internship20report20kpmg v2 kopi

! !

08!Herbst'

!!

!____________________!Johann!Rusche!Copenhagen,!22.03.2012!

Internship'Report'March' 2012!

Internship!Report!

KPMG!AG!Wirtschaftsprfungsgesellschaft!Corporate!Finance!Department!!M&A!Advisory!

! !Frankfurt!am!Main,!Germany!11.07.!!09.09.2011!!Johann!Rusche!CPR!Nr.:!310790D3819!BSc!International!Business!&!Politics!!Academic!advisor:!Michael!Hedegaard!PreDapproved!to!be!creditDtransferred!!!!!!!Tabs:!13,605!

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II!

Table of contents

I. KPMG at a glance

p. 1

II. Key learning experiences

p. 1

III. Analytical Description Pitch Presentations p. 3

IV. Relation to the IBP program

V. Problems regarding the IBP curriculum

VI. Conclusion

p. 5 p. 5 p. 7

Appendix

- IBP program structure - Evaluation/ Internship Report by KPMG

Important note: This internship was pre-approved to be credit-transferred with 15 ECTS. However, I am now only aiming at 7.5 ECTS, which also reasons the length of this report.

Internship*Report* * KPMG*AG*Wirtschaftsprfungsgesellschaft* * * *

* 1*

I. KPMG'AG'at'a'glance'

'KPMG*AG*Wirtschaftsprfungsgesellschaft*is*an*affiliated*company*of*KPMG*Europe*LLP*and*is*one*of*the*leading*auditing*and*advisory*firms*in*Germany.*Its*services*are*split*in*to* three* business* segments:* tax,* audit,* and* advisory* services.* KPMG* clients* include*business* corporations,* governments* and* public* sector* agencies* and* nonFprofit*organizations.* Around* 8,500* employees*work* at* 24* locations* across* Germany.* KPMG,*together* with* her* largest* competitors* Deloitte,* Pricewaterhousecoopers,* and* Ernst* &*Young*forms*the*group*of*the*so*called*BIG*4,*the*most*influential*service*companies*in*both*size*and*market*share.****The* Corporate* Finance,* Mergers* &* Acquisitions* Department* provides* analyses* in*connection* with* valuation* of* companies,* financing* advisory* related* to* equity* or* debt*capital,*and*transaction*and*strategy*consulting.*Mergers*&*Acquisitions*as*a*part*of*the*Corporate* Finance* provides* buy* and* sell* side* advisory* services* within* the* scope* of*corporate*transactions.1***II. Key'learning'experiences'

'My*personal* learning* experience*while* interning*with*KPMG*was* excellent* and* this* is*probably*the*main*reason*why*I*enjoyed*the*time*so*much.*Being*an*intern*with*KPMG*was*a* challenging* job,*because* I*was* fully* integrated* into*project* teams,* I*was* treated*like*a*normal*employee,*and*I*was*expected*to*deliver*almost*the*same*kind*of*work*as*the* Junior* Consultants.* However,* I* enjoyed* this* demand* a* lot* and* I* got* even* more*motivated*by*the*responsibility*I*faced.***In* general,* I* gained* a* sound* insight* into* M&A* processes* as* well* as* into* different*industries* and* about* strategic* management* consulting.* I* was* mainly* involved* in*supporting* the* teams* dealing* with* Transport* &* Logistics,* Energy,* and* General*Industrials.* In*particular* I*was* familiarised*with* the* following*tasks,*as*summarised* in*my*report*by*KPMG:*********************************************************1*Internship*Report*by*KPMG*AG.*


