Honing research and presentation skills while analyzing a recent tech IPO
by Steve Segall, MBA '14 (4/29/13)
As the semester continues and as we work our way through the investment banking practicum, our next challenge was to review an Initial Public Offering, or IPO. IPO’s represent one of the higher profile transactions that a banker may encounter and one that requires intense collaboration and intricate knowledge of the market to execute successfully. During our Week on Wall Street, we analyzed the Banco Santader IPO on the Mexican Stock Exchange, but for this project, we would have to dive much deeper into the numbers, produce a deck worthy of a board of directors, and be ready to answer any and all questions about our work in front of the ‘client’, played by our peers. To successfully complete this assignment and stand up to questioning by our peers, we would need to put our research and presentation skills to the test.
This project, as with every other one in the practicum, began with a real life scenario that provides context for the analysis. Our assignment, as detailed by our Managing Director, was to provide analysis and strategic recommendations to the CEO of Xoom Corporation, John Kunze. Xoom (NASDAQ: XOOM) priced its IPO on February 14th, 2012 at $16.00/share, and our task was to be the first non-bookrunner to meet with management to discuss the follow-on process. Our task included an overview of the Xoom IPO, an equity selling thesis, our thoughts on comparable companies to use in our analysis, an in depth valuation and review of the IPO price, and our recommendations about a follow-on, or secondary offering.
One of the most important skills we have learned throughout the semester is how to quickly and effectively find information. I have found the assignments thus far particularly useful as I have learned how to sift through mountains of data and find exactly what my team needs. For the Xoom IPO case, we were tasked with dissecting the S-1 and using the limited information provided by management and our Managing Director to forecast the financial statements and complete our valuation. Learning to find information in SEC filings is as much an art as it is a science. Through the combination of our core accounting and finance classes and now with more advanced knowledge from intermediate accounting, corporate financial policy, and the investment banking practicum, I can read and more easily understand the long and complex documents and find what I am looking for quickly. The research experience I am acquiring now on this real-life banking assignment mimics what I will be asked to do again and again over the summer, and I am confident that it will prove wildly beneficial during my internship and beyond.
The second and arguably more important aspect that is paramount to success in investment banking is solid presentation skills. Each type of analysis we have completed for the practicum requires a slightly different presentation, but the one constant in every PowerPoint and every presentation whether it be in front of peers in a classroom setting or in front of senior management in the boardroom, are simple, yet elegant slides and exceptional public speaking skills. Both of these are tested every week in our class and this week, we would have to defend our assumptions, comparable companies, and the multiples used to determine the IPO price range.
The practical experience we are getting at Johnson is the best preparation because in investment banking, you must be prepared to defend every assumption, number, and claim from any number of involved parties and as associates, it is our job to know the deck inside and out. Among other important lessons, the practicum teaches us that our work is not done when we submit our deck, but rather our work is only fully complete after we present to the broader group. This training is great preparation for those sleepless nights over the summer when we work to finish the deck, get it printed, and have the opportunity to present in front of actual C-level executives.