The Corporate +

consulting
Sell side
Investment bank (wholesale financial services)
Buy side
Sources of finance/
buyers of securities

Gateway Sector
e.g. consumer
Investment banking
(corporate finance)
Secondary markets

Retail banks

guide to

Retail finance services

Fixed income
Sector Mergers and Corporate Equity currency and
e.g. consumer acquisitions
Sector broking commodities

the City
acquisitions,
e.g. TMT
divestitures,
restructuring,
Sector spin-outs
e.g. technology, Sales Mutual funds

Companies
media, telecom-
munications long only

Corporate advisory
Sector

(sector coverage)
e.g. healthcare
Equity
What is the City? Sector
e.g. healthcare
initial public Trading
offerings,
follow-on offerings
‘The City’ used to refer to the mer-
chant banks, stock brokers and insur- Hedge funds
ance companies that had their head- Sector relative value
quarters in the so-called ‘square mile’ Sector Structured Structuring
e.g. industrials event driven

Alternative investment
– roughly equivalent to the old walled e.g. industrials
products directional
city of London. Debt (derivative
Now the City means the plethora of
financial institutions that have spread
Sector loans and bonds,
leveraged finance,
solutions)
e.g. financial
themselves out across London – from Sector
securitisation Research
institutions
Mayfair in the West End to Canary e.g. banking group Private equity
Wharf in the east.
And it does not just refer to invest- Leveraged buyout
ment banks, but also to the asset man- mid-market growth
venture capital
agers, hedge funds, private equity Merchant banking Proprietary trading
houses, accountants, lawyers, PR peo- (principal finance)
ple, headhunters and other brokers and
advisers who all work together to pro-
vide the great fuel of the world economy Strategy Middle office
– finance. risk, compliance, product control
The diagram on the right explains
Process
how this intricate web of organisations Back office
work together – the role they each play operations and technology
and how they make money. Each one Consulting
offers a career option for you – as an in-
tern or as a graduate hire.
It will require specialist knowledge Technology
to get ahead of the masses who will in- Accountancy Law Other advisory
terview with them for an internship or a audit, tax corporate, litigation recruitment, PR
Outsourcing
full-time position. Therefore it is never

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 too early to familiarise yourself with their re- Whereas an investment bank will advise a Stanley and Goldman Sachs.
spective roles in the economy so you can be company on the financing aspects of a transac-
ready when the time comes to apply. tion, a law firm will advise on its legal aspects,
ensuring it complies with legislation, the City Asset managers
code and the Stock Exchange rules. And if
Corporates things ever turn nasty, a law firm will provide Conventional asset managers look after the
an attack with litigation or defend against it. wealth capital of companies, pension funds,
‘Corporates’ means companies that actual- They support their clients on an on-going insurance companies and individuals. They
ly make stuff or sell services to customers. The basis with advice on every aspect of their rela- tend to invest in stocks or bonds and stay
largest companies in the UK include HSBC, tionships with customers, suppliers, investors, ‘long’ – i.e. they buy securities, hold them for
BP, Shell, Vodafone and GlaxoSmithKline. financiers and staff. the long term and hope they will go up. To at-
To make their product or sell their service In the City, the legal world is dominated by tract money from the public they advertise, but
they organise themselves into a host of sepa- the so-called Magic Circle firms – Linklaters, in return are heavily regulated.
rate but inter-connected departments, such Clifford Chance, Allen & Overy, Freshfields Famous asset managers include Fidelity,
as research and development, procurement, and Slaughter & May. Jupiter and New Star.
manufacturing, sales, marketing, logistics,
finance, HR, etc.
To expand, they can grow organically, Consultancies Hedge funds
which often requires expansion capital, or
take over rivals, customer companies or sup- The business badge of ‘consultancy’ could Hedge funds are a special type of asset
plier companies, which requires acquisition mean anything from a one-man band to the manager who are not allowed to advertise for
finance. multinational Accenture. The term refers to money to invest. Instead they attract pools of
Either way, companies need financial capi- any business that earns money by advising private capital. In return, they are largely un-
tal and associated advice and hence they turn another one. regulated and can go ‘short’ (i.e. sell stocks
to the other players in the City for help. A consultancy makes its money by charging they have borrowed in the hope that their
out its time and expert advice. value falls), use leverage (i.e. invest borrowed
The big consultancies like KPMG, Ernst money) and derivatives (futures and options)
Accountancy & Young, PricewaterhouseCoopers, Deloitte to add extra risk/reward or to hedge.
and Accenture provide services across every The names of hedge funds are less well-
To support any transaction, as well as to industrial sector and every commercial disci- known. Ones to look out for are GLG, Thames
simply comply with the law, companies must pline. The elite consultancies like McKinsey, River Capital and Olivant.
prepare accounts – either reporting historical- Boston Consulting Group and Bain confine
ly or forecasting into the future. Usually these themselves to ‘strategy’.
accounts must be audited and warranted as Some consultancies specialise in providing Private equity
accurate. Accounting firms like Pricewater- advice in a defined sphere, such as information
houseCoopers, Ernst & Young, KPMG and technology (e.g. IBM) or sector, such as oil and Like hedge funds, private equity funds sit
Deloitte provide such services. gas (e.g. Wood Mackenzie). outside the boundaries of traditional finance.
A huge cost and consideration for compa- Instead of buying minority positions in public
nies is tax and so the accountancy firms will companies like conventional asset managers,
also help companies minimise (legally) the tax Investment banks private equity investors seek to buy out com-
they pay. panies whole, taking them off the public stock
Like their legal brethren, accountancy firms The term ‘investment banking’ used to refer market and back into private ownership.
will support their clients on a continuous basis to institutions that acted purely in an advisory, Outside the scrutiny of the public market,
as accurate accounting and budgeting under- intermediary or underwriting capacity – not the company can be subjected to changes
pins everything a business does. investing or trading their own capital, unlike which might take longer to show results, or
‘merchant banks’ who did. can be financed in a different way, often by
Now investment banking is an umbrella displacing ‘expensive’ equity finance with
Law term that refers to the host of advisory, whole- ‘cheaper’ debt finance.
sale money market, trading, research, asset In the past few years, private equity houses
In strict terms, a law firm is a type of consul- management, stock lending, custodial and such as KKR and Blackstone have hit the
tancy in that it advises companies about legal other services that are provided by the super- headlines by taking over some huge compa-
issues. It does not produce a product per se – it market-size giants like Citigroup, JP Morgan, nies before going public themselves, which
sells its time and advice. Deutsche Bank, UBS, Credit Suisse, Morgan seems to us at The Gateway as a bit ironic.

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