One of the great features of the SMF program is an action-based course in the last academic term. Students have a number of projects from which to choose, from investment management to corporate finance to risk management, and students rank all the projects. Professor Pinteris then assigns people to groups based on their specializations, previous coursework, grades, and other factors. I was assigned to be team leader for a corporate finance project with Ohio State’s Treasury Office. My team and I are working with the office to model operating cash flows based on historical data, determine how much cash the university needs to keep in interest-bearing deposits, and addressing a number of pending considerations for Treasury.
The people with whom we are liaising on this project told us that they would like a candid assessment of Treasury’s results, so this project is already testing my knowledge of government and non-profit accounting. Plus the project is very relevant to the job that I took in public finance, so I’m really getting a great transition from school to the workplace.
This week is my last (predetermined) Spring Break, and I must say it’s bittersweet. I’ve spent the last four days in Las Vegas, Nevada, enjoying St. Patrick’s Day; taking in “O,” a Cirque du Soleil show; and taking a helicopter through the Grand Canyon. It’s my first time in Vegas, and I’ve been stunned by the activity, the scenery, and the just plain fun that can be had here.
Before my Vegas trip, I spent the weekend in Washington, D.C. staying and visiting with some dear friends and enjoying the best D.C. has to offer. Since I took a job elsewhere and will not be returning to D.C., it was a little unfortunate to inform friends that I will not be returning in the near future. Having exited undergraduate a semester early, I never got Spring Break last year, so I’m living it up now.
At the beginning of January, I accepted a job and will be moving away from Columbus. After nearly five years of being in Columbus and just finishing finals for the third term of the Fisher SMF program, it’s finally hitting me that I will be leaving Columbus. Here’s my bucket list for my last two months in Columbus:
Catch the Rocky Horror Picture Show live performance at Studio 35 in Clintonville, OH.
Spend a day at The Book Loft—I’ve been there many times, but I’d love to spend an early Spring day just strolling among the books.
Having lived in Columbus, OH for nearly five years now, I’ve had many opportunities to sample the restaurants, and have come up with a list of my favorites. Unfortunately, I recently found out that my favorite restaurants, Deepwood, between the Short North and Nationwide Boulevard shut down on New Year’s Eve. Deepwood was an upscale American eatery with charcuterie, soups, seasonable vegetables, and duck, as well as a wonderful selection of bourbon cocktails. In remembrance of Deepwood, I will now run through my revised listing of restaurants.
5. The Pearl – this seafood restaurant is a bit newer on the Columbus dining scene (circa 2013), but from the first time I visited, I loved its many nautical themes and casual atmosphere. It has one of the best oysters on the half shell and Moscow Mules around, and water is usually served in mason jars.
4. Hyde Park – the upscale American steakhouse, replete with a raw bar, hearty soups, seafood sides, chop salads, and carbs galore. The ambiance is wonderful, staff are always top-notch, and it’s truly an experience no matter where you’re sitting in the restaurant.
3. Rigsby’s – while Marcella’s and Martini didn’t quite make the cut (both are fantastic restaurants), both lack the heartiness and simplicity, yet incredible diversity of northern Italian cuisine, incorporating various seasonal vegetables, wines, and meats.
2. Till – by night, Till is an off the beaten path watering hole for the older university/young professional crowd, filled with pizzas, burgers, seafood, and tofu. By day, the restaurant is more of a café with the absolute BEST pour over coffee I’ve ever tasted. My barista had me sample a number of pour over variations from Till’s supply, and she compared them to strange flavors. I settled on a Burundi coffee that she likened to the taste of “car engine.” I can’t say that I’ve ever tasted car engine, but the coffee keeps me coming back. It’s very close to campus on King Avenue, closer to Neil Avenue, and I’ve found myself many a time studying for hours on end at the coffee bar.
1. L’Antibes – in my view, this is Columbus’ best kept secret. Usually when someone asks me my favorite restaurant and I respond with L’Antibes, they usually have no idea what I’m talking about. While its official address is on North High Street in the Short North/Italian Village, its entrance is really on Warren Street. Inside the restaurant stand about ten or so square or round tables seating two to four with white table cloths, lots of natural light, pale yellow walls, and tasteful yet discreet artwork scattered throughout the restaurant. It’s very quiet, which is such a break with all the noisy Columbus restaurants where you can’t hear the people with whom you’re having dinner. The restaurant bills itself as French with American influences. Any of the escargot and salmon dishes are to die for, as well as any of the desserts or dessert wines.
If you come to the program from a warm area, you will no doubt be shocked by the weather in our relatively northern state. While the weather conditions in Ohio can be very volatile, the temperatures are generally in the 10 to 30 Fahrenheit (-12 to -1 Celsius) degrees range.
Thus, the single most important thing to prepare for Columbus’ winter is to make sure you have a warm coat. Additional preparations include a warm scarf, gloves, socks, and something to protect your head.
The second most important tip is to layer, as multiple layers help trap warmth and keep it close to your body. This is especially important as the average daily minimum wind speed is around 10 mph, which can make effective temperature much colder than actual temperature.
