VEP: Merrill Lynch 2003 (Vault Employer Profile)

VAULT EMPLOYER PROFILE: MERRILL LYNCH

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EMPLOY PROFILE VAULT EMPLOYER PROFILE:

MERRILL LYNCH

© 2002 Vault Inc.

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EMPLOY PROFILE VAULT EMPLOYER PROFILE:

MERRILL LYNCH

BY THE STAFF OF VAULT

© 2002 Vault Inc.

Copyright © 2002 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and “the insider career networkTM” are trademarks of Vault Inc. For information about permission to reproduce selections from this book, contact Vault Inc., 150 W22nd Street, New York, New York 10011, (212) 366-4212. Library of Congress CIP Data is available. ISBN 1–58131–236–9 Printed in the United States of America

Merrill Lynch

INTRODUCTION

1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Merill Lynch at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

THE SCOOP

3

History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 League Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

ORGANIZATION

25

CEO’s Bio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Business Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Key Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

VAULT NEWSWIRE

31

Recent Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

OUR SURVEY SAYS

39

GETTING HIRED

45

Hiring Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Questions to Expect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 Questions to Ask . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 To Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

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CAREER LIBRARY

vi

ON THE JOB

51

Job Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 A Day in the Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 Career Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

FINAL ANALYSIS

55

RECOMMENDED READING

57

Merrill Lynch

Introduction Overview Merrill Lynch is among the largest of the large bulge-bracket investment banks. With a staff over 57,000, Merrill is second in headcount only to Morgan Stanley. Size, however, does have its disadvantages. In down times, Merrill has often been among the first investment banks to make sweeping layoffs. In 1998, when the industry was struck by the one-two punch of the Russian financial crisis and the near-collapse of Long Term Capital Management, Merrill laid off approximately 3,400 employees, or 6 percent of its staff. Many criticized the firm for such a drastic cut, and some analysts said Merrill was understaffed and suffered as a result when the economy rebounded. Some fear Merrill might have repeated the same mistakes in 2001. The firm cut approximately 15,000 jobs, including 9,000 in the fourth quarter alone, during the year through layoffs, attrition and buyouts. The cuts, along with other one-time expenses, led to the loss of $1.26 billion for the fourth quarter, the firm’s first quarterly loss since 1998. But Merrill says the workforce cutbacks are part of a plan to slash costs by $1.4 billion a year and increase profitability. Merrill has recently emerged from a power struggle near the top and, as a result, is about to make history. In 2001, after months of speculation, E. Stanley O’Neal was named president and COO at Merrill Lynch, putting him in line to succeed CEO David Komansky when he retires. O’Neal had been considered a shoo-in for the job in early 2000 when he was named head of the brokerage division, but the firm was subsequently rumored to be considering other candidates until appointing him COO. At the time of O’Neal’s COO appointment, Komansky said he would remain with Merrill until 2004, but midway through 2002 his retirement was moved ahead of schedule. In July 2002, Merril’s board officially elected O’Neal as Komasky’s successor. The board said O’Neal would succeed Komansky as CEO in December 2002 and as chairman in April 2003 – at which time O’Neal would become the first African-American to head a major brokerage house.

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Merrill Lynch at a Glance Headquarters 4 World Financial Center 250 Vesey Street New York, NY 10281-1332 Phone: (212) 449-1000 www.ml.com

DEPARTMENTS Asset Management Corporate and Institutional Client Group Private Client Group

UPPERS • Good relations with superiors • Name recognition • Outstanding perks, benefits

DOWNERS • Research facing legal troubles • Lagging in pay • Unpredictable schedules

THE BUZZ

WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING

THE STATS Chairman and CEO: David H. Komansky Employer Type: Public Company Ticker Symbol: MER (NYSE) 2001 Revenue: $38.8 billion 2001 Net Income: $573 million No. of Employees: 57,400 No. of Offices: 900

KEY COMPETITORS Credit Suisse First Boston Goldman Sachs Morgan Stanley Salomon Smith Barney

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• “Strong showing lately“ • “Should stick with retail business” • “Nearly as good as Goldman Sachs and Morgan Stanley” • “Still strong, but falling with all the layoffs” • “Still a solid performer” • “Blue collar compared to Goldman and Morgan Stanley” • “Top tier” • “Brokerage diminishes prestige factor”

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Merrill Lynch

The Scoop History What to do? Born into a well-educated middle class family in Green Cove Springs near Jacksonville, Fla., James Merrill spent his youth and early adulthood doing just about everything under the sun. After working at his father’s drugstore, Merrill delivered newspapers, worked as a newspaper reporter and a semiprofessional baseball player, worked for a textile mill owned by his girlfriend’s father, sold mail order clothes and also put in a brief stint at the University of Michigan’s law school. “I didn’t know what I wanted to do,” Merrill later confessed, “except that it had to be something exciting.” Finally, Merrill discovered his calling when he was hired to set up a bond department for the commercial paper firm Burr & Co. While working at Burr, Merrill realized that the old-style Wall Street firms’ elitism, which made them insensitive to consumer needs and the advantages of new marketing techniques like direct mailing, prevented them from taking advantage of new opportunities. In 1914 Merrill left Burr and established his own underwriting firm. Six months later, he took his friend Edmund Lynch on as partner and founded Merrill Lynch. In the 1920s, the company pursued small investors by offering personalized service at a time when most investment firms were concentrating on larger investors. The firm made its mark by financing supermarkets and other new mega-stores that sought to provide consumers with more variety.

Not always bullish As the 1920s drew to a close, Merrill was one of the few bankers who began publicly to voice concerns about the state of the stock market. Merrill’s customers were so astonished by his pessimism at a time of great prosperity that they suggested that he see a psychiatrist (he took the suggestion). In 1929, unfortunately, Merrill was proved right when the stock market crashed. In 1930 Merrill Lynch sold its retail business to E.A. Pierce and survived the Great Depression as an investment-banking firm. During this time, the firm invested only its personal funds and the funds of the companies that it had taken public. Even after the stock market recovered in the post-War period, Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch The Scoop

Charles Merrill noticed that Americans were still reluctant to invest heavily in the stock market. It was then that Merrill made a statement for which he is still remembered: “We must bring Wall Street to Main Street, and we must use the efficient, mass-merchandising methods of the chain store to do it.” By the early 1950s, Merrill began to realize his dream of bringing Wall Street to the masses as the firm topped 100 offices and 3,400 employees.

Onward and upward After Merrill’s death in 1956, the company continued innovating. In 1959 the company became the first New York Stock Exchange member to incorporate. In the 1960s, the company made major forays into government securities, real estate financing and asset management. In the 1970s, the company came under the leadership of Donald Regan (who would later become Ronald Reagan’s Treasury Secretary and Chief of Staff). During that decade, the company introduced its trademark and revolutionary Cash Management Account (CMA), which combines investment and banking into a single account. The 1980s were a boom period for Merrill. The firm became a global leader in public offerings, and played a major role in the decade’s largest LBO – Kohlberg Kravis Roberts’ buyout of RJR Nabisco. After the stock market crash of 1987, the company retrenched heavily, cutting staff, dropping some businesses altogether (such as real estate and mortgage insurance), and closing select overseas offices. Merrill Lynch used the late 1980s as a period of internal restructuring. Noticing that its staff turnover of 14 to 15 percent was hurting productivity and morale, Merrill Lynch undertook new training and pay procedures in 1990 designed to reward loyalty. Despite its rebound in profits during the resurgence of the stock market in the early 1990s, Merrill Lynch’s record during the decade was not unblemished, largely a result of its involvement in the Orange County bankruptcy scandal. In 1994 and 1995, Merrill was hit with several lawsuits related to the county’s bankruptcy – the firm had sold some of the derivatives that led to the municipality’s financial collapse, and the county claimed that it had not been adequately warned of potential risks by Merrill and other banks. In 1998 the firm agreed to pay $437 million to the county to settle the claims. The firm was also fined $2 million by the Securities and Exchange Commission.

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Merrill Lynch The Scoop

On top of the tables Part of the investment banking bulge bracket, Merrill Lynch is a global powerhouse. The firm has a top-notch research staff and private equity group, and employs 1,600 investment banking professionals in 22 countries. Almost all of Merrill’s departments are at the top of their respective league tables or, at the very least, hover somewhere in the top five. Despite the firm’s 2001 fourth-quarter setbacks, Merrill was the leading underwriter of stocks and securities-related to stocks, and the second-ranked adviser on mergers and acquisitions during the year. Merrill lead managed 14 IPOs, including CNOOC Limited’s $1.3 billion offering, Cross Country’s $133 million and Alliance Data Systems’ $156 million IPO. In 2001 Merrill acted as lead acquirer adviser on 11 of the top 35 M&A deals, including General Electric’s purchase of Security Capital Group for $4.7 billion in December 2001, AT&T Wireless’s $4.3 billion acquisition of TeleCorp. in October 2001 and Alltel’s $9.2 billion takeover of Century Tel in August 2001. For its work in 2001, Merrill won several awards from various publications. Corporate Finance named Merrill “Bank of the Year for Equity” and “Bank of the Year for Emerging Markets.” International Financing Review’s named Merrill both the “Equity House of the Year” and the “Equity-Linked House of the Year.” Institutional Investor ranked Merrill has having the “Overall Best Credit Derivatives Products.” Acquisitions Monthly called Merrill Lynch the “Corporate Broker of the Year.” And awarded Merrill with two “Best M&A Deal” awards for its role as an advisor to United Overseas Bank Limited in its $5.8 billion buyout of Overseas Union Bank Limited (which created the largest bank in Singapore), and to British Telecommunications in its $2.1 billion sale of its telecom directories firm, Yell, to Apax Partners and Hicks, Muse, Tate & Furst. All of Merrill’s underwriting prowess would mean little if not for its distribution capabilities. The firm employs more than 16,400 financial advisors and account executives in its private client unit. Brokers’ commissions consistently contribute the largest chunk to Merrill’s annual net revenues. Commissions represented 24 percent of the firm’s revenues in 2001 and 26 percent in 2000.

Following in the bull’s footsteps Size and market share, however, are not enough to ensure profits, as Merrill well knows. Merrill does its best to keep costs down so that its business translates into profits. The firm’s return on equity (ROE), a commonly used measure to assess the performance of banks, doesn’t outpace, but does keep Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch The Scoop

up with, its competitors. Merrill Lynch’s return on equity was 24 percent in 2000 (as compared to Morgan Stanley’s 31 percent and Goldman Sachs’ 29 percent.) In 2001, a terrible year in the equity markets, Merrill’s ROE crashed to 12 percent (as compared to Morgan Stanley’s 19 percent and Goldman Sachs’ 18 percent.) It’s important to note that Merrill’s 2000 return on equity beat the firm’s five year average of 22.8 percent and its stated goal of 18-20 percent ROE.

