1. Strategic Synergy
Consulting Group
Apostolos Antoniou | Ashleigh Womble | Dylana Suarez | Mike Kavanagh | Ni Zhan | Taylor Polchinski | Roberto Westerband
Executive-in-Residence Program
Spring 2014
LEERINK PARTNERS LLC
MGT REPORT RE-DESIGN
2. Agenda
• SWOT Analysis of Leerink Partners LLC
• SWOT Analysis of Leerink’s Current MGT Report
• Key Stakeholders
• Design Methodology
• Deliverable of Leerink Quarterly Review
2
3. SWOT Analysis
Leerink Partners LLC
Strengths
3
Weaknesses
Opportunities Threats
• Reputation/knowledge in
healthcare
• MEDACorp/research capability
• Client service
• Investment banking capability
• MEDACorp use limitations
• Lack of diversity within product
offerings
• Brand image
• International presence
• MEDACorp expansion to other
expert networks
• Brand development
• Growth through acquisitions
• International expansion
• Increased regulation in within
industry
• Competition from Mature asset
management companies with
larger market share
• Other investment banks acquiring
research companies similar to
MEDACorp
4. SWOT Analysis
Current MGT Report
Strengths
4
Weaknesses
Opportunities Threats
• Detailed Financial Information
• Includes all necessary ratios and
metrics
• Quantitative information to
highlight current work stream
performance
• Easy to miss important information
• Design aesthetic is visually
unpleasing
• Difficultly in finding financial results
due to clustered bullets
• Allow transparency for key
stakeholders
• Better managerial decision
making due to ease of use
• More streamlined reporting would
allow for less redundancy
• Important metrics are missed
• If management is misinformed, it
will have negative effects on
internal processes
• Misinterpretation of Leerink
performance
5. Key Stakeholders
Who Are They?
5
What are their Needs?
Stakeholder Takeaways
• Board of Directors
• Upper-level Management
• Current and Future Investors
• Interested External Parties
• Understanding of Company
Performance
• Quick Comprehension
• Easy Comparability
• Key Financial Highlights and
Metrics
• Geographic Profitability
• Historical Trends per Business
Segment
• A Comparative Review of
Revenues, Expenses and Pre-Tax
Income
• Recent Banking Transactions
• Top and Bottom 10 Client Accts.
• Employee Metrics
6. Design Methodology
6
• Built a storyline to highlight work stream
performance.
• Chose a graphical approach to financial
statements.
• Condensed graph design that combines
current year, prior year, and planned
figures.
• Color coding for ease of identification
• Includes key highlights and metrics to
provide better transparency.
• Use of Current Technology to auto-
populate management report
Current Year
Budget
Overall Design Legend
PY/Plan
Prior Year
9. Q3 2013 Income Statement Overview
Financial Highlights
$36.1M
Operating Revenue for Q3 13, ahead of Plan by $11.4M and Q3
12 by $17.2 M (+91.0%). It was the firms highest ever quarterly
revenue.
$23.1M
Compensation Costs for Q3 13, unfavorable to Plan of $7.3M
(+46.3%), which was mostly the effect of the favorable revenue
on the incentive compensation accrual.
$7.7M Operating NPE for Q3 13, unfavorable to Plan of $6.4M (+19.3%)
and Q3 12 of $5.5M (+40.1%).
$5.3M Pre-tax Net Operating Income, far surpassed the $2.4M
planned for the quarter (+117.4%) and $2.7M earned in Q3 12
(+96.4%).
14.7% Pre-tax Operating Margin % for The Firm’s Q3 13.
9
PY/Plan
PY/Plan
PY/Plan
PY/Plan
PY Plan
10. Q3 2013 Balance Sheet Overview
Financial Highlights
10
$68.5M
Cash and Cash Equivalents increased $22.1M from year-end
primarily due to the proceeds from the sale of Humica and
positive net cash flows from business operations.
$25.5M
Receivables include customer ($18.6M) and employee and
other receivables ($6.9M). The increase of $9.5M from PY is
mostly related to accrued banking revenue.
