Investment Banks, Hedge Funds, and Private Equity


  • David Stowell, is Professor of Finance at the Kellogg School of Management, Northwestern University, Evanston, IL. He also manages Paradigm Partners, a boutique investment bank.

The dynamic environment of investment banks, hedge funds, and private equity firms comes to life in David Stowell’s introduction to the ways they challenge and sustain each other. Capturing their reshaped business plans in the wake of the 2007-2009 global meltdown, his book reveals their key functions, compensation systems, unique roles in wealth creation and risk management, and epic battles for investor funds and corporate influence. Its combination of perspectives-drawn from his industry and academic backgrounds-delivers insights that illuminate the post-2009 reinvention and acclimation processes. Through a broad view of the ways these financial institutions affect corporations, governments, and individuals, Professor Stowell shows us how and why they will continue to project their power and influence.
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Book information

  • Published: August 2012
  • ISBN: 978-0-12-415820-7


"A comprehensive introduction to Investment Banking and Private Equity.  Loaded with intricate details, it contains a unique frame of reference on best practices on both subjects.  The book defines diverse concepts in clear and concise terms, and readers will benefit from valuable insights and expertise to vet opportunities that meet risk and reward objectives."  --Viney Sawhney, Boston National Capital Partners and Harvard University

"It is the best on the subject that I have found, and I have been teaching for fifteen years.  As long as Professor Stowell keeps it current it will be a valuable source of information on these three topics."  --Charles Murphy, New York University

"In the first edition David Stowell gave students and accessible way to develop a deep understanding of financial firms.  The new version smoothly and successfully integrates the lessons from the financial crisis and how the industry has evolved." --Jonathan Brogaard, University of Washington

"Books on investment banking are few and far between and mostly out of date. Usually they are very academic or written by lawyers rather than by someone who understands the business. This one, written by a former practitioner, gives students of investment banking just the insights they need into the nexus of investment banking, private equity and hedge funds." --Brian Scott-Quinn, Chair in Investment Banking, ICMA Centre, Henley Business School, University of Reading

"Investment banking is in permanent change. This new book on investment banking describes the most recent trends that have taken place in the industry, in particular the interaction between investment banking and the hedge funds and private equity businesses. This is an exhaustive and up-to-date guide to the major banking activities. The different themes covered in the book are illustrated by fascinating real life cases. The book by David Stowell will become the new reference on investment banking."  --Pierre Hillion, INSEAD

"A clearly written account of several popular segments of the global financial services industry. Students who wish to enhance their understanding of the banking system would benefit from reading this book." --Sanjay Gupta, Swiss Finance Academy

Table of Contents

Section One: Investment Banking

1 - Overview of Investment Banking

2 - Regulation of the Securities Industry

3 - Financings

4 - Mergers & Acquisitions

5 - Trading

6 - Asset Management, Wealth Management and Research

7 - Credit Rating Agencies, Exchanges and Clearing and Settlement

8 - International Banking

9 - Convertible Securities and Wall Street Innovation

10 - Investment Banking Career Opportunities and Trends

Section Two: Hedge Funds and Private Equity

11 - Overview of Hedge Funds

12 - Hedge Fund Investment Strategies

13 - Shareholder Activism and Impact on Corporations

14 - Risk, Regulation and Organizational Structure

15 - Hedge Fund Issues and Performance

16 - Overview of Private Equity

17 - LBO Financial Model

18 - Private Equity Impact on Corporations

19 - Organization, Compensation, Regulation and Limited Partners

20 - Issues and Opportunities

Section Three: Case Studies

  1. Investment Banking in 2008 (A): Rise and Fall of the Bear
  2. Investment Banking in 2008 (B): A Brave New World
  3. Freeport-McMoRan: Financing an Acquisition
  4. The Best Deal Gillette Could Get? Procter & Gamble’s Acquisition of Gillette
  5. A Tale of Two Hedge Funds: Magnetar, Peloton, CDOs, and the 2008 Financial Crisis
  6. Kmart, Sears, and ESL: How a Hedge Fund Became One of the World’s Largest Retailers
  7. McDonald’s, Wendy’s, and Hedge Funds: Hamburger Hedging? Hedge Fund Activism and Impact on Corporate Governance
  8. Porsche, Volkswagen and CSX: Cars, Trains and Derivatives
  9. The Toys "R" Us LBO
  10. Cerberus and the U.S. Auto Industry