A repo trader operates in a relatively niche corner of the money markets, principally involved in activities related to the Federal Reserve’s overnight repurchase program. Repo trading is generally slower and less intense than other trading desks. This can be…
With the advent of high-frequency trading (HFT), market making strategies have become increasingly algorithmic. Market making itself is not a new occurrence, but deployment of cutting-edge HFT technology has transformed the business. To help break things down, here’s an overview…
Spread duration is the sensitivity of a security’s price to changes in its credit spread. A security’s credit spread is the difference between the yield-to-maturity of the security itself and the yield of a benchmark rate (treasury or other government…
The syndicate desk is a team within a sell-side investment bank that is responsible for researching, marketing, and pricing large deals across both debt and equity capital markets. It’s a product group that usually sits between the investment banking and…
An unencumbered asset is an asset that is wholly-owned, free of any associated debt, liens, or claims. Conversely, an encumbered asset is an asset that does have associated liabilities or claims. Unencumbered Assets Deeper Dive Knowing that an unencumbered asset…
Both an IOI (Indication of Interest) and LOI (Letter of Intent) are bid documents in an M&A process, so what’s the difference between an IOI vs. LOI? IOIs are non-binding documents that typically come earlier in the M&A process, while…
A reverse triangular merger is a type of acquisition structure in which the acquiring company forms a new subsidiary with which to acquire the target company. The subsidiary, known as the ‘merger subsidiary’, merges with the target company, allowing the…
The concept of a synergy in the context of M&A is commonly understood to mean a situation where the whole is greater than the sum of the parts as two businesses combine. Dis-synergies (or “dissynergies”), on the other hand, refers…
There are endless resources for standard coverage and M&A investment banking, but good lists of technical fixed income interview questions are hard to come by. Here’s a curated list of questions and answers to help you prep for any entry-level…
Sum-of-the-parts, or SOTP, is a modeling and valuation approach frequently used by bankers and investors. This guide will provide background on the methodology, cover how to employ it yourself, and just give you a real explanation of the term if…
Rogue trading is when an employee authorized to trade on behalf of their employer begins to trade outsize the parameters of their mandate. This article provides a deep dive into rogue trading. We’ll look at how it’s done, cover one…
Finance isn’t all about transactions that end up on the front page of the Wall Street journal. Some of the more interesting aspects of the industry are kept low key. Today we take a look at one of these issues,…
A Key Man clause or Key Person clause provides protections to LPs against adverse events related to the fund’s most critical leaders. A limited partner (LP) will allocate capital to a certain fund because it believes that the fund’s investment…
If you’ve spent any time working with or reading about companies going through venture rounds or IPOs you’ve probably come across the concept of pre- vs. post-money valuation. It’s important to distinguish between the two and here’s a quick guide…
Building out the balance sheet is probably one of the most annoying parts of modeling. It usually comes last in a three statement model and isn’t a driver like the income statement, so I don’t particularly enjoy it. That said,…
You’ve probably heard of EBITDA before, but perhaps you’ve come across EBIAT (Earnings Before Interest After Taxes) for the first time. It’s a similar metric, but ignores a company’s capital structure while allowing for tax comparison (without the tax benefit…
IRR, or internal rate of return, is one of the most common metrics for measuring private equity performance, as well as general investment performance. If you’ve ever spent time looking at private equity fund returns, you may have come across…
