Investment Bank - Definition

- An institution that performs a variety of financial services for corporations, individuals, and the government - It is a financial intermediary - Acts as an underwriter or agent for corporations and municipalities issuing securities - Help investors purchase se curities, manage financial assets, trade securities and provide financial advice

Investment Bank - Functions
- Primary function - Raise capital for growing companies and the government by issuing equity and debt securities - Underwriting (i.e. for IPOs of companies) - Acting as an intermediary between an issuer of securities and the investing public - Facilitating Mergers & Acquisitions and other corporate reorganizations - Acting as a broker for institutional clients - Advisory services to investors - Private equity placements and corporate restructuring - Conduct Research where companies are analyzed and buy-sell recommendations about those companies' financial instruments are made

Investment Bank - Operations
An investment bank is split into the so-called front office, middle office, and back office. While large full-service investment banks offer all of the lines of businesses, both sell side and buy side, smaller sell side investment firms such as boutique investment banks and small broker-dealers will focus on investment banking and sales/trading/research, respectively. Investment Banks offer services to both corporations and Individuals . For corporations, investment bankers offer information on when and how to place their securities in the market. To the investor, the responsible investment banker offers protection against unsafe securities. Sell side is a general term that indicates a firm that sells investment services to asset management firms, typically referred to as the buy side, or corporate entities. These services encompass a broad range of activities, including broking/dealing, investment banking, advisory functions, and investment research. Buy side is a term to refer to advising institutions concerned with buying, rather than selling, assets or securities. Private equity funds, mutual funds, unit trusts, hedge funds, pension funds, and proprietary trading desks a re the most common types of buy side entities. The top investment banks: Goldm an Sachs, JP Morgan and Morgan St anley

Investment Bank Underwriting Process – IPO: Pictorial Representation

Details of the process are explained in the first edition of Summers Special

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