#sample dcf model | Explore Tumblr posts and blogs

journalmaterialscience-blog · 6 years ago

Text

Preliminary Studies on the Protective Effect of Rosmarinus Officinalis on Astrocytes Introduction Different pro-oxidant compounds in the form of reactive oxygen species (ROS) such as hydrogen peroxide, nitric oxide, superoxide and the highly reactive hydroxyl radicals and reactive nitrogen species (RNS) are naturally generated in biological systems. Its production is counteracted by the intrinsic antioxidant defense, both enzymatic and non-enzymatic, which protects against free radicals and the subsequent cell damage [1]. Oxidative damage occurs as an imbalance between the production of ROS and the ability of intrinsic antioxidant systems, to scavenge these radicals. Oxidation of macromolecules such as proteins, lipids and DNA may lead to cell degeneration and death due to an increase in the release of apoptotic inducing factors [2,3]. Brain is especially sensitive to oxidative stress because of the high proportion of unsaturated fatty acids, the high metabolic rate, the low antioxidants proportion and the slow cellular regeneration. Neurodegenerative diseases such as Alzheimer’s, Parkinson or amyotrophic lateral sclerosis have been found to be directly related to oxidative stress increase, elderly being the main risk factor for the development of these kind of diseases, together with toxic metabolic or infectious processes [4-7]. Rosmarinus officinalis L. (Lamiaceae) is an ever green plant spontaneously growing in the Mediterranean area. Aerial parts of rosemary are rich in polyphenolic compounds endorsed with antioxidant activity [8-12]. In continuation with our research line, R. officinalis methanolic extract was assayed on the human astrocyte glioblastoma, which is known as a useful model for the study of astrocyte functions under both physiological and pathological conditions, with the aim of assessing the mechanism of action of the antioxidant ability. In this study, the antioxidant capacity was first evaluated in the R. officinalis methanolic extracts by the oxygen radical absorbance capacity (ORAC) method [13]. Briefly, sample of Trolox was mixed with fluorescein in a 96-multiwell plate and the AAPH added. AAPH was used to generate peroxyl radicals that oxidize fluorescein, causing a decrease in fluorescence (excitation wavelength 485nm and emission wavelength 528nm) which is measured every 4 seconds for 90 minutes at 37 CºC. Then, the effect of Rosemary methanol extract on cell viability was tested in the MTT assay at different concentrations on the human astrocyte glioblastoma U373. Finally, GSH and GSSG/GSH ratio levels were tested to determine whether rosemary extract may influence on this antioxidant defence activity. Trolox (6-hydroxy-2,5,7,8-tetramethylchroman-2-carboxylic acid), a water-soluble analogue of vitamin E, was chosen as a positive control in all the assays conducted in this work. Trolox is able to decrease ROS production, to prevent cytotoxicity in human cancer cell lines and to rescue cells from apoptotic death [14,15]. Go to Materials and Methods Plant material and extraction process Aerial parts of R. officinalis spontaneously growing in Spain were harvested during flowering in May, 2004. Samples were identified by the Department of Aromatic and Medicinal Plants Research, National Institute of Agricultural and Food Technology (INIA). A voucher specimen was deposited for internal control at the INIA (Madrid, Spain). Samples were dried in an oven at 35°C, grind down and sieved through a 2 mm mesh, and kept protected from light and moisture until use. 60 mg of each sample was extracted with 20 ml Methanol for one hour, under shaking. The suspension was then filtered through one filter paper; 10ml Methanol were added to the sample and filter again over the first methanolic extract. The extract was left for overnight to dry and stored at 5ºC and protected from light until use. Reagents Dulbecco´s modified Eagle´s medium (DMEM), RPMI1640 medium, Foetal bovine serum (FBS), PBS, Gentamicin were purchased from Gibco (Invitrogen, Paisley, UK). Dimethyl sulphoxide (DMSO), Hydrogen peroxide solution (30% w/w), 3-(4,5-dimethyl-2-thiazolyl)-2,5-diphenyl tetrazolium bromide (MTT), 6-hydroxy-2,5,7,8-tetramethylchromane-2-carboxylic acid (Trolox), 2,7-dichloro-dihydrofluorescein di acetate (DCFH-DA), AAPH were obtained from Sigma-Aldrich (St Louis, MO, USA). Cell culture Human astrocytoma U373 MG line was obtained from Cell Culture and Biological Resources Unit at Alcalade Henares University (Madrid, Spain). Cells were grown in a humidified incubator at 5% CO2 and 95% air at 37ºC in Dulbecco’s Modified Eagle’s medium (DMEM) piruvate free,from Invitrogen (Madrid, Spain),, supplemented with 10% fetal bovine serum (FBS) (Biowhitaker) and 50mg/l of each one of the following antibiotics: gentamicin, penicillin and streptomycin. ORAC assay Sample of Trolox was mixed with fluorescein in a 96-multiwell plate and the AAPH added. AAPH was used to generate peroxyl radicals that oxidize fluorescein causing a decrease in fluorescence (excitation wavelength 485nm and emission wavelength 528nm) which is measured every 4 seconds for 90 minutes at 37 °C in a multiwell plate reader (FLUO star OPTIMA fluorimeter, BMG LABTECH). Results calculate the relationship of the areas under the curve between blank and samples and are expressed as micromoles of Trolox equivalents per gram. MTT assay Cell viability (cell growth inhibition) was determined by MTT assay [16] with some modification. Cells were incubated in 96-well plates, at density of 5 x 10⁴ cells/well for 24h, then the cells were treated with different concentrations of the Romero extracts (range from 3.13 to 800 µg/ml) for another 24h. Triton X-100 