What Does An Investment Banker Do?
Businesses conduct different kinds of transactions regularly. They may join forces with another firm or buy another company in transactions known in the industry as mergers and acquisitions. A private company may opt to offer its stock to the public for the first time in what is known as an initial public offering (IPO). All these transactions would not be possible without the participation of investment bankers.
Investment bankers basically connect companies to investors. Businesses big and small will need funding to continue their operations, grow their line of services or expand in other markets. There are many ways for them to accomplish this. Investment bankers basically perform underwriting services by advising companies on the type of securities to offer, evaluating the worth of the business and reviewing that the paperwork is in order before offering the available securities to interested investors.
Assisting companies during IPOs or in acquisition and merger transactions is a serious task. There are strict regulations that companies must comply with before they can start offering the securities in an IPO. In transactions between companies, voluminous paperwork must be reviewed and the details fleshed out before the deal can be finalized.
In a typical day, investment bankers usually spend most of their time meeting and talking with clients. Depending on the circumstances, they can provide advice on such things as the best way to structure a deal, the legal repercussions of a particular aspect of a contract and the pros and cons of entering a certain transaction. Since companies can and do transact with firms located in other states and even in other countries, investment bankers may have to travel to meet with clients. Sometimes, they may also have to check facilities located in other countries to determine if these are still valuable enough to be acquired. They also have to be very prepared when meeting with clients. Thus, preparing the visual materials containing charts, graphs and other types of data and information is an important part of their job.
Evaluating the impact of a potential transaction is part and parcel of the job of investment bankers. To do this, they will have to perform the necessary research by looking into the offer, the financial status of each firm and then coming up with financial models that project how a company would perform given various circumstances. This responsibility requires the investment banker to have a thorough understanding of the financial markets and financial laws.
When a company enters into an agreement with another firm, investment bankers participate in each stage of the process. They develop agreements, facilitate the transaction between the two parties and iron out concerns about the terms of the contract. From the beginning of the negotiations to the time the deal is finally closed, investment bankers are there every step of the way.
In the course of doing their duties, investment bankers will become privy to very important yet highly confidential information that could potentially benefit them. They must not use this to enrich themselves or to benefit those who are close to them. They are required to respect the confidentiality clauses of these agreements.
Career Spotlight: Investment Banker
As an investment banker, your role is to serve as the bridge that links companies needing money to the investors that can provide it. New, growing and even established businesses need money to be able[...]