* 2*

Work*on*the*compiling*of*pitch*presentations* Participation* in* compiling* a* corporate* rating,* in* particular* assessment* on* the*basis*of*various*multiplier*procedures* Carrying*out*market,*industrial*and*corporate*analyses*with*the*help*of*databases,*for*example*MARKUS,*LexisFNexis,*Thomson,*One*Source*and*Mergermarket* Compiling*of*corporate*profiles* Compiling*long*and*short*lists*within*the*scope*of*a*transaction*process* Support*in*compiling*a*business*plan* Compiling*an* investment*overview*and*participation* in*creating*an* information*memorandum*within*the*scope*of*a*transaction*process** Contribution*towards*the*preparation*of*a*management*presentation**A*very*nice*side*effect*were*the*sharp*improvements*I*made*using*MS*Office,*mainly*MS*PowerPoint* and*MS*Excel,* since* I*was*dealing*with* these*programs*on* a*daily*basis.* I*also* got* to* know* various* banking* databases* such* as* CapitalIQ,* Bloomberg,* or*Mergermarket,*which*I*can*handle*quite*well*now.***Moreover,* it*was* interesting* to*observe*and*understand*how*management*consultants*work,* especially* in* the*very* interesting* field*of*M&A,* linking* investment*banking*with*strategic* management* consulting.* It* was* the* first* time* for* me* to* work* in* a* highly*professional*environment*for*a*longer*time*and*it*was*a*great*experience*to*be*dealing*and* working* with* people* that* all* graduated* from* leading* European* or* US* business*schools*and*universities.**Furthermore* I* was* seriously* surprised* and* impressed* at* the* same* time,* how* much*people*in*this*industry*do*actually*work**including*me*for*these*ten*weeks!*I*started*to*work*around*9am,*had*a*very*quick*noon*break*just*to*eat*some*food*and*then*continued*working*until*very* late* in* the*night,* interrupted*by*a* little*snack* in* the*evening*only.* I*rarely*left*office*before*midnight*and*in*case*I*had*finished*my*work*earlier*that*evening,*it*was*an*unwritten*internFlaw*and*commonly*expected*to*check*with*other*colleagues*for*new*tasks*to*support*other*projects*team.*This*might*sound*as*if*interns*were*heavily*exploited*by*KPMG,*but*this*is*definitely*not*the*case.*Everybody*in*the*M&A*department*


* 3*

worked* that* long* and* intensively* and* as* an* intern* one*was* not* freed* from* this*work*culture*since,*but*rather* fully* integrated.*However,* I*never*complained*about*this*very*intense*workload*and*I*was*usually*in*a*good*mood*while*working*in*the*office.*This*was*mainly*due*to*one*reason:*The*very*friendly*working*atmosphere*and*the*overwhelming*kindness* of* my* colleagues.*With* these* people* it* was* simply* fun* to* work* with.* I* was*always*treated*in*a*very*fair*and*helpful*manner*and*got*help*whenever*needed.*Another*positive* aspect* is* the* fact* that* I* could* start* building* my* own* professional* network.*Whereas*I*am*still*in*a*loose*contact*with*some*former*KPMG*colleagues,*I*was*especially*delighted*when*one*partner*offered*me*his*future*support*at*the*end*of*my*internship.****III. Analytical'Description''*Pitch'Presentations'

'In*this*section*I*will*elaborate*on*the*central*task*I*have*been*dealing*with*most*of*my*time* * the* compiling* of* pitch* presentations.* Apart* from* my* contribution* towards* a*management* presentation* and* a*market* outlook* about* the* energy* industry* almost* all*the*tasks*I*have*listed*in*the*section*above*were*related*with*the*overall*work*for*several*pitch*presentations.**Pitch* presentations* certainly* belong* to* the*most* tedious* yet* crucial* part* of* the* M&A*advisory* business.* SellFside* pitch* presentations* are*worked* out* by* all* the*major*M&A*transactions* companies* as* well* as* smaller* M&A* boutiques* as* an* application* to* be*selected*as*the*advisory*firm*of*the*certain*target*which*is*about*to*be*sold.*Thus,*a*pitch*presentation* is* the* way* to* land* a* job* for* the* M&A* advisors.* Though* the* pitch*presentations*are*submitted* free*of* charge* to* the*potential* client,* they* involve*a*great*deal* of* research* as* well* as* analytical* and* strategic* work* until* the* presentation* is*finalized.*Pitch*presentation*usually*do*not*exceed*a*length*of*25F30*pages,*excluding*a*comprehensive*appendix.*In*a*pitch*presentation,*one*will*rarely*find*anything*negative*since*the*main*purpose*is*to*sell*KPMGs*competences*and*later*on*the*target*company*itself.*The*structure*of*a*pitch*presentation*is*usually*the*same*and*does*only*vary*to*a*minor*extend:*Pitch*presentations*contain*an*overview*about*the*target*companys*key*strengths* and* some* general* statements* about* the* companys* industry.* They* further*include* a* brief* future*market* outlook* as*well* as* a* suggestion* for* the* future* corporate*