5% was used as a negative control, finally 2mg/ml MTT was added and the plate were incubated for 1 h at 37 °C, then the form azan crystal formed were dissolved by adding DMSO and the absorbance was measured at 550 nm using Digiscan 340 microplate reader (ASYA Hitech GmbH, Eugendorf, Austria). For all the experiments, every sample was analyzed in triplicate, with four plates for each condition. Intracellular ROS production assay ROS production was evaluated by the DCFH-DA assay [17] with some modification, This assay is based on the oxidation of the non fluorescent compound 2′,7′-dichlorofluorescein (DCFH) into the fluorescent compound dichlorofluorescein (DCF) in presence of ROS. Cells were incubated in 96-well plate for 24h and 50µl of 2ʹʹ, 7ʹ-dichlorofluorescin diacetate (DCFH-DA) at a concentration of 10 µM were added for 30 min at darkness. Then, cells were treated with different concentrations of rosemary extract and the generation of ROS was measured for 2h in a microplate fluorescence reader (FLx800, Bio-Tek Instrumentation) with excitation at 480 nm and emission at 510 nm. Determination of the Glutathione levels The GSH and GSSG levels were determined according to the method of Hissin and Hilf [18]. Determination of GSH was performed by adding 50 μL of the sample to a mixture of150 μL of 0.1 M sodium phosphate buffer (pH 8.0) and 20 μL of o-phthaldehyde (1mg/mL methanol). The determination of GSSG was conducted by mixing 50 μL of the sample and 3 μL of N-ethylmaleimide for 30 min in darkness before adding 150 μL of 0.1 N NaOH (pH 12) and 20 μL of o-phthaldehyde (1mg/mL, methanol). Finally, both preparations were incubated for 15 min at room temperature in darkness, and fluorescence was measured at an emission wavelength of 485 nm and an excitation wavelength of 528 nm with a microplate fluorescence reader (FLx800, Bio-Tek Instrumentation). Statistical analysis Stat graphics Centurion 16.1.15 (XV) was used. One-way analysis of variance (ANOVA) followed to Fishers least significant difference (LSD) test was applied to obtain the differences between samples. p < 0.05 was considered as statistically significant. Go to Results and Discussion Results showed a showed a strong antioxidant activity by the ORAC method, with a value of 3.03±0.15 µmol TE/mg (value is mean ± SD, n=3). The direct effect of Rosemary extraction cell viability (MTT) showed no statistically significant differences on cell survival with respect to the control group (untreated cells) for concentrations between 12.5 and 200µg/mL; the lowest (3.13 and 6.25µg/mL) and the highest (400-800µg/ml) concentrations induced a decrease in cell survival although far away from the levels achieved with the toxic alone (Triton) (Figure 1A). Thus, concentrations ranging from 12.5 to 200µg/mL were chosen for the following assays. Pretreatment of cells with doses of 12.5, 25, 50 and 100 μg/mL of the extract for 24h before H2O2 exposure was able to significantly recover cell viability when compared to the negative control, Triton (Figure 1B). To test the effect of different concentrations on intracellular ROS levels, doses of 12.5, 25, 50 and 100 µg/mL of the extract were added and evaluated by the DCFH-DA assay (Figure 2A). H2O2 as the oxidant insult caused an increase in ROS levels by 117% when compared to control cells. Rosemary extract did not increase ROS concentration, this indicating no cellular stress or oxidative damage which could influence the functional conditions of cells. Pretreatment of the cells with the methanolic extract previous to oxidative insult, ROS levels were also inferior to those achieved by untreated cells, although no statistically significant differences were found (Figure 2B). Therefore, neuronal cells treated with the R. officinalis extract seem to be in a favourable condition to face an oxidative challenge. Then the protective effect of rosemary on GSH and GSSG concentration was determined in cells treated with 1mMH2O2 or 1 mM H2O2 plus noted concentrations of extract or Trolox as a positive control (Table 1). A slight depletion of intracellular GSH levels was observed when 1 mM H2O2 was added for 24 h to astrocytes; co-treatment with 0.5mM Trolox completely prevented the depletion of GSH. Co treatment with different rosemary concentrations partially recovered GSH levels, the strongest effect found with 50 µg/mL rosemary extract. Although the GSH recover was no statistically significant, the ratio GSSG/GSH was closer to untreated cells (0.46 vs 0.41, respectively). The role of reduced Glutathione (GSH) as the main non-enzymatic antioxidant defence is due to the reaction with free radicals and the repair of free radical induced damage through electron-transfer reactions. Moreover, the loss of cellular GSH seems to have an important role in apoptotic signalling [19-21]. Therefore, maintaining GSH concentration above a critical threshold while facing a stressful situation represents a crucial advantage for cell survival. In conclusion, the results obtained in this work support previous data on the antioxidant effect of R. officinalis [10,11]. Rosemary methanolic extract was not toxic on the assayed cell line and exerted moderate antiradical and antioxidant activities by partially recovering GSH levels. These results may contribute to the knowledge of the mechanism effect, althoughfurther experiments are needed to assess and define the molecular mechanism of action involved in such antioxidant effect in order to confirm R. officinalis as a potential therapeutics within those diseases in which oxidative stress plays a crucial role. For more Open access journals please visit our site: Juniper Publishers For more articles please click on: Journal Material Science juniper publishers material science composite materials

