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What is Investment Banking?

See also:
What Your Banker Wants You To Know
Alternative Forms of Banking
Debt Compliance 101: Keep Your Banker Happy
Manage Your Banking Relationship

What is Investment Banking?

What is investment banking? In this article, you will learn the investment banking definition, about investment bank analysts, about investment bankers as executors, and examples of investment banking firms.

Investment Banking Definition

The Investment Banking definition is an elite financial service to advise companies, individuals, and governments on financial and investment decisions. They also help them raise equity and debt capital. Investment banks help companies develop their investment portfolios and expand access capital markets. Capital markets include the stock and bond markets. Investment bankers are known to be the well-trained and effective contributors in the financial market. Because large firms raise significant capital through selling securities, they usually use the services of an in-house security issuance division or an investment banking institution. These banks often offer cost savings compared to maintaining an in house security issuance division.

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Investment Bank Analysts

Investment banking analysts serve as consultants for companies during mergers, acquisitions, and reorganizations of companies. Consultative services within an investment bank provide guidance and advice about the issue and placement of securities as well as the management of public assets. Furthermore, these analysts evaluate financial markets to guide companies on when to make public offerings.

Investment Bankers as Executors

Investment bankers are able to execute purchases and transactions for their clients. They act as their clients’ agents when purchasing, selling, or trading securities. If a company is in need of buyers for their stocks or bonds, then an investment bank finds those buyers and handles the transaction with appropriate attorneys and accountants.

Raising Capital

Investment bankers raise debt and equity capital for their clients. Raising debt capital includes issuing bonds to generate funds. Raising equity capital includes launching a company’s initial public offering (IPO).

The Buy Side

Investment bankers working on the “buy side” usually handle buying investment services, including the following:

The Sell Side

Investment bankers working on the “sell side” usually handle the trading. In addition, they sell investment services, such as facilitating security transactions, engaging in market making, and selling IPOs.

Examples of Investment Banking Firms

Some examples of investment banking firms include the following:

  1. Goldman Sachs
  2. Morgan Stanley
  3. JP Morgan Chase

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What is investment banking, Investment Banking Definition
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What is investment banking, Investment Banking Definition

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Investment Banks

Investment Banks

Investment banks are banks that offer expert financial services. The services include the following:

They also serve as financial intermediaries between companies issuing securities and the investing public that purchases the securities; however, they do not accept deposits or offer loans like commercial banks.

League Tables

League tables rank investment banks according to performance in various categories. For example, the mergers and acquisitions league table would list the top M&A dealmakers according to the deal volume and market share.

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Investment banks

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Investment banks

See Also:
Capital Structure Management
Agency Costs
Mining the Balance Sheet for Working Capital
Inventory to Working Capital
Venture Capitalists Definition
Commercial Bank

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