Table of Contents
1. Citigroups Investment Banking Michigan Team 2. Structure of an Investment Bank 3. Deal Teams and the Role of an Associate 4. Why Citigroup?
Directors Nathan Eldridge Mergers & Acquisitions Jodi Schenk Mergers & Acquisitions Victor Voorheis FIG Peter Kapp FIG
Vice Presidents
Associates Ben Riback (A4)* Global Consumer Arun Prasad (A3) Health Care Owen Bittinger (A3) Palo Alto Benjamin Carpenter (A3) Los Angeles Jason Godley Generalist Paul Croci (A3) Pablo Pallas (A3) London
* Team Co-Captain
Research
Capital raising Debt Equity Strategic advisory services Mergers & acquisitions Restructuring Takeover defense
Distribution and execution arm of the investment bank Sells and trades stocks and bonds Manages the firms risk and makes markets for the securities underwritten by the investment bank
Analysis and recommendations of stocks and bonds Includes company coverage and sector coverage
Private Side
Client
Public Side
Capital Markets
Chinese Wall
Corporate Banking
M&A
Research
Hedging
Capital Raising
Equity
Debt Exchanges
Consent Solicitations
Syndicated Loans
Restructuring
Financial Strategy
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Consumer
Financial Institutions
Communications
Health Care
Real Estate
Financial Entrepreneurs
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Industrials
Technology
Client
Accountants
Attorneys
Capital Markets
Associate
IBD Support
Analysts
Compliance/ Legal
Strategic Advisory
A good investment banker is a trusted advisor to their client a CEOs first call for strategic advice Investment bankers are most valuable when they can provide unique insight regarding a companys operations or strategic direction As part of a normal client dialogue, investment bankers will show clients strategic ideas that may or may not be obvious to their client CEOs often use their bankers to approach potential counterparties on an informal basis Investment bankers typically handle negotiations and most other aspects of the M&A process, allowing management to focus on running their business Valuation Fairness opinion Purchase/Sale documentation Process management Whatever else it takes Structuring
Purchasing other companies Friendly Mergers Hostile Takeovers Leveraged Buyouts Selling companies Selling entire companies Spin-off of subsidiaries
Defending Company Buyouts Poison Pill
The Pitch
Announcement
Preparation Solicitation of preliminary bids Solicitation of binding bids Negotiations Contract Signing
Preparation for announcement Press release Q&A script Week of announcement Market reaction Roadshow? Bankers work is largely done once the deal is made public
Between announcement & closing SH vote HSR Other regulatory approvals Closing Lucites Dinner
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fundamentals HOW can the company improve its valuation? Does an acquisition make sense? What is an appropriate price?
Is cash or stock a better choice? What is appropriate leverage? How would the market value the company in a public offering? How long will a company take to pay back debt holders? Do cash flows support an LBO?
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Valuation is NOT . . . A single, quantitatively derived answer A precise number A static number
Valuation is . . . Lots of number crunching More art than science Heavily dependent on judgment
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Pitching
Pre-Filing Preparation
Marketing
Pricing / Closing
Post-deal follow-up
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Organizational Meeting Establish agenda, timetable, information request list and working group list Due Diligence Meetings
Marketing Preparation
Prepare roadshow presentation with company Coordinate for reds to be delivered as necessary
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Chicago 1 one-on-one
Montreal 1 group mtg Boston 7 one-on-ones 1 group mtg New York 6 one-on-ones 1 group mtg
Philadelphia 6 one-on-ones
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4. Why Citigroup?
714.7
315.1
440.9
664.3
315.3
384.9
592.2
260.4
371.0
524.2
185.0
344.8
472.9
166.5
279.6
452.8
Source: Securities Data Company, Inc. Note: Data as of September 30, 2006, based on rank date.
297.6
175.3
13
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$89 Billion
$32 Billion
$71 Billion
$30 Billion
$44 Billion
$28 Billion
$41 Billion
$27 Billion
$38 Billion
$26 Billion
Source: Securities Data Company, Inc. Data as of September 30, 2006, based on rank date.
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$629
$622
$609
$575
$522
$474
Pending
Completed
GS
Volume (US$bn)
JPM
MS
DB
ML
Completed
Completed
$74
$71
$68
$66
Source: Securities Data Company, Inc. (1) Advising a non-U.S. or non-European client in a cross-border transaction. M&A deals rank-eligible 2004-YTD 2006 (as of August 31st).
