How To Enhance Your Investment Banking Applications Through Sector Selection

Welcome back to the podcast. And as you can see, if you're watching this conversation on the YouTube channel, there is no Stephen this week. So we have an upgrade to Silvia. How's it going?

Hi, Ant. Yeah, it's going very well. Thank you very much. Very happy to be on the podcast again.

Well, great. I mean, look, by popular demand, I must add, because that last episode was very well received by the community. So great to have you back on. And just to give a bit of a flavor of what we're going to cover. I recently put out a post earlier this week, in fact, where I spoke to a member of the community about the kind of end-to-end application tips for working, targeting a role in investment banking. And just to kind of add to that, and also to your previous one on equity research, what we're going to discuss today is what type of sectors to target in order to break into investment banking. And I think this is probably relevant for roles in M&A as and also research. So we can touch on which sectors would you like to work in? I know that's a very common question that you get presented as a kind of summer intern if you're applying or a grad, but then it's like, okay, so what sectors exist, which we can go through and you can run us through. And then how do you select your preferences? And perhaps we can talk about some of the hot areas right now Um, I know this deal just broke as we're recording this. Chevron have agreed to buy US oil and gas producer Hess for $53 billion in an all-stock deal, and that comes after a mega deal with Exxon and Pioneer for $60 billion. So definitely we can talk about natural resources, we'll talk about tech, and we can talk about financials. And hopefully you can also, um, give us some information about how the valuations differ sector to sector, just so we can better equip the community if they're going into interviews for these types of roles. So perhaps we could just dive in then with that kind of question that I'm sure perhaps even you had when you were applying for some of these roles, which is, which sector would you like to work in? So, so how would you go about approaching that?

Yeah, no, it's true. This is like a very important question because I remember when I was like back at my interviews and even when I had to like First, my preference is to choose a team. When I started working, I was a bit confused because there are so many sectors that you can choose, like M&A division, equity research division. They are usually distinct in terms of like team focus for regions, but also especially for like industry focus. And so you can start with like the stocks that are like most familiar to you, perhaps if you have like any interest in particular, any passion, but it is not all about that. So first of all, there are so many sectors that are like very, very, very like interesting, and maybe you're not familiar to those, but just like starting working on those, you can like understand more about them and understand how interesting they are. So point number one I would like to say is when maybe you get your job and you will express your preference, maybe you will not get your preferred sector. So anything you get, it can actually turn out to be like very, very interesting. So like dive into that and try to like learn as much as you can of the sector because like they are all so, so interesting. And then yeah, it is actually also like a strategic kind of choice as we will see because like there are some teams that like from time to time depending on the year and the economic cycle will need more analysts to sit on the team. And so you can take also this question that either an interviewer or like the HR team will ask you also from a strategic perspective. So yeah, it is like to a very important question and Yeah, I think we can start perhaps with like just an overview of the various sectors that you can usually find. Then this would probably differ a bit in terms of like the size of the bank or like how many stocks are covered in each of these industries. But generally, we can start for example with something that everybody is familiar with, so consumer retail. What is consumer retail? Basically, you can find there like apparel, food and beverages, supermarkets, so like the Tesco's, Coca-Cola, Dior, for example. You found that like luxury firms, you like tobacco and similar kind of firms. So it is a huge sector, usually maybe dividing like some sub-teams. And yeah, as I was saying, it is something usually everybody's like familiar with, so can be like a good start. And it's actually very interesting, like for example, when you're analyzing supermarkets, you can find like e-commerce and like, I don't know, Deliveroo, for example. So you can find also like some innovation aspects also there. It is not all just about like the regular supermarkets and like products you find when you go grocery shopping, basically. And then just like, yeah.

So just a question with, with, um, with these. So when you are putting these, so say like that sector, for example, are they— how far do they probe you as to like why that? I mean, the obvious one is like students always put around is like, you know, know what deals are happening. But can you talk about it more like if you were talking about fashion, luxury, fashion. Uh, could you talk about that in terms of a way of a personal interest, or like there's some designer that you like, or a collaboration that happened and it was really successful, or like how— what are they actually looking for?

