四川大学经济学院投资银行学复习重点

Investment banking engage in public and private market transactions for corporations, governs and investors. These transactions include mergers, acquisitions, divestitures, and the issuance of equity or debt securities, or a combination of both.

M&A PE asset securitization project financing.

从发行方式上：私募业务，时间短快；速实现融资；不需要注册不需要披露信息/募集资金数额不大政券流动性差pp the sale of new securities to a few qualified investors instead of through a public offering. Pp securities don’t have to be registered with SEC

Typically consist of stocks shares of common stock or preferred stock or other forms of membership, warrants or promising notes.

1933 Glass-Steagall Act/Banking Act - Introduced the separation of bank types according to their business (commercial and investment banking)

1999 Gramm-Leach-Bliley Act/GBLA - Deregulation and revenue diversification

Underwriting:

中：核准制：政府主导型：实质管理，要审核公司实质条件，赋予监管当局决定权

美：注册制：市场主导型：强调信息披露，关注市场导向，强调市场对股票发行的决定权

美股发行

Pre-filing period

Find underwriter and sign underwriting agreement

Due diligence before the registration statement becomes effective, the underwriter will hold a due diligence meeting attended by members of the IPO team. The purpose is to list gather and authenticate matters such as articles of incorporation, bylaws, patents, completeness and correctness of minutes, and verification of corporate existence. Due diligence meetings are held to reduce risk of liability associated with filing by ensuring that all material matters have been fully and fairly disclosed in the registration statement. This is an important safeguard. Part of the due diligence activity of legal counsel is to make formal visits to the company’s offices and plant sites.

Registration statement

Filing date

Waiting period

Sec

初步审查

出具意见信

收到修正报告

详细审查

准予生效

Issuing Company

口头要约

Red herring/preliminary prospectus is distributed to brokers and prospective purchasers to gather indications of interest from investors.

Road show

Tombstone

Final price

Final prospects

Effective date

Post-effective period

开立第三方账户

发售股票

移交资金和股权证书

市场维持

结算

BOOKBUILING:

refers to the process of operating capturing and recording investor demand for shares during an initial public offering or other securities during their issuance process, in order to support efficient price discovery.

Strike bid: is a request for shares regardless of the issue price

Limit bid: specifies the maximum price that the bidder is willing to pay for shares

Step bid: the bidder submit a demand schedule as a step function.

降低发行风险，保证发行成功的同时还能够使承销商选择以合适的价格发行股票，发行这可以选择较为理想的股东结构

承销商的股份配售权成为激励机构投资者说真话的实现完全信息揭示分析逻辑的重要切入点配售股溢价（当前较高定价二级市场长远发展

FIXEDPRICE: used to be the standard practice in euro时间长募集少

Issuer and bank set price before bids are submitted

Firm commitment is in which investment bank agrees to purchase the entire issue and distribute it to both institutional and retail investors

Best efforts agreement agrees to sell the securities but not guarantee the price.

AUCTION: the least common price-setting mechanism投资者对市场信息掌握不准确

Uniform: all winningbidders pay the same price set at market-cleaning level

Discriminatory: each investor whose bid is above the clearing price would receive the whole amount of shares demanded.

In bb the price and allocation rules are not transparent; investment bank does not have to allocate the highest bidders

Cost fees: gross spread: the difference between the price the issuer receives and the offer price Direct expenses: Filing fees/legal fees/taxes/

Indirect expenses: cost of management time of the issue

Abnormal returns: seasoned issue

Underpricing: price paid by selling the stock below the true value

Floating risks consists of wpm,

Waiting risks during the period after filing the registration statement, but before the effective date, changes in market environment often affect the offering price/issuer

Pricing risks when market conditions worsen after the underwriting agreement is signed. Marketing reduces floating risk by building a book of interest before the effective date and by aftermarket trading.

GREENSHOE OPTION an option allowing investment bankers to purchase up to specified additional shares, typically 15 percentof the issue.

IPO:the first sale of a company’s shares on a stock exchange.

M&A: Definition: M: combination of two companies into one large company. Such actions are commonly voluntary and involve stock swap or cash payment to the target.

A: takeover/buyout: is the buying of one company (target) by another. Friendly/hostile: the companies cooperate in negotiations;the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer.

Motivation: Corporate acquisitions are capital investments.Determined by whether it makes a net contribution to shareholder wealth. Undervalued shares/agency problems/diversification (reduce sys risk)//Sellers’motivation: founders of other individual owners sell as part of their retirement and estate planning, or as a strategy to other business ambitions/recurring need for expansion capital when public markets are either not desirable or unavailable.

Growth: companies seeking to expand are faced with a choice between internal growth and growth through M&As. internal growth may be slow and uncertain.

Synergy: the ability of a corporate combination to be more profitable that the individuals parts of the firms that were combined. The anticipated existence of synergistic benefits allows firms to incur the expenses of the acquisition process and still be able to afford to give target shareholders a premium for their shares, which means positive NAV / bid premium

Operating synergy:

Revenue-enhancing operating synergy: it may arise from a company with a strong distribution network merging with a firm that has products of opportunity.

Cost-reduction operating synergy: these cost reductions may come as a result of economies of scale, decreases in per-unit costs that result from an increase in the size scale of an company’s operations

Financial synergy: refers to the impact of a corporate merger or acquisition on the costs of capital to the acquiring firm or the merging partners.

Pros of takeover: increase in sales/revenues; venture into new business and markets/profitability of new business and markets/increase market share/decrease competition/reduce overcapacity/enlarge brand portfolio/increase economics of scale/

Cons:reduce choice for consumers in oligopoly markets/job cuts likelihood/enterprise culture conflict/hidden liabilities of target entity

Strategic Planning and intermediary

Valuation and financing

Takeover defenses

Risk arbitrage

Buffett princess-company looks to acquire/toad-company waiting to be acquired

Much management were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad’s body by a kiss from a beautiful princess. So they believe their managerial kiss will do wonders for the profitability of the target company

Financing

All-cash transaction-fastlow-cost/tax, cash flow, debt

Stock for stock transaction-tax-free transaction to seller/dilution股权被稀释

Preferred stock or debt financing-deferring of tax liability of sell entity/dilution and more debt Issuing convertible securities-issue fewer shares, low cost, mutual benefit/require payment of interest or preferred dividends for a period of time.

Earnout-contingent payments

Bridge loans-to secure closing a deal, junk bonds issues/involve escalating interest costs, equity kicker, penalty fee

LBOsleveraged buyouts

Use borrowed money for a substantial portion of the purchasing price of the buyout company. Acquires little money, bulk of the purchase price is borrowed from bank and other lenders/LBO firms look for distressed companies in out-of-fashion industries to avoid paying top dollar Senior debt: collateralized by a first lien on the assets of the company 50-70%/senior term loan:based on a certain percentage of the appraised fair market value of the land and buildings and the liquidation value of the machinery and equipment, subordinated financing raised from insurance companies or subordinated debt funds with a high yield or noninvestment-grade bonds to insurance companies pension funds and other institutional investors 6-10years 15-30%/Equity financing: make up the difference between financing required and financing available in the form of debt. Management usually invest in the equity of an LBO company together with an LBO fund a corporate or a group of investors. Seller and subordinated lenders receive equity in the new company.

MBO the purchaser are management

Financial techniques/Structural and strategic actions preventative/active antitakeover measures Poison pill/golden para/greenmail/WK/capital structure change/litigation/ Pac-man / Crown jewel

Corporate charter amendmentssupermajority provisions/staggered boards/

Tender offer: public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to the tendering of a minimum and maximum number of shares.

Keep management honest and limit agency costs

私募