The bull charges online Traditionally, Merrill Lynch’s brokerage philosophy has been of the handholding sort: kindly investment advice from its army of brokers to help Ma and Pa develop a nice nest egg. As this full-service system has been the firm’s backbone for years, Merrill had been leery of joining the ranks of the low-fee, no-advice online brokerages. However, after seeing competitors such as Charles Schwab, Ameritrade and E*Trade succeed (at one point in 1999, Schwab’s market cap actually exceeded that of Merrill’s), the firm’s management decided it had better get with the new brokerage order. In June 1999, the firm announced an online brokerage plan: customers with a minimum of $20,000 in their account can conduct trades for $29.95. Also in 1999, the firm acquired D.E. Shaw’s online brokerage business, D.E. Shaw Financial Technology, for $30 million. The firm’s online service, ML Direct, was launched in December 1999. ML Direct was honored by Money magazine as one of the “Best Online Brokers” in 2000.

Heir to the Merrill throne CEO David Komansky ended months of speculation in August 2001 when E. Stanley O’Neal was named president and chief operating officer – and Komansky’s eventual successor. Observers thought O’Neal was a shoe-in as future CEO when he was named head of the brokerage division in February 2000. But O’Neal’s march to the top became more uncertain as time passed. They mystery was fueled by Komansky’s admission in a CNBC interview in May 2001 that there were “at least three” possible successors under consideration. In July 2002, Merrill’s board quashed the rumors and made O’Neal’s succession official, electing O’Neal to replace Komansky as Merrill CEO and chairman. The board said O’Neal would replace Komansky as CEO in December 2002 and as chairman in April 2003, at which time O’Neal would become the first African American to head a major Wall Street firm. Previously, Komansky said he would retire in 2004, but after Merrill reported 6

CAREER LIBRARY

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Merrill Lynch The Scoop

strong second quarter earnings and Komansky settled the firm’s legal dispute with the New York Attorney General, Komansky thought it was time to step aside. According to The New York Times, Komansky said he requested that Merrill’s board support his early retirement because “Stan is clearly ready to take on the job.” The board’s endorsement wasn’t surprising. For the most part, O’Neal had been running Merrill since he became the president in the fall of 2001.

Fourth-quarter blues O’Neal first great challenge came in September 2001. The firm evacuated its headquarters in the World Financial Center after the terrorist attacks of September 11, 2001. Three Merrill employees died in the attacks and some 9,000 workers were displaced. (Most were able to return to the World Financial Center, which sustained only minor damage, within a few weeks.) Many observers were struck by O’Neals leadership during the crisis. According to The Wall Street Journal, O’Neal made key decisions such as splitting up the firm’s senior management immediately after the attack (reducing the possibility that the company would be incapacitated by the sudden loss of its leadership). O’Neal also decided to restructure the management team shortly after the attacks, naming executives closer to him to positions such as chief legal counsel and head of institutional securities – despite the fact that, according to an interview with the Journal, Komansky felt the firm needed a measure of stability after the trauma of the attack. O’Neal’s biggest decision was to trim the firm, cutting nearly $2 billion in costs. By the end of 2001, Merrill Lynch had 15,000 fewer employees than at the start of the year. The firm cut jobs through layoffs, attrition and buyouts throughout the year, including 9,000 job cuts of various kinds during the fourth quarter. At the beginning of 2002, Merill sacked more. An additional 1,800 employees lost their jobs during the second quarter 2002. “We’ll continue to trim around the edges,” Thomas Patrick, Merrill’s chief financial officer, told The New York Times. “I wouldn’t be surprised if the head count drifted down through the rest of the year.”

End of an error? In what some saw as the final nail in the coffin of the New Economy, Merrill Lynch’s famed Internet analyst Henry Blodget announced his resignation in November 2001, accepting one of the lucrative buyout packages offered by the firm in late 2001. Blodget rose to fame in November 1998 while at CIBC Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch The Scoop

Oppenheimer, predicting that Amazon.com’s share price would reach $400. The online retailer was then selling for $240 per share but soon met Blodget’s ambitious target. Blodget, along with his counterpart at Morgan Stanley, Mary Meeker, became stars of the New Economy. Conversely, their reputations suffered when Internet stocks began plummeting in value in 2000 and 2001. Blodget told The New York Times he would write a book about the Internet bubble, then seek work at a money management or hedge fund firm.

Not so fast, Hank In April 2002, not long after Henry Blodget left Merrill, news surfaced that the former star analyst had been the focus of an investigation into Merrill’s research practices. The investigation, led by New York State Attorney General Eliot Spitzer, centered around phone calls and e-mails made by the firm’s Internet research group, which Blodget oversaw. Spitzer discovered that Merrill analysts had publicly hyped stocks, while privately they had referred to the same stocks as “junk” and “crap.” (Merrill said the e-mails were taken out of context.) After tech stocks tanked, regulators began scrutinizing possible conflicts of interest between a firm’s investment bankers and analysts, whose negative research can hurt bankers’ chances of obtaining advisory work. Spitzer’s office obtained a court order forcing Merrill’s research department to make several changes, including disclosing to investors whether it has or intends to have an investment-banking relationship with a corporate client, and adding in its reports how many buy-and-sell recommendations it has in a particular sector. These changes, however, didn’t end Spitzer’s spat with Merrill. When Spitzer later announced that he might bring criminal charges against Merrill, the firm retained former New York Mayor Rudy Giuliani to negotiate a settlement with the state attorney general. Soon after Rudy became a Merrill consultant, the firm’s CEO, David Komansky, publicly apologized for the firm’s malpractices. During Merrill’s annual shareholder meeting in April 2002, Komansky called the internal emails that went public “very distressing and disappointing,” and said they fell “far short” of the firm’s standards in research. Komansky also voiced plans to take “meaningful and significant actions to restore investor confidence.” According to The Wall Street Journal, Spitzer called Komansky’s remarks a step in the right direction, but he also said they might not satisfy his requirement for an admission of wrongdoing. In May 2002, Merrill agreed to pay a $100 million fine to New York and other

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Merrill Lynch The Scoop

states to settle Spitzer’s charges that the firm gave overly optimistic research advice in order to win advisory business. Although Spitzer initially targeted Merrill, he later widened the investigation to include several other firms. And in late April 2002, the Securities and Exchange Commission announced that it had joined forces with Spitzer and had begun a “formal inquiry” into the research practices of Wall Street’s top firms.

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Merrill Lynch The Scoop

League Tables Global Debt & Equity Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Goldman Sachs Morgan Stanley Lehman Brothers UBS Warburg Deutsche Bank BofA Securities Bear Stearns ABN Ambro Barclays Capital BNP Paribas DK Wasserstein INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

486.9 432.7 346.9 315.1 302.5 277.6 260.6 252.8 224.4 162.5 134.7 90.0 72.9 55.0 53.1 4,075.1

11.9 10.6 8.5 7.7 7.4 6.8 6.4 6.2 5.5 4.0 3.3 2.2 1.8 1.4 1.3 100.0

1,574 2,012 1,312 1,094 795 929 861 949 770 728 427 776 314 216 272 16,748

2,401.7 1,940.9 1,641.0 1,037.5 2,111.1 1,976.0 972.7 888.2 745.3 465.8 230.0 353.4 121.8 207.7 251.2 18,159.6

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

Global Debt & Equity Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

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ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Goldman Sachs Deutsche Bank Lehman Brothers Goldman Sachs UBS Warburg BofA Securities Bear Stearns Barclays Capital ABN Amro Royal Bank of Scotland HBSC Holdings INDUSTRY TOTAL

CAREER LIBRARY

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

244.8 197.0 183.2 175.4 152.5 143.4 143.0 135.1 132.2 97.3 69.8 50.8 46.2 33.5 32.9 2,199.0

11.1 9.0 8.3 8.0 6.9 6.5 6.5 6.1 6.0 4.4 3.2 2.3 2.1 1.5 1.5 100.0

797 811 627 656 534 588 438 372 507 529 236 211 295 115 204 8,234

1,346.3 753.4 690.1 811.4 688.1 501.5 446.1 647.3 364.8 292.1 150.9 147.9 125.8 39.5 91.3 8,745.2

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

Global M&A Transactions (announced): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Goldman Sachs Merrill Lynch Morgan Stanley CSFB J.P. Morgan Chase Citigroup/Salomon SB UBS Warburg Deutsche Bank Lehman Brothers Dresdner Kleinwort Wass. Lazard Rothschild Bear Stearns Quadrangle CIBC World Markets INDUSTRY TOTAL

RANK VALUE ($BILLIONS)

# OF DEALS

602.8 477.0 460.6 395.3 388.4 264.9 227.9 224.1 123.2 120.7 103.5 90.1 78.2 72.5 37.1 1,751.9

339 255 313 455 403 331 239 253 148 89 161 168 71 2 101 28,885

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

Global M&A Transactions (announced): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER CSFB Goldman Sachs Citigroup/Salomon SB Morgan Stanley J.P. Morgan Chase UBS Warburg Merrill Lynch Deutsche Bank Lehman Brothers Rothschild Lazard BNP Paribas Cazenove Dresdner Kleinwort Wass. RBC Capital Markets INDUSTRY TOTAL

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RANK VALUE ($BILLIONS)

# OF DEALS

124.5 110.9 108.3 95.9 94.2 93.5 90.8 75.2 69.7 68.5 42.0 23.1 18.9 18.2 16.5 590.3

191 123 117 132 155 109 102 80 84 76 87 40 4 43 34 11,585

CAREER LIBRARY

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Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

Global Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Merrill Lynch Citigroup/Salomon SB Goldman Sachs Morgan Stanley CSFB UBS Warburg Lehman Brothers Deutsche Bank J.P. Morgan Chase Societe Generale Nomura BofA Securities ABN Amro BNP Paribas Credit Agr. Indo-Laz Frere INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

61.3 60.9 48.8 45.4 42.2 29.7 18.4 16.9 14.6 7.6 6.1 5.7 4.8 4.8 4.5 425.7

14.4 14.3 11.5 10.7 9.9 7.0 4.3 4.0 3.4 1.8 1.4 1.3 1.1 1.1 1.1 100.0

206 129 1,482 98 161 160 66 81 60 27 82 26 47 25 7 2,472

1,219.9 1,576.8 1,026.1 1,083.8 934.7 469.0 418.0 276.2 281.0 146.0 215.2 163.4 70.7 51.7 80.0 8,926.8

