It's a must for anyone who wants to learn more about, and be savvy in the world of investment banking.

- Judy Rosemarin, New York Post

I enjoyed the reading material - it is very good and simple to understand. I wish I would have read this before my MBA

I learned more by studying your guide this weekend than in the last three years of finance courses. Thanks, guys.

I was so impressed with your guide that I went and talked to the Chair of my Economics Department and told him that this is the stuff we should be learning for our students to be competitive for investment banking positions.

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Excerpt from Introduction:
Welcome to the world of investment banking. By purchasing this guide, you have embarked on a journey to venture behind the tightly shut doors of Wall Street finance. In just a few months, you will be an insider within this cryptic, secretive world. Some of the things you'll see will amaze you, some you will loathe, but in the end, you'll know first hand how companies raise money and how deals are done...

For those of you cramming for interviews, Chapters 3 and 5, in particular, will immediately bring you up to speed:

Excerpt from
   Section Summary
Chapter 1    Overview of Wall Street (5 pp)
Chapter 2    Overview of Corporate Finance (12 pp)
Chapter 3    Investment Banking Deal Analysis (7 pp)
Chapter 4    Banking Universe and Current Issues (4 pp)
Chapter 5    Succeeding in Your Interview (20 pp)
Chapter 6    Investment Banking War Stories (4 pp)

Reviews of Training Guide

Boy have Wall Street Advisors and Roberto Milk ever put together a wonderful resource. You can buy the book from their website that is 57 densely packed pages chock full of crucial information. It gives you more than just hints. It takes a look at the real world of business and examines how the 'tightly shut doors of Wall Street corporate finance' operate. It's a must for anyone who wants to learn more about, and be savvy in the world of investment banking. -- Judy Rosemarin, Career Editor, "New Grads, Now What?", New York Post.

The Wall Street Advisors guide is not only an enjoyable read (even for non-industry folks), but it was also key in my success at securing a banking internship for the summer with a bulge-bracket firm. Especially as a student from non-finance geared undergrad school, I had to learn the banking mindset and lingo quickly!

This resource takes you through the stock underwriting process from prospectus to pitch in gritty, gripping detail; it also includes excellent descriptions of a bank's other functions, for example: issuing debt and providing M&A advisory. I found the WSA guide to be much clearer than other help books. That is, it was detailed without being overly technical.

Last but not least, the example Q&A, along with honest explanations, really allowed me into the minds of my interviewers. It's a cutthroat numbers game out there - polished resume-ready candidates at too many prestigious schools vying for the same few positions, so you'll want to be well-prepared. Don't hesitate: the earlier you read Wall Street Advisors, the better.

I learned more by studying your guide this weekend than in the last three years of finance courses. Thanks, guys.

Hey guys! I just wanted to let you know that I got my Lehman Brothers offer. I read every line in your guide and it worked out. The best investment I've made in my life.

I loved the training guide! I will be putting another check in the mail for the advanced guide. I need the experience of modeling with Excel. I took a course in corporate finance, but that was not directed toward the financial uses of Excel.

What a wonderful product you guys have! I downloaded my copies of the training guide and the advanced guide last night, and haven't been able to put either down. They are exactly what I've been looking for, and I can't thank you guys enough for making such a product available to those of us embarking on new careers in banking.

I just got offered an Associate position at Goldman! Coming from a legal background was tough, but I guess I really impressed them because I got the offer that day. Thanks for the info and the guides were great.

As you know, landing an investment banking internship is difficult enough, even if you are a junior undergraduate. So you can imagine how difficult it was this year as a sophomore undergrad to get an offer in IB. After reading the training guide, I really felt that I had an in depth understanding of what actually goes on at an investment bank and this allowed me to formulate intelligent answers and ask pertinent questions in interviews. With the knowledge I gained from the guide I was able to tailor my answers and questions so that I received the most out of the interviews, and the interviewer knew that I had knowledge of investment banking. The guide really is tailored for job seekers which gives it an advantage above the other investment banking books that merely tell what the industry does.

