The financial crisis on Wall Street has hit home for every American, but eight students from Rochester Institute of Technology gained a unique perspective on its anatomy as their learning experience shifted from classrooms to New York City executive suites.
“At every firm we visited, the discussion tended to gravitate towards deteriorating economic conditions, or members would talk about their friends who were concerned they would be next to get pink slips in a few weeks,” says Michael Percia, an MBA student in RIT’s E. Philip Saunders College of Business. “There wasn’t a sense of panic, but there was a sense of great concern of the overall economic conditions and forecast out over the next several quarters.”
Percia, who received his undergraduate degree in finance from RIT, is president of the university’s Financial Management Association— where 25 members manage a “real money” investment portfolio with a current market value of more than $100,000 and decide to invest or not-invest based on their analysis.
They spent October 23-24 in New York visiting WL Ross & Co., a private equity fund manager; EuroConsult, a private boutique investment bank that specializes in mergers and acquisitions; International Textile Group, a global manufacturer of denim, wool, polyester and industrial fabrics; and Moody’s, a bond rating organization.
“The trip was a unique learning experience for our students,” says Patricia Wollan, assistant professor of finance in the Saunders College and FMA faculty advisor. “The inner workings of private equity funds, merger deals and debt ratings are not visible to the general public and they receive scant coverage in textbooks.
“In each venue, senior executives sat down with us for two hours or more to explain their businesses in great detail. They could not have made us feel more welcome.”
At ITG, the students presented their detailed analysis of Guess? Inc.—one of the firm’s customers in the world of fabric and fashion.
“Since we are in the midst of a credit crisis, the students spent more time than usual talking about Guess? Inc.’s liquidity and creditworthiness,” Wollan explains. “Fortunately for Guess, they are in relatively good financial shape.”
Also accompanying the students was RIT accounting professor Daniel Tessoni and Jare Alloco Allen, director and controller of investment accounting and debt management in RIT’s finance and administration department. Tessoni was responsible for arranging meetings with WL Ross, EuroConsult and ITG, and Allen for the Wall Street trip to Moody’s.
“Each firm was a learning experience, but Moody’s gave us the big picture of our financial crisis because they play a key role in the capital markets where they rate a company’s debt based on bankruptcy risk,” Percia explains. “With recent conditions and volatility of the market, they’ve described their workload as 24/7 because they have been revisiting companies more frequently than they normally would in a bull market when the times are high. Needless to say, they’ve downgraded a number of them.”
Tessoni says the trip, especially visiting Moody’s on Wall Street, was a real eye opener for FMA students, who not only major in finance at RIT but diverse disciplines ranging from biology to applied math.
“Moody’s is global, visibly front and center in all this economic downslide, and the investors service is among the largest financial rating organizations in the world for credit ratings, research and risk analysis,” Tessoni says.
“Business activity has slowed these days; it’s tough to get deals over the line if you will. It’s complicated by the lack of liquidity in the market and the overall increased risk has caused many, many companies to pull in the reins and not be as aggressive.
“What these students learned in their short time in New York is invaluable to what they might be doing as their careers progress. The trip allowed them to meet top-level executives of firms and ask questions on how they got there and the nature of their work—issues that are very difficult to replicate in the classroom—although we try hard.”
Editor’s Note: Available for media interviews are Michael Percia at (315) 725-3676, Patricia Wollan at (585) 475-4419, and Daniel Tessoni at (585) 475-6054.