What Do Investment Bankers Do?


Quick Answer

Investment bankers serve as agents or underwriters for municipalities and corporations. They help companies facilitate complex financial transactions, such as mergers and acquisitions, initial public offerings, corporate restructuring and private equity placements.

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Full Answer

Unlike traditional banks, investment banks do not provide loans to the public, nor do they accept deposits. They are specialized financial professionals who help business and government entities raise capital by facilitating complex financial transactions. They help companies issue new shares of stock through IPOs or help them procure debt financing by finding investments for their fixed-income securities.

Investment bankers use their expertise to determine the best market and strategy to raise equity or debt for the issuing entity. Investment bankers are responsible for preparing a private placement memo, which includes all the mandatory legal and financial documents, to display the intricacies of the financial transaction. They examine the issuing entity’s financial statements and craft a prospectus to elucidate the offering to investors before issuing securities.

Investment bankers utilize a network of institutional, private and accredited investors to raise capital for the issuing entity. Through their network, investment bankers are able to connect entities to qualified investors for capital or debt financing. In addition to raising capital and facilitating security offerings, investment bankers lend their expertise on specific transactions, such as reorganizations, spin-offs, or mergers and acquisitions.

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