#Juniper Publishers #material science #composite materials

0 notes

ronnykblair · 7 years ago

Text

Equity Research in Brazil: The Best Way to Apply Economics to Real Life?

What happens if everyone in your family is an economist?

You might want to follow in their footsteps… but maybe do something a bit different.

One good option is equity research, where you can combine your economic skills with finance and the capital markets.

Our reader today came to the same conclusion as he navigated his way into equity research in Brazil – from a family of economists:

Out of the Central Bank and into the Investment Bank: Getting In

Q: How did you first become interested in equity research?

A: I was born in “Economist Land:” My immediate family (plus cousins and others) all worked in economics or finance in some way.

One of them had worked for the IMF and the Brazilian Central Bank, and another family member had owned a small broker-dealer company in Brazil in the 1990s.

I saw how the high inflation and the currency fluctuations made the capital markets a high-risk, high-reward place, and I knew I wanted to get into the industry from a young age.

Q: So, you majored in finance or economics, and then…

A: No! I did an undergraduate major in engineering, completed a Master’s in Finance degree, and worked in various fields before entering equity research: Risk management and the back office, a family office, and FICC-related sales & trading.

After a few years in those roles, I applied for MBA programs, won admission to a top business school in the U.S., and joined the sell-side equity research team at a large domestic bank in Brazil.

I gained experience there and in a corporate finance rotational role, and now I’m looking to get into buy-side equity research.

Q: Good luck!

What was the sell-side equity research recruiting process like?

A: It’s far less structured than it is in the U.S.

Banks still hire students out of undergrad and incentivize them to stay for the long term, but the entire process happens more slowly, and firms don’t necessarily make you go through a specific set of steps.

People who network their way in tend to come from related roles, such as sales & trading, corporate finance, and investment banking. But it gets very difficult to network your way in after more than a few years of full-time work experience.

My story of winning an offer during an MBA program is quite rare.

Interviewers focus heavily on your soft skills and your ability to fit in with the team. As in other regions, you need a demonstrated interest in the markets, and you must be able to discuss recent trends.

The ER industry has become more competitive because there are so many Brazilians with MBAs from top schools, so the CFA is also becoming more important for setting yourself apart.

The technical questions and case studies in interviews are the same as those anywhere else: Expect 3-statement modeling tests, accounting/valuation questions, and stock pitches.

On the Job at a Large Brazilian Bank

Q: Can you tell us about the equity research industry in Brazil?

A: Since Brazil has the largest economy and capital markets in Latin America, it has a well-developed equity research industry as well.

