Glossary - Investment Bank
An investment bank is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities. Investment banks also assist in the sale of securities, facilitate mergers and acquisitions, restructurings, and broker trades for both institutions and private investors. They may also offer guidance to issuers regarding the issue and placement of stock.
Also known as
- Corporate finance advisory
Use cases examples
- IPO Prospectus: The investment bank acted as the lead underwriter in the Initial Public Offering (IPO) of XYZ Corporation, coordinating the due diligence, regulatory filings, and pricing of the shares.
- Mergers and Acquisitions (M&A) Agreement: In the acquisition of ABC Ltd by DEF Inc, the investment bank served as a financial advisor, conducting valuation analysis and negotiating the purchase terms on behalf of DEF Inc.
Considerations for investors
- Evaluate the reputation and past performance of the investment bank, especially in managing and underwriting securities offerings.
- Consider the investment bank's role and its impact on market perception of the transaction, as well as potential long-term relationships.
Considerations for founders
- When engaging with an investment bank, consider the firm’s expertise in your industry and its track record in similar transactions.
- Understand the costs involved, including advisory fees and any potential conflicts of interest, as investment banks typically offer multiple services.
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