$8.6M Other Assets increased largely due to a $1.7M letter of credit
that was signed related to the NY lease as well as purchases of
fixed assets.
$43.9M Members’ Equity decreased by $7.8M from Dec. 2012 due to
the Lovell Minnick equity repurchase ($40.0M) mostly offset by
net income ($32.4M).
$4.02 Tangible Book Value per share was $4.02, up from $3.52 in Dec.
PY/Plan
PY/Plan
PY/Plan
PY/Plan
PY/Plan
12. Location Highlights
Comparative Expenses by Location
• +30% Q3 Revenue from San Francisco
Year-Over-Year
• Attributed to increased sales force
• 10 More Clients Out of New York
Year-Over-Year
• Attributed to higher referral rate
• -15% Expenses in Boston Year-Over-Year
• Attributed to decreased rent expense
Location Metrics
Key Highlights Comparative Revenue by Location
12
$15,000,000
$6,500,000
$1,250,000
$10,000,000
$5,000,000
$1,000,000
New York San Francisco Boston
Q3 2013 Q3 2012
$750,000
$300,000
$125,000
$500,000
$250,000
$100,000
New York San Francisco Boston
Q3 2013 Q3 2012
Boston, MA
• $$ Revenue
• 94 Employees
• $$ Rev/HC
New York, NY
• $$ Revenue
• 82 Employees
• $$ Rev/HC
San Francisco, CA
• $$ Revenue
• 10 Employees
• $$ Rev/HC
13. Business Segment Trends
Institutional Equities
• Executed 19 Deals in Q3 13, up from 15
deals in Q2 13.
• Average Fee per Transaction was up in
Q3 13 at $1.18M vs. $992k in Q2 13.
• 20% M&A Deals of total Q3 13 revenue.
• 263m Shares Trade Volume was up
compared to prior quarter of 245m
shares.
Asset Management
Key Highlights Investment Banking
$17,250
$18,650
$18,200
$19,850
$20,275
$20,850
$22,600
$21,002
$22,041
$22,347
Q3'10 Q1'11 Q2'11 Q3'11 Q1'12 Q2'12 Q3'12 Q1'13 Q2'13 Q3'13
$7,200
$7,900 $7,850
$9,000
$8,750
$9,000
$9,450
$10,000
$11,250
$10,144
Q3'10 Q1'11 Q2'11 Q3'11 Q1'12 Q2'12 Q3'12 Q1'13 Q2'13 Q3'13
$1,450
$1,500
$1,586 $1,620
$1,700
$1,750
$1,800
$1,900
$1,950
$2,048
Q3'10 Q1'11 Q2'11 Q3'11 Q1'12 Q2'12 Q3'12 Q1'13 Q2'13 Q3'13
13
14. Q3 2013 Revenue
Key Highlights
Revenue Comparison
• Q3 Investment Banking revenue was 22.3M
favorable to plan by 9.8 Million. The highest
quarterly revenue result in the Firm’s history.
• Q3 Institutional Equities revenue was 10.1M
favorable to plan by .8M.
• Trade volumes for the quarter were up 7% from
the previous year to 263M shares.
• Asset Management continues to grow steadily
with a 15% increase from the previous quarter.
Revenue Breakdown by Segment
14
62%
28%
6%4%
Investment Banking
Institutional Equities
Asset Management
Other Revenue
22,347
10,144
2,048 1,514
36,053
7,693 8,742
2,809
(372)
18,872
Investment Banking Institutional Equities Asset Management Other Revenue Total Revenue
Q3 2013 Q3 2012 Budget
15. YTD 2013 Revenue
Key Highlights
YTD Revenue Comparison
YTD Revenue Breakdown by Segment
15
61%
29%
6% 4% Investment Banking
Institutional Equities
Asset Management
Other Revenue
58,994
31,113
6,038 4,359
100,504
26,975 29,344
8,565
1,173
66,057
Investment Banking Institutional Equities Asset Management Other Revenue Total Revenue
YTD 2013 YTD 2012 Budget
• YTD Operating Revenue was $100.5M, up 52%
(+$34.4M) vs. 2012, and up 34% (+25.2M) when
compared to plan.
