JP Morgan Flashcards
Why JP Morgan?
- People- Being around genuine, nice, and intelligent people is important to me
a. Kevin Riley
b. Ryan DeMartino
c. Ryan Rafeh
d. Eric Guo
e. Chris McBride- Deal Flow/Large transactions/Wide Array of Product Offerings
a. In order to become a competent investment banker I need a lot of experience, and JP Morgan’s deal flow offers me that opportunity
b. Exposure across various product groups/wanting debt/equity experience, not just M&A - Recruit for a specific group
a. Really want consumer retail, and I like that I have the opportunity to recruit for that specific role
b. Why consumer retail?
i. Natural extension of my experience
ii. Relatable products
iii. Constantly evolving industry
- Deal Flow/Large transactions/Wide Array of Product Offerings
Explain the difference between product and coverage groups.
Goldman’s product and coverage groups are combined
Product • M&A ○ Sell-side M&A ○ Buy-side M&A ○ Divestitures/spinoffs • Leveraged Finance ○ High yield debt § LBOs from private equity firms § Company spin off and requires capital § M&A transactions § CapEx § Leveraged recapitalization □ Share buyback □ Issue dividends • Debt Capital Markets ○ Investment grade debt (LevFin focused on high yield debt) ○ Debt issuances to investment grade companies • Equity Capital Markets ○ IPOs ○ Companies wanting to raise equity capital § IPOs vs Follow on offerings ○ Private placements § Raise capital without going public § Popular among later stage tech companies
Coverage Groups
• Industry specific
• Work on a variety of product offerings for a specific industry
○ M&A
○ Debt offerings
○ IPOs
• Origination (pitching) and advisory work
Shareholder Advisory
• Takeover defense
Why consumer retail?
- Natural extension of my experience given my role at Unilever/Ben and Jerry’s
- I like that the products and businesses are relatable
- Significant activity due to shift towards e-commerce and other digital platforms
a. Continued growth
consolidation
Tell me about a deal. Okay, how about another deal.
- Newell’s divestiture of Pure Fishing brand to Sycamore Partners
- Amazon’s acquisition of Ring
- Michael Kors acquired Versace
- Conagra/Pinnacle
What determines whether an acquisition is accretive or dilutive?
Synergies achieved, consideration (cash vs stock), acquired company’s performance
Why bulge versus boutique?
- Exposure to the wide array of product offerings as opposed to strictly focusing on M&A
- Opportunity for larger cross-border deals due to global nature of firm
- Diversified revenue streams
- Opportunity for larger cross-border deals due to global nature of firm
What do company CEOs most care about?
If public company, their share price. If private, making itself the most valuable company it can be.
What is the cause of the recent market volatility?
- Expectation of rising rates
a. Makes money more expensive
b. Lowers valuations due to higher cost of capital
i. Less business investment, perhaps less growth
c. Shifting money into bonds that perhaps offer better risk adjusted returns
What have been recent federal reserve actions, and why?
Recent Fed actions
- Raised discount rate 3 times the year to potentially combat inflation and return to more "normal" levels - Current discount rate is 2.75%
What is the discount rate?
- Rate offered to banks that need to borrow money from the fed to meet overnight reserve requirements
How is the discount rate different from the federal funds rate?
- Federal funds rate is the rate banks use to lend each other to maintain reserve requirements - Discount rate is the rate offered by the federal reserve is banks need to go to the federal reserve for money - Both are used to maintain reserve requirements - Extremely similar interest rates between Fed funds and discount rate
What is the impact of higher interest rates?
- Makes money more expensive
- It’ll increase the cost of capital, thus making projects more expensive and lowering value of those projects
○ Leads to less business investment
- People put more money in interest bearing investments
- Investors put money in bonds
Explain to me what is contained in a pitchbook.
Depends on the product - Buy side M&A (Firm purchasing another firm) ○ Situation § Industry overview □ Growth opportunities § Current company's valuation □ Precedent transactions □ Comparable companies □ DCF ○ Solution § M&A spurs growth □ List of target companies and their valuations ® Company profiles ® Strategic rationale/synergies ® Valuations ○ Impact-Acquirer's valuation
- Sell side M&A (company looking to sell itself)
○ Situation
§ High valuations
§ Industry Overview
□ Where are deals happening?
○ Solution
§ Sell yourself
□ List potential buyers
® Company profiles
® Strategic vs financial buyers
○ Impact-Company's valuation
□ Precedent transactions
□ Comparable companies
DCF
What are your strengths and weaknesses?
Strengths
1. Coachable a. Able to process information b. I can learn whatever it is that I need to learn 2. Adaptable a. Taking the lead for management reporting due to unexpected departure of manager b. Office managerial skills i. Delegate ii. Incorporate all opinions iii. decisive 3. Reflective a. Journal, constantly reflecting on how to improve myself i. Translated into role at Unilever/Ben and Jerry's focused on process improvement ii. Entrepreneurial 1) Waste forecasting 2) Ideal conditions to reduce waste
Weaknesses
1. Bogged down into details sometimes and not fully taking into account high level strategy/purpose 2. I'm bad at asking questions/seeking help 3. Too much of a yes man at times
Do you have any questions for me?
- What are CEOs/CFOs most concerned about right now when you talk to them?
- M&A outlook, dry powder in PE. Rise of small deal?
- Exposure to modeling as an MBA associate?