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

Global Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

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ADVISER Citigroup/Salomon SB Goldman Sachs Merrill Lynch CSFB Morgan Stanley Deutsche Bank J.P. Morgan Chase UBS Warburg Lehman Brothers Societe Generale Cazenove BofA Securities BNP Paribas Nomura Bear Stearns INDUSTRY TOTAL

CAREER LIBRARY

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

31.2 27.5 24.5 16.6 12.6 12.2 11.2 9.0 7.0 4.3 3.7 3.3 3.2 2.8 2.2 201.1

15.5 13.7 12.2 8.2 6.3 6.0 5.6 4.5 3.5 2.1 1.8 1.6 1.6 1.4 1.1 100.0

118 57 81 84 45 50 48 72 34 18 16 18 12 34 22 1,180

802.4 473.9 524.4 489.6 337.3 147.5 221.6 151.3 206.8 45.6 24.7 82.1 26.2 89.3 99.7 4,218.2

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Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

Global Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Goldman Sachs Lehman Brothers Morgan Stanley UBS Warburg Deutsche Bank BofA Securities Bear Stearns ABN Ambro Barclays Capital BNP Paribas DK Wasserstein INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

429.3 367.4 303.7 299.2 238.7 237.9 255.7 220.8 206.8 156.2 130.7 83.0 72.3 49.8 49.2 3,609.7

11.9 10.2 8.4 8.3 6.6 6.6 7.1 6.1 5.7 4.3 3.6 2.3 2.0 1.4 1.4 100.0

1,345 1,778 1,130 1,026 649 756 796 773 680 700 402 723 312 189 259 14,033

1,157.5 640.5 696.1 725.6 445.4 456.9 730.4 372.0 461.5 302.4 116.4 240.2 206.1 149.4 168.9 8,372.6

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

Global Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Goldman Sachs Lehman Brothers Deutsche Bank UBS Warburg Goldman Sachs BofA Securities Bear Stearns Barclays Capital ABN Amro Royal Bank of Scotland HBSC Holdings INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

213.6 172.5 172.1 158.8 139.9 136.0 131.2 123.3 107.6 93.9 67.6 50.8 44.7 33.5 31.2 1,997.9

10.7 8.6 8.6 8.0 7.0 6.8 6.6 6.2 5.4 4.7 3.4 2.5 2.2 1.7 1.6 100.0

679 730 579 572 489 404 538 435 315 511 214 211 279 115 196 7,054

543.9 228.9 468.5 321.7 350.7 239.3 354.0 213.5 173.5 210.0 51.2 147.9 120.6 39.5 72.0 4,536.0

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CAREER LIBRARY

13

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. Debt & Equity Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Goldman Sachs Lehman Brothers Morgan Stanley UBS Warburg BofA Securities Deutsche Bank Bear Stearns ABN Ambro Royal Bank of Scotland Countrywide Securities Wachovia INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

394.5 350.0 278.7 248.0 244.1 232.0 189.7 180.8 160.2 133.4 132.3 38.5 36.0 26.0 23.8 2,880.1

13.7 12.2 9.7 8.6 8.5 8.1 6.6 6.3 5.6 4.6 4.6 1.3 1.2 0.9 0.8 100.0

1,277 1,741 1,029 869 624 758 644 595 715 404 420 539 116 457 161 12,269

1,807.4 1,399.8 1,178.1 782.1 1,737.2 809.5 1,463.1 462.8 458.4 314.5 219.2 104.7 9.3 40.6 31.1 11,437.2

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

195.8 169.1 148.5 145.0 126.8 118.6 103.9 94.5 93.9 82.7 69.2 25.8 18.1 16.8 15.0 1,537.4

12.7 11.0 9.7 9.4 8.3 7.7 6.8 6.1 6.1 5.4 4.5 1.7 1.2 1.1 1.0 100.0

635 706 504 513 368 397 288 343 518 308 234 85 198 93 119 5,796

1,042.0 6,006.3 536.1 605.8 396.1 574.0 504.0 221.6 279.9 283.4 145.9 6.1 6.3 36.1 26.3 5,720.4

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

U.S. Debt & Equity Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

14

ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Lehman Brothers Morgan Stanley Goldman Sachs UBS Warburg BofA Securities Deutsche Bank Bear Stearns Royal Bank of Scotland Countrywide Securities Bank One Wachovia INDUSTRY TOTAL

CAREER LIBRARY

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. M&A Transactions (announced with U.S. targets): Jan 1, 2001 - December 31, 2001

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

RANK VALUE

ADVISER

($BILLIONS)

Goldman Sachs Merrill Lynch Morgan Stanley CSFB J.P. Morgan Chase Citigroup/Salomon SB Deutsche Bank Lehman Brothers UBS Warburg Bear Stearns Quadrangle Lazard Dresdner Kleinwort Wass. BofA Securities Greenhill INDUSTRY TOTAL

410.3 289.2 285.0 272.6 234.1 144.2 118.4 87.3 81.3 75.3 72.5 32.0 24.5 23.5 20.4 825.7

# OF DEALS 167 112 138 199 149 112 62 86 66 60 2 37 30 57 11 7,533

Source: Thomson Financial

RANK

U.S. M&A Transactions (announced with U.S. targets): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER CSFB Goldman Sachs Citigroup/Salomon SB J.P. Morgan Chase Morgan Stanley UBS Warburg Merrill Lynch Lehman Brothers Deutsche Bank BofA Securities Lazard Bear Stearns Dresdner Kleinwort Wass. Rothschild ABN Amro INDUSTRY TOTAL

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RANK VALUE ($BILLIONS)

# OF DEALS

56.9 52.9 44.3 39.6 39.3 32.7 19.7 18.2 15.1 13.6 9.0 8.0 7.3 6.4 5.5 206.5

105 47 39 49 50 42 42 35 26 37 23 16 11 9 4 3,242

CAREER LIBRARY

15

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Goldman Sachs Merrill Lynch Citigroup/Salomon SB CSFB Morgan Stanley Lehman Brothers UBS Warburg J.P. Morgan Chase BofA Securities Deutsche Bank Bear Stearns FleetBoston Financial CIBC World Markets ABN Amro Friedman Billings Group INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

43.6 39.9 31.3 29.7 28.7 13.7 10.4 9.6 5.7 4.6 2.7 1.0 1.4 0.9 0.7 228.9

19.1 17.4 13.7 13.0 12.5 6.0 4.5 4.2 2.5 2.0 1.2 0.4 0.6 0.4 0.3 100.0

94 157 108 120 70 51 63 42 25 36 17 8 12 6 14 769

1,331.4 863.1 668.4 724.6 791.8 333.0 273.7 206.1 162.5 100.2 94.0 20.0 39.4 23.0 38.8 5,893.9

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

U.S. Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

16

ADVISER Citigroup/Salomon SB Merrill Lynch Goldman Sachs CSFB Morgan Stanley J.P. Morgan Chase Lehman Brothers UBS Warburg Deutsche Bank BofA Securities Bear Stearns Friedman Billings Group CIBC World Markets RBC Capital Markets Thomas Weisel INDUSTRY TOTAL

CAREER LIBRARY

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

21.1 20.2 16.2 13.4 9.4 7.7 5.5 3.6 3.4 3.3 2.2 1.0 0.5 0.5 0.5 112.8

18.7 17.9 14.3 11.9 8.4 6.8 4.8 3.2 3.0 2.9 2.0 0.9 0.4 0.4 0.4 100.0

73 66 39 68 31 36 32 46 25 18 22 13 9 2 4 460

611.3 435.3 381.2 432.8 287.7 162.3 190.8 120.0 96.1 81.8 99.1 51.5 19.7 17.6 23.5 3,183.6

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. Initial Public Offerings 2001: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

Goldman Sachs Merrill Lynch Citigroup/Salomon SB CSFB Morgan Stanley Lehman Brothers UBS Warburg J.P. Morgan Chase BofA Securities Deutsche Bank Bear Stearns FleetBoston Financial CIBC World Markets ABN Amro Friedman Billings Group INDUSTRY TOTAL

11,915.6 8,511.8 5,510.3 4,457.1 1,470.1 1,427.0 695.2 561.2 529.1 426.2 332.0 179.4 162.3 135.7 124.0 37,095.4

32.1 22.9 14.9 12.0 4.0 3.8 1.9 1.5 1.4 1.1 0.9 0.5 0.4 0.4 0.3 100.0

18 12 15 8 10 14 7 4 8 4 3 1 2 1 2 106

517.4 333.1 197.3 140.9 83.3 67.3 30.8 33.1 29.9 27.8 21.4 10.9 10.9 4.1 8.1 1,556.8

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

U.S. Initial Public Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

Citigroup/Salomon SB CSFB Merrill Lynch Morgan Stanley Deutsche Bank Goldman Sachs UBS Warburg Lehman Brothers Bear Stearns Cazenove Jefferies US Bancorp J.P. Morga Chase Legg Mason ING INDUSTRY TOTAL

5,979.6 2,508.9 2,238.6 1,497.4 693.1 691.9 554.7 537.8 384.2 121.5 115.2 103.5 85.5 85.0 78.6 15,954.6

37.5 15.7 14.0 9.4 4.3 4.3 3.5 3.4 2.4 0.8 0.7 0.6 0.5 0.5 0.5 100.0

7 11 8 5 4 4 5 6 4 2 1 1 1 1 1 55

244.8 119.6 99.8 76.6 33.5 45.6 34.7 33.4 24.1 3.7 8.1 6.3 2.6 6.0 3.4 756.4

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CAREER LIBRARY

17

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Lehman Brothers Goldman Sachs UBS Warburg Morgan Stanley BofA Securities Deutsche Bank Bear Stearns ABN Amro Royal Bank of Scotland Countrywide Securities Wachovia INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

355.1 306.4 248.4 238.0 214.6 198.1 168.3 154.6 153.9 128.6 128.5 37.8 36.0 26.0 23.0 2,618.0

13.6 11.7 9.5 9.1 8.2 7.6 6.4 5.9 5.9 4.9 4.9 1.4 1.4 1.0 0.9 100.0

1,124 1,558 888 822 669 513 516 539 688 363 396 533 116 457 150 11,271

926.9 462.8 446.9 565.1 381.1 330.4 142.4 509.6 295.8 213.3 111.2 81.7 9.3 40.6 16.6 4,801.7

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

U.S. Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

18

ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Lehman Brothers Morgan Stanley UBS Warburg BofA Securities Goldman Sachs Deutsche Bank Bear Stearns Royal Bank of Scotland Countrywide Securities Bank One Wachovia INDUSTRY TOTAL