Yeah, I would say absolutely, like they always really appreciate when there is like some genuine interest. So if there is a sector in which you have like a real passion, that can be like fashion as you said, for example, you should go for it. And also because like probably as it is like your interest, you will probably like tracking a bit more the news as well. And so the more you can talk about what's going on, the more you can have an understanding about how the industry works in terms of like how many competitors there are there and like how companies are structured, what are the most recent deals, what are like the new advancements. Like, I don't know, platforms like the Farfetch, uh, it can just be something that proves that you have a genuine interest there and that you are already like kind of like, um, you already know a lot about that, and so it will be just easier also for you to just pick up elements.

Yes, I mean, part of the training that I always do with the— our own summer interns is about trying to get them to pick— I, I— we do this exercise where I get them to pick, say, something they're very passionate about. So often it's like, I don't know, it might be like a sports team or a musician or something like that. And then you're like, okay, so tell me about that musician. And then they tell you about it and their eyes light up because they're thinking of the music or a particular performance. They sound really authentic. Their voice starts to really flow and has lots of variation in its pitch and tone. And you're like, that's believable. And it's like, if you could lean into that, I guess it'd be very powerful in an interview, I'd imagine.

Yeah, 100%. I think that's like just being authentic and really talking about what you like gives you a competitive advantage in getting eventually like that team.

Okay, cool. So what, what other sectors are there?

Yeah, so going on, we can then see there are industrials. So usually in industrials there are some sub-teams, sub-sectors. There are aerospace and defense, automotive, construction, for example. Very interesting one. Usually lots of analysts going in industrials because there are a lot of firms to cover. So that's a very good one. Then especially for like M&A teams, we can find teams that are covering, for example, states, local governments. So more like public sector infrastructure area. And then another very interesting one is actually healthcare. So under healthcare, we can find, for example, biotech firms, healthcare services, so like hospitals, pharmaceutical companies. This is very, very, very interesting. On the other hand, it is one of the most technical ones, I would say, from what I know. So this is actually also something very interesting for, for like science students. So if you study something like biotech, pharma, and you're thinking about a career in finance, this could be like a very good option for you. Like, as I said, like many, many times, to go into finance, you don't need to have studied finance at university. So this could be like a very good route for you. So bear that in mind. Then switching a bit like focus, we have financials, which we'll talk about later. So banks, insurance companies, PE firms, pension funds, for example, and also like real estate teams. Covering real estate investment trusts. And then just like finally, other two of the sectors we will speak about today that are like natural resources. So speaking more like in particular, we have like energy and power, chemicals, metals and mining teams. And finally, one of my favorites, actually probably my favorite as I've been working there, tech. So under tech, we find hardware, software, but also fintechs, media companies, and telecoms.

Okay, so perhaps then let's, let's dive into some of the— we can't talk about every single one, but perhaps we can talk about 3 of the ones that are more kind of popular, I guess: tech, natural resources, and financials. And perhaps, given your area of expertise, we could start with, with technology.