* 4*

strategy* after* an* acquisition.* Pitch* presentation* finish*with* a* summary* about* KPMGs*competences*and*M&A*advisory*successes*in*the*past,*supported*by*credentials*tailored*towards*the*industry*of*the*potential*customer.*In*the*appendix*the*reader*can*find*an*analysis* of* around* 25F30* potential* investors,* in* other* words* short* profiles* of* both*financial* (such* as* e.g.* private* equity* funds)* and* strategic* investors,* whereas* the*emphasis*is*generally*placed*on*the*latter.**My*work*mainly*involved*the*responsibility*for*the*appendices.*Thus,*I*had*to*take*care*of* the* short*profiles* of* potential* investors,*which* I* had* to* identify*myself.* Therefore* I*analyzed*the*market*environment,*found*major*player*or*searched*industry*indexes*by*using* databases* such* as* CapitalIQ,*One* Source* or*MARKUS.* I* compiled* a* long* list* and*then*further*ranked*the*investors*I*had*identified*according*to*three*criteria:**1) Financial*Capacity:*I*screened*financial*statements*looking*for*key*figures*such*as*EBITDA* and* annual* turnovers* to* analyze* the* financial* capacity* for* a* potential*takeover.**2) Strategic*Fit:* I* analyzed* the*degree*of*overlapping* corporate*activities*between*the* potential* investors* I* had* identified* and* the* acquisition* target* to* assess* the*strategic*fit*for*the*investors.*3) Recent* M&A* Activities:* M&A* databases* such* as* Mergermarket* allowed* me* to*figure*out*whether*the*potential*investors*had*accomplished*any*takeovers*in*the*recent*past*and*whether*M&A*belonged*to*the*business*practice*of*these*players.**However,*I*also*contributed*to*the*main*part*of*several*pitch*presentations.*I*worked*on*corporate* rating* and* quite* quickly* began* to* realize* that* the* Discounted* Cash* Flow*method*is*not*really*used*for*valuation*any*longer,*but*rather*are*multiplies*such*as*P/E*ratio,*EBIT*or*EBITDA*multiple*much*more*common.*I*have*also*learnt*a*great*deal*about*different*markets* and* industries* and*got*used* to* read* corporate* annual* reports*when*filtering*for*particular*information.*All*in*all,*working*on*pitch*presentations*was*a*very*good*opportunity*to*dive*into*M&A*for*the*first*time,*mainly*because*of*the*broad*variety*of*task*that*I*was*allowed*to*deal*with.**'

'