It typically snows in January about 40% of the time. This means that a sturdy pair of boots would be a wise investment. Additionally, because it rains about 20% of the time, compounded with the freezing temperatures, another wise investment would be ice cleats or spikes to attach to boots to ensure that you’re not falling all over the sidewalks. While the campus does a very good job of keeping the sidewalks iced, off campus is not always so well-tended.
As always, keep a nice pair of shoes in your locker at Fisher or carry a pair with you, just in case you need to interview or meet with someone important.
The beginning of the SMF program was very structured: everyone takes the basic list of courses, which includes Corporate Finance I, Investment Management I, microeconomics (formally, Industry, Risk & Pricing), and several others. Certainly, one has the opportunity to take a few electives during the first two terms, but up to only three.
There are only two required courses in the third the fourth terms collectively, which are macroeconomics (formally, Global Financial Markets) and Team Projects (which are essentially client projects the program acquires for students to work on with the clients), which allows for up to ten electives in Spring semester.
Because I am specializing in corporate finance, I’ve chosen to take Corporate Finance IV with Professor Karen Hopper Wruck. Professor Wruck is a widely published and recognized expert on corporate restructuring. Our first two classes have combined cases that she has written demonstrating how value can be created through different types of restructuring (e.g., borrowing roughly the net worth of a firm, paying the proceeds out as a special dividend, and using the increased leverage to effect prioritizing cash flow).
Another elective I’m taking is Enterprise Risk Management with René Stulz. Dr. Stulz is a world-renowned expert in risk management and is a member of the Board of Trustees of the Global Association of Risk Professionals. Our first two classes have focused on the mechanics of many of the derivatives crises, such as Barings, Lehman Brothers, Orange County, and Metagesellschaft, with the primary lesson that many of these crises came about not because derivatives are inherently bad, but because derivatives, like the machinery of almost any profession, need to be handled with care and with full knowledge of the associated risks.
In terms of fascinating classes and distinguished professors, the list goes on, and I continue to both broaden my knowledge of the various areas of finance and dive deeper into corporate finance and how firms create value for creditors and shareholders.
Dr. George Pinteris, academic director for the Specialized Masters in Business Finance program at Fisher College of Business, wanted to try out a merger simulation with his Corporate Finance II classes. He assigned us the Wrigley-Mars merger cases to analyze. Half the class read the information to which Mars was privy, the other half Wrigley. My team and I were assigned to Mars (the buye), in the transaction. Dr. Pinteris used one lecture period as an initial discussion of the information to which both parties had access and to emphasize that there was more to this transaction than the price Mars paid to acquire Wrigley.
My group based our negotiation strategy on five factors, in addition to the price: the placement of the current target’s CEO; the plans for one of the target’s most treasured and iconic assets (Wrigley Headquarters in Chicago); the naming of the merged company; the independence of the target’s management post-merger; and the extent to which the acquirer can impose efficiency measures on the target after the merger. As the buyer, we packaged three deals with varying premia over the current share price and over the intrinsic value—an initial offer, a target offer, and a walkaway offer.
When we began negotiations, because we were the buyer, we made the first offer: a meager control premium over current market value, with a number of conditions that granted the target substantial operational independence. The target’s counteroffer was revealing: they mentioned that they wanted a more equitable share of the synergies from the merger and countered with a very high offer outside our acceptable range. We came back with a larger control premium, with a number of more restrictive terms than the initial offer. For example, we did not place the target’s CEO in as important a position and we insisted on greater efficiency measures. The target countered with $79, still intent on capturing larger portions of the synergies in the transaction, but this time they disapproved of our demotion of the target CEO. We offered to increase our price to $75 and place the target CEO on the Board of Directors. They offered to go down to $77 with the same conditions. My group did not want to increase our price, but we had reached a set of conditions with which we were very pleased. When we offered an additional board seat, the other team acted utterly taken by surprise. After about five minutes of hushed discussion in their group hunched over their own valuations in Excel, they accepted. It was a term that neither of our groups had seriously considered, but it was something that ultimately allowed us to close the deal at a price more amenable to us, the buyer.
We had begun the negotiations with the goal of getting the lowest price with terms that would preserve Wrigley’s independence. Instead, we walked away by paying $3 over our target, but the counterparty had practically given us as much as we needed to achieve synergies by ceding decision-making authority over its Chicago headquarters, over its management and employees, and general operational aspects of the business—Wrigley had practically handed us all the synergies we needed to make the deal worth it.
In Dr. Pinteris’ next lecture, we discussed our experiences in the merger. All of our negotiation experiences had been quite different, and Dr. Pinteris used this lecture to illustrate the different scenarios that play out with different zones of agreement on price and to illustrate the importance of qualitative factors in the negotiations. I thoroughly enjoyed this simulation that Dr. Pinteris set up for us—it was hands-on and engaging, and I think I learned more about M&A negotiations than if I had simply read the case and participated in the class discussion.