• YTD Institutional Equities revenue ($31.1M)
increased 6% (+$1.8M) vs. 2012, and up $5.3%
(+$1.6M) when compared to plan.
• YTD Asset Management revenue ($6M) declined
30% (-$2.5M) from 2012, and down 15% (-$1.1M)
vs. plan.
16. Q3 2013 Expenses
Q3 2013 Key Metrics
Expenses Comparison
16
Key Highlights
23,073
7,666
30,739
10,672
5,470
16,142
Comp Expenses NPE Expenses Total Expenses
Q3 2013 Q3 2012 Budget
43%
32%
25% Variable Comp.
Fixed Comp.
NPE
• Compensation vs. Revenue Ratio was 64%, flat
compared to prior year.
• NPE Expenses was $7.7M up 40% (+$2.2M) when
compared to prior year, up 12% ($792k) from Q2
2013, and up 19% (+1.2M) compared to plan.
• NPE vs. Revenue Ratio was 21.3%, down when
compared to the last 8-quarter average of
25.9%, and down vs. plan levels of 26.1%.
17. YTD 2013 Expenses
YTD Key Metrics
Expenses Current Year to Prior Year
64%
Variable Compensation Ratio
to Revenue
17
39%
35%
26% Variable Comp.
Fixed Comp.
NPE
64,322
22,414
86,736
40,871
19,224
60,095
Comp Expenses NPE Expenses Total Expenses
YTD 2013 YTD 2012 Budget
18. Q3 2013 Pre-tax Income
Pre-tax Income Current Year to Prior Year
Pre-tax Income Actual to Budget
18
36,053
30,739
5,314
24,644
22,201
2,443
Q3 Revenue Q3 Expenses Q3 Pre-Tax Income
Actual Budget
5,314
2,730
Pre-Tax
Income
Q3 2012 Q3 2013
Key Highlights
• Operating Pre-tax Income was $5.3M, which
was the 2nd highest ever (next to $7.6M in Q2
2007).
• Pre-Tax Margin was +14.7%, higher than a
year ago levels of +14.5%, and up vs Q2 2013
levels of 13.1%, and up compared to plan
levels of +9.9%.
• Operating Leverage was a +0.6%, vs. plan of
-6.9%, a full year 2012 of +11.8%.
19. YTD 2013 Pre-tax Income
Pre-tax Income Current Year to Prior Year
Pre-tax Income Actual to Budget
19
13,768
5,962
Pre Tax
Income
YTD 2012 YTD 2013
100,504
86,736
13,768
75,296
68,530
6,766
Q3 Revenue Q3 Expenses Q3 Pre-Tax Income
Actual Budget
• Operating Pre-tax Income was $13.8M, up
131% (+$7.8M) vs. 2012, and up 103% (+$7M)
when compared to plan. This already have
exceeded full year target levels of $10M.
• Pre-Tax Margin was +13.7%, up from last
year’s levels of +9%, and up vs. plan of +9%.
• Operating Leverage was a +7.8%, up vs. plan
of 0%.
Key Highlights
21. Deal Activity
Q3 2013 Banking Transactions
Future Transactions
• October revenue includes $7.7M from the Restat M&A, the largest banking transaction fee
received in the history of the firm.
• Three biopharma public equity transactions expected to price in October ($2.7M of fees).
• $75M IPO for Veracyte, Jt. BR, expected to launch in October.
• Two private placement offerings expected to close by early November, ($1.7M).