Yeah, definitely. This is like an incredibly interesting sector, so I would advise to anybody just like check out a bit the news, and you probably are already doing that because if you're interested in M&A, in research, there so much stuff going on recently for like M&A deals. We have like the Microsoft Activision Blizzard super deal. That is like the deal of the year, definitely. And yeah, it is very interesting, especially like in this point in time, like during this year and the years to come, because there is so much going on. So I would say from a research perspective, some of like the key teams that are very interesting about tech are definitely like AI, so generative AI, all around that. It is like something great because I think that with respect to like other new advancements in tech that we have seen, AI is definitely something that is looking to like be transformative for real. So it is not just a bubble, it's not just like hype, but it's something that is going to like unlock new business models, transform what is currently going on, transform industries, reshape jobs as well. And eventually boost also economic productivity. And then we can see like from a tech perspective, we've seen that also like last year, like 2022, start of 2023, have been like key for companies like software because everybody was focusing just like on cost cutting. For example, the focus was just on efficiency. And when you say efficiency, most of the times you're referring to software because you are referring to like some companies, some projects that can automate what you're doing and make it more efficient, optimize it. So that has been like key. And instead now, like on the reverse, we can see that we are going like down from like, uh, out from a down cycle. And because we have all these advancements in tech, and so we will be able to see like companies spending more and more in order to like, um, get new technologies, either if it is like through research and development inside of the company or through M&A deals. There is a lot of excitement which eventually will also spur a lot of spending. We can see it, I guess, as something like— I heard it like, uh, on another podcast, I was hearing too, as a kind of parallel between like Great Financial Crisis and cloud. What we've seen there is pretty much like what we're seeing at the moment with like generative AI. So that's definitely a very interesting area. Search about it, like look up online what is generative AI, which are the companies that can benefit from it, because they're Many, many, definitely. Then I would say, thinking about other teams that are like hot in the tech space, we can find clean technologies, for example. ESG, I think, has been a theme for so long, but it actually still is. Like, investors are more and more interested to like invest in more sustainable companies. And so we see that like one way in which companies can become more sustainable is through exploiting clean technologies. And so here is where also once again tech comes into place. And then just to mention another one, then a space is definitely like very, very interesting is that of fintechs. Usually you can see fintechs as a bit under software and financial services as well because there is a bit of like mixed area. But with fintechs we refer to all the neobanks, bank as a service, the whole way to digitalization. And yeah, it is pretty much like hot topic right now.

Yeah. So I've got two questions there. So first one being a little bit more about the actual deal side of it. So say if you had a traditional bank, let's take a NatWest and they were looking to acquire Monzo or Revolut or something like that, like a new more fintech technology-based bank. Then would you combine then your financials team with your tech team and they would collaborate and work together, or would it just be assigned to one or the other?

Yeah, that's interesting because it is a bit like depending from bank to bank if usually fintechs fall under the area of tech or they fall under the area of financials. In some areas, in some banks, you can also find like just specific teams only look at fintechs, especially in the US, because there are like so many emerging companies. It is a very, very, very active area. But yeah, anyway, uh, I would say that if you would get like an acquisition like that, probably then it would fall under, uh, the financial area if NatWest, for example, would be acquiring a new emerging fintech firm. But at the same time, it would still remain something that a tech team would constantly check and look at because it still remains like a good comparable company, a good case study, and so something you want to like continue tracking.

And my second question would be, so let's say you break the tech division down into hardware, software, fintech, media, and telecoms. So as a student, let's say, whether an intern or a graduate in your first few years, is it common to fit within a subsector within tech? Or is it common to rotate within the sector across the different buckets, so to speak? Like, could I go— could I start in hardware and then pivot into media, and then year 3 I'm in telecoms? Like, what's the normal journey?

Yeah, absolutely. So I would say that, let's say you're starting your internship, probably you will be placed like in one of these teams. But around all the like tech, like bigger team, there is like a lot of conversation, lots of discussions, because there are a lot of things that are just like interrelated, a lot of topics in common. So it's pretty easy to like just being able to network also with people from another team. And it is definitely a shift that you can do. You can work some years, for example, in the hardware team and then just pivot into like the media team if you are very interested about that one. Or maybe if just there is like demand in that team, and you would also have a kind of like little competitive advantage as you've already been like in the tech area, and so you're already a bit more used to like the types of businesses. So yeah, it's definitely a route that can happen.

Okay, and then without getting too complicated here, um, perhaps you could kind of break it down for me in terms of— I'd imagine the valuation techniques for pure-play software are very different to, say, a telecom giant, for example. So how would you group these and how do they differ?