* 5*

IV. Relation'to'the'IBP'program'

'As*stated*earlier,*the*internship*with*KPMGs*Corporate*Finance*department*was*a*great*chance*for*me*to*learn*about*M&A*and*a*variety*of*other*topics*as*well*as*to*deepen*my*economic*understanding* in*general.*However,*at* this*stage*of*my*study*(2nd*year)* it* is*rather*hard*to*relate*my*work*to* theories,* issue,*or*problems* from*the*part*of* the* IBP*curriculum*I*have*been*studying*so*far.*Since*the*M&A*advisory*business*is*a*subFsector*of* Investment* Banking* in* the* financial* industry,* the* theories* and* concepts* from* the*political* courses*may* not* be* used.* However,* my* so* far* acquired* knowledge* from* the*economic/*business*courses* is* far* too*basic*and* theoretically* to*be*related* to* the*very*specific* work* I* did* with* KPMG.* However,* I* expect* my* internship* with* KPMG* as* an*optimal* preparation* for* the* course* Corporate* Finance,*which* is* scheduled* in* the* 6th*term,*and*I*am*very*much*looking*forward*to*be*provided*with*the*academic*view*on*the*M&A*business.**Due*to*this*issue,*I*chose*to*focus*my*analysis*on*the*IBP*curriculum*itself*with*relation*to*the*challenges*I*was*facing*both*when*preparing*for*my*interview*and*when*I*started*my*actual*work*in*the*office.*'

'

V. Problems'regarding'the'IBP'curriculum''When*planning*and*eventually*conducting*my*summer*internship*I*had*to*face*serious*problems* of* academic* lacks* due* to* the* structure* of* the* BSc* program* International*Business*and*Politics.*Since*I*applied*for*a*position*with*KPMG*AG**a*rather*technically*operating*firm** it*was*clear* from*the*beginning*that*the*politically*orientated*courses*would*be*less*useful*for*both*the*application*process*as*well*as*the*actual*work.*When*I*started*my*application*process* in* January*2011,* I*had*merely* finished* three*courses**Micro* Economics,* Managerial* Economics* 1,* and* Political* Science.* Thus,* my* academic*economic* understanding* was* on* a* really* low* level.* In* fact,* my* practical/applied*economic* knowledge* was* actually* nonFexistent,* since* both* Microeconomics* and* ME1*mainly*deal*with*basic*economic*theories*and*general*concepts.*Although*the*latter*tries*to*approach*real*cases*and*further*more*practical*knowledge,*fist*year*students*are*still*


* 6*

far* away* from* gaining* business* relevant* skills* that* can* be* used* in* the* real*world.* To*extend*the*perspective*on*the*economic*courses*of*the*2nd*term**Macro*Economics*and*Managerial* Economics* 2* * it* turns* out* that* this* imbalance* of* economic* theory* and*businessFrelated*taught*skills*is*not*getting*any*better.**Thus,*the*main*question*to*face*regarding*the*program*structure*is*probably:*How*less*academically* should* students* be* taught* be* in* favour* of* a*more* applied* and* businessFrelated*approach,*acknowledging*that*the*respective*skills*are*probably*more*trivial*and*less* scientific* than*purely* economic* theories?* I* am*aware*of* the* fact* that* this* issue* is*part*of*an*ongoing*debate*regarding*the*design*of*study*programs*in*general.*However,*from*my*point*of*view**admitting* that* I* can*enter* the*discussion* from*a* second*year*university* student* perspective* only* * the* business* and* management* related* focus*should*be* emphasized* in* the* IBP*program*structure*more* strongly.* In* the* following,* I*will*specify*my*reasoning.**First*of*all,*CBS*as*the*institution*behind*the*IBP*program*is*a*business*school**which*should*be*different*from*a*regular*university.*Whereas*regular*universities*tend*to*have*a*rather*holistic*approach*to*academic*education*in*general,*business*schools*are**also*historically* * usually* operating* towards* a*more* practical* educational* concept,* closely*connected*to*actual*needs* from*the*business*world.*Therefore* it* is*not*surprising,* that*one*of*CBS*slogans*that*can*be*found*on*one*of*the*banners*in*the*main*entrance*hall*in*Solbjerg*Place*stating:*Where*University*means*Business.*This*statement*reflects*well*what*I*tried*to*explain*above.*Therefore*I* face*problems*understanding*the*correlation*between*the*general*approach*of*Copenhagen*Business*School*and*the*nature*of*the*IBP*program.**One*of*the*reasons*why*I*am*studying*at*CBS*is*the*fact*that*I* like*to*get*prepared*and*qualified*for*my*further*professional*career*in*the*business*world.*No*doubt*that*the*IBP*program* is* challenging* and* demanding* quite* a* lot* of*work* from* students.* However,* I*unfortunately*do*not*enjoy*the*feeling*that*I*am*achieving*actually*valuable*knowledge*that*helps*me*applying*for*certain*jobs*in*the*future**at*least*this*is*my*impression*after*the*first*half*of*the*program.*In*my*opinion,*IBP*students*should*not*be*studying*merely*to* achieve* certain* educational* goals* by* passing* courses.* They* should* rather* be*


