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- First Step to Final Offer 11/19/24
First Step to Final Offer 11/19/24
Brooks Gammill
November 20, 2024
Your weekly round-up of an M&A deal walkthrough, insightful market news summaries, technical quiz questions, and various internships, events, and diversity programs. A key resource to best prepare yourself for finance recruiting. If someone sent you the newsletter subscribe below!
CAREER OPPORTUNITIES
RecruitU Investment Banking Prep Series Overview
Every Monday and Wednesday, RecruitU Mentors from Evercore, Morgan Stanley, Guggenheim, and JPM will be presenting about their experiences in banking and answering questions. Please RSVP below:
November 20th @ 7pm EST, Lesson 12: M&A Link
November 25th @ 7pm EST, Lesson 13: M&A Link
Class of 2027 Opportunities
Rothschild & Co US 2026 Global Advisory Summer Analyst Link
GTCR 2026 Private Equity Summer Analyst Link
Houlihan Lokey Women in Financial and Valuation Advisory Insight Day Link
Houlihan Lokey 2025 Women in Financial Restructuring Insight Day Link
Perella Weinberg Partners 2025 U.S. Perella Weinberg Advisory Prep Program Link
RBC Capital Markets 2026 Capital Markets, Global Investment Banking Summer Analyst Link
The Raine Group LLC 2025 Growing Diverse Leaders Program Link
Lincoln International 2026 Summer Analyst Intern (M&A) Link
Lincoln International 2026 Summer Analyst Intern (CAG) Link
Lincoln International 2025 Sophomore Job Shadow Program Link
Lincoln International 2026 Summer Analyst Intern (PFA) Link
The Raine Group LLC 2026 Summer Analyst (New York) Link
William Blair Investment Banking Summer Analyst, Private Capital Advisory, Summer 2026 Program Link
William Blair Investment Banking Summer Analyst, Financial Sponsors Group, Summer 2026 Link
William Blair Investment Banking Summer Analyst, Leveraged Finance, Summer 2026 Program Link
William Blair Investment Banking Summer Analyst, Equity Capital Markets, Summer 2026 Program Link
William Blair Investment Banking Summer Analyst, Life Sciences, Summer 2026 Program Link
Point 72 2025 Summer Internship - Private Investments Link
RBC Capital Markets 2026 Capital Markets, Global Markets Sales & Trading Summer Analyst Link
RBC Capital Markets 2026 Capital Markets, Global Investment Banking Summer Analyst Link
Insight Partners 2026 Summer Investment Analyst Overview Link
Class of 2026 Opportunities
Lazard, Inc. 2025 Summer Analyst - San Francisco Healthcare Link
D.A. Davidson Companies Investment Banking Summer Analyst, Technology Group - Summer, 2025 Link
D.A. Davidson Companies Investment Banking Summer Analyst, Financial Sponsors Group - Summer, 2025 Link
D.A. Davidson Companies Investment Banking Summer Analyst, Financial Institutions Group - Summer, 2025 Link
TECHNICAL QUESTION OF THE WEEK:
MARKET NEWS
HSBC's CEO Shakeup Puts Pressure on Senior Managers to Prove Their Value
HSBC Holdings Plc's incoming CEO, Georges Elhedery, is reportedly considering plans to streamline the bank's structure by removing layers of middle management. This initiative aims to enhance efficiency and reduce costs, aligning with similar strategies employed by competitors like Citigroup and Standard Chartered. The potential restructuring could impact various managerial roles, including country head positions within HSBC's global network. These developments reflect a broader industry trend of banks focusing on core areas to improve investor returns amid global economic uncertainties.
Source: Bloomberg
Musk's Growing Political Influence Boosts Confidence in X Corp's Financial Future
Elon Musk's ascent as a political figure alongside President-elect Donald Trump has led Wall Street banks to hope they can soon offload $13 billion in debt tied to Musk's 2022 acquisition of social media platform X (formerly Twitter). Banks like Morgan Stanley and Bank of America, part of the lending consortium, believe Musk's proximity to Trump might boost X's prospects, allowing them to sell the debt without significant losses. The debt became challenging to sell due to Musk's changes to X, which affected its value and increased default risks. Musk's appointment by Trump to lead a government department on efficiency is also seen as potentially benefiting his other ventures, including Tesla and SpaceX. However, analysts caution about the actual impact on X's revenues, noting the divided user base and competition from platforms like Bluesky and Threads. Similarweb data indicates increased U.S. traffic around the election, but also a notable number of user deactivations. The banks are evaluating their next steps based on X's upcoming financial reports.
Source: Reuters
Private-Equity Investors Seek Capital Returns Before New Commitments
Private-equity firms are being urged to find innovative ways to return capital to investors to navigate a challenging fundraising environment. Limited partners hold significant assets and are at or above their private-equity allocation targets, leading to cautious commitments to new funds. Investors value liquidity, and fund managers who can return capital are preferred. The global decline in private-equity exit deals has constrained reinvestment, further tightening the fundraising landscape. Increased competition among private-equity firms necessitates creativity and transparency. Institutions require sponsors to address broader market issues and offer diverse investment mechanisms. Proven portfolio profitability and transparency in complex deals are essential for private-equity firms seeking new investments.
Source: Wall Street Journal
M&A DEAL OVERVIEW
Blackstone Nears $8 Billion Acquisition of Jersey Mike's Subs
Blackstone is reportedly close to acquiring Jersey Mike's Subs, a popular sandwich chain, in a deal valued at approximately $8 billion, including debt. The acquisition aims to accelerate Jersey Mike's expansion both within the U.S. and internationally, as well as to support ongoing technological investments. Founder and CEO Peter Cancro will retain a significant equity stake and continue to lead the company. The transaction is expected to be finalized in early 2025, pending regulatory approvals and other closing conditions.
Source: Reuters
Blackstone and Warburg Pincus Consider $12 Billion Sale of IntraFi
Private equity firms Blackstone and Warburg Pincus are reportedly exploring the sale of IntraFi, a network facilitating large-scale deposits among banks, in a deal valued at approximately $12 billion. The potential sale reflects the firms' strategic focus on optimizing their investment portfolios. IntraFi's services are integral to the banking sector, offering solutions for managing large deposits and ensuring FDIC insurance coverage. The transaction is expected to attract interest from both financial institutions and private equity firms seeking to expand their presence in the financial services industry.
Source: Reuters
ADDITIONAL RESOURCES
LAST WEEK TECHNICAL QUESTION OF THE WEEK ANSWER:
Correct Answer: C & D, WACC mostly increases because equity is more expensive than debt, which is similar to D as well which is WACC most likely increases because 20% debt is fairly low, and at that low level, the benefits of debt tend to outweigh the risks
Explanation: When a company shifts from a 20% debt and 80% equity structure to 100% equity by paying off all its debt, its WACC is likely to increase. This happens because debt is typically cheaper than equity due to the tax shield benefits that reduce the effective cost of debt. At low levels like 20%, the benefits of debt (lower cost and tax advantages) usually outweigh the risks. By moving to 100% equity, the company loses these benefits and relies solely on more expensive equity financing, raising its overall cost of capital.