GS
JPM
UBS
MS
CS
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MANAGER
Citigroup J.P. Morgan Deutsche Bank AG Lehman Brothers Morgan Stanley Merill Lynch Goldman Sachs Credit Suisse Barclays Capital UBS TOP 10 TOTALS INDUSTRY TOTAL
$490.0 382.6 340.5 330.9 319.3 300.9 276.6 262.9 241.3 232.2 $3,177.1 $5,463.5
9.0% 7.0 6.2 6.1 5.8 5.5 5.1 4.8 4.4 4.3 58.2% 100.0
1,384 1,270 1,072 955 968 1,097 643 834 757 870 9,850 15,264
$431.5 322.6 331.2 326.1 299.2 259.9 246.8 256.4 194.2 256.5 $2,924.3 $4,933.9
8.8% 6.5 6.7 6.6 6.1 5.3 5.0 5.2 3.9 5.2 59.3% 100.0
1 4 2 3 5 6 9 8 12 7
Citigroup Lehman Brothers Deutsche Bank AG J.P. Morgan Morgan Stanley Merill Lynch Credit Suisse First Boston UBS Goldman Sachs Barclays Capital TOP 10 TOTALS INDUSTRY TOTAL
$564.7 420.8 418.1 414.6 383.5 343.2 337.3 323.5 310.2 269.7 $3,785.6 $6,511.3
1,856 1,249 1,398 1,553 1,238 1,450 1,138 1,188 819 853 12,742 20,118
8.7% 6.5 6.4 6.4 5.9 5.3 5.2 5.0 4.8 4.1 58.3% 100.0%
$539.9 377.2 343.4 395.6 416.3 385.7 366.5 303.6 291.1 191.8 $3,611.2 $5,767.0
1 5 7 3 2 4 6 8 9 12
Who's No. 1?
Leading stock-and-bond underwriters, by volume, third-quarter 2006.
MARKET SECTOR NO 1 RANKED MANAGER
Who's No. 1?
Leading stock and bond underwriters, by 2005 proceeds.
MARKET SECTOR NO 1 RANKED MANAGER 2005 MKT SHARE CHANGE FROM 2004 (pct. Pts.)
Global Debt, Equity & Equity-related U.S.Debt, Equity & Equity-related STOCKS Global Common Stock Global Convertibles Global Common Stock- U.S. Issuers Global Convertibles- U.S. Issuers BONDS U.S. Asset-backed Securities U.S. Investment Grade Corporate Debt U.S. High Yield Corporate Debt U.S.Mortgage-backed Securities SYNDICATED LOANS U.S. Syndicated Loans
Citigroup Citigroup J.P. Morgan Citigroup Goldman Sachs Citigroup Citigroup Citigroup Citigroup Royal Bank of Scotland J.P. Morgan
9.3% 10.6 11.3 19.2 16.0 31.6 9.6 17.1 17.8 10.8 28.1
0.80 0.20 3.60 3.30 -0.40 17.00 -0.60 2.20 1.30 0.30 -5.40
Global Debt, Stock & Stock-Related U.S.Debt, Stock & Stock-Related STOCKS Global Common Stock Global Convertible Offerings Global Common Stock- U.S. Issuers Global Conv. Offerings- U.S. Issuers BONDS U.S. Asset-backed Securities U.S. Investment Grade Corporate Debt U.S. High Yield Corporate Debt U.S.Mortgage-backed Securities SYNDICATED LOANS U.S. Syndicated Loans
Citigroup Citigroup Citigroup J.P. Morgan Morgan Stanley Goldman Sachs Citigroup Citigroup J.P. Morgan Bear Sterms J.P. Morgan
8.7% 10.1 9.5 14.6 12.1 15.7 8.6 16.5 13.0 10.7 28.1
-0.70 -0.90 -1.10 5.00 -3.30 4.90 -1.10 -3.90 1.60 -1.70 -4.00
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Acquisition of American Household Inc. Buy-Side Advisor Acquisition Finance $890,000,000 January 2005
New Credit Facility in Connection with Acquisition of Grey Goose Joint Book-Runner $4,400,000,000 September 2004
European Beverages Financing of Acquisition by Blackstone and Lion Capital Joint Book-Runner 1,850,000,000 February 2006
Sale of Tohato, Inc. to Yamazaki Baking Co, Ltd. Advisor to Unison Capital Partners 18,200,000,000 July 2006
Convertible Senior Subordinated Notes Sole Bookrunning Manager $190,000,000 May 2006
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