Yeah, that's very interesting, especially as like valuation piece is something that is key for like both research teams and M&A teams. And we know like a lot of M&A deals happening right now. Companies want to stay ahead of competition and so to acquire new tech. And we also see like, um, a bump of tech IPOs that is finally coming back. So yeah, I would say it is very, very, uh, nice question because actually you can find some key differences between like valuing a software company with respect to telecoms one. So starting with software, what what you usually do is preferring multiples over DCF. So you would use trading multiples like P/E or EV/EBITDA, for example. And one other important thing to bear in mind is that, as I just said, M&A has always been a key theme for software and like tech in general. So what you would also look at usually are also transaction multiples on top of trading multiples. And then I would say anyway, this doesn't mean that you don't use the DCF at all. The DCF is always like a good friend to keep in mind. So usually you would use a DCF more when, for example, you are particularly bullish or bearish. And just like to go back for a second, the key reason why you prefer like multiples over DCF is because of like how this business are. So their type of revenues and of cash flows. Cash flows can be not very predictable sometimes, and so you just go and look at multiples. But there are other things that you can do, and like many teams do that for like many stocks, is using a sum-of-the-parts analysis. So very easily, this is not like an entire new valuation method, but in sum-of-the-parts analysis, you just basically take other two methods. So it can be DCF and multiples, or like multiples and transaction multiples as well, and you put them together and you just average these two methods to find out your target price. And then instead, we're going to telecoms. We are literally like reversing everything we just said. So usually DCF is preferred this time because there is like large availability of data and you usually get some very reliable numbers or at least good numbers of years horizon. And so this makes the cash flows more predictable and so DCF is like a powerful tool in this case. Then once again, usually as an analyst, you will never use just like just one method and don't look at all at the other one. So multiples this time can become useful when you would like perhaps to get some shorter-term targets.

Cool. Yeah, and it's just to say that if anyone listened to that and they're a little bit unsure even what a DCF is and these other different techniques or models, Sylvia does have some phenomenal slides that's been put together as kind of notes for this, and I'm going to make her shoot, shoot us a video where she can kind of dive into this stuff in a little bit more detail. So fear not, that is coming down, down the pipe. But perhaps then we could, we could pivot then. Let's move from tech and let's talk a little bit about natural resources, because that's probably been the, the hottest one of late. And I did see that the deal announced this week, the one about Chevron and Hess. I think, uh, I think Goldman Sachs is the lead advisor on the Hess side, and I'm just trying to think who is the other. Okay, Morgan Stanley is on the Chevron as lead advisor with Evercore, and then Goldman Sachs is lead advisor with JP Morgan on the Hess side. So these are big deals, and these are deals very much in play that you're likely to be questioned upon. So yeah, maybe you could just give me a little bit of flavor around— though we're not just talking about oil majors here, there's a lot breadth, isn't there, to the space. So how is that deconstructed as an area?

Yeah, that's very true. And actually, just picking up what you just said, it is very important. So if you're going for an interview and you know that you would like to talk about a sector, you've already chosen, for example, you have a stock pitch in mind, be sure to be on top of like all the recent deals that happened. There can be much activity right now in this space in tech, as we've just seen. So make sure to be on top of all this news. Always good to know also like which are the advisors resource on both sides, especially on these super big deals. So yeah, as I was saying, we are talking about natural resources a bit in general, but inside of natural resources, you can find a good number of sectors that are energy and power, first of all. So we'll find there all the oil and gas companies like those we just mentioned. Then you can have inside of this team, or perhaps like spun in another team, some more renewable energy-focused companies or those that are like exploiting carbon, hydrogen, very like rising area right now. And then a bit like different, like in another space, you can have chemicals companies, but anyway, we can see us falling around this area of like natural resources and the metals and mining as well. And yeah, as I was saying, very, very interesting area. It is probably, as you were saying, one of like the hot topic of the most recent years and something that has been like hot for so long and is continuously being because Because you can see from one side, like, energy transition is definitely like the big team. We can see it like when you're talking about natural resources, but actually when you're talking about any other sector, like any company is trying to become more sustainable, just like trying to match the demand from investors of more sustainable companies, more companies that keep an eye on like ESG, so also like social governance aspect. And so focusing, for example, on O&Gs, like when we talk about oil and gas, we can see energy transition as twofold. So from one side, as I was mentioning, we have the rise of all these new renewable-focused companies, companies that have to do with carbon, with hydrogen, and they exploit a lot of new technologies. So we're just like linking back again to what we were saying about tech. And on the other hand, we have also a shift of oil and gas companies towards more sustainable practices. So also like the current, like, very big giants of oil and gas are like trying to exploit these new technologies in order to shift to more sustainable practices. So for example, we can have horizontal drilling with respect to like vertical drilling. That can be like one just to mention. And I would say this is also like very, very topical area if you're interested in M&A. Because just like to put it like very simple, when you're looking at oil and gas companies, you usually divide them in upstream, midstream, and downstream based on which cycle, which part of the cycle, sorry, they are specifically focusing on. But what happens many, many of the times is that you have conglomerates. So oil and gas companies maybe start like just focusing on midstream, and then they try to acquire some other companies, some competitors, or also some companies that are like positioned in different parts of the value chain in order to vertically integrate and create this big conglomerates. That, uh, it's something very strategic because basically when you're just not looking at a single part of the cycle, you can actually lower a lot of volatility and also exploit economies of scale.