A mix of international bulge-bracket banks, “In-Between-a-Banks,” and domestic Brazilian banks cover companies here.

Middle-market and boutique firms (whether regional or “elite boutique”) don’t do much yet (as of 2017 – 2018).

Pretty much all the international BB banks cover companies here: JPM, MS, Citi, CS, GS, BAML, and DB.

Of the “In-Between-a-Banks,” the European and Japanese ones have the strongest presence – firms like Santander, BNP Paribas, Mizuho, and Sumitomo all have solid coverage teams.

Three major domestic banks control most of the investment banking market: Itaú, Bradesco, and BTG Pactual.

They all have a strong presence in equity research as well, which you’ll see if you look at any of the Institutional Investor rankings.

That might change in the future because of the corruption scandal(s); the political climate could give smaller domestic banks and international firms an opening.

Q: Thanks for that summary.

What are the most common industries, and does any of the analysis differ from what you do in other regions?

A: Brazil has a diversified economy, at least compared with the smaller countries in Latin America, so research teams cover a mix of industries.

Some of the biggest industries by market cap are commodities (Oil & Gas and Metals & Mining), financials (Commercial Banks), and consumer staples (Food & Beverage), so many of the companies we cover are in those sectors.

Financial modeling is financial modeling, so you’ll still see quarterly and annual projections of the three statements, valuations using multiples and DCF analysis, and industry data to support initiating coverage reports.

The main differences include:

Brazilian GAAP vs. IFRS – These have been converging over the years, but if you look at older reports and filings, there will be discrepancies. Some of the differences relate to subsidiary accounting, dividends, and exchange rates and borrowing costs.

Lower Liquidity and Market Capitalization – Since there is far less liquidity, and since firms are much smaller than they are in the U.S., you have to dig into companies in a lot more detail to understand them.

It’s much harder to skim through a company’s financial statements and build a model just based on the documents; you have to get to know management and speak with sources on the ground.

Currency Fluctuations – Since the BRL/USD exchange rate has been volatile and since the Real has fallen so much against the Dollar, sometimes research analysts will present financial projections in both BRL and USD side-by-side.

If you want to see a few sample reports for companies and industries, check out these examples:

Brazil Retail & Consumer Goods Research – Santander

Brazil Macro & Market Research – Generali Investments

LatAm Universe Coverage Book – Santander

NOTE: We found all these reports with simple Google searches. Many firms make reports and updates publicly available if you search for the right keywords.

Q: Thanks for explaining that.

Previous interviewees in research have said they spent more time speaking with investors and management teams than they did on financial modeling.

What was your experience?

A: I agree with those previous comments; you do a lot of modeling for the initiating coverage reports, but not quite as much after that.

In my role, I spent more time getting to know the management teams and putting them in touch with institutional investors.

I didn’t speak with the investors as much as the salespeople did, but we still interacted a fair amount because sales always wanted our views on various issues.

You split your time more evenly between company management and investors in buy-side equity research since you have to understand what everyone else in the market is doing.

Q: What are the compensation and long-term prospects of this role? Do most research analysts stay there for a long time?

A: Post-tax, post-living-expense equity research compensation in Brazil is about 20% lower than in New York.

Individual income taxes are about 15% lower in Brazil, companies pay for 100% of your healthcare, and the cost of living in São Paulo is ~30% lower than in NYC.

However, salaries and bonuses are also lower, so you can expect to earn about 20% less after taxes and living expenses.

Regarding exit opportunities, most sell-side research analysts either stay in the field or move into investor relations at companies they have covered.

A few may go into private equity or mutual funds, which is possible because recruiting is less structured than in NY and London.

But traditional ER exit opportunities are more limited because there are relatively few hedge funds here.

Q: Thanks for explaining that.

You mentioned in the beginning that you’re looking to move into buy-side research now. What’s your long-term plan?

A: Buy-side research was my plan all along.

I like buy-side research because it combines analytical/introspective work and communications with investors and management.

In most roles, you tend to do one or the other (investment banking skews heavily toward analytical work at the junior levels), so it’s rare to find that balance.

Also, the compensation and working hours are quite reasonable if you find a good team.

Finally, I like the importance of communication skills in research.

You publish reports and speak with different parties all the time, and, coming from a technical background, I’ve always wanted to do more of that.

Q: Great. Thanks for your time!

A: My pleasure.

