Investment Banking and Private Equity

Investment banking and private equity represent two distinct yet highly interconnected sectors of corporate finance. Investment banking, often referred to as the "sell-side," acts as an intermediary, specializing in raising capital for corporations and governments through activities like underwriting initial public offerings (IPOs) and bond issuances, as well as providing strategic advisory services for mergers and acquisitions (M&A). In contrast, private equity is on the "buy-side," where firms raise large pools of capital from institutional and high-net-worth investors to acquire controlling stakes in companies, often taking them private in leveraged buyouts (LBOs). The goal of a private equity firm is to actively manage and improve the acquired company's operations over several years before exiting the investment at a significant profit, frequently utilizing the services of investment banks to finance the initial acquisition and to later facilitate the sale or public offering of the company.

1. Foundations of Corporate Finance
   1. The Corporation and Its Stakeholders
      1. Definition and Purpose of a Corporation
      2. Types of Business Entities
         1. C-Corporation
         2. S-Corporation
         3. Limited Liability Company (LLC)
         4. Partnership Structures
      3. Stakeholder Theory vs. Shareholder Primacy
      4. Shareholders
         1. Rights and Responsibilities
         2. Types of Shares
            1. Common Stock
            2. Preferred Stock
            3. Voting vs. Non-Voting Shares
         3. Dividend Policy
            1. Dividend Distribution Mechanics
            2. Dividend Yield and Payout Ratios
      5. Creditors
         1. Types of Creditors
            1. Senior Lenders
            2. Subordinated Lenders
            3. Trade Creditors
            4. Bondholders
         2. Debt Covenants
            1. Financial Covenants
            2. Negative Covenants
            3. Affirmative Covenants
         3. Priority in Capital Structure
            1. Absolute Priority Rule
            2. Waterfall Distribution
      6. Management
         1. Corporate Governance
            1. Board Structure and Independence
            2. Audit Committee Functions
            3. Compensation Committee
         2. Board of Directors
            1. Fiduciary Duties
            2. Director Elections and Terms
         3. Executive Compensation
            1. Base Salary and Bonuses
            2. Equity-Based Compensation
            3. Severance and Change-in-Control Provisions
      7. Other Stakeholders
         1. Employees
         2. Customers
         3. Suppliers
         4. Regulators
         5. Communities
   2. Core Financial Statements
      1. Income Statement
         1. Revenue Recognition
            1. Revenue Recognition Principles
            2. Timing of Revenue Recognition
         2. Cost of Goods Sold (COGS)
         3. Operating Expenses
            1. Selling, General & Administrative (SG&A)
            2. Research and Development (R&D)
            3. Depreciation and Amortization
         4. Operating Income (EBIT)
         5. Interest Expense and Income
         6. Tax Provisions
         7. Net Income
            1. Earnings Per Share (EPS)
            2. Diluted vs. Basic EPS
      2. Balance Sheet
         1. Assets
            1. Current Assets
               1. Cash and Cash Equivalents
               2. Accounts Receivable
               3. Inventory
               4. Prepaid Expenses
            2. Non-Current Assets
               1. Property, Plant & Equipment (PP&E)
               2. Intangible Assets
               3. Goodwill
               4. Investments
         2. Liabilities
            1. Current Liabilities
               1. Accounts Payable
               2. Accrued Expenses
               3. Short-Term Debt
            2. Long-Term Liabilities
               1. Long-Term Debt
               2. Deferred Tax Liabilities
               3. Pension Obligations
         3. Shareholders' Equity
            1. Common Stock
            2. Additional Paid-In Capital
            3. Retained Earnings
            4. Accumulated Other Comprehensive Income
      3. Cash Flow Statement
         1. Operating Activities
            1. Net Income Reconciliation
            2. Working Capital Changes
            3. Non-Cash Items
         2. Investing Activities
            1. Capital Expenditures
            2. Acquisitions and Divestitures
            3. Investment Purchases and Sales
         3. Financing Activities
            1. Debt Issuance and Repayment
            2. Equity Issuance and Repurchases
            3. Dividend Payments
         4. Free Cash Flow Calculation
      4. Statement of Shareholders' Equity
         1. Components of Equity
         2. Changes in Equity Accounts
         3. Stock-Based Compensation Impact
   3. Financial Statement Analysis
      1. Ratio Analysis
         1. Liquidity Ratios
            1. Current Ratio
            2. Quick Ratio
            3. Cash Ratio
         2. Profitability Ratios
            1. Gross Margin
            2. Operating Margin
            3. Net Margin
            4. Return on Equity (ROE)
            5. Return on Assets (ROA)
            6. Return on Invested Capital (ROIC)
         3. Solvency Ratios
            1. Debt-to-Equity Ratio
            2. Debt-to-Total Capitalization
            3. Interest Coverage Ratio
            4. Fixed Charge Coverage Ratio
         4. Efficiency Ratios
            1. Asset Turnover
            2. Inventory Turnover
            3. Receivables Turnover
            4. Days Sales Outstanding (DSO)
            5. Days Payable Outstanding (DPO)
      2. Common-Size Analysis
         1. Vertical Analysis
         2. Horizontal Analysis
      3. Trend Analysis
         1. Multi-Period Comparisons
         2. Growth Rate Calculations
      4. Benchmarking Against Peers
         1. Industry Comparisons
         2. Best-in-Class Analysis
   4. Capital Structure
      1. Debt Capital
         1. Types of Debt Instruments
            1. Bank Loans
            2. Corporate Bonds
            3. Commercial Paper
            4. Convertible Debt
         2. Senior vs. Subordinated Debt
         3. Secured vs. Unsecured Debt
         4. Covenants and Security
            1. Collateral Requirements
            2. Personal Guarantees
      2. Equity Capital
         1. Common Equity
            1. Voting Rights
            2. Dividend Rights
         2. Preferred Equity
            1. Dividend Preferences
            2. Liquidation Preferences
            3. Conversion Features
         3. Rights and Dilution
            1. Anti-Dilution Provisions
            2. Preemptive Rights
      3. Hybrid Securities
         1. Convertible Bonds
            1. Conversion Ratios
            2. Conversion Premiums
         2. Preferred Shares
            1. Cumulative vs. Non-Cumulative
            2. Participating vs. Non-Participating
      4. Weighted Average Cost of Capital (WACC)
         1. Cost of Debt
            1. After-Tax Cost of Debt
            2. Credit Spreads
         2. Cost of Equity
            1. Capital Asset Pricing Model (CAPM)
            2. Risk-Free Rate
            3. Market Risk Premium
            4. Beta Calculation
         3. Calculating WACC
            1. Market Value Weights
            2. Tax Shield Benefits
         4. Impact of Capital Structure on WACC
            1. Optimal Capital Structure Theory
            2. Trade-off Theory
   5. Capital Markets
      1. Primary Markets
         1. Initial Public Offerings (IPOs)
         2. Secondary Offerings
         3. Private Placements
            1. Rule 144A Offerings
            2. Regulation D Offerings
      2. Secondary Markets
         1. Stock Exchanges
            1. NYSE
            2. NASDAQ
            3. Regional Exchanges
         2. Over-the-Counter (OTC) Markets
            1. OTCQX
            2. OTCQB
            3. Pink Sheets
      3. Public vs. Private Markets
         1. Access to Capital
         2. Disclosure Requirements
            1. SEC Reporting Obligations
            2. Sarbanes-Oxley Compliance
         3. Liquidity Considerations
         4. Valuation Differences