Preparing for a TMT interview

MaxLeverage's picture
Rank: Monkey | 42

Hi guys,

So suppose you having been working in a BB for two years in ECM/DCM and have gotten the opportunity to interview for industry groups, specifically, TMT. What would be the best way to prepare for such an interview. Would the interview be very much like that for a new analyst aince you don't have prior industry experience? Or would it more associate level?

Specifically, what within TMT would it be important to know of? Industry trends and general market dynamics? Or more so specific transactions? Multiples maybe Do you think one should have a preference for Tech, or Media and Telecom? And how relevant would your prior experience in the cap markets be in the interview. In terms of technicals, what would one need to know besides the standard stuff? Any info for valuations etc specifically in the TMT space?

Asking because this opportunity has come up recently and I have been a avid follower of the Tech and Telecoms industry, not so much on Media, but would like to familiarize myself with that too. Any good resources?

Please save the flaming, constructive feedback earns silver bananas :)

Comments (43)

Jul 10, 2011

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Jul 10, 2011

techmeme.com, techcrunch.com, engadget.com

Jul 10, 2011

After your 2 years in ECM would you be starting as an analyst 1 in TMT or as an analyst 3?

Jul 10, 2011

If you are changing groups but staying at the same bank, any interviews should be a formality. If you haven't already developed relationships w/ the TMT people and convinced them that they want you you're doing it wrong.

Is your ECM/DCM group verticalized by industry? If so hopefully you are in the vertical that works with TMT, if not maybe try to move to that vertical first? Should make your story for the switch to coverage more compelling.

Jul 10, 2011
NYCbandar:

If you are changing groups but staying at the same bank, any interviews should be a formality. If you haven't already developed relationships w/ the TMT people and convinced them that they want you you're doing it wrong.

Is your ECM/DCM group verticalized by industry? If so hopefully you are in the vertical that works with TMT, if not maybe try to move to that vertical first? Should make your story for the switch to coverage more compelling.

I am actually at the point of reaching out to them right now. These interviews are actually just meetings which have been setup to meet with them through someone I know in the group who has mentioned it could be very possible. I am just approaching them as interviews should the conversations turn that way.

As for my team, the product I work in does not have any relation to tech so there is no such vertical to join. I also imagine that if i am joining it would be as an analyst, not as an associate. And given my lack of experience, could be a 1st year analyst, which does suck but is the reality I have to deal with.

Also, will definitely look up what a semiconductor is :)

Jul 10, 2011

"what is a semiconductor?"

got stumped on that one when i was interviewing...

Jul 10, 2011

on a side note, some of the valuation multiples in BIWS is not as relevant anymore (i.e. EV/unique visitors, etc). Investors are looking more and more and earnings, recent IPOs like Pandora are anomalies. So your usual EV/EBITDA are common valuation metrics

Since you're interviewing for an analyst role, I would say know the recent tech deals in the market, and get your basics covered. Have a good answer for "why tech?" and show a genuine interest in tech.

Hope this helps and good luck! :)

Jul 10, 2011

Whats a good answer for "Why Tech"?

Jul 11, 2011
TheKid1:

Whats a good answer for "Why Tech"?

Not trying to be rude, but if you can't answer why right now is an awesome time to be a tech banker, then you are probably illiterate*. Literally, my fourteen-year-old brother knows why right now is an awesome time to be in Tech banking.

Here are a few hints...
http://dealbook.nytimes.com/2011/07/08/googles-dea... http://dealbook.nytimes.com/2011/06/02/groupon-fil...
http://dealbook.nytimes.com/2011/07/01/zynga-files... http://dealbook.nytimes.com/2011/07/08/livingsocia...
http://dealbook.nytimes.com/2011/07/01/apple-and-m...

*Ironically, if that were indeed the case, this message would mean nothing to you...

"Millionaires don't use astrology, billionaires do"

    • 1
Jul 11, 2011

Indeed Tech is, atleast for me and probably for most other people, the most interesting and the easiest to swing in interviews but I am sure every monkey waltzes in talking about Tech. What about Telecoms, or more so Media, where can we get valuations on these companies? Industry Trends? And why would it be a great time, say, to get involved in these industries?

Thanks in advance.

Jul 11, 2011
MaxLeverage:

And why would it be a great time, say, to get involved in these industries?

It's one thing to ask for help, and another to be hand-held. Look that question up yourself. Read the prior posts. Nobody's gonna feed you their personal story info for you to regurgitate.

% of vertical coverage depends on bank/team.

Jul 11, 2011

On a related note, in the actually TMT group, what do you think the divide up of work is overall between the three industries?

