How to Use Investment Banking

Investment banks are financial institutions which specifically deal in business related activities such as trading and promotion of securities. They differ from commercial banks in the sense that they do not entertain or accept deposits but assist individuals, large corporations and the government on managing their investment portfolios. Their presence took a hit following the 2008 financial meltdown; however, it brought them into greater limelight with people now eager to understand the basis of this financial institution and how it can cater to their needs.

Instructions

  • 1

    Before looking out for help, it is important to understand the services provided by investment bankers. To put it simply, there is a buying side and a selling side to investment banking. Whenever, a company decides to go public, it usually takes the help of an investment bank, which assists the business in raising the intended amount through the Initial Public Offering. The investment bank could either buy shares of the company or sell it to the general public or simply facilitate the transaction by creating awareness. In turn they will charge a lump sum commission. In other scenarios, it will invite people to pool their money in mutual funds and pension funds etc and take a certain percentage from the return.

  • 2

    Deciding on whether to hire the services of an investment bank will typically depend on your own portfolio. If you are a small business, then you might not qualify to use the facilities of an investment bank. However, if you are a large company, aiming to go public, or wanting to diversify your business portfolio by investing in various stocks and bonds, then investment banks may just offer you the best of deals by safeguarding your interests. Moreover, if you want to analyze corporate risk factors, investment banks will have their own research teams for this very purpose.

  • 3

    You may need to contact multiple investment banks and asses your own requirements before choosing one which best fits your needs.  You need to be clear about their level of assistance, fee structures, overall services and assess their results by evaluating the health of the companies they have done business with in the past. Make sure that you provide all necessary information about your business in order to get the best feedback.

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