The post Equity Research in Brazil: The Best Way to Apply Economics to Real Life? appeared first on Mergers & Inquisitions.

from ronnykblair digest https://www.mergersandinquisitions.com/equity-research-brazil/

#ronnykblair digest

0 notes

enough-finance · 8 years ago

Photo

Good For Stock Investors, Less So For Buyers of Small Businesses Was hoping for something a little more suited toward,buying a small business. This seems well suited for stock investors of public companies, and while their ideas certainly have value for evaluating larger private companies, it's less so for someone looking to buy a small business from a private seller. Not a bad book for finance practitioners however. Go to Amazon

The best book on the subject I'm currently doing equity valuation for a small endowment fund, and this book is by far the best I've seen. I've read it several times and keep coming back to it. Highly recommended. I enjoy the book put out under the auspices of the CFA program as well, but this one is just fantastic. Go to Amazon

Pedantic but Not Practical I wanted to read this book for years, and recently got around to purchasing it. Honestly, I was a bit disappointed because this book is more theoretical than it is practical. I personally believe that "Valuing a Business, 5th Edition: The Analysis and Appraisal of Closely Held Companies," by Pratt and Niculita; "Financial Valuation: Applications and Models" by Hitchner, et al.; and even "Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions," by Rosenbaum and Pearl are much better purchases if you are seeking to understand how to value a business. Go to Amazon

... in a way to both improve your knowledge and easily apply. Helpful for not only valuing companies Well written in a way to both improve your knowledge and easily apply. Helpful for not only valuing companies, but also for driving management to maximize the value of them. Go to Amazon

An earlier edition will do just fine This is a good book on valuation by applying the discounted cash flow methodology. The book is worth four stars, because it is in no way a perfect book. The book is now in its fifth edition so the material on DCF analysis is solid in my opinion. It covers basics as well as interesting extensions, but also has glaring gaps. For instance you do not get any information about valuing the cost of working capital requirements. The links to accounting are also weak, you would imagine the book would have a section on accounting ratios like ROA, RONA, ROCE. How can you forecast the future without having a good grasp of the past??? Go to Amazon

Great for Banking This is a must-have book for wannabe bankers and it is a great supplement for a valuation course. The chapters are very organized and detailed. The book would be even better if there were more examples and perhaps a sample model. Nonetheless, the content is very good and the book is a keeper. Go to Amazon

easy enough read this is the book being used for my financial statement analysis class at webster university. it's a easy enough read with a good mix of technical terms and layman wording for the non-CFOs among us but you must have a solid foundation in finance. i do really appreciate the real world examples used to apply the concepts Go to Amazon

Great read and a must have for any industry professional Great read and a must have for any industry professional. Carefully covers many valuation techniques and theories and gives both real world examples and historical background and precedence. Go to Amazon

great Five Stars Five Stars Five Stars Will Order Again! Four Stars Four Stars Five Stars Five Stars Five Stars

#David Wessels: Books

0 notes

arxt1 · 5 years ago

Text

Time-delay measurement of MgII broad line response for the highly-accreting quasar HE 0413-4031: Implications for the MgII-based radius-luminosity relation. (arXiv:2005.09071v1 [astro-ph.GA])

We present the monitoring of the AGN continuum and MgII broad line emission for the quasar HE 0413-4031 ($z=1.38$) based on the six-year monitoring by the South African Large Telescope (SALT). We managed to estimate a time-delay of $302.6^{+28.7}_{-33.1}$ days in the rest frame of the source using seven different methods: interpolated cross-correlation function (ICCF), discrete correlation function (DCF), $z$-transformed DCF, JAVELIN, two estimators of data regularity (Von Neumann, Bartels), and $\chi^2$ method. This time-delay is below the value expected from the standard radius-luminosity relation. However, based on the monochromatic luminosity of the source and the SED modelling, we interpret this departure as the shortening of the time-delay due to the higher accretion rate of the source, with the inferred Eddington ratio of $\sim 0.4$. The MgII line luminosity of HE 0413-4031 responds to the continuum variability as $L_{\rm line}\propto L_{\rm cont}^{0.43\pm 0.10}$, which is consistent with the light-travel distance of the location of MgII emission at $R_{\rm out} \sim 10^{18}\,{\rm cm}$. Using the data of 10 other quasars, we confirm the radius-luminosity relation for broad MgII line, which was previously determined for broad H$\beta$ line for lower-redshift sources. In addition, we detect a general departure of higher-accreting quasars from this relation in analogy to H$\beta$ sample. After the accretion-rate correction of the light-travel distance, the MgII-based radius-luminosity relation has a small scatter of only $0.10$ dex.