21
Client Deal Type II Deal Type III Capital Raised Total Revenue
Insmed Follow-On Sole Bookerunner - $ 2,310,438
Medicines Co. Follow-On Jt Bookrunner $ 46,000,000 2,097,236
OncoMed IPO Jt Bookrunner - 2,078,975
Ophthotech IPO Co-Manager 90,000,000 1,680,897
Acceleron IPO Jt Bookrunner 103,500,000 1,640,260
Onconova Therapeutics IPO Jt Bookrunner - 1,578,994
Foundation Medicine IPO Co-Manager 40,000,000 1,225,953
Sophiris IPO Jt Bookrunner 197,000,000 1,010,751
Verastem Follow-On Jt Bookrunner - 1,006,655
Agios IPO Co-Manager - 894,178
Kalobios Follow-On Sole Bookerunner - 800,832
Cellular Dynamics IPO Co-Manager 275,000,000 558,421
22. Client Metrics
Top 10 Accounts
YTD Top 10 Largest Producers YTD Net Eligible YTD Net Budget $ Diff % Diff
Fidelity Management & Research, LLC $ 1,099,963 $ 678,973 $ 420,990 62%
Hennion & Walsh 854,192 941,006 -86,814 -9%
Visium Asset Management 791,450 749,282 42,168 6%
Balyasny Asset Management 747,819 405,426 342,393 84%
Pyramis Global Advisors, LLC 704,547 695,419 9,128 1%
Mason Capital 575,309 403,897 171,412 42%
Sabby Capital 549,898 485,279 64,619 13%
Partner Funds 514,789 265,104 249,685 94%
Orbimed Advisors 452,168 250,185 201,983 81%
Ridgeback Capital Management 449,379 295,881 153,498 52%
Accounts as % of Revenue Key Financial Highlights
• YTD Net Eligible: $123,456,789
• Average Loss Ratio: 23%
• Top 5 Capital Users
• Fidelity Management & Research, LLC
• Visium Asset Management
• Partner Funds
• Mason Capital
• Capital World Investors
22
32%
20%
26%
22% Top 10 Accounts
Accounts #11 to #25
Accounts #26 to #50
Accounts #51 to #100
23. Client Metrics
Bottom 10 Accounts
23
YTD Top 10 Laggard vs Budget YTD Net Eligible YTD Net Budget $ Diff % Diff
Tradewinds Global Investors $ 32,551 $ 352,846 -320,295 -91%
Columbia Mgmt 197,237 352,436 -155,199 -44%
Capital Research Global 397,218 544,611 -147,393 -27%
Ayer Capital 93,039 222,075 -129,036 -58%
Tang Capital 0 127,876 -127,876 -100%
PointState Capital 21,054 147,725 -126,671 -86%
Marshall Wace 214,516 340,766 -126,250 -37%
Turner Investment Partners 133,358 230,312 -96,954 -42%
JP Morgan 133,015 229,372 -96,357 -42%
UBS O'Connor 141,215 235,825 -94,610 -40%
32,551 197,237 397,218 93,039 0 21,054 214,516 133,358 133,015 141,215
Tradewinds Global
Investors
Columbia Mgmt Capital Research
Global
Ayer Capital Tang Capital PointState Capital Marshall Wace Turner Investment
Partners
JP Morgan UBS O'Connor
YTD Net Eligible YTD Net Budget
24. Headcount Statistics
2013 2012
Q3 A Q3 P Delta Q3 A
Headcount - End 187 196 -4.6% 180
Headcount - Avg 183 194 -5.8% 182
Rev / HC $197.0 $126.8 55.3% $103.5
Q3 2013 Headcount Roll Forward
43
128
25%
75%
Managing Directors All Others
98
73
57%
43%
Revenue Generator
Non-Revenue Generator
19
152
11%
89%
Administrative Professionals
Managing Director
Summary
Revenue Generator
Summary
Administrative Staff
Summary
24
25. Previous Year
$789
Plan
$456
$845
Comp. Cost
per FTE
Employee Metrics
Q3 2013 Highlights
Key Metric Comparisons
96.3%
Employee Satisfaction
4.2%
Turnover
Rate
Previous Year
9%
Plan
3%
$1,072
Profit per FTE
Previous Year
$543
Plan
$876
$2,492
Revenue
per FTE
Previous Year
$3,456
Plan
$1,234
Success Against Hiring Initiatives
Department Plan To Date
Sales 10 13
HR 2 1
Admin 3 0
25