CAREER LIBRARY

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

174.7 148.8 140.8 131.6 121.4 109.1 90.9 90.5 87.7 79.3 67.0 25.8 18.1 16.8 14.7 1,424.6

12.3 10.4 9.9 9.2 8.5 7.7 6.4 6.4 6.2 5.6 4.7 1.8 1.3 1.2 1.0 100.0

561 640 468 445 336 366 296 500 249 283 212 85 198 93 113 5,335

430.7 171.0 373.8 172.9 205.3 286.3 101.6 198.2 123.0 187.3 46.9 6.1 6.3 36.1 13.9 2,536.8

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. High Yield Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

CSFB Citigroup/Salomon SB Goldman Sachs J.P. Morgan Chase BofA Securities Morgan Stanley Deutsche Bank Lehman Brothers Merrill Lynch UBS Warburg Bear Stearns Jeffereies Wachovia TD Securities CIBC World Markets INDUSTRY TOTAL

12,811.7 9,664.7 9,312.8 8,069.9 7,363.0 6,014.6 5,394.6 5,097.5 4,753.2 2,902.4 2,646.4 661.8 476.6 348.0 332.5 76,319.2

386,103.9 291,263.3 280,658.2 243,201.1 221,897.4 181,260.9 162,576.1 153,622.4 143,246.3 87,469.1 79,754.1 19,944.5 14,363.2 10,487.6 10,020.5 100.0

60 39 36 48 345 18 31 25 22 18 17 5 4 3 3 261

62.3 86.4 34.6 23.6 43.9 63.5 14.1 22.7 38.6 8.4 10.7 0.0 0.0 0.0 5.3 414.7

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

CSFB Citigroup/Salomon SB BofA Securities Deutsche Bank Lehman Brothers J.P. Morgan Chase Goldman Sachs UBS Warburg Morgan Stanaley Merrill Lynch Bear Stearns CIBC World Markets Dresdner KW Wachovia Jefferies INDUSTRY TOTAL

7,003.7 4,342.3 3,767.7 3,609.3 3,523.1 3,507.4 3,158.9 2,400.7 2,297.0 986.4 887.0 531.4 519.8 505.6 335.3 38,641.4

18.1 11.2 9.8 9.3 9.1 9.1 8.2 6.2 5.9 2.6 2.3 1.4 1.3 1.3 0.9 100

46 26 26 22 18 24 9 14 12 6 9 6 4 6 2 164

15.5 29.7 2.9 8.3 41.3 17.9 17.5 2.5 5.4 0.0 4.3 2.0 2.1 0.0 0.4 163.5

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

U.S. High Yield Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

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CAREER LIBRARY

19

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. Investment Grade Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB J.P. Morgan Chase Lehman Brothers Merrill Lynch Morgan Stanley CSFB Goldman Sachs BofA Securities UBS Warburg Deutsche Bank Bear Stearns Bnak One Barclays Capital ABN Amro BNP Paribas INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

140.1 94.2 66.0 59.6 5.8 51.1 46.6 43.6 20.1 16.3 12.2 7.0 5.5 3.6 3.0 638.5

21.9 14.8 10.3 9.3 0.9 8.0 7.3 6.8 3.1 2.6 1.9 1.1 0.9 0.6 0.5 100.0

321 286 164 206 129 138 111 148 66 50 35 36 21 23 6 1,189

657.8 383.9 219.2 287.9 297.3 255.3 212.7 199.6 82.4 64.4 50.3 23.8 21.3 12.5 13.9 2,825.1

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

78.4 59.9 39.5 32.1 31.4 25.9 23.5 20.3 11.6 9.7 5.2 4.0 3.6 3.1 1.9 357.7

21.9 16.7 11.0 9.0 8.8 7.2 6.6 5.7 3.2 2.7 1.4 1.1 1.0 0.9 0.5 100.0

242 227 97 292 73 112 80 70 44 38 28 21 23 11 182 1,059

323.6 252.4 118.6 168.9 183.3 99.7 104.7 73.5 47.3 62.7 20.6 18.8 9.8 9.7 26.4 1,552.3

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

U.S. Investment Grade Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

20

ADVISER Citigroup/Salomon SB J.P. Morgan Chase Lehman Brothers BofA Securities Morgan Stanley Merril Lynch CSFB Deutsche Bank Goldman Sachs UBS Warburg Bank One Barclays Capital Wachovia Bear Stearns In Capital INDUSTRY TOTAL

CAREER LIBRARY

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

All Municipal Bond Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Salomon Smith Barney UBS PaineWebber Merrill Lynch Morgan Stanley Bear Stearns Goldman Sachs Lehman Brothers J.P. Morgan Securities BofA Securities Piper Jaffray A.G. Edwards RBC Dain Rauscher Morgan Keenan George K. Baum Bank One INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

39.6 33.6 19.6 19.1 17.5 16.5 16.3 10.0 6.4 6.3 6.2 5.7 5.1 4.4 3.4 283.5

14.0 11.8 6.9 6.8 6.2 5.8 5.7 3.5 2.3 2.2 2.2 2.0 1.8 1.5 1.2 100.0

111 62 108 119 107 73 67 44 54 47 36 22 18 8 11 13,235

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

23.5 23.5 11.6 11.5 11.5 9.4 8.4 5.5 4.3 3.3 3.1 3.0 2.9 2.7 1.8 160.8

14.6 14.6 7.2 7.2 7.2 5.8 5.2 3.4 2.7 2.0 2.0 1.9 1.8 1.7 1.1 100.0

330 446 85 133 136 91 184 85 276 147 272 143 68 228 69 6,555

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

All Municipal Bond Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Salomon Smith Barney UBS PaineWebber Bear Stearns Lehman Brothers Merrill Lynch Goldman Sachs Morgan Stanley J.P. Morgan Securities RBC Dain Rauscher BofA Securities Piper Jaffray RBC Dain Rauscher Morgan Keenan George K. Baum Bank One INDUSTRY TOTAL

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CAREER LIBRARY

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

21

Merrill Lynch The Scoop

U.S. Asset-Backed Securities: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB CSFB J.P. Morgan Chase Deutsche Bank Lehman Brothers BofA Securities Bear Stearns Morgan Stanley Merill Lynch Wachovia Royal Bank of Scotland Bnak One Countrywide Securities Goldman Sachs UBS Warburg INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

49.2 48.8 43.4 34.6 30.7 23.5 20.5 17.8 15.4 13.2 12.1 10.2 8.6 6.9 3.3 349.1

1,440.6 1,427.8 1,270.6 1,013.0 897.2 687.6 599.9 521.9 451.7 387.6 355.1 297.5 252.2 202.6 97.1 100.0

88 130 70 77 82 59 55 48 46 37 30 25 19 23 19 785

91.2 72.7 64.0 78.7 60.9 44.5 8.5 35.2 19.0 5.1 5.0 17.5 9.6 6.4 2.8 529.6

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

27.6 25.3 24.6 24.0 23.7 16.3 16.0 10.6 8.9 8.8 8.7 7.9 6.0 4.7 3.1 223.1

12.4 11.3 11.0 10.7 10.6 7.3 7.2 4.7 4.0 4.0 3.9 3.6 2.7 2.1 1.4 100.0

41 76 49 47 46 38 54 34 13 23 16 17 21 12 5 453

37.9 23.0 24.0 55.5 26.6 6.4 23.7 4.9 15.2 15.0 14.5 1.8 3.0 1.7 3.4 260.7

Source: Thomson Financial

Jan 1, 2001 - December 31, 2001

U.S. Asset-Backed Securities: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

22

ADVISER J.P. Morgan Chase CSFB BofA Securities Deutsche Bank Citigroup/Salomon SB Morgan Stanley Lehman Brothers Bear Stearns Merill Lynch Wachovia Royal Bank of Scotland Bnak One Countrywide Securities Goldman Sachs UBS Warburg INDUSTRY TOTAL

CAREER LIBRARY

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 - Jun 30, 2002

Merrill Lynch The Scoop

U.S. Mortgage-Backed Securities: Jan 1, 2001 - December 31, 2001

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER UBS Warburg Goldman Sachs Bear Stearns CSFB Lehman Brothers Citigroup/Salomon SB BofA Securities Royal Bank of Scotland J.P. Morgan Chase Merrill Lynch Countrywide Securities Morgan Stanley Deutsche Bank Securities Sales & Trading Wachovia INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

86.1 82.3 72.5 67.1 61.5 58.1 36.7 21.7 20.8 19.6 8.7 8.0 6.2 5.3 3.4 586.1

14.7 14.0 12.4 11.4 10.5 9.9 6.3 3.7 3.6 3.3 1.5 1.4 1.1 0.9 0.6 100.0

111 62 108 119 107 73 67 44 54 47 36 22 18 8 11 838

DISCLOSED FEES ($MILLIONS) 0.0 0.0 1.3 0.0 1.5 0.0 0.9 1.8 0.0 0.5 0.6 3.2 11.8 0.0 0.0 21.5

Source: Thomson Financial

RANK

U.S. Mortgage-Backed Securities: Jan 1, 2002 - Jun 30, 2002

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER UBS Warburg CSFB Bear Stearns Lehman Brothers Goldman Sachs Citigroup/Salomon SB BofA Securities Royal Bank of Scotland Merrill Lynch J.P. Morgan Chase Countrywide Securities Securities Sales & Trading Morgan Stanley Nomura Deutsche Bank INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

52.4 45.7 39.6 38.3 36.1 25.5 19.0 18.6 15.0 13.6 6.5 4.1 3.1 2.7 2.4 330.2

15.9 13.8 12.0 11.6 10.9 7.7 5.8 5.6 4.5 4.1 2.0 1.3 0.9 0.8 0.7 100.0

47 62 66 70 39 31 37 28 28 26 35 5 9 8 9 470

0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6

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CAREER LIBRARY

Source: Thomson Financial

RANK

23

Merrill Lynch The Scoop

Compensation Pay Analyst: 1st year: $50,000 per year salary (plus bonus of up to $25,000); 2nd-year: $60,000 (+ bonus up to $40,000); 3rd year: $70,000 per year salary (plus year-end bonus) Analysts also receive a $10,000 relocation bonus Associate: 1st year: $80,000 per year salary + $25,000 signing bonus + $25,000 guaranteed year-end bonus Summer associate: prorated $75,000 salary + $5,000 – $7,000 bonus

Perks • Cellular phone • Tuition reimbursement • Employee discounts at local stores • Occasional tickets to sporting events, shows • Car home after 8 p.m. • In Merrill’s New York headquarters, the firm has accounts at six restaurants

24

CAREER LIBRARY

© 2002 Vault Inc.

