Who are Investment Bankers and What do they do?

Published On February 17, 2020
In Banking Financial Services & Insurance, Blog Archives

Most of us have wondered several times, who are investment bankers and what they actually do?  

Here’s a brief write up that presents an overview of who they really are. 

Firstly, investment bankers are salesmen just like real estate agents who deal with individual investors directly. They assist clients in fundraising, financial advice, mergers and acquisitions, and many more. 

Below are some of the highlights of what an investment banker actually does? 

Mergers and Acquisitions  

When companies plan to buy shares or acquire other companies, investment bankers act as financial advisories. In such circumstances, investment bankers offer insights on how the company should undertake pricing and acquisition. This involves auditing the company’s value according to the market standards and proposing a fair price. Investment bankers also assist companies to gauge asking price and offers when they want to sell themselves. 

Arrange Finance  

When large organizations are looking for market expansion or building a new factory, they look for investment banker’s assistance to fund the process with bond financing or equity financing. This also applies to government plans like large scale municipal projects or funds the building of an airport or highways. 

Stocks and Bond Offerings 

There may be scenarios where a company is going public or offering stock shares through Initial Public Offering or IPO. In these times, the investment banker is the core administrator. Also, in the matter of stocks and bond offerings, the investment banker is inclined to create a prospectus that describes the company and stock offering terms.  As setting up IPO stock prices are sensitive, investment bankers play a crucial role to maintain balance in drafting the best possible price that will furnish maximal funding as well as entice a substantial number of investors, including handling of necessary compliance and regulatory issues.  

Underwrite Deals 

Another piece of work that investment bankers take up is underwriting deals during charting capital market financing for clients. The accountability for the risk inherent in such cases falls totally on investment banker’s shoulders. In these deals, investment bankers procure securities for a price and add a markup value to generate profit that compensates the risk inherent. The underwriter may also become a mediator occasionally just for the purpose of marketing without embracing the underwriting risk. 

Wrapping Up 

Investment bankers are just like the oar of a boat.  They play a critical role in adding revenue, managing investments and allocating resources for companies and government bodies. 

Hope this article has helped you grt a gist of who investment bankers are and what they actually do! 

References:

  1. https://www.investopedia.com/articles/personal-finance/042215/what-do-investment-bankers-really-do.asp 
  2. https://corporatefinanceinstitute.com/resources/careers/jobs/what-do-investment-bankers-do/ 
  3. https://www.quora.com/What-do-investment-bankers-do 
  4. https://www.mergersandinquisitions.com/what-investment-bankers-do/ 
  5. https://www.npr.org/sections/money/2012/10/08/162518147/ask-a-banker-what-do-investment-bankers-actually-do 
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Jency Durairaj
Jency Durairaj
About the Author

JENCY is a content writer with SG Analytics. She loves reading and spreading knowledge about various topics through her writing skills. Her hobbies include trekking and traveling.

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