from gr-qc updates on arXiv.org https://ift.tt/2ZkVmTq

0 notes

arxt1 · 6 years ago

Text

Long term variability and correlation study of the blazar 3C 454.3 in radio, NIR and optical wavebands. (arXiv:1910.14329v1 [astro-ph.HE])

We performed a long-term optical (B, V, R bands), infra-red (J and K bands) and radio band (15, 22, 37 GHz band) study on the flat spectrum radio quasar, 3C 454.3, using the data collected over a period of more than 8 years (MJD 54500--57500). The temporal variability, spectral properties and inter-waveband correlations were studied by dividing the available data into smaller segments with more regular sampling. This helped us constrain the size and the relative locations of the emission regions for different wavebands. Spectral analysis of the source revealed the interplay between the accretion disk and jet emission. The source predominantly showed a redder-when-brighter trend, though we observed a bluer-when-brighter trend at high flux levels which could be signatures of particle acceleration and radiative cooling. Significant correlations with near-zero lag were seen between various optical/infra-red bands, indicating that these emission regions are co-spatial. Correlations with a time lag of about 10--100 days are seen between optical/infra-red and radio bands indicating these emissions arise from different regions. We also observe the DCF peak lag change from year to year. We try to explain these differences using a curved jet model where the different emission regions have different viewing angles resulting in a frequency dependent Doppler factor. This variable Doppler factor model explains the variability timescales and the variation in DCF peak lag between the radio and optical emissions in different segments. Lags of 6-180 days are seen between emissions in various radio bands, indicating a core-shift effect

from astro-ph.HE updates on arXiv.org https://ift.tt/2C2zsru

0 notes

ronnykblair · 7 years ago

Text

Equity Capital Markets (ECM) 101: How You Get In, What You Do, and What You Do Next

NOTE: This is a revamped and updated version of an older article on Equity Capital Markets. Since the time of the original article, we’ve added a lot of content about this topic and wanted to provide a more detailed overview and list of resources.

If you hear the words “Equity Capital Markets (ECM),” you might immediately think of initial public offerings (IPOs) and companies raising billions of dollars in huge stock-market debuts.

But there’s a lot more to the group than breaking records and making headlines in the process.

Like other capital markets teams at banks, ECM groups can be described as a cross between investment banking and sales & trading.

If you’re in this group, you’ll spend most of your time advising companies that want to raise equity capital.

“Raising equity capital” means that the company sells a percentage of ownership in itself in exchange for cash – as opposed to raising debt, where the company maintains its ownership but must pay interest on the funds it raises.

There’s a surprising amount of controversy online about this group, from how “good” it is to what the true exit opportunities are.

We’ll take a look at all those points in this article, as well as recruiting, team structures, typical deal workflows, on-the-job tasks, and more.

Breaking into Equity Capital Markets (ECM)

In some cases, students intern in ECM and then accept full-time offers; in others, they are brought in via a placement or “sell-day” process.

Some Analysts also find their way into the group via lateral hiring, and sometimes bankers from industry coverage groups join because they’re seeking a better work/life balance.

The recruiting process and interview questions for ECM teams are quite similar to what you would receive in investment banking interviews anywhere else.

Expect questions on accounting, equity value and enterprise value, valuation approaches, DCF analysis, and transaction modeling.

Questions on M&A deals and leveraged buyouts are a bit less likely since you do not work on them in ECM, but almost anything is fair game in entry-level interviews.

The main difference is that you need to show more of an interest in the markets – be able to discuss recent equity issues and trends, how indices are performing, and how IPOs and follow-ons have done recently in your region of interest.

You can follow our deal discussion examples to plan out what you’ll say for these questions.

To learn more about recent IPO filings, Renaissance Capital’s “Commentary & News” section is helpful.

It’s tougher to find information about follow-on offerings and convertible bonds, but sometimes the NY Times DealBook has good coverage.

If you’re interviewing for a convertible bonds role, you should also familiarize yourself with calls, puts, and the basics of how to value convertible bonds and create payoff diagrams.

The textbook Options, Futures, and Other Derivatives by John C. Hull can be a useful reference; we also cover convertible bond accounting and valuation in our IB Interview Guide and Excel & Fundamentals course.

Your story will be similar to what you would say for other groups, but you should emphasize how you like both markets and deals, so capital markets is the perfect combination, given your past experience, current interest, and future career goals.

The Structure: Three or Four Teams in One

Most people speak about ECM as if it’s a single group, but it is actually divided into a few different subgroups at most banks:

Equity Origination: This team pitches companies on raising capital and then executes financing deals such as IPOs and follow-on offerings.

