Investment Banker

Investment Banker. Role of an investment banker.

Investment bankers provide service and advice to companies,

organizations and governments. Investment bankers also assist and
advise companies on mergers and acquisitions, which basically means
that they act as the buyer or seller (whatever position the company is
taking) and negotiate the transaction. In other instances they just provide
a strategy for action against an unwelcome bid. Investment bankers
provide a wide array of services, including underwriting the issuance of
equity or debt to aid a company having financial difficulties. It is the
duty of the investment banker to provide advice on issues such as how to
raise capital through equity or debt instruments.

In addition to the above mention activities, investment bankers also

governments deal with the privatization of public entities. For example,
when the American government decides to privatize a correctional
facility, an investment banker will negotiate with a buyer and advise or
act on behalf of the government throughout the entire transaction.
Privatization has become a very lucrative focus for investment bankers.
Although most popular in the United States and the United Kingdom, it
is a growing phenomenon in many governments.

An investment banker's main goal is to help clients achieve their goals.

Investment bankers will assist their clients with the implementation of
their chosen plan, including but not limited to buyouts. Investment
bankers also must take charge of their own client load. Investment
bankers must identify and secure their own clientele, so they literally
have total control of how much or how little work they have.

Investment bankers need the function using the most up-to-date news
sources, so they must receive real-time market updates. In order to
provide clients with the most accurate and effective strategy, investment
bankers need access to in-depth information and comprehensive research
and financial modeling tools to analyze the market and formulate likely
outcomes.

An effective investment banker will form close relationships with each

client, including devoting numerous hours to client contact, meetings
and even travel. Because investment bankers need to secure new clients,
it is essential that they look for new opportunities for existing clients

ole of The Investment Banker in

Company Finances
By Carmelo J. Montalbano, eHow Contributor
updated: December 1, 2009

Role of The Investment Banker in Company Finances

The investment banker serves multiple roles as an adviser to a company. The banker must understand
the current situation of the company and help it move in the direction it wishes to go. This means assisting
the company to improve its competitive standing while adding and subtracting assets and liabilities in
order to strengthen the position of the company. Bankers do this by finding takeover candidates, leading
sales of stock and bonds or suggesting new investment techniques. The ability of the banker to
understand the thinking of a corporate client is key to his or her success.

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Acheiving Strategic Objectives

1. Investment bankers meet regularly with management to discuss what objectives the company is
strategically focusing on. The banker also needs to provide an outside view of what competitor
companies are doing and what, if any, strategic complications this provides. Bankers must
provide solutions for achieving objectives and have the financial strength to lead bond and stock
offerings on behalf of the company.

Due Diligence
2. If a company has made a bid for another company an outside third partysuch as the investment
banker will need to supply an opinion regarding the careful study and decision making that went
into acquiring the company. This is called a due diligence report. The due diligence report is a
necessary document and requires that the investment banker ask probing questions and
ascertain that the company did everything in its power to uncover problems that might arise later.

Fairness Opinions
3. Another document necessary for the purchase of one company by another is the fairness opinion.
The fairness opinion is written by the investment banker and provides detailed determinations,
often using several investment metrics, to demonstrate that the company did not overpay for the
acquired company. Fairness opinions allow management to show that substantial effort was used
to get the best price possible for investors. An investment banker may be sued by shareholders if
it is later learned that his opinion was incorrect.

Managing Debt Offerings

4. Investment bankers suggest ways to finance or refinance financial obligations. In a period of low
interest rates a banker may demonstrate cost savings by redeeming outstanding debt at higher
interest rates and substituting a new, lower interest cost issue. The banker earns fees for the
underwriting while guiding the company's efforts to choose the proper size and maturity of the
offering as well as handling negotiations with the debt rating agencies.

Managing Stock Offerings

5. Investment bankers are responsible for bringing new companies to the public markets for the first
time (also called an IPO or initial public offering), raising capital for privately held companies, or
improving the capital strength of existing public companies by redeeming debt with additional
stock offerings. Taking a company public is a difficult task as the stock offering may not be
received well if it is overpriced or will rise greatly in value if it is under-priced. It is the job of the
banker to negotiate terms and get all legal, accounting and regulatory documents prepared. In
addition, the investment banker will work with the sales force and other customers to buy the
stock.