Dear Wall Street Advisors, It has been my first week on the job. All I read about in your guide seems to be true, it's an extremely demanding job where every single detail matters. The pressure is very high and mistakes are not acceptable. All week was like one day: I was coming home and could hardly make it to bed, I was just exhausted. Hopefully my second week will be better, I am learning a lot and already did comps analysis. However my spreadsheet skills needs to be improved ASAP. Receiving your advanced guide disk should help. I really need it. Thanks a lot for your help.

I was so impressed with your guide that I went and talked to the Chair of my Economics Department and told him that this is the stuff we should be learning for our students to be competitive for investment banking positions. Now, when I talk to other students that want positions in investment banking I just smile, because I realize they know so little about what its really about.

Thanks for spending the time to put such good materials together. The few other written materials available on the net are nothing compared to your stuff -- its obvious that you all were really bankers -- thanks for taking the time to write the guides.

Thank you for this site which seems to be the best site in the net, for me. I got the Internship. It was like you wrote -- they asked me why I wanna do this and then I asked them some questions. I mentioned the things you instructed. It was great, although I was realy nervous because of these hot shots. They were really grilling me. But now I'm very happy. Thank goodness there exists such a thing like an internet.

Things went well at Morgan Stanley. It was pretty rigorous, but nothing I wasn't ready for (thanks to your i-banking training guide and quite a bit of studying). Thanks again for an extremely professional product. Believe me, I had exposure to similar guides from your competitors, and yours was the most comprehensive and useful product available. I would be happy to give you as much detail on my day at MSDW as you like. Please let me know if I can offer any insight that might prove helpful with your future publications. For now, suffice it to say that I interviewed with 9 individuals at Morgan Stanley - 3 Analysts, 4 Associates, and 2 VPs. Overall, a very positive experience. The people I had opportunity to meet with were extremely professional, and of the highest caliber.

Click to read other testimonials.

Excerpt from Chapter 1:   Overview of Wall Street

Excerpt from Chapter 1, Section 3:

To recap, bankers need distribution to sell deals. They get distribution from their institutional salesmen and their retail brokers. Also, bankers need research analysts to attract companies as clients. Both research and sales are actively tied to the investing public, either in terms of offering investment advice or managing money. Investment bankers, however, are removed from the investing public. They live and operate in an extremely tight, secure world of inside information. Interaction occurs with client companies only. In order to preserve confidentiality with the clients of the investment bankers and in order to prevent communication of sensitive information to the public, firms have been mandated to construct "Chinese Walls."

Chinese Walls

Practically everything the banker knows about most investment banking deals is private and confidential and must be kept on their side of the Chinese Wall. As a result, corporate finance departments are usually located on separate floors of the firm and are highly secure (laser passcards, hidden camera surveillance, etc., etc.) [more]

Excerpt from Chapter 2:   Overview of Corporate Finance

Section 1: Equity Transactions

The following is a typical IPO timetable for a fictional deal:

  1. The senior management of Texas Oil selects Merrill Lynch as the lead underwriter. This decision is usually based on the following factors: senior management gets along with the senior Merrill banker, Merrill has a research analyst that is respected in the company's industry, Merrill has done other IPOs with similar companies, and the senior management agrees with Merrill's valuation of their company. The latter point is particularly important because in an IPO the senior managers are typically large shareholders and thus are keenly focused on the value of their particular holdings. In Texas Oil, Merrill was competing against Lehman to lead manage the IPO. Merrill said they could sell the Company to the public at a valuation of $500 million whereas Lehman said that $460 million was the appropriate valuation for the company.
  2. Week One: The underwriters (Merrill), the senior management of Texas Oil, Merrill's corporate lawyers and Texas Oil's corporate lawyers all get together for the "Organizational Meeting". They discuss timing and they begin to draft the prospectus [more]...
  3. Week Two & Three: The lawyers, underwriters and management continue to draft the prospectus. Merrill conducts due diligence on the Company by doing site visits, interviewing other senior mangers, calling references, scouring the financial statements and checking operations and systems [more]...