Merrill Lynch

Organization CEO’s Bio The groundbreaker How does the grandson of a slave and son of an assembly-line worker become the head of a bulge-bracket investment bank? Perseverance and hard work, to be sure. But a little practical advice from Pops also helps. Stanley O’Neal, who becomes the first African American chief executive of a major Wall Street firm in December 2002 when he succeeds David Komansky as Merrill’s CEO, says his father gave him the best advice he ever received. According to BusinessWeek, O’Neal’s father, who supported a family of four on less than $50 a week, told young Stan, “Go to college. Forget being a writer. Pursue a more practical job.” O’Neal took his father’s advice and, alternating between working in a factory and attending the General Motors-sponsored Kettering Institute in Detroit, received his BS in industrial administration. Later, he received an MBA from Harvard Business School. After graduating from HBS, O’Neal quickly rose from entry-level analyst to assistant treasurer at General Motors (Today, O’Neal is a member of GM’s board.). In 1986 O’Neal, then 35 years old, decided to switch gears and become an investment banker, because, according to O’Neal, “I thought investment bankers were smart. But I didn’t think they were five times smarter than me, which is about what they were making.” Less than three years after joining Merrill, O’Neal was named head of the firm’s high-yield bond unit. Under O’Neal’s leadership, the unit became the top junk bond division on the Street and stayed there until O’Neal was promoted to head of the entire Merrill Lynch capital markets businesses in 1995. O’Neal became the firm’s CFO in 1998 and was promoted to president of the U.S. Private Client group in 2000. As head of Merrill’s brokerage division, O’Neal slashed headcount and shifted the unit’s focus away from the average Joe and toward clients with at least $1 million in assets. The unit prospered, and as a result, O’Neal was again promoted. Since July 2001, O’Neal has served as Merrill’s president and chief operating officer. And since that time, he has, essentially, been running Merrill’s day-to-day operations. In the summer of 2002, Fortune called O’Neal the most powerful African–American businessman in the U.S.

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CAREER LIBRARY

25

Merrill Lynch Organization

It remains to be seen how the relatively low–profile O’Neal, who is known for his calm demeanor, will handle the high–profile Merrill CEO post (and chairman post, too; he takes over that spot in 2003). But those close to him have confidence in his continued success. Morgan Stanley banker Raymond McGuire, who used to work with O’Neal, says of the newly appointed Merrill CEO, “The more pressured the situation, the cooler he gets.” This cool should also help O’Neal outside the boardroom: he and his wife are raising 10-year old twins, a boy and a girl.

Business Description Merrill Lynch consists of three main business units: Global Markets and Banking (GMI) (previously known as Corporate and Institutional Client Group or CICG), Merrill Lynch Investment Management (MLIM) and the Private Client Group (“Private Client”). GMI comprises operations that are normally considered investment banking, including underwriting and advisory. The investment management unit includes, not surprisingly, investment and asset management businesses while the Private Client Group contains Merrill Lynch’s conventional and online brokerages. Pay close attention to what department – and what subgroup within those departments – you’re hired into. As one might expect of a giant organization, movement between departments at Merrill is problematic. Says one insider, “One thing Merrill does very badly is moving people from one group to another. If you want to move to a different division, you need to work it out with [the other division]. HR usually insists that you go through them, but that slows everything down.” That contact continues: “Every group is very autonomous – every division is run as if it were a separate company. Our division has quarterly ‘town hall’ meetings with 150 people, and while sometimes someone says something about the overall financial health of Merrill Lynch, it’s basically like the division is its own separate company.”

Global Markets and Banking (GMI) The Global Markets and Banking (GMI) consists of Merrill Lynch’s underwriting, advisory and trading services, as well as the firm’s research and venture capital activities. GMI employees approximately 12,600 people and banked approximately revenues of $10 billion in 2001 and $12.5 billion in 2000.

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Merrill Lynch Investment Management (MLIM) Merrill Lynch’s asset management group was rebranded Merrill Lynch Investment Management (MLIM) in 2000. It had previously consisted of two units: Merrill Lynch Asset Management and Merrill Lynch Mercury Asset Management. MLIM products are sold in the U.S. and abroad by Merrill Lynch and through other sources. With 3,200 full-time employees, MLIM banked approximately $2.1 billion in revenues for 2001 and, at the end of 2001, had $529 billion in assets under management – a hefty decline from its account statement a year earlier. At the end of 2000, MLIM had $557 billion under management. Global Finance named MLIM “Best Asset Management Bank” in November 2000.

Private Client Group (Private Client) Merrill Lynch’s Private Client Group (Private Client) allows Merrill’s individual customers access to the firm’s brokers and research through commission-based accounts (usually best for small investors), asset-priced accounts (better for large investors) or online accounts. Total assets in Private Client accounts in the United States declined 11 percent during 2001 to $1.2 trillion at the end of year. Before the market slide, Merrill’s relatively new online unit grew to $3 billion in assets at the end of 2000, adding $1 billion in fresh cash. As a result, Merrill’s online platform was named one of the “Best Online Brokers” in 2000 by Money magazine. At the end of 2001 Private Client employed 36,900 people, including 16,400 financial advisors. This is a quite a drop from its Private Client payroll in 2000, when the firm employed a total of 46,800 people, including over 20,000 financial advisors.

Locations U.S. Institutional Locations: • New York, NY (Global HQ) • Princeton, NJ (HQ, retail brokerage) • Atlanta • Boston • Chicago • Dallas • Houston Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch Organization

• Los Angeles • Puerto Rico • San Francisco

International Headquarters: • London, UK (Europe, Africa and The Middle East HQ) • Tokyo, Japan (Japan HQ) In addition to the U.S., the UK and Japan, Merrill has a presence in 34 countries worldwide.

Key Officers Chairman and CEO: David H. Komansky (relinquishes CEO spot in December 2002 and chairman post in April 2003) President and Chief Operating Officer: E. Stanley O’Neal (takes over as CEO in December 2002 and as chairman in April 2003) Executive Vice President and Chief Financial Officer: Thomas H. Patrick Vice Charman and Head of Private Equity and Research: Thomas W. Davis Executive Vice President and President of U.S. Private Client Group: James P. Gorman Senior Vice President, Communications and Public Affairs: Paul W. Critchlow Executive Vice President and Head of Global Technology and Services: John A. McKinley, Jr. Senior Vice President Human Resources: Terry Kassel Senior Vice President and President of Merrill Lynch Investment Management: Robert C. Doll Executive Vice President and Chairman of Global Markets & Investment Banking Group: Barry S. Friedberg Executive Vice President and Chairman of Merrill Lynch Investment Management and International Private Client Group; Executive

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Merrill Lynch Organization

Chairman of Merrill Lynch Europe, Middle East & Africa: Michael J.P. Marks Senior Vice President and Head of Global Securities Research and Economics Group: Robert J. McCann Senior Vice President and Head of the Merrill Lynch Bank Group: John Qua

Ownership Merrill Lynch is a publicly traded company with the trading symbol MER. The firm is listed on the New York Stock Exchange, Chicago Stock Exchange, Pacific Exchange, Paris Bourse, London Stock Exchange, and Tokyo Stock Exchange. Merrill’s employees own about 30 percent of the company’s stock.

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Merrill Lynch

Vault Newswire July 2002: Merrill married to Enron mess? Two separate incidents were reported linking Merrill to Enron – and possibly to the bankrupt energy firm’s shady dealings. According to Congressional investigations, in 1988 Merrill had replaced a research analyst who rated Enron “neutral” with an analyst who upgraded the rating. Some allege the rating was changed in order to get more advisory business from Enron, a claim that Merrill denies. Additionally, Merrill placed Andrew S. Fastow, Merrill’s lead investment banker with dealings with Enron, on paid leave after he invoked his Fifth Amendment right to not testify before a Senate committee examining deals between Merrill and Enron. Fastow’s wife, Elizabeth A. Tilney, had close (very close) ties to Enron: she was a senior Enron executive and a personal friend of the chairman, Kenneth L. Lay.

July 2002: It’s official: O’Neal in, Komansky out As expected, Merrill’s board elected E. Stanley O’Neal to replace David Komansky as Merrill CEO and chairman. But in an unexpected move, the board said O’Neal would replace Komansky as CEO in December 2002 and as chairman in April 2003. Previously, Komansky indicated he would retire in 2004, but after Merrill reported strong second quarter earnings and Komansky settled the firm’s legal dispute with the New York Attorney General, Komansky decided it was time to step aside.

July 2002: Overseas overhaul Merrill sacked about 25 equity traders and sales staff members in Europe, representing about 5 percent of the firm’s European equity group. The layoffs come on the heels of a decision by senior equity managers to focus on Merrill’s largest trading clients. According to company insiders, additional layoffs were expected. Nearly 25 percent of Merrill’s 450 European investment bankers could soon lose their jobs as well.

June 2002: Merrill in the middle of Martha mess Merrill put two employees on paid administrative leave in connection with allegations that homemaker guru Martha Stewart traded shares of ImClone stock on inside information. The employees, Stewart’s Merrill broker Peter

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Merrill Lynch Vault Newswire

Bacanovic and his assistant, were not charged with any wrongdoing. The investigation is still pending.

May 2002: Merrill settles Merrill agreed to pay a $100 million fine to New York and other states to settle New York State Attorney General Eliot Spitzer’s charges that Merrill’s research department issued overly optimistic research in order to win advisory business.

April 2002: Star analyst named in state probe Former Merrill Lynch research analyst Henry Blodget was named as the focus of an investigation into Merrill’s research practices. The investigation, led by New York State Attorney General Eliot Spitzer, centered around phone calls and e-mails made by the firm’s Internet research group, which Blodget oversaw. Spitzer discovered that Merrill analysts had publicly hyped stocks, while privately they had referred to the same stocks as “junk” and “crap.” As a result of the investigation, Merrill made several changes to the way its analysts issue stock ratings on corporate clients, and agreed to pay a $100 million fine to New York and other states to settle charges that it provided overly optimistic research to win investment-banking business.

January 2002: Merrill details full scope of cost, job cuts Merrill Lynch announced that it would take a $2.2 billion charge against earnings for the fourth quarter of 2001 to pay for a massive restructuring. The firm cut 9,000 jobs in the fourth quarter and a total of 15,000 for the entire year. The firm announced the closing of 20 branches and the elimination of 1,200 jobs in Japan; Merrill began investing heavily in Japan in 1998 but never saw that investment pay off.