Sometimes you do assignments for classes or complete classes without realizing just how valuable that assignment or class was. One such assignment for me was a comprehensive valuation report on a publicly-traded company in our introductory finance course in the SMF program. Our professor and the academic director of the program, Dr. George Pinteris, gave us certain parameters for the projects—such as no companies in the industrials or financials industry verticals. He also restricted us from valuing certain companies that other students had done before, such as Nordstrom, L Brands, and Coca-Cola. Professor Pinteris segmented our class into groups. My group chose The Boeing Company. For the report, we had to use Capital IQ, Bloomberg, IBIS World Industry Reports, and several other sources of information. For example, in understanding the operating margins for Boeing, one must understand the price directions for key inputs, such as steel, composites, titanium, and aluminum. To understand which way those prices are moving, one must understand key economic assumptions and inputs for the prices of those commodities.
I especially enjoyed this project because it drew on the strengths of my team members. One member has a background in energy investments and so had keen insights into oil and natural gas commodity markets. My own background in public policy and politics informed the analysis of Boeing’s strategic direction as the United States Congress wrestles with the issue of how to stimulate exports (Boeing earns half its revenues by exporting goods). All of us were proficient at financial modeling, but one team member was especially adept and provided the team with reams of data and analysis on Boeing’s historical and projected financials. Her analysis includes several valuation methods, such as dividend discount model, discounted cash flow using multiples, transaction multiples, and market multiples. Dr. Pinteris stressed the need to produce a professional report, with an accompanying Powerpoint and presentation. In short, Dr. Pinteris’ project stressed a number of skills needed in the financial industry: teamwork, professionalism, modeling skills, and strategic thinking.
As an economics undergrad with no formal finance background, Fisher College of Business’ course structure has been highly valuable to me. Fisher splits the semesters into terms, and students take five courses each term. This allows me to take many courses and broaden my finance background very quickly and comprehensively. Thus, I’ve been able to take such electives as financial modeling and international finance, and for next term, private equity, enterprise risk management, and accounting for M&A, on top of core courses.
One invaluable elective I took last term was Financial Institutions with Dr. Isil Erel. Professor Erel is an expert on banking and capital requirements, and is heavily involved in research on corporate governance and M&A. This course focused heavily on the development of the financial services industry after the deregulation of the banking industry in the 1980s or 1990s, modeling the impact of interest rate changed on banks’ balance sheets, hedging interest rate risk, modeling credit risk, accounting for off-balance sheet items, the logistics of securitization of loans, and applying capital requirements. We also discussed the root causes and impacts of the financial crisis in 2008 and the responses of the regulators. Cases for the class focused on hedging interest rate risk with swaps and analyzing exchange rate ratios for bank mergers. While the final exam was quite difficult, I am now equipped with the tools to analyze more rigorously the risks facing financial institutions.
To supplement our course, Dr. Erel invited two bank executives, Don Kimble, Chief Financial Officer of KeyCorp, and Helga Houston, Chief Risk Officer of Huntington Bank, to speak to our class. During these sessions, these executives fielded questions about all of the topics we were learning in our course and covered additional topics, such as the importance of information technology innovation in the sector and reputational risk.
Dr. Erel and Financial Institutions are just one example of how students gain from Fisher’s programs—in many other courses, professors are providing us valuable real-world skills, putting us in situations where we need to perform, and introducing us to executives and alumni who can help us in the job search. Time and time again, Fisher is working for its students.
If you are pursuing a career in finance, it is important not just to have a conceptual understanding of the discipline, but also to keep up on the news and to know how to use different software programs. The Specialized Masters in Finance (SMF) program at the Fisher College of Business places a premium on just these two things.
With respect to software training, the program has adopted a curriculum that forces students to learn how to use Excel in their sleep, use certain Excel add-ons like Crystal Ball (which includes Monte Carlo analysis), CapitalIQ, and the ins and outs of Bloomberg terminals, the industry standard for gaining corporate information. In order to teach these software programs, Fisher has retained a former institutional investor, Professor Matt Sheridan. In addition to these software programs, Fisher students have free access to a plethora of other resources, such as IBISWorld Industry Reports, Thomson Research Reports, and LexisNexis, all of which are very helpful in researching companies, sectors, and markets for class projects. Knowledge of these programs is often prerequisite for many of the positions to which finance students will apply. In my interviews, I haven’t gotten brownie points for having these programs on my résumé—but I doubt I would have gotten an interview without some of them.
Dr. George Pinteris, the director of the SMF Program, likes to tell students that when finance professionals get together, they don’t talk about the risk premium over a risk-free asset that they use in the Capital Asset Pricing Model or whether they use the current portion of long-term debt when calculating the cost of debt. Instead, they discuss current events. Dr. Pinteris and other professors expect (but do not require) that students read the Wall Street Journal., Financial Times, and/or The Economist. Personally, I like to supplement my reading of WSJ and FT with American Banker. Whether students access these resources through online university library resources or through special discounts Dr. Pinteris distributes to students, students have access to very valuable resources. A full year’s subscription to American Banker costs about $1,400, while full year subscriptions to WSJ and FT cost a little over $300 each. During some of my interviews, mentioning a recent relevant article I read in FT or AB has often been a catalyst that made a good interview a phenomenal one.
The SMF Program not only gives students a solid academic background in finance, but also an excellent technical and professional background as well.