Jul 11, 2011

The same way you would prepare for any other ib interview, only you will pay more attention to a) TMT companies and b) the growth of Asian TMT companies. The the future growth prospects of the industry. Talk about something like Taiwan becoming the world's largest computer chip maker. The recent surge in Asian M&A, further tech advances, ect.

Best Response
Jul 11, 2011

You'll be looking into a fair number of fabs (TSM should be a household name), OEMs and some other distribution-oriented companies. Understand that a lot of American companies ship almost all their orders to Asia before distribution (example: seagate). A few other facts couldn't kill you, such as the relative unpopularity of notebooks in emerging markets relative to the mature markets compared to desktop PCs. Read up on analog versus digital semiconductors and how the companies differ. For instance, you have a lot of line-item semi companies which sell essentially out of a catalog like TXN from which a company can build their own. Others are more focused on application specific circuits.

As always, be aware of trends. How will China's minimum wage increasing by 20% every year for 5 years affect output, employment, demand for securities and mergers and acquisitions? For the record, a number of US semiconductor companies are holding ludicrous levels of cash right now and as Intel has shown, many find they'd rather use the cash on M&A than share repurchases (which are also done frequently, don't mistake me).

Of course, understand what an investment bank actually DOES (underwriting, IPOs, follow-on offerings, M&A, research coverage) and what will be expected of you (long, long hours of labor). Read up on your corporate finance. As always, know excel cold and have a strong affinity with power point. Show that you can think on your feet (bullshitting) without outright fabricating details. Unfortunately, I'm buyside TMT, so it's a bit hard to wrap my head around what you would need for sellside.

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Jul 11, 2011
FinancePun:

As always, be aware of trends. How will China's minimum wage increasing by 20% every year for 5 years affect output, employment, demand for securities and mergers and acquisitions? For the record, a number of US semiconductor companies are holding ludicrous levels of cash right now and as Intel has shown, many find they'd rather use the cash on M&A than share repurchases (which are also done frequently, don't mistake me).

Seems like you have a background in semis. US semiconductor companies have boat loads of cash and no debt. While the industry desparately needs consolidation, it'll probably never happen among the public companies...even the small cap guys. Most of the CEOs more or less control their BoDs and their companies are constantly cash flow positive, which leads to them being able to influence shareholders to vote against a merger/takeover. It's the nature of the industry - huge egos. Just look at Emulex last year when Broadcom tried a hostile takeover. It didn't work. Within semis, the majority of M&A happens with public companies acquiring smaller private companies with it generally being a buy vs build decision. They want a certain technology so they can either integrate it into their current chips or fill out their product portfolio.

With that said, INTC has been on a buying spree lately. Their track record in M&A is atrocious so we'll see if they have any luck with MFE or IFX's wireless unit. Shareholders probably would have preferred an increased dividend or buyback (though INTC specifically is against doing this).

As it relates to Asia, just know the supply chain out there. Know the difference between the OEMs, ODMs (make products for OEMs but have input on design process), EMS (make products for OEMs with little to no input), foundries, distis, chip makers, retailers, etc.

At the end of the day though, just prepare like it's any other banking interview. You probably won't get asked much about the industry unless it specifically relates to how it interests you. It'd be nice to have a few industry trends as talking points in that case. Good luck man.

    • 1
Jul 11, 2011

also FYI GS is hosting a large TMT conference in NY right now called "Communacopia"... you might be able to find feedback on company presentations and industry trends in the media or elsewhere.

Jul 11, 2011

Double posting for this one. This may sound a bit "buyside-y" and I apologize, but consider the sources of growth in the TMT subspaces in Asia. I'll list a few and maybe some related companies. I do US equities only because I'm gimpy, but it may give you some idea. Understand basic engineering issues like heat buildup and how it becomes a greater problem with greater miniaturization.

-Growth in Smartphone demand. Obviously this will depend on the GDP growth rates in Asia. Look at RIMM, AAPL, the LG group, NOK, MOT, Sony E. As a result, handset manufacturers will experience growth. Take a look at ARMH and QCOM, as they make the processors that go into both. Actually, take a look at ARMH in general, they make a fascinating product that will likely see a lot of growth in the long term. SWKS, TQNT and RFMD go into handsets as well, though I suspect the latter two are American-focused.
-Growth in CDMA consumption.
-Additional construction of cell towers. You'll see companies with profiles similar to, or actually CSCO, AMT, ALTR, XLNX (these two make FPGAs, they're massive programmable circuits which can do a whole slew of shit), POWI and some others are active in the power space as well.
-Growth in content providers. Facebook games, streaming media and shit. I don't know much about the current asian cultural scene so your guess is as good as mine.
-Growth in need for enterprise-level server farms (again back to INTC) for providers like BIDU and GOOG.