November 2001: The end of the Internet economy Henry Blodget, Merrill Lynch’s Internet equity analyst and a symbol of the Internet mania of the late 1990s, left the firm after accepting a buyout package. Blodget became famous in November 1998 when he (correctly) predicted that Amazon.com’s share price would exceed $400. Blodget said he was writing a book about the Internet economy and would then seek work at a money management firm or a hedge fund. 32

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September 2001: New faces at the top The firm announced two management changes on September 20, 2001. James Gorman was named president of the firm’s U.S. Private Client Group, taking over for Stanley O’Neal, who was promoted to president and COO at Merrill Lynch a month earlier. Also getting new business cards was Terry Kassel; he was named senior vice president, human resources. Kassel, a former partner at consulting firm McKinsey & Co., joined Merrill in 1999 as chief marketing officer.

September 2001: Merrill hit by World Trade Center attack In terms of damage to infrastructure, Merrill Lynch was one of the companies hardest hit by the terrorist attacks that destroyed the World Trade Center. Three Merrill employees were killed in the attack; some 9,000 employees in the vicinity were displaced. The company quickly relocated most of the those employees to alternate sites in New Jersey, though the change may be only temporary. CEO David Komansky told BusinessWeek the firm “will reoccupy our buildings” once the financial center is rebuilt.

August 2001: O’Neal named president and COO E. Stanley O’Neal, the head of Merrill’s brokerage division and its former CFO, was named president and chief operating officer. O’Neal’s promotion puts him in line to become CEO at Merrill when David Komansky retires in 2004. O’Neal would be the first African-American head of a major Wall Street firm.

July 2001: Stock analysts face restrictions Responding to pressure placed on the industry regarding the objectivity of equity analysts’ opinions, Merrill Lynch announced its stock analysts would be prohibited from owning any of the stocks they covered.

April 2001: Merrill cuts 1,000 In a cost-cutting move the firm announced it was eliminating 1,000 jobs, including 200 investment bankers.

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Merrill Lynch Vault Newswire

November 2000: New hires beef up Merrill M&A Merrill Lynch lured back Richard Johnson, who left the firm in 1998 to join Tyco International. Johnson returned to his previous post as vice chairman of M&A. The firm also hired George Bilicic, a partner at prestigious law firm Cravath, Swaine & Moore, as a managing director in M&A.

July 2000: Merrill moves into sports management business The firm has bought a 50 percent stake in the financial services division of IMG, an international sports management and marketing firm based in Cleveland.

April 2000: Merrill partners with HSBC Merrill and London-based HSBC Holdings have created an online venture that would offer banking and brokerage services to individuals outside the U.S.

March 2000: Merrill offers pay guarantees to senior bankers The Daily Deal reported that, in the wake of high-level departures such as Jack Levy, Merrill is offering substantial packages to entice people to stay.

March 2000: Merrill’s head of M&A leaves the firm Jack Levy has jumped ship to become co-chairman and co-head of global M&A at Goldman Sachs. Daniel Dickson and Steven Barnoff were picked to replace Levy.

February 2000: Merrill announces plans to offer interest-bearing brokerage accounts Customer funds not invested in securities would be swept into Cash Management Accounts (CMA) managed by two Merrill-owned commercial banks. The Federal Deposit Insurance Corporation expressed reservations, saying that if other brokerages followed Merrill’s lead, it would overtax the system by creating too much insured money.

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January 2000: Merrill announces record year Merrill has announced a record year in earnings for 1999. The firm retained its No. 1 spot among underwriters of all common debt and equity. It slipped to No. 3 (from the second position) on the rankings of M&A advisors, but increased market share significantly.

December 1999: Merrill launches ML Direct As planned, Merrill launched ML Direct, an online trading service for “selfdirected investors.”

July 1999: Allison leaves Merrill After 28 years with the firm, Herb Allison has retired to pursue “other interests,” according to the firm. Rumor has it that Allison was opposed to the firm moving online and was told he had no shot at succeeding David Komansky.

June 1999: The bull moves online Merrill Lynch has finally decided to join the rapidly growing low-fee online trading business. The firm had previously said it would stick only with its staple full-service retail brokerage, suggesting that online trading without quality investment advice is a risky business. But after seeing discount brokerages such as E*Trade and Charles Schwab succeed online, Merrill is making the move, offering broker-less trades for $29.95. Investors must keep a minimum balance of $20,000 in their accounts. As the firm is the nation’s leading brokerage, Merrill’s decision to move online is expected to be followed quickly by other brokerages.

March 1999: Merrill hooks up with MIT Merrill Lynch is giving $20 million to the Massachusetts Institute of Technology (to be split up among the Sloan school of management, the school of engineering, and the schools of architecture and planning) to pursue joint research in technology for financial services and management. Among the projects the partnership will pursue is the development of technologybased corporate finance advisory capabilities. The move is yet another in Merrill’s string of technology plays.

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Merrill Lynch Vault Newswire

February 1999: Merrill buy’s D.E. Shaw’s online business Seeking to bolster its use of technology in financial services, Merrill Lynch has agreed to acquire D.E. Shaw & Co.’s online brokerage technology business, called D.E. Shaw Financial Technology. The acquisition includes about 35 web programmers.

January 1999: Merrill named one of Fortune’s “100 Best Companies to Work For” Merrill Lynch ranked No. 71 in Fortune’s list of the “100 Best Companies to Work For.” The magazine reports that in 1998, Merrill began offering health insurance to part-time employees working as few as 18 hours per week.

Recent Transactions • Merrill was co-lead manager for the Thomson Corporation’s $1 billion IPO in June 2002. • In May 2002, Merrill co-lead managed Aeropostale’s $225 million IPO. • Merrill lead managed the $450 million initial public offering for Heritage Property Investment Trust in April 2002. • In April 2002 Merrill co-lead managed Jetblue Airways’158 million IPO. • Merrill lead managed Petco Animal Supplies’ $287.5 million IPO in February 2002. • In March 2002, Merrill co-lead managed Alcon’s $2 billion in initial public offering. • Merrill co lead managed the $120 million IPO for Zymogenetics, which develops, discovers and commercializes therapeutic proteins for the treatment of human disease. • Merrill advised General Electric on its $4.7 billion purchase of Security Capital Group in December 2001. • In October 2001 Merrill advised AT&T Wireless on its $4.3 billion acquisition of TeleCorp. • Merril was Alltel’s advisor on its $9.2 billion takeover of Century Tel in August 2001.

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• Merrill was the lead manger on Alliance Data Systems’ $156 million IPO. • Merrill was the lead manager for the $221 million IPO for oil company FMC Technologies in June 2001. • Indian tech company Satyam Computer Services chose Merrill to lead a $141 million IPO in May 2001. • TK Merrill lead managed Cnoon Limited’s $1.3 billion IPO in February 2001. • Merrill was the lead manager for Specialty Laboratories’ $80 million IPO in December 2000. • In October 2000, Merrill co-led Asia Global Crossing’s $4.3 billion IPO. • Merrill raised $759 million for Entravision Communications in an August 2000 IPO. • Merrill was one of three lead managers on AT&T Wireless’ $10.6 billion IPO in April 2000. • In February 2000, Merrill lead-managed an IPO for Pets.com that raised $82.5 million. • Merrill led a $1.7 billion IPO for John Hancock Financial Services in January 2000. • Also in January 2000, Merrill Lynch served as one of three advisors (along with Morgan Stanley and JP Morgan) to Mannesmann, in its $190 billion acquisition by Vodafone. • In January 2000, Merrill served as the advisor to The Coastal Corporation in its $16 billion merger with El Paso Energy Corporation. • In December 1999, Merrill was the lead manager for the IPO of Infonet Services Corp, raising over $1 billion for the company. • In March 1999, Merrill lead-managed the IPO of Pepsi Bottling Co., which raised approximately $2.3 billion. • Merrill advised on the top announced deal in the first half of 1999, the acquisition of MediaOne Group by AT&T for $60.5 billion. Also advising MediaOne, which at the time of the deal was the No. 3 cable provider in the U.S., was Credit Suisse First Boston and schmoozy media bankers Allen & Company. MediaOne will be combined with AT&T Broadband and Internet Services (formerly TCI) to become the nation’s largest cable company. The deal was announced in April 1999. Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch

Our Survey Says Proud to be a Merrill-ite One insider says that employees are “proud to be part of Merrill Lynch, but not heady about it.” The people there are “hard working, driven and extremely bright but down to earth with a relatively good sense of reality,” continues that banker. Merrill has a reputation for a gentler culture than its competitors. “Historically, you must remember, Merrill was a ‘huge lumbering elephant’ because that was the culture in the dominant retail side of business,” says one source. “However, things are changing as Merrill becomes one of the top three investment banks, and we’re becoming more like Goldman Sachs or Morgan Stanley day by day.” One contact adds, “We’re different from other places. The people are nicer than at other banks.” That doesn’t mean things don’t get dicey. “While the overall culture at Merrill Lynch is much more collegial than at most Wall Street firms, investment banking, and M&A in particular, suffers from the same sharp elbows that afflicts all of the Street,” says one banker. Naturally, though, Merrill’s size fosters many subcultures, and insiders say that Merrill’s culture varies “from department to department.” “I found the culture to be very fragmented, though I doubt it is more so than other bulge bracket firms,” continues another banker. “For example, M&A has a very different culture than many of the industry groups in investment banking. M&A bankers consider themselves to be the ‘Marines’ of investment banking and will go to extraordinary lengths to serve their clients. Many of the industry groups still have an ‘old-school’ entitlement culture where the attitude is that their clients are lucky to have their attention. As you can imagine, this results in a very different work-life balance between the two types of groups.” The firm’s junior bankers report a fair amount of respect from their more senior colleagues. “Directors and vice presidents work associates hard but Managing Directors ensure proper care and feeding of the associates,” says one contact. Another says his bosses treat him as well as any associate in investment banking – which admittedly, isn’t always a love-fest. “While investment banking is billed as a meritocracy, one’s title and tenure is still extremely important in terms of getting respect from senior bankers – there is a bias that junior bankers don’t have much to add to a discussion that is valuable,” gripes that insider. “Generally, I found senior bankers to be disinterested at best and condescending and verbally abusive at worst to associates. Investment banking is simply not a culture where anyone says, Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch Our Survey Says

‘Please,’ ‘Thank you’ or ‘Good work.’” On the other hand, the firm’s training can be helpful. “Both formal and informal training is the great,” enthuses one associate. “Most associates are MBAs and only need a little specific training – the real training starts when you get to work on live transactions, interact with clients and have real money on the table.”

