ING Case Study Day

I noticed this event in Prague Banking Club’s Facebook group. M&A Case Study regarding acquisition of a telecommunication network operator in Hungary. Sounds interesting, right? Corporate Finance is a field I’d certainly want to try out, so I decided to give it a try. Some of my classmates originally wanted to come too but cancelled last minute so I was left in all alone. Yes, I’m looking at you guys!

After arriving to the ING building I was quickly assigned a professionally looking badge with my full name and was seated at the reception next to other students waiting for the case study. After a while we got a tour of the building throughout all the ING floors and ended up in the case study room.

The building generally looked very professional with an open space, where most of the desks were organized so that 4 people were close to one another. The atmosphere was relaxed as the employees freely debated with one another, while some of them kept working individually. There were a lot of flipcharts and boards with different priority lists, images etc. The overall first impression of the company was very positive on me.

I was surprised by the number of people that showed up. I expected a lot of competition and demand for this event. In the end, from all the people that had their badges created at the reception only 5 students actually arrived. Nonetheless, at least there is more space for us.

The day started with an introduction of the M&A team from Wholesale and Lending Services. I had the feeling that all the team members are on senior positions within the company, which gave a serious first impression on the team. They opened with the introduction of the company, where I really liked their vision of being between the “New revolutionary” banks and “Traditional” banks within the sector. ING also added they are the biggest global bank in terms of market cap. That surprised me since in the Czech Republic, they are not even that well known apart from some investment products. The presentation also showed the bank in good light.

Innovation highlight of the day was a digital product ING is currently working on, EMA, digital assistant similar to Siri for banking purposes. You can ask her for any banking product details, your current account balances, investment portfolio or ask her to do a payment for you. She can even filter your past transactions based on restrictions you dictate her, such as “How much money did I spend on beer in the last three months?” You can even ask her jokes, since that was the first thing people asked her for in the test versions.

Why does it make sense to develop such an assistant for banking market? According to their argumentation, which I mainly agree with, finances are a very sensitive field to lot of people and talking to a robot is much less intimidating than talking to a person. Additionally, if she can handle the tasks really efficiently, she can save a lot of time spend on clicking and filtering through the mobile applications. It is best seen at sending money with her or filtering the recent transactions, where you see the results immediately.

The selling point? They are developing her primarily in the Czech language! That is huge. We have a lot of similar products in English and it wouldn’t make sense to create new solution specifically for the banking market. But this girl speaks Czech. And she understands very well. We had a chance to talk to her and it surprised me how efficient she was. Let’s she where can she make it.

Then the case study started. I teamed up with a fellow student from IES currently completing his master’s degree and started working on the actual case study. Our mission was to evaluate a telecommunications network company in several Baltic states. We received very well summarized financial data from public records of the company and based on some tips from the mentors we had available chose the EBITDA and multiplicator approach. The calculation was then fairly simple. The team members were very helpful and willing to help us during our work and I was grateful for their valuable advice.

The second part of the case study was more creative as we had to think up how the acquiror should finance this acquisition. Firstly, we had limited ideas, but after discussing with the mentors we realized this assignment is actually much simpler than we thought. We were ought to calculate the debt capacity of the acquiror along with the acquired company to demonstrate whether this acquisition is capable of being financed. Then again, based on historical data on similar deals we were able to set terms and interest rate under which this transaction could happen. We came up with two different solution the acquiror could take. Either financing some with its cash and debt capacity of acquired company only or 100% financing with debt capacity of two of acquiror’s subsidiaries combined.

Then followed lunch. There were some handy refreshments even before, but for lunch we had a lot to choose from. The food was really well prepared. No doubt a highlight from the day. Several other employees came to see the Case Study participants. We had some small talks and followed them on the roof, where we had a quick coffee post-lunch break. I had an opportunity to discuss with actual employees in a friendly manner and enjoyed a majestic view from the roof. They convinced me that Corporate Finance is a really nice field to be in, regarding the company education, transferability and general support. This is maybe more ING specific, but just this alone made me change my mind about High Finance in general.

After returning to the Case Study Conference Hall, we had an opportunity to listen to Jakub Seidler, the chief economist at ING, coincidently from IES as well. He gave us some stories from the background of his work and client relationships and made us laugh a several times. But he didn’t convince me at all, that I wanted to follow macroeconomic indicators in my career. I’m happy to take those numbers from him, but I reassured myself I want to work on business issues, where I can see my results in action.

The highlight of our Case Study was the presentation of our results. We were the last to present and were confident we did a good job in our previous calculations. The presentation was smooth in my eyes and hopefully we were able to answer some of the follow up questions at least reasonably well.

The actual case solution in real life was quite different from the suggestions all the teams made, but we almost hit the valuations and debt capacities we were supposed to calculate. The actual solution was a loan for more than the acquisition price and the debtor was created above both subsidiaries and the acquired company to achieve enough debt capacity and reasonably low leverage to keep the interest rate low enough. We were the only team, who tried to estimate the actual interest rate and we almost hit it. We missed by 0.5 percentage points. I believe a solid result given the limited time and data capacity of this case study.

To end up with, we were served a glass of champagne as a goodbye for the day. All in all, I am happy I participated in this event and probably opened some doors in terms of internship opportunities, which were suggested by the HR of ING. I really liked the company in general and will probably apply for the internship since I believe this is a working environment I am currently very happy to work in, I liked the people surrounding us during the case study with their helpful and patient advice. The expertise from M&A is very valuable in my humble opinion and should move me forward in my career. Let’s see how it works out.