WCM Educational Recap #1: Introduction to Finance

Recapped by Amy Zado

Whether you’re new to WCM or a returning reader of this blog, welcome to the first educational! This week, we discussed the finance industry and opportunities across the capital markets!

  • Corporate Roles: This role is typically held within a company to help with financial planning and analysis and corporate development
  • Money Managing Roles (Buy-Side): This role typically helps make investments or purchase securities in public and private companies to develop a client’s portfolio
  • Advisory Roles (Sell-Side): This role typically involves providing financial advice to companies or individuals and promoting and selling companies and securities to them

The 6 Pillars of Finance

  • Asset Management, Private Equity, Venture Capital, Investment Banking, Equity Research, and Sales & Trading

The overall goal of individuals with these roles is to effectively manage clients’ assets to make the most returns on capital.

Private Equity

Firms that purchase companies using investor capital and debt, make improvements over 5–10 years and then sell for profit

  • Real-Estate Analogy — Buying a Home: If I purchase a home with a $100K down payment and a $400K mortgage and it appreciates to $650K over some holding time, I’ve made a significant return on my initial investment
  • Criteria for Investment: A stable and high cash flow yield, a sustainable advantage in the industry, and turnaround potential (the company must be able to go up in value for future investors when the private equity firm wants to sell)

Private Equity investment vehicles may include:

  • Growth Capital: An investment in more mature companies wanting to expand/restructure operations, enter new markets, or finance an acquisition
  • Mezzanine Financing: A hybrid of debt and equity financing to be explored in future meetings
  • Leveraged Buyout: Purchasing a controlling share in a company through outside financing
  • Distressed Buyout: Purchasing a controlling share in a distressed company (unable to pay back creditors) when a turnaround seems feasible

Venture Capital

Firms that invest in startups, early-stage, and emerging private companies with high growth potential — work to ensure investments are successful

  • Investment Criteria: TAM (Total Addressable Market) growth potential, business defensibility, and company management
  • Process Followed by VC Firms: fundraising, investment evaluation, investment and capital allocation, governance and business growth, exit and distribute returns

Asset Management

Firms that buy, sell, and manage a portfolio of stocks and investments on behalf of private or institutional clients

  • Generally, you bet on a company’s future performance — if it will perform well (long equity) or poorly (short equity)
  • Other strategies include merger arbitrage, convertible arbitrage, capital structure arbitrage, global macro

These individuals are the dealmakers — they promote and sell companies and securities to the buy-side

Investment Banking

Financial advisors who help companies and investors manage the process of buying/selling businesses and raising money

  • Two main functions include: Advisory (Mergers & Acquisitions, Restructuring, and Activism) and capital markets (Equity Capital, Debt Capital, and Leveraged Finance)

Sales & Trading

Firms who reach out to institutional investors with ideas and opportunities, and traders who execute those orders in the market

  • Sales is their primary function including fixed income, equity, and derivatives, and trading is their secondary function including credits/rates, cash equities/ETFs, and swaps/futures

Equity Research

Firms who conduct analysis and produce reports and recommendations to buy, hold, or sell investment opportunities for clients

  • Networking is one of the most important skills you’ll learn in finance
  • Keep coming to meetings and participating to help you learn and find what you’re passionate about
  • Use resources from clubs and upper-years to help with recruiting
  • Making your own equity research reports are a way to step up your cold-emailing when looking for an internship (and less time consuming than a stock pitch)
  • When looking for companies to do a stock pitch on, don’t choose obviously good and popular companies or ones where you don’t understand how they make money — it’s easier to convince someone that a company they’ve barely heard of is good, than to try to change their opinion about one they know well

A company may go through all areas of finance throughout its lifecycle

  • At the beginning, it will require some kind of financing, often from Private Equity or Venture Capital
  • After its IPO (Initial Public Offering), it will often gain some help on the sell-side to continue to grow its value, and use the buy side to help manage assets
  • Finally, equity research will likely be performed on the company

Ways to Get Involved

  • Participate in polls and Kahoots, ask questions, and earn prizes!
  • Volunteer for Week-in Reviews: Recap an interesting business event from the past week and discuss broader implications (1 person/week)
  • Topic Spotlight: Develop a case that relates to a specific part of the weekly educational with the Educations team (1 person/week)

Things to Look Forward To

  • Fundamentals of Finance (Economics Crash Course, Valuation, Strategy & Competitive Behaviour, + more)
  • Careers Within Finance (Sales & Trading, Private Equity/Venture Capital, + more)
  • Recruiting for Finance (HBA 1 & 2 Panels, Interview Prep Workshop, + more)



WCM’s mission is to educate, develop and provide real-world opportunities for members of the Western community to explore their interest in finance.

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Western Capital Markets

WCM’s mission is to educate, develop and provide real-world opportunities for members of the Western community to explore their interest in finance.