Yeah, and just to make sense of why so much big deal flow at the moment in M&A, cause, you know, the humanitarian disaster that was the Russian invasion of Ukraine did mean that energy prices spiked and it meant that these are all big super majors were making more money than, than they've ever made before. And so, you know, they're looking to deploy huge amounts of profits that they've made. I think the other thing that's really interesting about this area as a sector is that we're talking natural resource. So by definition, It's limited. It's not like technology, which is almost, you could say, infinite. It's how far does your imagination take you and then the technology to achieve that. Whereas with mining metals or oil or gas, things like that, typically it tends to be natural deposits located then, which start to be why you get these types of activities. You know, whether it was, I think Exxon's pioneer play is a shale play in America, for example. Whereas I think this latest one that's come out this morning with Chevron and Hess— sorry, Exxon was the other one— with Chevron is about— I was reading about Guyana, this South American country. So check this out, that's got a population— let's go on a tangent here— but Guyana has got a population of 800,000 and it's going to be the best growing country on the planet. Net this year, and it's going to grow their GDP 38%. That's insane. And I was— so I was kind of like, well, what, what's going on there? And why is— why is— why is Chevron paying up major dollar for this? Well, basically, this country in, in South America has made 30 discoveries in the country's offshore waters in just the last decade. And so basically, they've got this untapped massive of natural resource, and which they're exporting. Obviously it's boosting their local economy, but everyone wants in. And so it's a great way to just beef up your output. I think I read this morning the Hess acquisition will give Chevron immediately an increase in oil and gas of more than 10% on just that one deal. I mean, we are talking about a giant company increasing production overall by 10%. So yeah, Yeah, just to kind of make a bit of sense of why it's just gone a bit crazy in that space comparative to some, some of the others. So, um, maybe then just having a look at, again, like we did with the tech, how do these different areas, what do they look like from an analysis point of view then when you're trying to value these different types of companies?

Yeah, that's very true. Also here we have like some major differences, so I will take this time oil and gas versus like chemicals, metals, and mining, for example, because if we look at oil and gas in particular, these are sectors that are primarily driven by like government policies, government funding, and so details about these are usually pretty much available. Plus, they have very distinct drivers, rich data availability, and so oil and gas companies can actually be like very, very good DCF candidates. So in this case, we can deploy like a discounted cash flow analysis. But at the same time, if you want to look at multiples as like a backup option or just like to do like some of the parts. For example, this is very interesting because some sectors, while they look at some more common multiples that can be, I don't know, like EV over EBITDA or price over cash flow, they also look at more specific ones that will just be like more technical and used just for this type of industries. So for example, we have like EV over barrels of oil per day, or similar ones. So that's very interesting, like, and it's something that you just discover when you're like going a bit in depth in these types of sectors. And then on the other hand, instead, we have chemicals, and in this case instead multiples way more preferred over DCF. And it is good to see that also in this case it is very like more technical because the multiples that would be employed are different in terms of the different types of chemicals companies. You can get very different companies indeed. So for example, chemical companies distribution will use certain ratios, while chemical providers or like flavors and fragrances companies that also fall under chemicals will use some very different ones, just as we've seen for like those that are more technically used just for oil. And there's a final one, metals and mining. So you can see this sector as, I don't know, like pretty much like closer to like oil and gas, for example. It is also like very used like these limited natural resources, but in In this case, you will not use a DCF analysis usually, but you will prefer multiples just because basically of the very volatile nature of their revenues that are usually a bit tricky and difficult to like determine and forecast because they depend on factors such as like recovery grade, ounces that are mined, then the metal price that can also fluctuate a lot. And so also in this case, you would prefer multiples analysis.

