There’s an old Wall Street adage that “capital gravitates to where it’s most effectively managed.” Investment banks aid companies in raising capital by opening up financial markets and helping them work more efficient. This helps businesses grow as well as individuals flourish, and society as a whole improve.
Investment banks provide a broad range of services. Certain, like research divisions, look at the potential of a company and then create reports with recommendations for buying, holding or sell. Others provide M&A or merger and acquisition, guidance to clients during the purchase or sale of businesses. They also offer “broker-dealer services” that allow institutions to swap securities like bonds, stocks and commodities in exchange in exchange for cash or other securities.
Some investment banks specialize in certain types of transactions. Some investment banks specialize in certain types of deals. These include IPOs and follow-on offerings as well as bond issuances by corporates and government. They can also provide advice on spin-offs and leveraged buyouts which involve the sale of business units of a company to its shareholders.
Some investment banks have a huge Sales & Trading (S&T) division that trades public-listed securities such as bonds, stocks, and commodities for their own account as well as for other institutions such as mutual funds, life insurance companies, private equity funds and others. This is an important part of the business since it is a source of revenue when other activity such as M&A or IPOs aren’t as successful. They also offer “market making” services that are essential for the operation of financial markets. They serve as intermediaries between people who want to purchase or sell securities. They ensure there are enough buyers for every transaction.
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