equity investment banking robert castle, principal © 2006 piper jaffray & co. since 1895....
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Equity Investment BankingRobert Castle, Principal
© 2006 Piper Jaffray & Co. Since 1895. Member SIPC and NYSE.
Introduction
Robert Castle, Principal – Investment Banking• In seventh year at Piper Jaffray
– Associate for 2 ½ years– Vice President for 3 years
• Previously with Conseco Finance and Morgan Stanley
• MBA in Finance, University of St. Thomas• BS in Mortuary Science, University of MinnesotaLittle Known Facts• Nickname is Digger• Enjoy golf, tennis and reading mystery novels• Live in Eagan with wife and two boys (9 and 2 years
old)• Former model and actor
Introduction
Typical Week Day (Non-Traveling)• Wake up at 5:00am• Exercise from 5:15am to 6:30am• Arrive at work around 8:30am• Have multiple client meetings/calls throughout
day• Place calls into new/prospective clients• Arrive at home in between 7:00pm and 8:00pm• Read documents or other work at home before
bed
Typical Week• 60 – 70 hours per week with travel• Two to three days per week of travel
Introduction
Attributes of a Successful Banker• Client focused• Analytical and critical thinker• Good listener• Excellent communicator (orally and written)• Ability to delegate• Team player and mentor for junior staff• Unflappable
Banker Objectives• Become clients’ trusted advisor• Build our core base of five to ten key clients
Clients
Who they are• Small and middle-market companies
– Typically up t0 $2.0 billion in market capitalization– Private, growth companies
• Financial sponsors– Private equity firms– Venture capitalists
Value Piper Jaffray provides them• Provide customized, tailored and trusted advice
– No “cookie cutter” approach to our business
How they are assigned• By industry expertise and sub-sector
specialization
Clients• BioPharmaceuticals• Health Care Services• Information-Driven Health Care• Life Sciences Tools/Diagnostics• Medical Technology
• Asset Management• Broker-Dealers• Depository Institutions• Financial Technology &
Services• Insurance• Specialty Finance
Financial Institutions
Consumer
Health Care
• Apparel, Footwear & Softline Retail
• Consumer Products• Food & Beverage• Restaurants• Specialty & Hardlines Retail
• Computer Hardware & Semiconductors
• Enterprise Software• Internet• IT Services• Wireline & Wireless
Communications
Technology
• Business Information Services• Facilities Services• Human Resource Services• Industrial Services• Learning Services• Marketing Services• Professional Services
Business Services
• Clean Technology• Distributed Power Generation• Ethanol/Bio-Fuels• Fuel Cells• Solar Power• Wind
Alternative Energy
• Aerospace• Automotive Products• Building Products• Flow & Process Controls• Industrial Distribution• Metal Processing• Packaging• Plastic Processing• Security & Safety• Specialty Chemicals• Specialty Vehicles• Other Manufacturing & Services
Industrial Growth
Financing/Products/Services
Piper Jaffray has expertise in providing “cradle to grave” financing advice• Start up or private equity capital• Initial public offerings (“IPOs”)• Follow-on or secondary offerings• Debt capital
– Senior, subordinated and convertible debt• Financial advisory services
– Mergers & Acquisitions– Divestitures– Defensive Advisory
• Corporate and venture services• Restructuring (a/k/a Bankruptcy)
Most common and least common financing
• Approximately 50% of revenue comes from raising capital (i.e., IPOs, follow-offerings, convertible securities) and 50% comes from advisory services (M&A and private capital) Mergers & Acquisition AdvisoryUnderwriting
(IPOs, Follow-ons, ADRs & Convertibles)
1 J .P. Morgan Securities 1062 Merrill Lynch 903 Citigroup Global Markets 884 Goldman Sachs 835 UBS Securities 826 Morgan Stanley 797 Lehman Brothers 788 Banc of America Securities 759 Credit Suisse First Boston 6510 Piper Jaffray 6411 Wachovia Capital Markets 5911 CIBC World Markets 5913 Deutsche Bank Securities 5113 SG Cowen Securities 5115 Bear Stearns 44
Focus SectorsRank Manager # of Deals
Piper Jaffray finished 2005 ranked 15th in the number of Lead and Co-managed equity offerings completed – 10th overall in our focus sectors
Houlihan Lokey Howard & Zukin 126Jefferies & Co. 76Wachovia 69Piper Jaffray 48M&A International 40Keefe Bruyette & Woods 38William Blair & Co. 36Sandler O’Neill & Partners 35Lincoln Partners 33Daniels & Associates 32BB&T 30KPMG Corporate Finance 27Goldsmith Agio Helms & Co. 26Raymond James 24CIBC World Markets 24
Number ofMiddle-Market Advisors* Deals Closed
Source: Thomson Financial and Piper Jaffray; U.S. based buyers/sellers only* Excludes Investment Banks with Average Deal Size>$500 million
Underwriting (IPOs, Follow-ons, ADRs & Convertibles)