Syndicate: This group communicates with other banks to coordinate deal execution – since most equity deals involve other banks in order to distribute risk.

Convertible Bonds / Equity-Linked: This group helps companies raise capital with “convertible bonds,” which start out as debt issuances but convert into equity if the company’s stock price reaches a certain level.

At some banks, the ECM team might sit on the trading floor since there’s significant interaction with salespeople and traders.

As an Analyst, you might split your time between a few industry sectors within ECM, but as you become more senior, you’ll tend to specialize in one area (e.g., healthcare or technology).

Finally, some banks also have Private Placements teams, which help companies raise capital by selling equity to a small group of large investors (rather than a broad market offering).

Private Placements let companies raise significant capital without going public, and they’re especially popular among later-stage technology companies.

Workstreams, Projects, and Sample Assignments in ECM

Your main job in Equity Capital Markets is to tell stories about companies’ growth potential so that the companies can raise capital from investors.

The work differs depending on which team you’re in, and it gets more technical if you cover convertible bond offerings.

On the Equity Origination side, you can expect tasks such as the following:

Market Slides: An industry group that is pitching for a potential client’s business might request a few slides on equity markets activity, including the performances of stock before and after issuance. You can see a few examples below:

First City by Lazard

Equity Capital Markets Update by Piper Jaffray

Case Studies: You’ll also draft slides based on previous clients that have hired your bank to raise capital. To complete this task, you’ll look up information such as the amount of proceeds raised, the pricing premium or discount, and how the company’s shares performed after the issuance. You’ll try to argue that your bank’s clients have raised the capital they wanted without giving up too much ownership and that their share prices have risen afterward. As part of this process, you’ll also update your bank’s database of equity offerings.

Sales Force or Sales Team Memorandum: We have a detailed article on this one; this memo outlines why investors would want to buy your client’s offering. Along with it, you might also write an internal document (“Equity Commitment Memorandum”) that explains why your bank should take on the risk of the client’s assignment.

Shareholder Analysis: With this one, you analyze a company’s current shareholders, the percentages they hold, and the types of investors they are. Here are a few examples:

Rubios by Cowen

Revlon by Barclays

Crossholdings Analysis: With this one, you compare the shareholders across different companies. Often, you do this so you can tell a potential client, “Hey, Similar Company X has these shareholders – you share some, but not all, of them, so we should target the new ones when you raise capital.” Here’s an example:

GLG / Man Group by Goldman Sachs

Shareholder Momentum Analysis: Here, you analyze a company’s shareholders over time to explain which investors are increasing or decreasing their stakes in the company. You often use this information for targeting purposes, and you aim for investors that seem more interested in the company. Here are a few examples:

Rubios by Cowen

GLG / Man Group by Goldman Sachs

J. Crew Shareholder Rotation by Goldman Sachs

Trading Flow Analysis: You analyze the trading volume of an equity security across different price points and time periods, and you use it to advise a company on an appropriate range of issuance prices:

Average Daily Trading Volume by Cowen

Revlon by Barclays

Investor Targeting: You might write some commentary that confirms investor demand for your client’s equity:

GLG / Man Group by Goldman Sachs

Financial Modeling: And yes, you do some financial modeling as well… but there’s a reason it’s the last item on this list: It’s much simpler than modeling M&A deals or leveraged buyouts. You might value potential clients via comparable companies or analyze how a company’s ownership and capital structure change after an offering. You can see an example of an IPO model below:

IPO Valuation Model – Tutorial

IPO Valuation Model – Excel File and Explanation

With convertible bonds, you’ll complete similar tasks, but for the convertible market instead. Plus:

Convertible Bond Valuation: There are a few ways to do this, but one simple method is to separate the bond into its traditional bond and equity option, value each one separately, and then add them together. Key inputs to the option valuation include the cost of debt for the company, the option’s time to expiration, the stock-price volatility, and the dividend yield of the stock.

This analysis helps you answer questions about demand for possible issuances – for example, if interest rates rise by 2%, how would demand for a convertible bond change? Should the company offer a higher or lower conversion price if that happens?

Term Sheet Creation/Analysis: This document gives the key features of the bond, such as the conversion price, maturity, interest rate, optional redemption terms, covenants, and anti-dilution provisions. Sometimes you’ll create these, and sometimes you’ll have to read and interpret them. Here’s an example:

Jazztel – Convertible Bond Term Sheet

Payoff Diagram: You create diagrams that show the convertible bond’s value at different share prices, which helps the company assess the trade-offs of a convertible bond vs. equity vs. traditional debt.