Excerpts from Chapter 3:   Investment Banking Deal Analysis

Excerpt from Section 1 (Banking Hierarchy):

Remember this above all else - DEALS drive banking. Understanding investment banking revolves around your ability to understand the way deals are obtained and processed. First we will explain the role that each person in the bank plays within the flow of a deal and then we will outline the different stages of a deal. The banking hierarchy is as follows:

  1. Managing Director. The "MD" has one overlying mandate - call on companies to bring in deals. Their compensation (easily in the seven digits) is directly tied to the deals they bring in. They spend much of their time on the road, either "pitching" new business or solidifying relationships by visiting their clients, attending conferences, or visiting prospects. In the office, they are constantly on the phone. The best MDs are well-known within their area of specialization and carry enough clout to get into the office of any CEO in their industry. Remember, for MDs, banking is all about relationships [more]

Excerpt from Section 2 (Stages of a Deal):

Stage 2: The Pitch.  It's 3:00 p.m. You are an Analyst in the Lehman Media & Entertainment group. One of the group's MDs calls you into his office. He says, "I've been calling on Milkbone DeeJays, Inc. for a few months now. It's a great story - they're consolidating the party DeeJay industry in order to be the first nation-wide DeeJay company. I spoke with the CEO today and apparently they're actively thinking about going public to raise money for more acquisitions. We've got an edge 'cause I know these guys pretty well, but I've heard that Goldman and First Boston are after the business too. Tomorrow, I'm flying out to San Antonio to pitch them the IPO. My flight leaves out of La Guardia at 6:00 a.m. sharp. I need you to pull together a pitchbook that highlights our general firm capabilities, our IPO capabilities and our experience in the DeeJay industry. I've got a dinner at 6:00 p.m. so if you don't finish it by then just have it messengered to my apartment tonight. Capiche?"

You nod and head out, tasked with the all important pitchbook. This is the bread and butter of the first year analyst -- the king of the pitchbook. The pitchbook is basically a bound flip book that senior bankers use to market the firm's capabilities. Your process for putting it together is as follows [more]

Excerpt from Section 2 (Stages of a Deal):

Stage 3: The Mandate.  The MD in our example delivered a great pitch and he got the lead. This means that the life cycle of the deal has moved from prospect to mandate. The MD, let's call him Johnson, now chooses his deal team. He picks out Rally, an experienced VP and he picks you because you worked on the pitchbook. Rally says he needs someone else a little more senior than you on the deal (you just started) so he chooses Keenal, a bright up-and-coming third year analyst. Now the deal has a working team: Johnson, Rally, Keenal and you.

Cast of Characters:
JOHNSON: MD
RALLY: VP
KEENAL: ANALYST
YOU: ANALYST

Mandate Example ##1:  M&A:
Milkbone DJs wants to acquire private Hella Fun DJs in a friendly acquisition. Rally and Keenal go to both Milkbone DJs and Hella Fun DJs to conduct due diligence. Keenal begins to create a valuation model which shows what the combined company looks like based on different purchase prices and purchase structures (combinations of cash, debt and equity). You are given the task of "spreading" comparable transactions. So you ask the library to do a run of M&A deals in the DeeJay industry and they come up with five over the past three years [more]

Excerpt from Section 3 (On the Job):

It's 4:00 pm and Niccoli, one of the bank's top MDs, calls you into her office. "I just got off the phone with the CEO of Government Technology Partners (GTS)," she said. "They serve as outsourced information technology providers for the US government. They have contracts with the Navy, the Department of Defense and the FBI. The company is private and is 100% owned by the CEO, who apparently wants to retire and sell the company. Take this -- it's a summary of the company and their financials. I need you to give me a range of potential sale prices based on comparable companies and comparable transactions. I know he's focused on getting about $100 million which is approximately 1.2x sales of $84 million. I've got a meeting with him in three days so I need to see a draft tomorrow evening... [more]

