Investment Banking: Core Concepts

Investment Banking: What They Do (Simplified)

They’re the architects of big financial deals.

1. M&A Advisory (Mergers & Acquisitions)

• What: Helping companies buy, sell, or merge with others.
• Think: Financial matchmakers and deal orchestrators.
• Action: [ ] Valuation, [ ] Due Diligence, [ ] Negotiation.

2. Underwriting (Raising Capital)

• What: Helping companies (or governments) raise money by selling stocks (IPO) or bonds (debt) to investors.
• Think: They essentially guarantee to sell the securities for the client.
• Action: [ ] Advise on pricing, [ ] Market the offering, [ ] Distribute to investors.

3. Sales & Trading

• What: Buying and selling stocks, bonds, currencies, and other assets for big institutional clients (hedge funds, mutual funds) or for the bank’s own account.
• Think: Providing liquidity and market access.

4. Asset Management (Institutional)

• What: Managing investment portfolios for large clients (pension funds, endowments).

Why Use Them?

• Expertise: Deep knowledge of markets, industries, regulations.
• Network: Access to huge pools of investors and potential buyers/sellers.
• Complexity: Handle complex legal and financial structures.

Golden Rule: Investment banks facilitate the flow of capital and the restructuring of corporations at the highest level of finance. They work on big deals with big money involved.