Collection of Data

Data Collection in Investment Banking

Investment bankers rely on a broad range of data sources to analyze companies, value transactions, and advise clients. The Series 79 expects you to know what data to collect, where to find it, and how it feeds into financial models.

Key data categories include:

• Financial data: Revenue, earnings, cash flow, balance sheet items — sourced from SEC filings (10-K, 10-Q, 8-K), annual reports, and commercial databases (Bloomberg, Capital IQ, FactSet)
• Market data: Stock prices, trading volumes, credit spreads, interest rates, sector indices
• Transaction data: Precedent M&A deals, recent offerings, comparable company multiples — used for relative valuation
• Regulatory filings: Proxy statements (Schedule 14A), ownership filings (13D/G, 13F), insider transactions (Section 16)

Comparable Company Analysis ("Comps")

A cornerstone of IB valuation. Bankers identify a peer group of publicly traded companies in the same industry, then compare valuation metrics:

• Relative positioning: Where does the target sit vs. peers on EV/EBITDA, P/E, EV/Revenue?
• Capital structure comparison: Debt-to-equity, leverage ratios, credit ratings
• Growth and profitability: Revenue growth, margins, ROE, ROIC

The output is a "football field" chart showing the implied valuation range from multiple methodologies (comps, precedents, DCF).

SEC Exchange Act Filings — Deep Dive

Investment bankers must navigate the full spectrum of Exchange Act filings. Beyond the core periodic reports, these are critical:

• Form 8-K triggers: Entry/termination of a material definitive agreement, creation of a direct financial obligation, changes in the registrant's certifying accountant, non-reliance on previous financial statements, changes in control, departure of directors/officers, unregistered sales of equity, amendments to articles of incorporation
• Transition reports (Rule 13a-10): Filed when a company changes its fiscal year. Covers the "stub" period between the old and new fiscal year end.
• Section 16 short-swing profits: Any profit from a purchase and sale (or sale and purchase) within 6 months by officers, directors, or 10%+ holders must be disgorged to the company — regardless of intent or access to MNPI.

Building Deal Databases — Precedent Tracking

Bankers systematically track recent transactions to build precedent databases used in valuation and pitches:

• What to track: Deal value, implied multiples (EV/EBITDA, EV/Revenue, P/E), premiums paid (% over undisturbed stock price), deal structure (cash/stock/mix), and timing
• Sources: SEC filings (S-4, proxy statements, 8-K announcements), commercial databases (Dealogic, Bloomberg, Capital IQ), and the firm's own transaction history
• Competitor intelligence: Tracking deals executed by competing banks helps identify market trends and informs pricing in competitive pitch situations
• League tables: Rankings of investment banks by deal volume and value. Used in pitches to demonstrate the firm's market position and track record in specific sectors.

Macroeconomic Data Sources for Investment Bankers

Pitchbooks and financial models rely on macroeconomic data from specific government agencies and private organizations. The exam tests whether you know which agency publishes which release.

Government Agencies — Who Publishes What

Bureau of Economic Analysis (BEA) — Part of the Department of Commerce. Publishes GDP (advance, second, and third estimates), personal income and outlays, and the Personal Consumption Expenditures (PCE) Price Index. The PCE is the Federal Reserve's preferred inflation gauge because it captures a broader spending basket and reflects substitution effects.

Bureau of Labor Statistics (BLS) — Publishes the monthly Employment Situation report (non-farm payrolls and the unemployment rate), the Consumer Price Index (CPI), and the Producer Price Index (PPI). Core CPI excludes food and energy due to their volatility. Analysts use Core CPI to assess underlying inflation trends.

U.S. Census Bureau — Part of the Department of Commerce. Publishes the Advance Monthly Retail Sales report and jointly publishes international trade data with the BEA and housing data (housing starts, building permits) with HUD.

Department of Labor (DOL) — Publishes the weekly Initial Jobless Claims report, a high-frequency labor market indicator tracking first-time unemployment filings.

Department of the Treasury — Publishes the Daily Treasury Par Yield Curve Rates, which analysts use as risk-free rate benchmarks in CAPM and DCF models.

Federal Reserve Board — Publishes industrial production and capacity utilization (G.17 release), consumer credit data (G.19 release), the weekly balance sheet report (H.4.1), and the Beige Book — a qualitative summary of economic conditions across the 12 Federal Reserve Districts, released roughly two weeks before each FOMC meeting.