Could you use something like an interest in geopolitics as a way of bridging a gap to show interest or enthusiasm for this sector? Do you think that could be quite a powerful avenue to present to an interviewer?

Yeah, I would say 100%, because if you have like passion for like governments, geopolitics and stuff, definitely you are up on top of like all the news that have to do with like oil and gas companies, metals and mining, how to exploit these resources, how not to exploit too much in a sense, like these limited resources and all the policies that are under consideration. So yeah, 100% like a good way to appear, like talk about your interest and your possible feasibility for these types of things.

And then on my final one before we go to financials is that from a career perspective, let's say the Chevron deal, so for Hess is $53 billion, so that would be Chevron's biggest biggest deal in its history. So if you are a grad and you're working on the team and then like the MD or MDs that work on this deal, like, is there something whereby you can say that you worked on that ticket? Like in terms of, does that give you any internal capital in terms of your ability to be perceived the right way because you've worked on on the size of deals, or does it not really work like that? Is it more frequency of deals, or the specialism of the deal, or is just the big ones triumph? Like, what's the internal vibe amongst all the different sectors?

Yeah, it's interesting because I would say it is really like sector dependent, like industry dependent, because like in some industries you will mostly never have like these very huge deals. And so in that case, it would be a bit more about the frequency of the deals, like how many deals have you done. But I would say it is very, very strong and powerful to be able to talk about such a deal, honestly. So of course, like, inside of the teams, your team will work on this deal, but you will have like different tasks. Yeah, your task will be like different from those of your MD, but just because you have been involved in this and you've seen like everything that has been going on and you can talk about it, you can put it on your CV, you can just like use it as an element for like a further application or like interview view, this is definitely a very good element of like competitive advantage.

Okay, so our final one, financials. So I guess the question the interviewer is going to ask me then, and why do you want to work in financials? What am I going to say? So what's the breakdown here?

Yeah, absolutely. So yeah, just starting to see like what are like the subsectors that you can find here. We have banks that can be, uh, like divided in terms of like regional focus, and then we have insurance with private equity firms and all the likes of like pension funds. And this is actually a very interesting area. And I would say like going back to like the strategic element, it can be like very strategic of you to pick like financials because usually just like seeing it from the outside, I bet that like many of you listening to us right now will think like financial seems like very abstract and like, I don't know, like very difficult, complicated. The way that banks work is very different from like other companies in other sectors. But Yeah, it can be something very different, but you will realize, like, in any sectors you were working, that like any sector is this actually very different from another one. So any sector can be actually very complicated to like analyze and value. And, um, actually financials are such an interesting area, and especially like in these years there's so much going on that I would never just like rule financials, banks team, just because it feels like more complicated in a sense. So yeah, talking again here about like the topics, so we can see like from more like research perspective, a lot going on. So we've mentioned like neobanks, fintech wave before when we were talking about financials. So what is this like implicating for like the financial sector, the traditional banks Basically, they just need to consider more and more transformational steps to stay ahead of this wave of digitalization, sustainability, optimization, because otherwise legacy banks can risk remaining a bit behind. More and more young students would like to open a Revolut account, for example, or a Monzo, because it just feels a bit more familiar easy accessible than to like going to legacy bank, opening a bank account. So we will see like many, many banks either like partnering with fintechs or trying to acquire them. So we're talking like from IBD perspective about transformative M&A deals in order to acquire the new technology and like really being able to like stay on top of like competition. And then we have mentioned, like, when we were talking about software and tech, artificial intelligence. So one key aspect of it is, like, about chatbots. And some things, like, something very easy, but it's something that can be applied to so many sectors. And we have also, like, financials here. So in particular, insurance. So what is insurance about? This is about, like, costs, first of all. So you want to be able to optimize your model in order to, lower your costs and provide your clients with a less expensive alternative. And then it is about customization. The insurance contract for one person or one company will never be the same as the one for another person. And so it is all about this ability to tailor, to make it specific for your clients. And then it has to be immediate. And so what's better than using chatbots basically to do at least the first steps. So insurance companies are leveraging a lot of this technology in order to like optimize them on top of competition and create like great products in a more efficient way.

