Investment banking refers to the use of a specific financial institution to raise capital for another company or government. In this case, an investment bank is the entity responsible. Say, for example, if a company needs funds for a new project; thus, issues securities such as bonds or stocks, an investment bank has to be hired. The role of an investment bank in this scenario is to evaluate the worth of an enterprise so as to price the securities appropriately. Leaving the pricing to an investment bank increases the chances of maximizing revenues; not to mention that some regulations can be challenging to navigate for a regular company. An investment bank must also analyze the risks involved when a particular company issues its securities for sale.
An investment bank handles the underwriting of securities as well. Put simply; an investment bank is an intermediary between a company issuing securities and the public looking to invest. Typically, when an entity issues securities for sale, an investment bank buys them directly at a negotiated price and then puts them on the market. This part of investment banking makes it less complicated for companies to raise capital, and the investment bank can make a profit by the clever pricing of shares. However, there is a risk that comes with investment banking – an institution may overvalue the shares of a particular company, meaning that it suffers losses.
Mergers and Acquisitions
Investment banking also has a major role to play when it comes to mergers and acquisitions. Buying and selling companies involve intricate processes, which is why companies get professionals in the investment banking industry. During mergers and acquisitions, an investment bank takes on an advisory role. An investment bank analyzes variable such as operations, financial history, areas of interest, and future projections when acquiring a company to keep the risk levels minimal.
Madison Street Capital
Madison Street Capital is one firm that provides investment banking services to corporations across the globe. Some of these services include; financial opinions, merger and acquisition expertise, valuation of private and public companies, and financial advisory. MSC provides professionals with expertise in various markets. The investment banking firm prides itself as an expert in building working collaborations with middle-market businesses. Some of the sectors that MSC specializes in include IT, wholesale and retail trade, manufacturing consumer goods and services, real estate, business services, construction and financial services, to mention just a few. Read more: http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=116516616
When it comes to raising equity, Madison Street Capital has financial sponsors that span a “world-class network”. These sponsors have the power to provide lending for middle market companies both in the US and worldwide. The investment banking firm also forges strong relationships with government agencies that have interests in supporting middle market projects. MSC uses risk mitigation strategies when negotiating capital for entities.