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The winning Kellogg team (from left): Diego Ibanez, Igor Lima, Moises Herszenhorn, Davi Mota and Max Perez. Ibanez, Mota, and Lima are ’09; Herszenhorn and Perez are ’08.

Kellogg team wins first place in National IPO Challenge

Finance contest draws leading business schools; Kellogg students excel, capture $10,000 prize

By Adrienne Murrill

11/8/2007 - A team of five Kellogg students recently enjoyed a crash course outside of the classroom in dealing with initial public offerings, and the experience paid off handsomely.

Held Nov. 3 at the University of Chicago Graduate School of Business (GSB), the National IPO Challenge pitted teams from the nation’s top business schools against each other. Kellogg teammates Diego Ibañez, Igor Lima, Davi Mota (all ’09), Moises Herszenhorn and Max Perez, (both ’08) won the final round. Their reward: a trophy, $10,000 and a priceless experiential learning opportunity.

The competition is designed to simulate the analysis, preparation and delivery that investment bankers engage in when competing to win a mandate for an IPO transaction. Students were judged based on their understanding of the company and its industry, accuracy of the valuation analysis and the persuasiveness of their presentation.

Perez said one characteristic that distinguished the Kellogg team was how it performed in the contest’s valuation portion. “There were two things we did that speak to the strength of the Kellogg School’s finance program,” he said. These included the decision to value the company using a non-traditional framework, because the company was highly leveraged, and giving proper treatment to the off-balance-sheet vehicles that the company was using. “That was the tricky and technical part that no other team nailed,” Perez added. The Kellogg team’s success in this area, in turn, established a valuation that was closest to what the judges sought.

The team consulted with Clinical Professor of Finance David Stowell to prepare for the competition as much as possible. “The students worked 24 hours non-stop, which is a real-world kind of experience, and sharpened their thought process,” Stowell said. “The end product was an outstanding focus on IPOs with a comprehensive analysis of alternatives.”

Perez and Herszenhorn, students in the Kellogg One-Year MBA Program, said the opportunity to engage with Stowell and learn more about investment banking during the summer quarter prepared them for the IPO competition. For example, Stowell guided them on what was required in a complete sales pitch, which contributed to the team’s superlative performance.

The challenge included a qualifying round of 66 teams from which 15 were selected to compete in the national round. Those teams then delivered their presentations before judges composed of investment banking professionals and professors from GSB. A final round was held for the top six teams. Three of the teams in the national round were from the Kellogg School and two of these advanced to the final six. Teams from the Harvard School of Business and GSB tied for second place.

“This victory serves as proof that the Kellogg School’s finance faculty is strong, preparing students for careers in the industry,” said Ibañez.