Closing the Deal

by Drew Pascarella, Lecturer of Finance and Immersion Leader (6/23/13)
Drew Pascarella, Lecturer of Finance and Immersion Leader

As you've probably heard, investment banking is an apprenticeship business. The learning is continuous; an incoming associate is not expected to know every facet of the business on day one. My stated goal with the immersion, therefore, is to “prepare students for a career in investment banking, with an emphasis on a good start.” That good start will enable my students to perform at a high level as soon as they arrive at their firms, and will put them in the best position to succeed as they progress through their careers. Without that good start, it’s hard enough to remain employed, much less become an apprentice.

It’s hard to fathom the accomplishments of this year’s Investment Banking Immersion team (yep, I said team). First up was Week on Wall Street. We visited with eight investment banks and reviewed a series of recently-announced transactions directly with the execution teams who led them. We then kicked off a five-week immersion “core”, which covered the basics of banking: a bond offering; an IPO; an LBO; and an M&A deal. In addition, I had a third party vendor come in to teach LBO & M&A financial modeling (these sessions were timed to coincide with the LBO & M&A cases so the students had a built-in practical application of their skills).

The following week, we joined the MFI immersion for a joint session hosted by Jon Moeller, a dedicated Johnson alumnus and the CFO of P&G. He reviewed P&G’s divestiture of Pringles. Great to hear the client perspective!

After Spring Break, the students were treated to a lecture by Richard Goldberg, a career FIG M&A banker, who walked through the current FIG landscape and provided his views on long-term winners and losers. The next week, I provided an ‘Intro to Restructuring’ lecture (it brought back memories as I was heavily involved in the Nortel restructuring process). This teed up a fascinating lecture by Barry Ridings, arguably the most influential and successful restructuring banker practicing today, who reviewed the Six Flags bankruptcy, with a particular focus on valuation. In between, we had another third party vendor come in for more financial modeling training.

Then it was back to work. But with training wheels off. Welcome to banking.

The semester ended with 3 straight weeks of increasingly complex and somewhat vague assignments: A potential acquisition of Sea World (which was about to go public) by Six Flags (with which we were now very familiar), a “choose your own deal” capital mkts / LBO pitch, and a strategic alternatives pitch - directly to the CFO of a major US technology company. The students were gassed at the end, but the learning was extensive, and I could not have been more proud of the quality of work delivered.

The weekly student blog posts will hopefully provide you with additional detail about what they did in each assignment. At a high level, I constructed the course to be as real-world as possible. The assignments themselves were designed to be actual associate-level investment banking staffings (Having spent 10 years in banking at Citi, eight as team captain for Johnson IB recruiting, I am able to use my experience to create a “true” environment for the students). There was a heavy focus on modeling & valuation. There was time pressure & ambiguity. Students always worked in teams.  The end-product of every assignment was a pitchbook. These decks were presented to me in class (students played the role of senior or junior banker; I played the role of client or senior banker). We covered the full range of transactions in myriad industries. We ended the semester with an actual client pitch.

At the end of each class, I delivered direct feedback to the presenting groups, and provided the students with my views on the deal; how I would have structured it, what I would have highlighted for the client, and what I would have expected of the associates working with me. We left plenty of time for Q&A; I made sure the key learning points stuck and allowed for debate about aspects of the deal that could have gone either way.

So how did the team do? From my perspective, incredibly well. The learning curve was steep, but the team rose to the occasion week after week, made tremendous strides, and will walk into their respective firms as the most prepared summer associates on the Street.

Of course, none of this would be possible without the tremendous support of our dedicated alumni and the wonderful investment banks for whom they work. I spent a significant amount of time connecting with our alumni since coming back to Johnson and have been immensely impressed with not only their career success, but also their genuine desire to help our students, the immersion, Johnson, and Cornell, in any way they can. Thank you.