Excerpt from Chapter 4:   Investment Banking Universe and Current Issues

The investment banks in the bulge bracket offer a full array of product capabilities (e.g. equity, debt, M&A) for primarily Fortune 500 companies. They all have powerful research, distribution and trading capabilities and they serve as bankers for companies we've all heard about (GM, Microsoft, Intel). The bulge bracket investment banks hire a ton of junior bankers and they each have active recruiting programs at many universities.

Advantages to working in a bulge bracket firm include:

  • Ability to do deals that will make front page news
  • Chance to meet top corporate leaders
  • Exposure to a large investment bank with huge breadth in personnel
  • Opportunity to work in an overseas office
  • Positive resume and career move

Disadvantages of the "bulge" include:

  • Less top senior management exposure for junior bankers
  • Typically less junior banker interaction with senior bankers
  • "Overstaffing" of deals leaves junior bankers with the table scraps (an acquaintance of ours worked as an analyst at Merrill for three years, yet still didn't know how to build a model) [more]

Excerpt from Section 2 (Current Banking Environment):

Billion dollar deals, such as the Starwood-ITT acquisition, have garnered front page headlines and enormous fees for investment bankers. These politicized high profile transactions have significantly altered the competitive landscape within their industries. In addition, the popularity of the consolidation acquisition story has contributed to the M&A frenzy. In a consolidation play, a well financed company begins to acquire small companies within fragmented industries. The end game is to consolidate an industry and thus become the dominant player. The parent company buys small "Mom & Pop" companies and either "rolls them up" into itself or creates a "hub and spoke" network. In a hub and spoke network the parent will enter a new market by buying a large company (the hub) and will then buy an array of small companies (the spokes) and roll them up into the hub...[more]

Excerpts from Chapter 5: Succeeding in the Interview

Excerpts from Section 3 (Questions to Expect):

Every interview will have a question such as "What are your strengths?", "What do you bring to the table?", "What do you offer us in terms of skills?", or "Why do you think you're going to be good at this?"

These questions are tough and the key to answering them well is based on saying what the interviewer wants to hear. In other words, the interviewer needs to match your skills with the skills they seek in a good analyst. The most important traits in a good analyst are: keen attention to detail, [*****], [*****], good "quant" skills, and [*****].

Trait #1: Details. Your job (particularly for the first 3-6 months) is all about details. You can't screw up the details. You're paid a huge amount of money to get all the details right. This is the single most important trait for an analyst to have. You've got to shoot for 100% perfection in all tasks. This is something you've got to get across to your interviewer. A junior banker develops into the "trusted analyst" of a senior banker by getting everything right. Just recently the following question was posed to an analyst, "OK, it's 3:00 am and you're exhausted. You just got the pitch book back from the copy center and you notice a tiny mistake in one of the financial pages. It's not a material mistake and nobody else will probably notice it in the meeting. You mention it to the copy center guys and they say it'll take them two hours to fix the bug. They say, 'C'mon man, we're tired here. We're going home.' What do you do?... [more]

Trait #4: Good "Quant" skills. Every interviewer wants to determine whether you have any experience in modeling, valuing companies, and financial accounting.