Okay. And then in terms of the valuation, because when I hear an insurance company as compared to, say, a PE firm, I think that they're completely different. So how would you go about approaching them? Yeah, all that sector.

Yeah, in these terms, like, it can be a bit tricky because, like, insurance companies, PE firms have very, very different, like, business models. And so, like, different types of statements. So just, like, having an overview, for example, about banks. So if we were to, like, value a traditional bank, what would we do? So just, like, taking a step back, probably why these are a bit different for, like, usual, like, normal sectors in a sense. How do banks make money is like the key question in this case. So basically banks make money in 3 ways. So we can divide the type of income that banks are making in terms of like interest income, capital markets income. Here we find like the sales and trading and RBD services, for example, and fee-based income. So because of this, as it is pretty different from like how other corporates work, we will also find different types of valuation employed by analysts. Analysts. So, method number 1, some of you will be surprised. So, if you remember the Gordon Growth Model that you've studied at university, if you studied finance or economics, business, yeah, it is coming like helpful here because many times it is the method employed in order to value a bank. Or otherwise, again, method number 2, we have multiples. So, pretty much as we have seen for like an oil and gas company, basically here we can use some common multiples like price over earnings, for example. But it is important to bear in mind that when you're using these common multiples like price earnings, they can be a useful tool if you want to compare, like, for example, a traditional bank with a neobank that will be valued basically using these types of multiples and not like more specific ones. Or if you want, for example, to look across sectors and just get the general idea. But if you're just looking at your company and it is a traditional bank, probably price earnings is not like the top candidate. So it will be more used for like a comparison reason, because basically earnings can be like pretty volatile, bank can be underperforming, and so using multiple like this can be a bit like misleading. So this is why usually you would also complement this with the more like technical multiples in a sense, that can be for example price over book value. So basically market cap over book value of So yeah, just like going back to your main question, you were asking me like if you were to like value, for example, a traditional bank acquiring a target that is like a fintech, how can you like track these two basically? So I would say that if you want to compare them, you can use a price over earnings multiple. Then when you are going back and you want to value your like traditional bank company, you would use something a bit more technical. Specific.

Okay, understood. And there, there was a thing you mentioned there was about how banks make money, and we're also talking about PE firms here. Just to remind you, there is a really good— well, to our listeners, there's a really good YouTube series. If you just search Amplify Me on YouTube for our channel, there's a category called Amplify School, and there's really short bite-sized, and they're designed to be super easy to understand and it's like an animated presentation which explains these things, the difference between investment bank, how it works, the difference between a commercial bank, let's say, and how it works, and, and so on and so forth. So yeah, definitely for any of those who are inquisitive in that way and want to have a look at that, do, do check that out. But just going back to, um, a question then, kind of wrapping up. So we started with covering the different types of sectors, just to repeat, these would be, for example, consumer retail, industrials, public sector and infrastructure, healthcare, financials, real estate, natural resources, and technology. Now we talked about tech, natural resources, financials in more detail. When I look at the full list, is it sensible to think a bit more tactically as a student and think, okay, I reckon the least popular public sector and infrastructure does not sound quite as sexy as working in cutting-edge generative AI technology, would my odds be better to focus on that? And I imagine those deals come up less frequently and are much longer in their execution, just given the public sector. Is that a way to think about it? Or is it, look, if I want to be the best, I gotta run with the best. I gotta be in the biggest, best deals. I gotta be in tech because that's where it's at and that's where it's most competitive. But if I want to be the best, I gotta beat the best, and so I should think of it that way. Like, how— I know there's probably no right or wrong answer with this, but is there a, is there a bit of a play on perhaps targeting the lesser, lesser favorite sectors, so to speak, outside of the hot ones?