1 J .P. Morgan Securities 1062 Merrill Lynch 903 Citigroup Global Markets 884 Goldman Sachs 835 UBS Securities 826 Morgan Stanley 797 Lehman Brothers 788 Banc of America Securities 759 Credit Suisse First Boston 6510 Piper Jaffray 6411 Wachovia Capital Markets 5911 CIBC World Markets 5913 Deutsche Bank Securities 5113 SG Cowen Securities 5115 Bear Stearns 44
Focus SectorsRank Manager # of Deals
1 J .P. Morgan Securities 1062 Merrill Lynch 903 Citigroup Global Markets 884 Goldman Sachs 835 UBS Securities 826 Morgan Stanley 797 Lehman Brothers 788 Banc of America Securities 759 Credit Suisse First Boston 6510 Piper Jaffray 6411 Wachovia Capital Markets 5911 CIBC World Markets 5913 Deutsche Bank Securities 5113 SG Cowen Securities 5115 Bear Stearns 44
Focus SectorsRank Manager # of Deals
Piper Jaffray finished 2005 ranked 15th in the number of Lead and Co-managed equity offerings completed – 10th overall in our focus sectors
Houlihan Lokey Howard & Zukin 126Jefferies & Co. 76Wachovia 69Piper Jaffray 48M&A International 40Keefe Bruyette & Woods 38William Blair & Co. 36Sandler O’Neill & Partners 35Lincoln Partners 33Daniels & Associates 32BB&T 30KPMG Corporate Finance 27Goldsmith Agio Helms & Co. 26Raymond James 24CIBC World Markets 24
Number ofMiddle-Market Advisors* Deals Closed
Houlihan Lokey Howard & Zukin 126Jefferies & Co. 76Wachovia 69Piper Jaffray 48M&A International 40Keefe Bruyette & Woods 38William Blair & Co. 36Sandler O’Neill & Partners 35Lincoln Partners 33Daniels & Associates 32BB&T 30KPMG Corporate Finance 27Goldsmith Agio Helms & Co. 26Raymond James 24CIBC World Markets 24
Number ofMiddle-Market Advisors* Deals Closed
Source: Thomson Financial and Piper Jaffray; U.S. based buyers/sellers only* Excludes Investment Banks with Average Deal Size>$500 million
Financing/Products/Services
How is our research product used?• Provides investment banking clients with a
“voice” on the Street
• Ability to provide company specific and industry specific knowledge to new/prospective clients
• Enables bankers to keep informed of key company events
• Utilized by institutional sales force to keep in front of their clients and to sell new offerings
Financing/Products/Services
How is our research product used?• Our research analysts are independent from our
investment bankers and develop their opinions based on the results and merits of a covered company.
• Our research analysts, together with research management, make their own coverage decisions, including decisions to initiate or terminate coverage. Our investment bankers do not have any input into company-specific coverage decisions.
• Piper Jaffray does not offer favorable research or specific ratings or price targets in consideration of, or as an inducement for investment banking business.
• Our research analysts do not participate in efforts to solicit investment banking business.
Financing/Products/Services
Financing/Products/Services
Number of Companies Under Coverage Less than $2 Billion
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Equity Research Coverage – Consumer, Financial, Health Care and Technology
Sector classifications via Global Industry Classification Standard (GICS)Source: bigdough; data as of 12/31/2005
How is our research product used?
Conferences that Investment Banking has access to:• Industry conferences sponsored by trade
associations• Piper Jaffray sponsored conferences
Financing/Products/Services
• Financial Conference March New York, NY
• China Internet & Technology Conference MarchBeijing, China
• Hardware & Technology Conference May New York, NY
• Health Care Conference June London, England
• Consumer Conference June New York, NY
• Digital Media Technology Conference SeptemberNew York, NY
• Software & Business Services Conference SeptemberNew York, NY
• Retail, Apparel & Footwear Conference OctoberLondon, England
• Financial Services Conference November Boston, MA
• Health Care Conference November New York, NY
Conference Date Location
Partnerships
Internal• Product specialists
– Equity capital markets (i.e, syndication)– Convertible securities– Debt capital markets– Corporate and venture services
• Industry team– Analysts, Associates, Vice Presidents, Principals
and Managing Directors
External• Accountants, attorneys, printers, financial
sponsors
Partnerships
Seamless Teamwork & Integrated
Client Focus
Minneapolis
NewYork
Chicago
DepositoryInstitutions
VP
FinancialTechnology& Services
Principal
SpecialtyInsurance
Analyst
Associate
MD
SpecialtyFinance
Revenue
Is created by:
• Working hand-in-hand with clients
• Providing thoughtful, value-added advice
• Constantly developing existing and new/prospective client relationships.
• Being retained to represent companies on transformative events
– IPOs (typically 7.0% commission)
– Follow-on offerings (typically 5-6% commission)
– Private capital offerings (typically 3-6% commission)
– Advisory assignments (1-2% of transaction value)
– Debt offerings (.50% to 3% commission)
Questions