What You Need to Know About Investment Banking

Investment banking assists large organizations, entities, and the government in raising capital by facilitating mergers, acquisitions, financial assistance and other significant operations. In addition, this practice offers research functions including creating presentations on specific market upshots or upshots and operating financial models.

Industry participants are divided into Bulge Bracket investment banks, Middle Market investment banks and Boutique investment banks; each group serving specific functions and clients.

Underwriting

Underwriting services offered by investment banks assist clients in raising capital by selling securities such as stocks or debt to investors, helping companies, governments and other organizations finance large projects using proceeds from these securities sales. Investment banks earn fees from underwriting these transactions.

This work includes performing due diligence on proposed securities issuances and creating documents to comply with U.S. Securities and Exchange Commission regulations, while creating marketing material and deliverables used when pitching a security issuance to prospective institutional investors.

Investment bank teams typically assign this work to dedicated teams rather than the core banking division for this reason, to avoid conflicts of interest involving equity research: researchers could potentially trade published analysis for business from investment bank clients; historically this practice led to significant conflicts of interest, such as those reported during the Enron scandal.

Mergers and Acquisitions

Investment banks provide businesses with assistance for purchasing or selling other businesses – this activity falls under the umbrella of mergers and acquisitions, or M&A.

Investment bankers engage in mergers and acquisitions (M&A) as an integral component of their work, searching for firms suitable and attractive enough to acquire or merge with existing businesses. M&A involves finding suitable targets before conducting due diligence — an in-depth risk-based investigation of their target firm that requires an intermediary to ensure nothing important is missed during this process. Investment bankers with extensive M&A experience are more capable than average business owners in ensuring everything important is not forgotten during due diligence processes.

Investment banks provide equity financing by finding investors to purchase shares of a company. This allows investors to acquire stakes in its growth while giving the business greater capital to grow faster. Furthermore, investment banks assist businesses with listing on public markets via initial public offerings (IPO). However, this process involves multiple specialists and requires time and patience from all involved.

Asset Management

Even though investment banking usually gets all the glory, asset management still plays an essential role. While investment banking operates on the “sell side,” asset management acts on the opposite side.

As such, many people choose asset management as a career to make an impactful difference in the world rather than to earn large bonuses – however sales skills will still be required of them.

Financial professionals working in asset management may manage investments for companies, government entities or individuals ranging from traditional investments such as stocks and bonds to alternative assets like real estate and private equity. Furthermore, those in this profession may also trade securities and make buy/sell/hold recommendations to clients; to break into this field requires at minimum a bachelor’s degree as well as certifications or designations from financial bodies such as certification bodies – although each bank may impose its own requirements as well.

Trading

Investment banking trading involves buying and selling securities to clients, typically pension funds, specialized investment companies or entities representing wealthy individuals who require raising cash by selling shares, investing surplus cash or changing the risk profile of existing investments.

Market making refers to a form of work known as market making that you see when watching stock prices scroll across CNBC or Bloomberg screens. Salespeople and traders whose job it is to connect buyers and sellers while taking a percentage as commission for acting as intermediaries between them.

Most major investment banks feature trading and sales divisions and are seeking talented people to expand their businesses. Many offer internships, placements and graduate trainee opportunities – for more information and application submit your resume today! For best results check their websites early!