Accounting
If you don't have a deep background in accounting, but if you are strong in math, then don't worry, you'll be able to pick it up fast enough once you're on the job. If you do have a background in accounting, then it gives you a nice edge. For second and third round interviews, you need to make sure that you understand the relationship between the income statement, the balance sheet and the cash flow statement...[more]

Corporate Finance
Corporate finance is different than accounting in that corporate finance relates to valuation and financing decisions. The purpose of accounting is to create statements that lay out the historical financial health of a company for management and investors. The purpose of corporate finance is to apply the results of these statements (along with intangibles such as the strength of the industry and the management team) to a valuation model in order to arrive at a value for the company. Why do people care about the value of a company?... [more]

Modeling
Every model has a purpose. Industrial engineers use production line models to show potential future bottlenecks in the production process based on the changes in certain variables. In finance, models are employed to show such things as the value of a company, the projected cash flow of a company, or the projected financing needs of a company. The creation of tight, solid models is what separates the good analysts from the stars. An acquaintance of ours was the first analyst ever to win "Banker of the Year" at DLJ and he did so by having a strong ability to create models and to clearly explain their results to senior bankers and clients... [more]

Excerpt from Section 4 (Finance Questions to Expect):

If a company is reporting negative earnings does that means it's in dire straits?

This question will immediately tell the interviewer whether you know basic accounting and corporate finance. You need to understand that cash flow (and not earnings) is the most important thing to determining whether a company is teetering off the edge. Two key items that you can always add back to earnings as a proxy for cash flow are depreciation and amortization. Open an accounting text and understand these two items. Focus on how they are not cash charges (they are just accounting/tax deductions). If cash flow is negative, you better hope that the company has some serious future upside potential in order to attract equity investors because the commercial banks won't lend money to it. Examples of companies with negative cash flow that could attract equity investors to fund their negative cash flow are biotech companies researching cancer, AIDS, etc. and technology companies (particularly Internet companies).

"Not necessarily. If you addback depreciation and amortization to net income and the number is positive then the situation may not be as bad as it seems...[more]

Excerpt from Section 5 (Game Questions to Expect):

You have a five gallon container and a three gallon container with no markings. You are standing next to a hose. Measure exactly four gallons of water.

"You fill the three gallon container and pour it into the five gallon container. You fill the three gallon container again and pour it into the five gallon container, which leaves one gallon in the three gallon container. You empty the five gallon container and pour the one gallon into the five gallon container. You then fill the three gallon container again and pour it into the five gallon container resulting in four gallons."

Excerpt from Section 6 (Questions You Should Ask the Interviewer):

YOU: "What type of material typically goes into an initial pitchbook?"

This is a good question for you to ask junior bankers. Why? Because they hate putting pitchbooks together and if you sound like an eager analyst who is ready to take that duty away from them then they'll love you. Their response will probably be overview slides, industry overview, etc. If they don't mention comps then you should ask them if comps are typically included -- another task that they like to hand off to new analysts. If you've taken our Investment Banking Training program then you've spread comps (so mention that to them)...[more]

Excerpts from Chapter 6: War Stories

Excerpt from "At The Printers"

...Sure enough, the next day, we were grinding through a few tough issues in the conference room at the printers when Donald, a fresh first year Lehman analyst (Lehman was a co-manager on this deal) stumbled into the room. I'm telling you, this guy was as fresh as they get. He introduced himself to the people around the room who stood to shake his hand then returned to the hot topic at hand.

There is this funny thing that exists among analysts - you can always tell how fresh another analyst is and what questions he's prepared to answer at first glance. At the same time, management teams can never tell this and always seem to address the freshest analysts with the toughest questions. Sure enough, as if it were right out of a book, the CFO turned to Donald and said, "Wait a minute. Donald, what's Lehman's position on the Underwriting Agreement."

All heads turned on him and I felt sorry for him as he perspired under the weight of their stares. There was a tense pause as I silently rooted for him. He gulped and mustered all the authority his 22 year old self could possible gather and stated, "It's a good point. I'll call up my people on that." With that, he got up and left the conference room to use the phone...[more]

Excerpt from "Caution: No Brown-nosing"

When I entered the room in one of my final round interviews at Goldman, the interviewer immediately blurted out, "OK, quick, if you could be anything in the world right now, what would you be?"

I quickly responded, "I'd be the kicker for the Cleveland Browns."

He said, "That's good. If you had said 'a Goldman analyst', I'd have asked you to leave this minute."

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