Private Organizations

The Conference Board — Publishes the Consumer Confidence Index (CCI) and the Leading Economic Indicators (LEI) composite.

University of Michigan — Publishes a widely followed monthly consumer sentiment survey that includes inflation expectations. Released in preliminary and final forms each month.

Institute for Supply Management (ISM) — Publishes the Manufacturing PMI and Services PMI. A reading above 50 indicates expansion; below 50 indicates contraction.

ADP Research Institute — Publishes the ADP National Employment Report, a private-sector payroll estimate released before the official BLS Employment Situation report.

S&P CoreLogic Case-Shiller — Publishes the Case-Shiller Home Price Index, tracking U.S. residential real estate prices using a repeat-sales methodology.

Navigating the Form 10-K — Item by Item

The Form 10-K is organized into four parts. Analysts collecting data must know where specific information lives:

Part I

• Item 1 (Business): Company overview, products, competition, and strategy
• Item 1A (Risk Factors): Material risks that could affect the business — broad but not the source for specific data points
• Item 1B (Unresolved Staff Comments): Disclosure of qualifying SEC staff comments received at least 180 days before fiscal year-end that remain unresolved. Signals potential reporting concerns.
• Item 2 (Properties): Principal facilities — location, character, owned vs. leased. Used for retail footprint analysis and real asset valuation.
• Item 3 (Legal Proceedings): Material pending litigation and regulatory matters. The designated section for litigation exposure, with specific dollar thresholds.

Part II

• Item 7 (MD&A): Management's discussion of liquidity, capital resources, off-balance sheet arrangements, and known trends
• Item 8 (Financial Statements): Audited financials plus the Report of the Independent Registered Public Accounting Firm (where the audit opinion lives)
• Item 9A (Controls and Procedures): Management's report on disclosure controls and internal control over financial reporting. Material weaknesses are disclosed here.

Part III

• Items 10–14 cover directors, executive compensation, security ownership, and related transactions. Companies often incorporate this content by reference from the proxy statement.

Key Exhibits

• Exhibit 10: Material contracts (merger agreements, credit facilities, executive employment agreements)
• Exhibit 14: Code of ethics for the principal executive and senior financial officers
• Exhibit 21: List of significant subsidiaries and their jurisdictions of incorporation
• Exhibits 31 & 32: Sarbanes-Oxley Section 302 and Section 906 officer certifications

Financial Statement Footnotes

The footnotes to the audited financial statements contain instrument-level detail that does not appear on the face of the statements:

• Long-term debt footnote: Maturity dates, coupon rates, and principal amounts by tranche
• Stock-based compensation footnote: Options outstanding, weighted-average exercise prices, and remaining contractual life — essential for dilution modeling
• Segment/geographic footnote: Revenue and operating results by reportable segment or geographic area
• Pension footnote: Projected benefit obligations, plan assets, actuarial assumptions, and expected future benefit payments

Cover page: The 10-K cover page states the number of shares outstanding as of a recent practicable date — the most direct source for share count when calculating market capitalization.

Inside the Proxy Statement (DEF 14A)

The Definitive Proxy Statement is far more than a meeting notice. For analysts collecting data during due diligence, it is the primary consolidated source for several critical categories:

• Compensation Discussion and Analysis (CD&A): Explains how the compensation committee designs executive pay, links incentives to performance metrics (ROIC, EPS, revenue growth), and identifies the peer companies used for benchmarking
• Summary Compensation Table: Tabular disclosure of named executive officer pay, including base salary, bonus, stock awards, option awards, and the All Other Compensation column (where perquisites like personal aircraft use and financial planning services are itemized when thresholds are met)
• Beneficial Ownership Table: Consolidated listing of directors, officers, and 5%+ beneficial owners — the starting point for building a cap table
• Related-Party Transactions: Transactions with directors, officers, and their affiliated entities where the insider has a material interest — critical for conflict analysis in M&A diligence
• Audit Fees: Detailed breakdown of audit and non-audit fees paid to the independent auditor for the past two fiscal years, plus the audit committee's pre-approval policies
• Shareholder Proposals: The text of qualifying shareholder proposals and the board's recommendation on each — used for ESG and governance pressure analysis

Key Sections of Registration Statements

When collecting data from IPO and merger filings, analysts must know where specific information lives:

Form S-1 (IPO Registration Statement)