-Future possibilities for LTE (4g) expansions will feed back into the above.

-Growth in notebook demand as the market matures.
-Movement away from desktops as the market matures. More enterprise spending. This effects the following firms' margins: INTC, NVDA, ARMH.

-Cloud Computing. This is a whole new world. Some security companies like CHKP, RAVN etc. are active.
-As this and home demand increase, expect to see a gain in security companies' presence.
-You may see some M&A activity here in the software space from BIDU to gobble up little service providers.
-Compliance Outsourcing. This one works for the USA as well, but as regulations get more intense, expect some outside firms to come in and take the bait.

Understand the differences between a fab and a fabless hardware company and the effects on balance sheet/cash flow/capital structure. This is rushed and incomplete, sorry.
-Fab: makes the shit they design and sell, sometimes totally vertically integrated. Lower margins, more debt, less asset turnover, larger market cap, higher need for financing. These guys can be monsters and frequently buy up little companies.
-Fabless: Design houses. Tend to have very high margins and are actively engaged in design win wars. These shops have little to no debt, tend to have a large cash holding and pay few to no dividends.

Right now, TMT firms, like many firms are holding huge cash balances, as mentioned above.

Software companies sometimes buy up firms to completely integrate, but that seems less common these days.

I hope this helps, if you like, you can PM me and I can probably send you some primer PDFs on the industry from one of my primes if you gimme an email address.

Clearly, my afternoon is too free, I should look busy. Hope you get the job. At the end of the day, smaller firms, particularly in the infrastructure, distribution, cloud, security and online service areas are likely to get bought up. For instance, I know certain tech distributors in the US/EU are frantically scanning APAC for a possible acquisition so they can break into that market.

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Jul 11, 2011

Thank you for your post. I learned a lot. I am currently a sophomore in college. Could you send me some resources to do further learning on the topics you discussed?

Jul 11, 2011

Wow, really appreciate all the advice and feedback guys!!

Jul 11, 2011

Great post. Much less discombobulated than my response Shawn. Especially agreed on the importance of supply chain understanding.

Jul 11, 2011

Thanks FinancePun. I was more adding onto your post since you provided a wealth of information across the entire spectrum of tech. I was merely focusing on semis.

OP - if you have anymore questions, feel free to PM me. Similar to FinancePun, I could go into much more depth on a lot of these topics.

Jul 11, 2011

Hi FinancePun and ShawnPU2009,

Big thanks for all the constructive comments!! I've PM-ed you guys, but not sure if they got through. Please let me know if you didn't get any PM's from me! Appreciate all your help. :)

Jul 11, 2011

pretty sure it is @pjc.com

Jul 11, 2011

the middle initial.

Jul 11, 2011

Know Technology, recent trends in the market and the top firms within the segment, maybe research some recent deals the firm has been a part of that he likely worked on, and mention those (ask intelligent questions about them etc)

  • Anonymous Monkey
  •  Jul 11, 2011

Where would I be able to get a track of the recent deals the group was involved in? I was thinking of looking up SNL League Tables, but I want something less quantitive and something more substantive.

Jul 11, 2011

Any suggestions where I can find deal involvement info? I was considering taking a look at the SNL League Tables, but I wanted to center the conversation in a more substantive tone, as opposed to quantitive.

Asking intelligent questions is the obvious choice here, but could some of you guys give me some examples? I don't want to sound like a robot here.

Jul 11, 2011

What do you want to know? Ask him that. Just don't ask questions about hours/salary/etc., ask about the work itself.

Jul 11, 2011

Bump bump

Jul 11, 2011

I don't think HR will inform your manager, at least they aren't supposed to. BUT people talk. If your manager does not know and you have a good relationship, let them know. A good word from them can go a long way. If they are not aware, after your interview you should let them know asap. Better coming from you than from elsewhere.

Unless you have a good relationship w the tmt team, you will most likely be put through the same process as an external as far as technicals/case studies go. Gotta remember, especially since your at a BB, you're going against top talent and laterals from similar banks.

Best of luck!

Jul 11, 2011

Thanks for your input man!

Jul 11, 2011

google.com

Jul 11, 2011

thanks for your wonderful insight. Anyone with something constructive to say?

Jul 11, 2011

How might switching to a SaaS model change a company's balance sheet? Its income statement?

Jul 11, 2011
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