Do you read Kafka? The major drawback of working for Merrill, most agree, is the “horrendous” bureaucracy, which “can sometimes combine with office politics to make life miserable and incomprehensible.” An insider repines, “Sometimes, for no apparent reason, you get blamed for things you didn’t do and get assignments you’re not supposed to have, and there’s no one to complain to – life becomes like a page from a Kafka novel.” Another source agrees, “While I’m in the world outside, I’m proud to be working for Merrill. But on the inside, I know that bureaucracy and politics can make life pretty miserable.” One source, who thinks the bureaucracy can be circumvented, says, “Merrill Lynch runs relatively flat in terms of day-to-day decision-making, but tends to get bogged down in large-scale company-wide initiatives. In other words, if a decision needs to made quickly to take on a new client or hire a high-profile banker, senior bankers have a lot of latitude to do so.” That associate finds that with a major change, like a change in benefits or compensation, “it can take months, if not years, to work its way through the system. The general rule is: if you can keep your request out of HR, you can add light-years to the decision-making process.”

The bull’s perks Perks at Merrill, according to employees, are “the same as those you get at other banks. If you stay past a certain hour, you get dinner and transportation home.” Officially, you have to stay past 8 p.m. to get a car, and past 7 p.m. to get dinner. The firm’s dinner plan utilizes restaurants with which Merrill has negotiated discounts. Some insiders say they get sick of the food, “but a lot of the associates love it.” Those who work on Saturday or Sundays get three meals covered. Other perks include “free travel and accommodations when you travel with clients.” “When you travel,” one analyst notes, “you have it pretty good because you use airlines and hotels that must be up to the standard of your clients.” The firm still has casual dress, except for client contact, and officially has no plans to change. However, the industry seems to be in disarray on this subject – one banker warns that “the Street doesn’t know 40

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what it wants to do regarding formal attire” – so a change is not out of the question.

A hundred times worse than cramming In your first two years at Merrill, say our sources, “expect the worst. If you can’t cope with 70 or 80 hours a week, you’re not going to make it. Even after that, you’ll be working about 60 to 70 hours a week. Plus, at least one day a weekend, you’re sure to be in the office.” An employee describes her shock at discovering that “working during your first two years at Merrill is not like cramming for two nights before an exam. It’s a hundred times worse. The bottom line is that whatever happens, you have to get the job done. If that means three all-nighters in a row, so be it.” As with most investment banks, “the hours of an analyst are the worst,” one analyst says. “It’s very much a pyramid structure, and the lower you are down, the more work. The analyst is the backstop. Once in a while it gets to you. The VP comes up with ideas [and the] angle they want to take. Implementation is on the analyst and associate level.” But it’s not as if associates aren’t working hard. One junior associate reports working about 100 hours a week, and regularly working both days on the weekends.

Write your schedule in pencil Some Merrill employees say a hot deal can burn. “It is not purely the hours that are difficult, it is the unpredictable nature of when a project may become hot and consume every moment of your time and every ounce of energy for days on end,” complains one insider. Another source has a theory for the unpredictable schedule. “[The hours] are driven primarily by inefficiencies in information flow,” he says. “The majority of time, the hours beyond 5060 per week are the result of poor communication by senior bankers – either because they a) neglected to tell junior bankers about the depth of an assignment until shortly before its due date, b) did not clarify with the client the level of detailed work required for a given assignment or, c) created an unnecessary and unreasonable expectation with the client about the timing of the delivery of the work.”

Living large The lifestyle at Merrill certainly doesn’t help employees stay in shape. One New York analyst complains: “I worked so many hours at the office that I gained a substantial amount of weight. I got fat, to avoid euphemisms. The problem is, you spend so much time sitting at your desk, with no time to Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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exercise, and you’re always eating a lot at meetings at night or ordering food from different restaurants. There’s no company gym for easy, during-the-day access to weights or jogging.” There is an “executive gym” in the building for those high up on the ladder; as for the hardworking junior employees, “some associates go to the nearby Marriott, some go to another club.”

Prestige you can take with you Employees feel that they benefit from Merrill’s high profile in a number of ways. One former associate notes, “Firstly, when I left the firm, I found it easy to get a job wherever I wanted on Wall Street – even though I took two years off after leaving Merrill and did nothing. Still, when I sent in my resume to various places, they saw the Merrill name and pounced on me.” Another insider says, “Even more important than the resume value after you leave the company is the fact that Merrill, because of its name and reputation, is able to obtain major business that smaller places would not gain. So, while working at Merrill, you are exposed to clients who are in the top ranks of important companies that you might want to work for some day.”

How low can they go? One area where Merrill lags is pay. While the firm is around the industry average, insiders complain Merrill is slow to match competitors’ increases. Gripes one banker, “[The firm] doesn’t ask, ‘How much do we have to pay to get people to stay?’ but ‘How little do we have to pay people to get them to stay?’ They look at Morgan Stanley and Goldman Sachs and then price at the lowest.” In general, though, “the firm works hard to be fair and is successful,” concedes one associate. Private Client Services employees are more pleased. One employee in that department notes that his base salary is more than 10 percent than offers he received from several competitors. The firm’s 401(k) is standard while employees rave about the health insurance, “one of the best plans in corporate America.”

Merrill offices: Be impressed Merrill Lynch’s offices are “impressive and large.” While “they’re not furnished in a particularly lavish fashion, they’re always tastefully decorated.” The digs are “very comfortable and functional – Merrill doesn’t tend to go for as much marble and oil paintings as some of its competitors,” critiques one source. Insiders say the firm spends most of its decorating cash on impressing clients. One insider notes, “The conference rooms and other areas visited by clients are very nice, but some of the analyst bullpens are 42

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kind of dumpy.” Another banker concurs, saying that when clients visit they “are hosted in very nice conference rooms and dinning rooms – that is what really matters.”

Life made better by support The support staff at Merrill is “professional,” according to employees. The company assigns one secretary for every three or four analysts and associates. The secretary “is just there to answer the phones and not do much else. In some firms, the secretaries also do word processing and other tasks, but not at Merrill. They weren’t very skilled.” Another insider describes the support staff as “not too bad, because there’s a separate word processing department where you get everything done, but it would be easier to get things done if the secretaries were more skilled. But, in general, it’s excellent in terms of resources and facilities, and your life is made a lot easier.”

Bankers’ happy hours Merrill employees say that during the workday “a lot of bankers pretty much keep to themselves.” After hours, though, things apparently change. One insider at the firm’s New York headquarters raves that “every Friday, there’s a happy hour where everyone goes. It’s a great meat market. Everyone’s looking to pick someone up. It’s fantastic.” Others are also positive, if less ebullient. One banker says of Friday happy hours: “Every Friday, around 4 o’clock, the secretaries leave early, and the bankers get together downstairs for a beer – [there are] several bars in the World Financial Center. What happens is you go down for beer, and if you have work, you go back up.” Another insider in New York enjoys the firm’s social life, but is a bit more sedate: “Moran’s [a bar] is right downstairs. People will go down there on a Thursday or Friday. I think people tend to get along well with each other. It’s the typical parties.”

Serving the community Merrill Lynch “has a real conscience compared to other places on Wall Street,” according to one longtime employee. The company offers a number of innovative schemes to encourage its employees to contribute to their local communities. Through its Scholarship Builder program, Merrill enables employees to make tax-deductible contributions to scholarship funds for children from inner cities. The Merrill Lynch Foundation has a “Matching Gifts” program under which the foundation matches employees’ gifts of $50 or more to eligible educational, cultural, or environmental organizations and Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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hospitals and health care services. Gifts are matched dollar for dollar up to $1,000 in any calendar year. Merrill Lynch also has an Employee Community Involvement Program (ECIP) which makes grants of between $100 and $1,000 to community organizations for projects in which Merrill Lynch employees play an active role. However, recent hires comment that they “hardly have time for a life, so forget community involvement for now.”

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Getting Hired Hiring Process Tough buy Like all bulge-bracket firms, positions at Merrill are hard to come by. “The overall markets dictate whether it is extremely difficult or nearly impossible to get into Merrill Lynch,” reports one associate. “The work is difficult, the hours are long and the lifestyle is tough – but many, many people want to work for Merrill Lynch and competition is tough and only gets tougher to move up within the firm.” Another contact echoes that assessment, noting that the recent slump has made landing a job at Merrill even more difficult. “Merrill Lynch has become extremely selective in this market downturn,” says that source.

Who do you know? Resumes submitted to Merrill through college career centers and direct mail are sorted by Merrill’s recruiting personnel; all qualified applicants are invited for interviews. The first round of interviews is held on the applicant’s campus, and those candidates who make the cut are invited to further rounds at the New York office. Make sure you’re at your most charming at cocktail parties, lunches and other informal Merrill gatherings. “Each social outing prior to interviews is very important in determining who makes the closed list,” reports one insider. Who you know is important, say others. “Merrill Lynch Investment Banking has a target roster of schools numbering in the dozens,” reports one insider. If you’re not from one of these schools, and don’t happen to know a bigwig, getting attention from recruiting is tough.” But bigwigs aren’t the only ones with influence, continues that contact. “Resume books with hundreds of resumes – Penn has over 400 – are handed out to analysts to comb through. Our selections, mostly people we know, with a few others who we’re in some other way impressed by, are then given first-round interviews. From there, it’s all about who you meet and how you do.”

Meeting Merrill Insiders also report that Merrill’s interviews (even the initial on-campus screening interviews) “can last a lot longer than the typical half-hour Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch Getting Hired

interviews that other firms conduct.” The firm doesn’t shy away from technical questions. “I went through the typical full-time hiring process at business school,” reports one associate. “With an investment banking internship under my belt, I did the standard on-campus interview, followed by a group-specific interview [with] five people, followed by an office-specific interview (another five people). The questions were based primarily on my summer experience – I was asked to describe the deals I worked on, the strategic rationale and the valuation methodologies used.” Those looking at smaller offices outside of New York might meet most or almost all of the employees at the office, say sources.

Questions to Expect 1. Why are you interested in investment banking? If you have no previous experience on Wall Street, you are guaranteed to get this question. The primary purpose of this question is to weed out those who are interested in banking solely for the money. Even if that is your primary interest, you’d better have a better answer planned. Try discussing your longheld love of finance, how you have followed the markets for years and find them fascinating, or how you love the idea of combining your love of numbers with your entrepreneurial drive in order to win business for the firm. If you don’t have a banking background, also be prepared to talk about the long hours you will be expected to work. Most candidates, of course, are somewhat informed, though they may not know whether to believe the rumors. “They all want to know about the hours,” says one interviewer at Merrill. Whatever you feel about working 100-hour weeks, don’t lie and say you can’t wait to get to it. Says one Merrill insider: “If someone looked enthusiastic about the hours, that would be weird.” 2. Walk me through the major line items on a Cash Flow Statement. First, the Beginning Cash Balance, then Cash from Operations, then Cash from Investing Activities, then Cash from Financing Activities, then the Ending Cash Balance. 3. What is the link between the Balance Sheet and the Income Statement? The main link between the two statements is that profits generated in the Income Statement get added to shareholder’s equity on the Balance Sheet as Retained Earnings.

