What is the role of an investment banker

Who is an investment banker?

To put it simply Investment bankers are the ones who help organizations (from governments to corporations) by handling various finance-related issues within the organisation or while dealing with other organizations.

This may include handling stock and bond issues, negotiations involved in acquisitions and mergers or making ownership structure rearrangements within the company itself. Additionally, the investment banker may also occasionally take a look at the structure of finance-related documents within the company like if the funds flow statement format being used is accurate or not.

Given the profession’s high profile and handsome compensation, investment banking is a draw for many interested in building a career in finance. However, the term investment banker is not exactly self-explanatory of the duties and expertise expected of an individual in this profession. 

Don’t worry here we will answer all the questions related to the roles and responsibilities of an investment banker. If you are a business owner you can use this guide to find out whether you need an investment banker for your business and if you are a student you can see for yourself if you want to become an investment banker. So here are the major responsibilities of an investment banker:

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  • Dealing with capital

The primary goal of an investment banker is to raise capital for their client. Investment bankers have the expertise needed to design various types of securities that will attract investors. They know how to do much more than just put together a prospectus. They need to be able to explain the risks involved in an investment and what the potential returns might be. In such cases, trial balance may be useful for the banker in certain scenarios.

Investment bankers also help companies decide whether it would be better for them to borrow money or sell part of their company to raise capital. In addition, they might create a plan for how a company can refinance its existing debt by issuing new securities

  • IPO and equity

The investment banker plays a crucial role in the company’s initial public offering. They help to prepare the prospectus, which is a detailed document explaining the terms of the issue and its risk.

The investment bank also helps to price the equity, which entails estimating how many shares will be sold, how many investors are interested in buying them, and how much they are willing to pay. It’s critical to get this right. The stock can’t be sold for too high a price — that would mean some people would lose money when it starts trading on the market — or for too low a price because then the company would be leaving money on the table that it could have used for its expansion

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  • Mergers and acquisitions

Investment bankers negotiate mergers and acquisitions between two or more businesses. They might also advise corporations on how best to spend their cash reserves or determine which assets should be sold and which ones should be retained.

Investment bankers often specialize in specific industries or types of transactions, such as mergers and acquisitions involving technology companies or those involving public utility companies.

In addition to these three main functions, investment bankers use their expertise to advise companies on how they can improve their performance or structure themselves for maximum benefit. These services are called advisory services.

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