Corporate Analyst & Consultant Pvt. Ltd. (CAC) is a leading management consulting company with well-trained professionals. Our team is well-equipped to offer exceptional results with their deep functional and industry knowledge. Investment banking is primarily responsible for raising capital, obtaining funds, or other financial resources so that different entities can create long or short-term investments. It is also responsible for negotiating with large firms for client profitability and investing shareholders in trading in the capital markets of the countries. This banking completely differs from commercial banking as it focuses on small savers. It negotiates with them for better business conditions and profitability for investors and shareholders. Now we will discuss the crucial role of investment banks in corporate finance.
What is the role of investment banking in corporate finance?
Advice on mergers and acquisitions
From tracking the marketing for finding a company to being punctual for the moment of negotiation and purchase, it offers holistic advice. When a firm purchase merges, it needs to carry out risk studies, propose formulas to finance the purchase, and close all legal issues.
Underwriting
The investment bank is a platform where corporations can raise capital by underwriting new securities offerings, which means that they buy securities for the issuing firms and then sell them to investors.
Management of assets
There are some investment banks that also provide asset management services. Their main role is to manage the investment portfolios of the clients.
Issuance and creation of structured products
The issuance and creation of structured products fall within the advisory part and are less complex than they seem. These services are used when a firm wants to provide financial products to structural investors or to the general public that go beyond debt issues for use. Business banks take charge of creating debt issuances and even move further with the creation of structured products.
Private Wealth Management (PWM)
Investment banks offer personalized investment and financial management services to high-net-worth people. Some banks have specialized subsidiaries or divisions that provide such services to their clients. Portfolio management, investment planning, estate planning, and tax planning are among the services typically included in private wealth management.
Risk management
Investment bank assists their clients manage risk by offering well-planned solutions and other risk management strategies.
What are the different types of investment banking?
An investment bank offers capital raising, mergers, and acquisition advice to a wide variety of clients. The different types of investment banks are mentioned below.
Middle-Market Bank
Global banks and specialized/small businesses are typically connected by middle-market investment banks. These companies provide a wide range of services, including acquisition and mergers, capital raising, and asset management.
Bulge Bracket Bank
One of the major banks in the investment banking industry is Bulge Bracket Bank. These firms are located all over the world and serve large companies. This bank usually has a separate department for different work to fulfill the wide range of financial requirements of the clients.
Elite Boutique Banks
The elite boutique bank is a step ahead of regional boutique banks in accessibility and size. This institution operates in many countries that do not have big global banks. Elite Boutique mainly focuses on high-value transactions including acquisitions and mergers.
Regional Boutique Bank
Regional boutique bank is one of the smallest types of investment banks. This institution usually focuses on specific industries or geographic areas. It offers specialized services to local organizations and businesses. For example, a firm having less than 30 employees. It can handle smaller transactions.