Deals, Deals, Deals, and More Deals

Everyone knows about the initial public offering (IPO), but you could work on plenty of other deals in ECM:

Follow-On (FO) Offering: With this one, the company is already public and simply wants to raise additional equity capital. FOs are faster and easier to execute than IPOs, and the key questions are the pricing discount to offer and the appropriate offering size. You can divide FOs into a few categories:

Fully Marketed: Includes an “investor roadshow,” a presentation to potential investors by the investment banking team and the client’s management.

Confidentially Marketed / Registered Direct: The bank targets only selected investors over a few days with the offering.

Accelerated Bookbuild: This one happens even more quickly (24 hours to 3 days), and companies often do it when they need capital ASAP and cannot wait for better pricing or terms.

Secondary Offering: The company does not raise capital at all – instead, one group of investors sells its shares to another group of investors.

Concurrent Offering: The company might raise equity and another form of capital, such as traditional or convertible bonds, term loans, or a revolver, at the same time.

At-the-Market: The company issues shares gradually over days or weeks, and it does so at prevailing market prices; the company avoids an intensive roadshow, but it’s a bad choice if the company needs cash ASAP.

Block Trade: The investment bank buys shares directly from the client and then resells them to investors. The bank takes on far more risk in this deal, so the issuance price also tends to be lower. This type of transaction is also known as a “bought deal” in some areas.

Rights Offering: The company sells additional shares to its existing investors, and the shares are allocated according to each investor’s “subscription rights” – this deal allows investors to maintain their ownership stakes as the company raises capital.

You could even help a company to repurchase its shares via an Accelerated Share Repurchase (ASR) deal.

It’s the reverse of an equity offering, and companies often do it when they have excess cash but no plans for how to use it, or when they believe their shares are undervalued, or a combination of both.

Finally, there are different roles for banks in all these deals.

For example, in an IPO, an investment bank could be either a bookrunner or a co-manager – bookrunners do most of the work, get most of the investors, and collect the highest fees, while the co-managers are less involved and earn lower fees.

Most bulge-bracket banks act as bookrunners, while boutique and middle-market banks tend to act as co-managers. On the biggest deals, though, even the bulge-bracket banks could be assigned to act as co-managers.

In ECM, you’ll almost always work with other teams as you execute deals. Here’s an example of the workflow for different tasks in a healthcare IPO:

Valuation and IPO Model: The healthcare team will build a 3-statement model and value the company, but they’ll use the ECM team’s assumptions for the proper offering size and discount.

Customer Due Diligence Calls: The healthcare team will conduct these calls and speak with customers to better assess the company’s growth prospects and risk factors.

Sales Force Memo: ECM will write this memo and summarize the key points for the sales force so they can pitch the company to investors more effectively.

S-1 Registration Statement: The lawyers will draft/copy the initial template, the healthcare team will make its additions, and then ECM and the lawyers will review it and make more additions. Rinse, wash, and repeat dozens of times.

Road Show: The healthcare team will prepare the management team and conduct the event, but ECM may see the sales force presentation and answer their questions.

Culture, Lifestyle, Hours, and Pay

We mentioned earlier that some industry bankers move to ECM if they want a better lifestyle.

In many cases, that happens: An average day might be 7 AM – 7 PM, which may seem like long hours, but which is quite mild compared with other groups in banking.

If you’re done with your work, you can just go home; there’s far less “face time,” and all-nighters and weekend sessions are rare.

Much of your day will be taken up with “Please take 15-30 minutes to do this task” requests because you work with many different industry groups.

The hours in the convertible team can be longer because the work is more quantitative and deals can be more complex, but even there, you’ll probably work less than you would in an M&A or industry group.

At the Analyst level, compensation is similar to compensation in any other group.

The pay ceiling for Managing Directors and other senior bankers is lower than in other groups because the fees are split more ways, but high-six-figure to low-seven-figure compensation is still possible.

The Exit Opportunities: ECM Forever?

And now we reach the major downside of ECM teams: The exit opportunities.

The most common exits are moving to an industry group (healthcare, technology, consumer/retail, etc.), going into investor relations (IR) at a normal company, or joining a hedge fund or other buy-side firm in an IR or fundraising role.

Outside of those, it would be tough to win roles such as equity research or investment analysis at hedge funds because of the types of projects you work on as an ECM professional.

It from ronnykblair digest https://www.mergersandinquisitions.com/equity-capital-markets/

#ronnykblair digest

0 notes