• Use of Proceeds: How the company plans to deploy the offering proceeds — debt repayment, CapEx, working capital, acquisitions, or general corporate purposes
• Dilution: The difference between the IPO price per share and the pro forma net tangible book value per share after the offering — shows new investors their immediate dilution
• Capitalization Table: Cash, debt, and equity on an actual basis and an as-adjusted basis reflecting the offering and use of proceeds
• Shares Eligible for Future Sale: Lock-up arrangements, Rule 144 resale restrictions, registration rights, and the timeline for insider shares becoming tradeable — used to model post-IPO supply overhang
• Cover page: The lead book-running managers are listed prominently on the front cover, reflecting their role in the underwriting syndicate

Form S-4 (Merger Registration Statement)

• Pro forma financial information: Illustrates the merger's effects as if the transaction had occurred at the beginning of the most recently completed fiscal year (income statement) or the most recent balance sheet date (balance sheet). Illustrative, not predictive.
• Background of the Merger: Narrative timeline of negotiations, board meetings, and the process leading to the deal
• Management projections: Target company's internal standalone financial projections provided to the board and financial advisors during the deal process
• Financial advisor analyses: Summary of the valuation methodologies (comps, precedents, DCF) supporting the fairness opinion

Final Prospectus — Rule 424(b)

The final prospectus, filed under Rule 424(b) after pricing, contains the definitive offering terms: public offering price, underwriting discount, net proceeds, and the final syndicate composition. It supersedes the preliminary prospectus for all finalized data points.

Section 16 Insider Reporting — Forms 3, 4, and 5

Section 16 of the Exchange Act requires officers, directors, and beneficial owners of more than 10% of any class of equity security registered under Section 12 to publicly report their holdings and transactions. The three Section 16 forms are a primary data source for analysts tracking insider sentiment, insider sales overhang, and potential short-swing profit exposure.

Form 3 — Initial Statement of Beneficial Ownership

• Who: Anyone who newly becomes an officer, director, or 10%+ beneficial owner of a Section 12-registered class
• When: Within 10 calendar days of becoming an insider. For a new issuer, Form 3 is due on or before the effective date of the Section 12 registration statement.
• What: All beneficial ownership of the issuer's equity securities, both direct and indirect (including holdings through trusts and family members)

Form 4 — Statement of Changes in Beneficial Ownership

• Who: Existing insiders reporting transactions in the issuer's equity securities
• When: Within 2 business days of the transaction date — a deadline imposed by Section 403 of the Sarbanes-Oxley Act of 2002, which compressed the prior ten-day-after-month-end timeline
• What: Open-market purchases and sales, option grants and exercises, gifts, and similar transactions. Filings are electronic and publicly viewable on EDGAR almost in real time. After the 2023 amendments to Rule 10b5-1, Form 4 must indicate by checkbox whether the reported transaction was executed under a Rule 10b5-1 trading plan.

Form 5 — Annual Statement of Beneficial Ownership

• Who: Insiders with transactions exempt from Form 4 (certain small gifts or acquisitions), or insiders reporting transactions that were previously missed
• When: Within 45 days of the issuer's fiscal year-end
• What: Cleanup filing for exempt or previously unreported transactions. A Form 5 is not required if the insider had no reportable transactions during the year.

Data collection note: Because Form 4 reports transactions only after they occur, analysts tracking forward-looking insider sales intent look to Form 144 filings (resale notices under Rule 144) and the Rule 10b5-1 plan-adoption disclosures now required in Forms 10-Q and 10-K.

Rule 144 — Resales of Restricted and Control Securities

Rule 144 is a safe harbor under the Securities Act that allows public resale of restricted securities (acquired in unregistered transactions, such as Rule 506 private placements, PIPE investments, or direct grants) and control securities (any securities held by an affiliate, regardless of how acquired). Analysts modeling post-IPO supply, lock-up overhang, and insider selling pressure follow Rule 144 mechanics closely.

Affiliate vs. Non-Affiliate

An affiliate is a person who directly or indirectly controls, is controlled by, or is under common control with the issuer — typically officers, directors, and large shareholders. Non-affiliates face a lower compliance burden once the holding period is satisfied.