Yeah, absolutely. That's a great question. And as you said, I don't know if there is like a real answer to this because like there are two ways of looking into this. So definitely if you're looking at the sector that is not like something so sexy in a sense, as you said, probably you could get like more chance of ending up in that team just because there will be less competition basically. But on the other hand, like also for what regards like the most hyped teams and sectors right now, because there is like so much activity going on, probably there will also be like more seats inside of the team. So if you're like a fun or like an energy fun, don't feel like you should just like discard it and go for like another one where you can find less competition just because of that. And especially as we said in the very beginning, it is all about taking your interests, your passions, and like leveraging them. So if for example you are like public sector passionate or can be like a fashion passionate, just go for it. Like you don't need to go for like the hot sectors at the moment in a sense, But if you have a real interest there, you can know that they are like very, very hot at the moment, which means there is a lot going on, more seats probably in the team. So there is two ways of looking at this.

Yeah, I think, I think you've said this a few times, but I think if you follow what you're interested in and passionate in, you're probably not only going to impress more when you talk about why that sector, you're probably going to do a better job when you're in that role just because it is of more natural interest to you. So perhaps then the leveler of how to go one way or the other is that, so actually, am I interested in infrastructure? Probably not. So therefore, you know, how thrilled am I going to be working long hours in an area that I'm really not enthused about? The one thing I would say is a caveat to that— caveat to everything, of course— course, which is you said also, um, you know, if you don't get the sector that you're, that you're going for as your number one top pick, don't worry about it. And that I could definitely say from experience, I would definitely say that's 100% true. You know, no one ends up in the end of their career where they started at the beginning of their career. I mean, while you're stud— I mean, forget sectors, you could talk about even in different industries that you might pivot completely. So So yeah, I definitely think that spending some time in an area that perhaps is not quite where you want to be, but then just getting that knowledge, getting that network, finding those opportunities later and being patient and working hard to get to that point, I think is definitely a good way to think about it as well. So look, we'll wrap it up there. Thank you very much, Silvia. Perhaps you could just finish by telling me a little bit about the the M&A Finance Accelerator simulations. I know a few of them have happened already. I know there's been, touch wood, really incredible demand for it that we've had to cap a lot of the sessions, but I know we've got others planned in the future. So if anyone's listened to this and they want to get some practical experience, what could they expect from the M&A FA?

Yeah, absolutely. That's great that you talked about this because I really wanted to mention it. We got like such a strong demand and I want literally like everybody out there to know. So we're running this public session that are M&A Finance Accelerators. So in these sessions, what you can get is a 2-hour simulation in which you can be able to understand how to analyze the statements of a company and how to value a company with a real-world M&A model. So that's a great opportunity for you to get that first experience or also to really understand if it's something you would like to do in your career. Maybe if you are undecided between a couple of sectors. You can really understand if you like to work on Excel, to work on valuation. That's very exciting, it's competitive environment, but we also like provide you all the tools that you need. So even if you are not from a finance background, if you have not opened like Excel in your life, we're providing you with all the elements, some supporting videos guiding you over all the simulation. So make sure to check out our LinkedIn, we will post there the next date, which will probably be very soon, and I'm very, very excited for it.

Cool. All right. Well, yeah, I'll drop the link of that into the show notes. And Silvia, thank you very much, and I'll see you for the next conversation.

Thank you very much. See you next time.