firm money
Pay dependent on idea generation
Stressful job as there is a lot of money on the line, performance is tied to compensation

Very difficult to add value above and beyond market rate of performance, difficult to
justify high compensation
Movement toward passive investment management

Typically less hours (market hours)

Easier to work outside of the office, from home, the beach etc.

Investment Management Recruiting

Major Firms with Past OCR or Current DoreWays Listing

Private Equity & Venture Capital

Niche within alternative investment management

Private equity firms purchase control stakes in companies, oversee the operations of
the company, and then sell the company at a later date
Can make money for investors through using leverage, selling the company for more than the
purchase price, revenue growth, cost cutting, etc.
Typically target a 15-20% IRR

Venture capital firms purchase minority stakes in high growth companies

Assist company with strategic, operational, and financial decisions in order to improve the
company
Investments typically exited when entire company sold or company goes public in IPO

Extremely few entry level positions exist

Most people start in private equity after two years of investment banking or after
receiving a MBA

What Do PE & VC Analysts Do?

Analyst responsibilities can vary tremendously between firms

In both PE & VC, entry level investment professionals assist in the sourcing
& monitoring of investments

Investment banking skills come in handy

Build financial models to perform valuation tasks and justify potential transactions
Perform detailed due diligence on industries and specific investment opportunities
Day-to-day monitoring of portfolio companies
Work with operating executives of portfolio companies to ensure investment
objectives

Private Equity & Venture Capital Fit

Most people pursue private equity & venture capital to utilize skills from
investment banking and transition away from the longer hours & worse
lifestyle
Involves entrepreneurial spirit, passion for specific industries, etc.
Private equity hours are fund dependent and vary
Largest funds usually have hours similar to banking
Pay is generally higher, but becomes increasingly tied to fund performance
Compensation often deferred till fund close (5-7 years)

Very difficult to get on the Partnership track

Cultural fit tends to be similar to banking but more focused on due diligence,
generation of investment ideas and relationship management with potential
partners
Value add determines compensation

PE & VC Recruiting
Current Listings on DoreWays

Plan for Semester

Cover tools you need to secure internship in your area of interest within finance
Resumes & cover letters

Networking
Behavioral interviews (co-hosted with Career Center)
Technical interviews (four-part series)
How to cold email firms without internship listings
Freshman & sophomore event series (November)

Revamped mentorship initiative: fill out the form on the website!

Well keep sending out job opportunities as we receive them

Avoid overlap with info sessions & Vanderbilt Investment Club

Juniors & seniors: start networking & studying technicals ASAP (see website)

In general: ~1 meeting per week on Tuesday, Wednesday, or Thursday

Upcoming VFC Events

Resumes & Cover Letters: How to Stand Out from the Pack
Sunday, September 4, 2016, 4:00 PM to 5:00 PM
Furman Hall 114

Panel Discussion on Networking: How to Position Yourself for Interview

Invitations
Wednesday, September 7, 2016, 7:00 PM to 8:00 PM

No meeting the following week

New Website
vanderbiltfinanceclub.com

Key Dates: Next Two Weeks

Sunday, September 4th: Resumes & Cover Letters: How to Stand Out from
the Pack

Tuesday, September 6th, 4 PM: Acing the Finance Interview! by Matt Spencer,
followed by Houlihan Lokey Info Session

Wednesday, September 7th, 7 PM: Panel Discussion on Networking: How

to Position Yourself for Interview Invitations

Thursday, September 8th, 7 PM: BlackRock Info Session

Friday, September 9th, 1 PM: Centerview Partners Info Session

Monday, September 12th, 5 PM: Deutsche Bank Info Session

Tuesday, September 13th, 7 PM: Cambridge Associates Info Session

Wednesday, September 14th, 6 PM: Jefferies Info Session

Thursday, September 15th, 3 PM: BofAML Info Session

Small Group Breakout

Investment Banking & Capital Markets: Brent Bainwol (Lazard) and David
McGrath (Colliers)

Sales & Trading: Lexie Tonelli (Morgan Stanley)

Equity Research & Investment Management: Spencer Rugen (Fidelity)

Private Wealth Management: Josh Abreo (BofAML)

Private Equity & Venture Capital: Kyle Pezzi (BofAML, Pharos Capital)