Investment Banks: The Interplay between Investment Banking, S

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Investment Banks The Interplay between
Investment Banking, ST and Research
Confidential

• October 2001

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Mike Stanek Software Research
Mike Stanek
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
Mike Stanek Managing DirectorInfrastructure
SoftwareEquity Research
Coverage BSQUARE Citrix Systems Click
Software Gemstar Inktomi Liquid Audio Microsoft
RealNetworks SeeBeyond Sybase Talarian TIBCO Vit
ria webMethods
4 Ranked 5 Ranked  1999 All-American
Team 2000 All-American Team
67 millionInitial Public Offering July 2000
32 millionInitial Public Offering June 2000
39 millionInitial Public Offering May 2000
119 millionFollow-on Offering December 1999
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Dan Myers Semiconductor Investment Banking
Dan Myers
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.


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Overview of an Investment Banks Divisions
Firm
Asset Management (a)
PrivateClient Services
EquitiesDivision
InvestmentBankingDivision
FixedIncome Division
Equity Sales Trading
Equity Research
Fixed Income Research
Fixed Income Sales Trading
__________ (a) Not all investment banks have an
asset management division.
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The Life Cycle of a Company
Investment Banking Financing and Advisory
Products(a)
Private Public
LBOs
Asset-backed Securitizations
Fixed Income (Bonds)
Divestitures (Spin-offs/Carve-out)
Stock Buy-Backs
Convertible Bonds
Warrants
Mergers Acquisitions
Follow-on Equity
IPO
PrivatePlacement
VC
Time
Private
Early Stage
Middle Stage
Mature
__________ (a) Time frames are rough estimates
for illustrative purposes. Will vary by industry
and with economic cycles.
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Who Talks to Whom?
Information Flow Between Investment Bank
Divisions and Clients(a)
Client
Asset Manager(i.e., Fidelity)
Sales Trading
Research
Client
Company(i.e., Microsoft)
Chinese Wall
Capital Markets Group(Issuance)
Investment Banking
__________ (a) Darker lines indicate the primary
recipient of information flow from a particular
position.
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Role of Research

• EquityResearch

• Global EconomicsResearch

Fixed IncomeResearch

• 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 Firms
  clients as well as the Firms 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

• 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

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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 Overview
Organization Chart
Investment Banking Division
Product Groups
Industry Groups
Equity Capital Markets Syndicate
Debt Capital Markets Syndicate
Private Equity
High Yield
Private Placements
Financial Sponsors
Mergers Acquisitions
Merchant Banking
Venture Capital
Industrial
Real Estate
Financial Institutions
Health Care
Technology
Media/Telecom
Natural Resources
Power
Consumer / Retail
Chemicals
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Equities Division Overview
Organization Chart
Equities Division
Equity Capital Markets Syndicate
Equity Research
Equity Trading
Equity Sales
Equity Capital
Portfolio Sales
Equity Financing
Industry / Company Coverage
Convertible Bonds
Listed Products
International Emerging Markets
Convertible Research
Syndicate
Derivatives
OTC Products
Equity Strategy
Derivatives
Global Economics
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Fixed Income Division
Organization Chart
Fixed Income Division
Debt Capital Markets Syndicate
Fixed Income Research
Fixed Income Sales Trading
Debt Capital Markets
High Yield Capital Markets
Syndicate
Sovereign Strategy
High Yield
Global Economics
Foreign Exchange
Corporate Bonds
Leverage Finance
High Yield
Money Market
Derivatives
Municipal Public Finance
Mortgage Asset-Backed
Corporate Sovereign Bonds
Governments
Foreign Exchange