- resources in finance

Shearman & Sterling
New York

  Finance for Lawyers Seminar Series
Prof. Ian Giddy
New York University

Ian Giddy has taught finance at NYU, Columbia, Wharton, Chicago and in 40+ countries worldwide for the past two decades. He was Director of International Fixed Income Research at Drexel Burnham Lambert from 1986 to 1989. The author of more than fifty articles on international finance, he has served at the International Monetary Fund and the U.S. Treasury and has been a consultant with numerous corporations and financial institutions in the U.S. and abroad. As a banker and consultant he has been involved in the growth of the ABS market in the USA, Europe and Asia. He is the author or co-author of The International Money Market, The Handbook of International Finance, Cases in International Finance, Global Financial Markets, Asset Securitization in Asia and The Hudson River Watertrail Guide. - resources in finance

Inside Commercial Banking
This module takes an inside look at commercial banking in a time of transition. Which banks can make money, and how can they do so? Starting with the basic economics of the characteristics of banks that make them special and subject to specific regulations such as capital requirements, the instructor explores the past and future competitive pressures that are driving the transformation, consolidation and even collapse of many banks at home and abroad.  These pressures include the incursion of investment banks into commercial banks' domain, and vice-versa; the ability of banks' corporate clients to raise multicurrency, multimarket debt; the Euro phenomenon; the unbundling of credit risk; and the increasing importance of leveraged lending and equity or quasi-equity financing in M&A activities. The growth of asset-backed securities and other forms of off-balance sheet financing, including project finance, is accorded in-depth treatment.

Topics include:
  • Commercial Banking in a Time of Transition
    • Banks vs. Markets
    • Deposits, Reserves and the Fed
    • Moving Money – Domestic and International
    • The Eurocurrency Market
    • Bank Risk, Bank Capital
    • Why Regulate Capital?
    • “Value at Risk”
    • Bank or Non Bank?
  • Banks and the Securities Markets
    • Asset/Liability Management
    • Loan Pricing—Basis and Margin
    • Leveraged Lending and the M&A Financing Business
    • Venture Financing
    • Transferability of Loans: Off-Balance-Sheet Banking
    • Unbundling of Loan Features
    • Leveraged Lending and Acquisition Financing
  • Asset-Backed Financing
    • Commercial Banks and Securitization
    • The Process: Example of Typical Structure and Cash Flows
    • Legal Prerequisites: Bankruptcy Remote, no or Limited Recourse to Sponsor
    • Accounting Prerequisites: Sale for Accounting Purposes, FAS 140
    • Tax Prerequisites
    • The Impact of Basel II on Bank Capital and the ABS Technique
    • Focus on CLOs and CBOs
    • Focus on Asset-Backed Commercial Paper
    • The Rating Process and Credit Enhancement
  • Project Financing and Future-Flow ABS
    • Non-Recourse Structures
    • Contractual Roles of Sponsor and Other Participants
    • Sources of Funding
    • In-depth Case Study
    • Dealing with Currency, Transfer and Sovereign Risk, and the Securitization of Future-Flow Receivables

A Roadmap for Corporate Finance
This module offers an overview of finance from the perspective of the corporate financial manager. Beginning with the premise that the goal of management is to increase the value of the firm, participants will walk through the key decisions -- investment, financing, and risk management -- that contribute to shareholder value.  The investment side will include portfolio selection and management decisions, capital budgeting under risk, and M&A.

The financing side comprises decisions about capital structure -- how much debt, relative to equity is optimal for a particular firm, including regulated financial institutions -- as well as decisions about what kind of debt, and what kind of equity, is right for the firm.  Both investment and financing decisions are tied to financial risk management, including the choice of hedging instruments.  The third leg will therefore offer insights into how corporations measure and manage interest rate and currency risk, and which instruments best suit their purposes.

Topics include:
  • The Corporate Finance Roadmap
    • Investment, Financing and Risk Management
    • Managers' vs. Owners' Interests: Corporate Governance and Incentive Issues
  • Principles of Corporate Investment Decisions
    • Financial Investments
    • Principles of Portfolio Management
    • Real Investments
  • Mergers, Acquisitions and Divestitures
  • Merger Valuation
  • Why Mergers Succeed or Fail
  • Principles of Corporate Financing
    • Corporate Financing Decisions in Theory and Practice
    • Finding the Optimal Capital Structure:  Debt, Equity or Mezzanine?
    • Corporate Taxation and Capital Structure
    • Financing and Corporate Volatility
  • Principles of Corporate Financing:  Debt Structure
    • From "How Much Debt?" to "What Kind of Debt?"
    • Public vs. Private
    • Domestic vs. International
    • Long Term vs. Short term
    • Fixed vs. Floating
    • Currency of Denomination
  • Corporate Risk Management
    • When Should Companies Actively Hedge Financial Risk?
    • Defining and Measuring Financial Risk
    • Tools and Techniques: Derivatives Such as Futures Options and Swaps
    • What Can Go Wrong and Why?
Corporate Financial Restructuring
Corporate financial restructuring involves any substantial change in a company’s financial structure, or ownership or control, or business portfolio, designed to increase the value of the firm. This course will be taught around several major topics employing in-depth group work on case studies and deal documentation. The focus will be on identifying situations that call for nonstandard corporate finance solutions, and the design and pricing of the situation-specific financing instruments. Examples of such situations include stress-induced financial restructuring, recapitalizations, private equity and leveraged buyouts, mergers and acquisitions, and divestitures. In many cases resolving these issues will require structured finance solutions.

Topics include:
  • Operational versus Financial Restructuring
  • Restructuring Debt and Equity to Create Corporate Value
  • Recapitalizations and Exchanges
  • Ownership Restructuring: How Much Value Added? Who Gets It?
  • Financial Distress and Restructuring
  • Valuation of Debt and Equity in Distressed Companies
  • Going Private
  • The Business of Leveraged Buy-outs
Inside Investment Banking
This module expands upon the role of an investment banker or securities professional and his or her interaction with legal counsel when bringing a deal to market.  Ideally bankers contribute to the corporate decision making process as advisors and generators of new ideas as well as acting as intermediaries between corporate financial managers and the markets. Throughout the advisory and distribution process they may however be critically reliant upon the experience, judgement and timely support of legal counsel.

Therefore the module begins by setting out a time line for a representative corporate financing transaction. It examines the expectations of all parties: corporate client, banker and lawyer during the decision-making and security issuance process until a deal is finalized.

In addition, in this half-day session participants are asked to work through a case study in small groups. The case emphasizes the decision making process that leads to a selection of a banker. It also requires an understanding of corporate financing as well as risk management alternatives. Finally it addresses the role of legal counsel in completing the process and bringing an issue to market whether acting on behalf of the corporate or the bank.

Topics include:

  • Underwriting and Investment Banking
    • Inside an investment bank: who does what
    • The process of equity issuance
    • Underwriting IPOs
    • Private placements, 144A, ADRs
    • Getting paid for underwriting
  • Equity Issuance and Corporate Valuation Techniques
    • Pricing IPOs and secondary issues
    • Comparables and DCF valuation
    • Valuation in turnaround situations
    • Pitfalls of mispricing

Presentation Slides
Case Studies
Articles | | | | contact
Copyright ©2006 Ian Giddy. All rights reserved.