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Investment Banking
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Investment banking is one of the basic functions provided to corporations by banking institutions. It includes financial analysis, mergers and acquisitions advice, and assisting companies with capital market investments. By working with an investment bank, companies can derive the benefit of expert advice without the expense of employing an in-house investment banking division. Typically, the corporate finance services provided by an investment bank are divided into two categories; industrial coverage groups handle industry-specific financial transactions and requirements, while product coverage groups promote and service specific financial products. Depending on a company’s specific needs, they may work with one or both groups within the bank. Larger corporations may split their business between several investment banks as well.
Typically an entry point into investment banking jobs is as an investment banking analyst which involves financial number crunching and comparison of various investment options. Stock market trends and economic indicators are taken into account by analysts and passed on as recommendations to corporate and private investors. An investment banking advisor is usually assigned to one or more clients and assists them with managing their financial position and ensuring that they are protected against market shifts and downturns.
Investment banking is also concerned with providing advice regarding mergers and acquisitions and assisting in the financing of these major corporate transactions. Mergers are, as their name suggests, the combining of two companies to produce a larger corporate entity, preferably in a way that adds synergistic value to the resulting company. They typically combine two companies of the same relative size and result in the replacement of all existing shares of both companies with an equal value in shares of the resulting new company. Acquisitions, on the other hand, are often conducted on a cash sale basis, and are the outright purchase of a company by another, subsuming the acquired company into its own stock and corporate value. Investment banking services provide financial and sometimes legal counsel regarding the most prudent method of undertaking both mergers and acquisitions, and assist client companies in obtaining financing for these significant corporate events. Investment banks provide valuation services to their clients in order to determine the worth of a business and the consequent price that should be offered in order to acquire it. These services include asset valuation, relative valuation, valuation of historical earnings, and discounted cash flow valuation among others. By obtaining an accurate picture of the target company’s financial situation, the acquiring company can make an offer that is at once likely to be accepted and designed to create a profit.
Investments in stocks and bonds are referred to as capital market investments; it is in this area that investment banks are generally most active. Investment banking specialists assist companies in diversifying their portfolios to provide a balance of earnings potential and security. By ensuring that investments are spread between a number of different risk levels and consequent potential earnings, investment bankers provide their clients with a measure of financial security and flexibility that most companies could not manage independently.
Financial Analysis
Typically an entry point into investment banking jobs is as an investment banking analyst which involves financial number crunching and comparison of various investment options. Stock market trends and economic indicators are taken into account by analysts and passed on as recommendations to corporate and private investors. An investment banking advisor is usually assigned to one or more clients and assists them with managing their financial position and ensuring that they are protected against market shifts and downturns.
Mergers and Acquisitions
Investment banking is also concerned with providing advice regarding mergers and acquisitions and assisting in the financing of these major corporate transactions. Mergers are, as their name suggests, the combining of two companies to produce a larger corporate entity, preferably in a way that adds synergistic value to the resulting company. They typically combine two companies of the same relative size and result in the replacement of all existing shares of both companies with an equal value in shares of the resulting new company. Acquisitions, on the other hand, are often conducted on a cash sale basis, and are the outright purchase of a company by another, subsuming the acquired company into its own stock and corporate value. Investment banking services provide financial and sometimes legal counsel regarding the most prudent method of undertaking both mergers and acquisitions, and assist client companies in obtaining financing for these significant corporate events. Investment banks provide valuation services to their clients in order to determine the worth of a business and the consequent price that should be offered in order to acquire it. These services include asset valuation, relative valuation, valuation of historical earnings, and discounted cash flow valuation among others. By obtaining an accurate picture of the target company’s financial situation, the acquiring company can make an offer that is at once likely to be accepted and designed to create a profit.
Capital Market Investments
Investments in stocks and bonds are referred to as capital market investments; it is in this area that investment banks are generally most active. Investment banking specialists assist companies in diversifying their portfolios to provide a balance of earnings potential and security. By ensuring that investments are spread between a number of different risk levels and consequent potential earnings, investment bankers provide their clients with a measure of financial security and flexibility that most companies could not manage independently.