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4. Why Merrill? Get ready to answer this question. Understand that Merrill is strong in virtually every business, is a huge, prestigious firm with a reputation for being less blue-blooded than chief competitors Goldman and Morgan Stanley, and is expanding aggressively (especially in asset management) overseas. Now figure out why that appeals to you. 5. How would you go about valuing a company whose stock you were considering buying? This is probably the most popular technical question asked of MBAs. One answer is to discount the projected cash flows by the company’s risk-adjusted discount rate. After projecting the first five or ten years, you add in a “Terminal Value,” which represents the present value of all the future cash flows that are too far into the future to project. You can calculate the Terminal Value in one of two ways: (1) you take the earnings of the last year you projected, say year 10, and multiply it by some market multiple like 20 times earnings, and that’s the terminal value; or (2) you take the last year, say year 10, and assume some constant growth rate after that like 10 percent. The present value of this constant growth rate is the Terminal Value. You should also mention other methods of valuing a company, including looking at “comparables,” or how other similar companies were valued recently. 6. What would the other members of your business school team have to say about you? This is a question designed to probe your fit for I-banking. “I think anyone can pick up investment banking,” says one Merrill insider. “The question is, will they want to? It takes a special person to do it for extremely long hours.” 7. Give me the sum of all the numbers between 1 and 100. “You’re looking for people to think a lot. I think a lot of people go into it without realizing just how quantitative it is,” says one insider. This is a famous question that 19th–century German mathematician Carl Gauss figured out when he was a tot. Simply pair up 1 and 100, 2 and 99, and so forth. There are 50 such pairs of 101. 8. You have a painting that is $320 that is selling for 20 percent off. How much is the discounted price? If you are applying for an analyst position, be ready for simple math questions if you have a weak quantitative background. One recent hire at Merrill Lynch reports receiving this question. 9. Do you know the relationship between the price and yield on the bond? You should also be prepared for general economics questions like this one. As the yield on a bond (the interest rate it pays) increases, the price decreases. Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch Getting Hired

Questions to Ask 1. How much responsibility am I able to receive in my first year at Merrill? Merrill expects its first-year hires to accept a large amount of responsibility right away, so this question indicates your willingness and eagerness to accept responsibility. 2. Merrill redefined the large financial services firm by merging I-banking capabilities and retail brokerage. However, recent trends point to the reemergence of even larger “financial supermarkets” such as Citigroup. Are there any other retail businesses like, say credit cards, that the firm believes it should move into? Well, how well did financial supermarkets work the first time around? 3. How has the recent trouble in worldwide financial markets affected Merrill’s aggressive overseas expansion plans? If you’ve read this report, you know that Merrill continues to expand in Japan. However, in an age of global consolidation among financial services firms, Merrill has had its eyes on other overseas markets. 4. How is Merrill responding to the I-banks and retail brokerages such as Morgan Stanley and Salomon Smith Barney that are becoming more like it? Does the firm believe that its advantage as the only investment bank with massive distribution capabilities will be reduced? 5. How has Merrill changed since you joined the firm?

To Apply Merrill offers a job search function on its web site. It provides contacts for specific business units for both undergraduates and those with advanced degrees. The firm also posts its recruiting schedule, which indicates which business units are recruiting at which campuses and when. Resumes can also be sent to the following places:

Investment Banking Carrie Higginbotham Assistant Vice President, BA Recruiting Denise Patton Vice President, MBA Recruiting

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Sales and Trading Claudine Rippa Vice President Merrill Lynch 4 World Financial Center 250 Vesey Street, 2nd Floor New York, NY 10281-1302 Fax: (212) 449-3130

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Merrill Lynch

On the Job Job Descriptions Financial Consultant, Private Client Group Financial Consultants build long-term financial advisory relationships with wealthy individuals, families and businesses, and provide advice on matters relating to investments, balance sheet management, retirement and estate planning and other services. Financial consultants work closely with specialists from the research department (among Wall Street’s best) and from other areas such as trusts, mortgages and mutual funds.

Summer Associate, Investment Banking/Sales and Trading Summer associates in the investment banking division of Merrill Lynch spend their time performing due diligence on companies that their department is hired to sell or underwrite. Summer associates also create financial models and perform financial analysis. They prepare presentations on the basis of their analysis, and also prepare pitchbooks for potential clients. Summer associates in sales and trading have one or two rotations at each trading desk. Occasionally, they are assigned specific projects, but mostly they are expected to watch, listen and ask questions. Sales and trading summer associates generally work on one big project, on which they are supposed to give a presentation at the end of the summer.

A Day in the Life Analyst, I-banking 9:00 a.m.: Arrive in the office, check overnight e-mail and phone messages. 9:30 a.m.: Eat breakfast in the office. 10:00 a.m.: Begin work on presentation to a prospective client. (“The mornings tend to be quieter than later in the day.”) 10:30 a.m.: Write internal memorandum on potential problems with a prospective client. (“Highly, highly confidential material. If it gets read by someone who shouldn’t see it, you’ll get the sack, even if it’s not your fault.”) Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill Lynch On the Job

1:00 p.m.: Eat lunch at desk. (“Sometimes the firm buys lunch for the floor, but usually it’s out of your own wallet.”) 2:00 p.m.: Put together a prospectus for the client issuing high yield bonds. 4:00 p.m.: Late appointment with upper management from the client company. 6:00 p.m.: Order in dinner. 8:00 p.m.: Work on M&A pitchbook. 11:30 p.m.: Order car service and leave for home. (“On a deal, you might be there until 3. The average time I leave is about 11:30.”)

Career Path Undergraduates After the training period, analysts meet with different groups, and are ultimately assigned to one of them. “It’s a lot more focused than it used to be,” says one insider of the assignment process. “It depends on what you’re interested in and what their needs are. It would be rare to go in a group that you’ve never met before. I interviewed with all of them before I went in.” I-banking analysts usually stay with the company for two or three years, and are then expected to leave for business school. However, exceptionally talented analysts will be promoted to the associate level without an MBA. Unlike some other banks, Merrill will not pay for an analyst to return to business school. Says one analyst: “The analyst program is two years and most people make it clear before that time whether they want you to return or not.” “They let you know,” confides another insider. “There are reviews. You have a manager, a VP, and they’ll say: “We think it would probably be in your interest to you to do something else.” “It is a lot easier to become a third-year analyst than to become an associate. In each group, from each analyst group, there’s one or maybe two.” Sales and trading works differently. Sell side analysts have two three-month rotations. Previously, the number of rotations was three or four, and analysts in New York could take one rotation in a foreign office, but “you can’t travel anymore. It’s a cost-cutting thing,” reports one insider. After the two rotations, analysts join a group or “desk.” Top performers are normally about a year and a half to two and a half years after the six-month rotation period,

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although it can happen earlier, an insider reports. Merely “average to good” analysts are normally promoted to an assistant VP level in two and half to three years. Reports one insider: “I think you’ll eventually get a promotion, it’s not like in investment banking, where it’s two years and you’re out.”

MBAs MBAs join Merrill as associates. In investment banking, the firm is, like most banks, fairly structured in its career path, although the first promotion happens more quickly than at some banks. Explains one insider: “Associates are associates for three years. Then it’s VP. About three or four years and then you’re a director. Then you are a director for about four years, maybe three to four years . Then a managing director.” Says an associate: “The time when bankers leave is usually after Christmas, after bonus time. They say never to talk about [your] remuneration, but it only takes a couple of hours to figure out where you are in the ladder [based on your bonus], whether you rank as a top associate or in the bottom.” In sales and trading, associates can expect a promotion to vice president in two to three years.

Training Analysts and associates go through a centralized training program in New York for about two months. “Basically we have a general training program. It’s a month and then it gets specialized into sales and trading, investment banking, and technology for about a month,” reports one insider. Says one Ibanking analyst about the program: “It’s full-time, 9 to 6. There used to be a week at Princeton, but they don’t do that anymore. They train you for Series 7 [exams], which is unique – most firms don’t do that. It’s all those computers, finance, accounting, and Series 63 classes. There’s a lot of spreadsheets, and word processing, to some extent.”

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Merrill Lynch

Final Analysis One of the few firms to succeed both as a retail securities broker and as an investment bank, Merrill Lynch is ensuring its continued dominance of the financial world by developing highly skilled brokerage advisory services and an expanded international presence. With the backing of a huge capital base, league table-leading corporate finance and M&A department, and Wall Street’s most renowned – if not infamous – research unit, Merrill is set to reach even greater heights in the future. As an employee, you most likely won’t have to endure the snobbishness that afflicts many of Wall Street’s bulge bracket banks, but you will probably encounter an unrivaled bureaucracy and grapple with severe “small fish in a big pond” feelings. One thing’s for sure, though: Merrill Lynch’s great prestige and numerous strengths make the firm one of the best names to have on your resume.

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Merrill Lynch

Recommended Reading You should check out Merrill Lynch’s annual report, available online at www.ml.com . Riding the Bull: My Year in the Madness at Merrill Lynch, by Paul Stiles, is an interesting account of the author’s brief stint at the firm. We also recommend the following recent articles on the firm. • “Merrill Settles,” The Economist, May 25 – 31, 2002. • “Thunderstruck,” The Economist, May 25 – 31, 2002. • “Merrill forms New Operating Team That Doesn’t Include Komansky,” The Wall Street Journal, Feb 8, 2002. • “O’Neal Breaks the Mould in a White Man’s World,” The Financial Times, July 25, 2001. • “O’Neal Breaks the Mould in a White Man’s World,” The Financial Times, July 25, 2001. • “Merrill Moves to Stem Defections,” The Daily Deal, March 22, 2000. • “Merrill’s E-Battle,” Business Week, November 15, 1999. • “Retail Aside, Merrill Has Equally Big Plans for Its Institutional Side: Top Execs Foresee Online Issuance Factory for Mid-Size Corporates,” Investment Dealers’ Digest, June 7, 1999. • “Merrill Lynch Moves to Settle Some Discrimination Claims,” The New York Times, June 5, 1999. • “The Bull Has an Identity Crisis,” Forbes, April 5, 1999. • “Swallowing Pride, Merrill Lynch Joins the E-Traders,” U.S. News & World Report, June 14, 1999.

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Merrill Lynch Recommended Reading

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