Conditions for Affiliate Resales

• Holding period: 6 months for restricted securities of a reporting company; 1 year for a non-reporting company. The clock starts on the later of the date the securities were acquired or the date the affiliate paid for them in full.
• Current public information: The issuer must be current in its Exchange Act reporting (reporting companies) or have specified information publicly available (non-reporting companies).
• Volume limit: In any rolling three-month period, the affiliate may sell up to the greater of (a) 1% of the shares outstanding of the class or (b) the average weekly reported trading volume during the four calendar weeks preceding the Form 144 filing.
• Manner of sale (equity only): Unsolicited brokers' transactions, transactions with a market maker, or riskless principal transactions. Privately negotiated block sales and solicited transactions do not qualify.
• Form 144 filing: The affiliate must file Form 144 on EDGAR when the aggregate proposed sales in any three-month period exceed 5,000 shares or $50,000. Form 144 is forward-looking advance notice, not a post-sale report.

Non-Affiliate Relief

A non-affiliate who has held restricted securities of a reporting issuer for at least six months (or one year for a non-reporting issuer) can resell freely once the current public information test is satisfied. After a full one-year holding period for reporting issuers, non-affiliates are no longer subject to any Rule 144 conditions — not even the current public information test. This relief often triggers significant post-IPO supply pressure when pre-IPO lock-ups expire.

Rule 10b5-1 — Preestablished Trading Plans

Rule 10b5-1 establishes an affirmative defense against insider trading liability for trades made under a written plan adopted in good faith, at a time when the insider was not in possession of material nonpublic information. A valid plan specifies either (a) the amount, price, and date of trades, or (b) a formula that determines those terms, and leaves no subsequent discretion to the insider.

The SEC's December 2022 amendments (compliance date February 27, 2023) significantly tightened the safe harbor after a decade of concerns about opportunistic plan adoption and amendment.

Cooling-Off Periods

• Directors and officers: The longer of (a) 90 days after plan adoption or modification, or (b) 2 business days after the public filing of the Form 10-Q or 10-K covering the fiscal quarter in which the plan was adopted. The total cooling-off period cannot exceed 120 days.
• Persons other than the issuer or D&Os: 30 days after plan adoption or modification
• Issuer (for company buyback plans): No mandatory cooling-off period under Rule 10b5-1 itself, but buyback programs face disclosure and manipulation safeguards under Rule 10b-18 and Regulation M.

Certification, Good-Faith, and Overlapping-Plan Limits

• Directors and officers must personally certify at plan adoption or modification that they are not aware of material nonpublic information and are adopting the plan in good faith.
• The insider must act in good faith not only at adoption but throughout the life of the plan — canceling or overriding a plan based on subsequent information undermines the defense.
• No overlapping plans: Only one single-trade plan is permitted per 12-month period, and concurrent plans covering the same account are generally prohibited (narrow exceptions for sell-to-cover tax plans).

New Disclosure Requirements

• Adoption, modification, or termination of a Rule 10b5-1 plan by a director or officer must be disclosed in the issuer's quarterly and annual reports (Forms 10-Q and 10-K), including the plan's material terms other than price.
• Form 4 now includes a checkbox to indicate whether the reported transaction was executed pursuant to a Rule 10b5-1 plan.

Schedule 13D vs Schedule 13G — 2024 Modernization

Any person or group acquiring beneficial ownership of more than 5% of a class of equity securities registered under Section 12 must report the position on either Schedule 13D or Schedule 13G, depending on the filer's intent and eligibility. The SEC's October 2023 amendments (effective February 5, 2024) shortened the filing deadlines significantly and added structured data requirements.

Schedule 13D — "Active" Filers

• Who files: Any person or group acquiring more than 5% with an intent to influence or change control, seek board seats, or otherwise act as an activist.
• Initial filing: Within 5 business days after crossing the 5% threshold (previously 10 calendar days).
• Amendments: Within 2 business days of any material change, including an acquisition or disposition of 1% or more of the class (previously the vague "promptly" standard).

Schedule 13G — Three Categories of "Passive" Filers

• Qualified Institutional Investor (QII) — Rule 13d-1(b): Registered broker-dealers, banks, insurance companies, registered investment advisers, registered investment companies, employee benefit plans, and similar entities that acquired the securities in the ordinary course of business with no control intent. Initial 13G is due within 45 days of the calendar quarter-end in which 5% was crossed (previously 45 days after fiscal year-end). A QII whose holdings exceed 10% at any month-end must file (or amend to Schedule 13D, depending on intent) within 5 business days of that month-end.
• Exempt Investor — Rule 13d-1(d): Holders who owned more than 5% at the date the issuer first became subject to Section 13 reporting and have not acquired additional securities after that point. Initial filing is due 45 days after the calendar quarter-end in which the filer becomes subject to the obligation.
• Passive Investor — Rule 13d-1(c): Any other beneficial owner holding less than 20% of the class without control intent. Initial 13G is due within 5 business days of crossing 5% (previously 10 calendar days). Crossing 20% disqualifies the filer from Schedule 13G and requires conversion to Schedule 13D within 2 business days.

