How Investment Banking Institutions Help Companies Raise Capital
The finance industry offers many opportunities to start an exciting and rewarding career. And investment banking is one of the areas which attracts a lot of attention. It’s a high profile section of the industry because of the business areas that it covers, such as mega-bond offerings, arranging stock market listings, and takeovers for companies looking for financing and expansion. Investment banking is also a very lucrative area in finance, paying six figure salaries per year. Investment banking appeals to those seeking high profile careers and positions.
To put it simply, an investment bank is a financial organization or institution that underwrites for those corporations and government sectors that issue securities such as stocks, bonds, and treasury bills. Investment banks also provide advisory services, financial solutions and brokerage services to various clients and companies. Investment banks handle matters such as acquisitions, mergers, corporate restructuring, and private equity placements. These investment banks are very selective about the kinds of clients they work with, and they don’t normally work with small businesses and private individuals. Private individuals and small businesses would have to get help from a commercial or a personal bank.
An investment bank is different from a commercial bank, but it’s also different from a securities firm. While an investment bank focuses on helping clients issue securities to the marketplace, the purpose of a commercial bank is to lend a client money. An investment bank finds new investors to buy the securities for its client, which raises money for the company. To successfully sell new securities, investment bankers must predict accurately the price of the securities and the value of the company.
Wondering how investment banks work with companies in mergers and acquisitions?. Well, investment banks play an enormous role from the moment a company plans on an acquisition to the final process. Usually, when a seller or purchaser contemplates an acquisition, both parties and their management staff will form a special committee or board of directors that will evaluate the proposal, and then work with an investment bank for the purpose of evaluating the transaction’s terms and price. They will also work with the acquiring company and help them secure financing for the acquisition.
James Dondero is President and Co-Founder of Highland Capital Management. He specializes in high-yield income investments and distressed investing. Mr. Dondero has more than 30 years of experience in the credit markets. Mr Dondero is Chairman of Cornerstone Healthcare, Nexbank, and CCS Medical, as well as a board member of American Banknote and MGM Studios. Mr Dondero is active in philanthropic activities, such as veteran’s affairs, public policy and education. His portfolio management experience includes investment grade corporates, mortgage-backed securities, leveraged bank loans, emerging market debt, high-yield bonds, real estate, preferred stocks, derivatives and common stocks.