* 7*

stimulated*by*their*study*to*develop*themselves*achieving*higher*educational*levels*by*acquiring*a*rational* mix*of* theoretic*economic*concepts* joined*with*businessFrelated*skills.*As*already*mentioned*earlier,*I*consider*this*mix*in*the*IBP*Bachelor*program*to*be*in*an*unsatisfactory,*imbalanced*stage*today.**Concretely,* I* consider* the* first* term* to* be* structured* to* loose.* Although* it* allows*students* a* smooth* entry* into* university* life* providing* them* with* enough* time* to*integrate*into*their*new*environment,*I*believe*that*time*can*be*used*more*efficiently.*In*the*first*term,*students* face*three*courses*only,*whereas*the*Political*Science*course* is*weighted*more*heavily*due*to*its*15*ECTS*valuation.*In*fact,*the*workload*for*this*course*is* just* slightly*heavier* than* for*ME1*or*Microeconomics.*Thus,* it*would*be*possible* to*integrate* a* fourth* course* into* the* first* term.*This*would*be* chance* to* integrate* a* real*businessFrelated*course*into*the*curriculum*such*as*Financial*Accounting.*This*course*does* definitely* belong* to* a* sound* education* for* every* economics* or* business* reading*student.*However,*when*looking*at*the*structure*of*the*IBP*program*it*appears*that*this*essential*course*is*not*an*integral*part*of*the*IBP*curriculum*at*all2.*I*believe*this*to*be*a*pitfall*and*one*of*the*major*disadvantages*of*the*program.*I*think*it*is*misconception,*if*students* eventually* hold* a* Bachelors* degree* in* business* without* knowing* anything*about*accounting*and*financial*statements.***VI. Conclusion'

'The*time*working*with*KPMG*in*Frankfurt*last*summer*was*a*valuable*experience*I*do*not* want* to*miss.* I* learnt* a* lot* about* Corporate* Finance* and*M&A,* a* field* I* am* very*interested*in.*Furthermore,*my*motivation*to*perform*well*at*CBS*has*been*encouraged*since*I*learnt*to*know*about*the*high*requirements*within*the*topFtier*firms.*Moreover,*I*gained* a* good* insight* into* the* financial* industry.* But* I* could* not* only* develop*myself*professionally,*but*also*personally.*For*instance*I*have*noticed*that*the*way*I*deal*with*time*has*changed.*I*think*I*have*become*more*efficient*in*the*work*I*do*today*in*order*to*enjoy*my* free* time* since* this*was* heavily* cut* and* scarce*when* interning*with* KPMG.*Regarding* time* I* also* came* to* another* conclusion:* I* found* the* way* people* in* the*********************************************************2*See*IBP*program*structure*attached.*


* 8*

financial* industry* tend* to*deal*with* this*value* rather*unappealing*and*dissuasive.* I*do*not* necessarily* mind* to* work* intensively,* but* a* healthy* workFlifeFbalance* and* free*personal* time* on* the* weekends* is* really* important* to*me.* Regarding* this* issue* I* can*highly*encourage*to*read*the*article*Tribal*Workers*published*in*the*Financial*Times*in*2002.3*Concluding* my* experiences,* I* very* much* recommend* summer* internships* to*fellow*students*to*broaden*ones*knowledge*and*horizon.*

********************************************************3*http://msittig.freeshell.org/articles/FinT_TribalWorkers.html*

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