Other 2024 Changes

• All 13D and 13G filings now use structured, machine-readable XBRL data.
• The EDGAR filing cutoff time was extended from 5:30 p.m. to 10:00 p.m. Eastern Time, making same-day filings feasible for afternoon transactions.
• Guidance clarifying that certain cash-settled derivatives (and coordinated group arrangements) can confer beneficial ownership for Section 13 purposes, even without legal title to the underlying shares.

Form 8-K — Item-Number Reference

Form 8-K reports material current events between periodic reports. Most items must be filed within 4 business days of the triggering event (a small number, such as Regulation FD disclosures under Item 7.01, have stricter simultaneity rules). The exam tests recognition of specific item numbers, so it is worth knowing where each category of event is reported.

Section 1 — Registrant's Business and Operations

• Item 1.01 — Entry into a Material Definitive Agreement: New material contracts outside the ordinary course of business — merger agreements, credit facilities, material supply contracts, joint venture agreements, and executive employment agreements
• Item 1.02 — Termination of a Material Definitive Agreement: Non-ordinary-course termination of an agreement previously disclosed under Item 1.01

Section 2 — Financial Information

• Item 2.01 — Completion of Acquisition or Disposition of Assets: Closings of material acquisitions or dispositions. "Material" is measured using the significance tests under Rule 11-01(b) of Regulation S-X (asset, income, or investment test at the 10% level).
• Item 2.02 — Results of Operations and Financial Condition: Earnings releases and similar public disclosures of non-public financial results. Usually furnished (not filed) so it is not incorporated into registration statements by default.
• Item 2.03 — Creation of a Direct Financial Obligation or an Obligation under an Off-Balance-Sheet Arrangement: New material debt issuance, credit facility drawdown, or off-balance sheet obligation
• Item 2.05 — Costs Associated with Exit or Disposal Activities: Restructuring charges, plant closures, and similar programs

Section 3 — Securities and Trading Markets

• Item 3.02 — Unregistered Sales of Equity Securities: PIPE transactions, Regulation D placements, and other unregistered sales that, in the aggregate, exceed 1% of outstanding shares (5% for smaller reporting companies)
• Item 3.03 — Material Modification to Rights of Security Holders: Issuance of new senior securities, amendments to instrument terms, or dividend arrearages

Section 4 — Matters Related to Accountants and Financial Statements

• Item 4.01 — Changes in Registrant's Certifying Accountant: Dismissal, resignation, or engagement of an independent registered public accounting firm, including any disagreements during the prior two fiscal years
• Item 4.02 — Non-Reliance on Previously Issued Financial Statements or a Related Audit Report: Determination by the board, audit committee, or officers that previously issued financials should no longer be relied upon. A leading red flag in due diligence.

Section 5 — Corporate Governance and Management

• Item 5.01 — Changes in Control of Registrant: Completion of a change-in-control transaction
• Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers: CEO, CFO, COO, President, and Principal Accounting Officer departures and appointments, plus material compensatory arrangements. Also covers material director departures. One of the most frequently filed items.
• Item 5.03 — Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year: Charter amendments (new share classes, anti-takeover provisions) and fiscal year changes
• Item 5.07 — Submission of Matters to a Vote of Security Holders: Annual meeting voting results, including director elections, auditor ratification, Say-on-Pay, and Say-on-Frequency tallies. Must be filed within 4 business days of the meeting.

Section 7 — Regulation FD

• Item 7.01 — Regulation FD Disclosure: Public dissemination of material nonpublic information previously shared with a limited audience, in compliance with Reg FD

Section 8 and Section 9 — Catch-All and Exhibits

• Item 8.01 — Other Events: Voluntary catch-all for material events not captured by other items. Companies often use Item 8.01 for litigation updates, ratings changes, and press releases of general interest.
• Item 9.01 — Financial Statements and Exhibits: Used in combination with most other items to attach press releases, definitive agreements, pro forma financials, and acquired-business financial statements as exhibits.