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A Review of Ipo Activity

In: Business and Management

Submitted By muhko
Words 621
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Investment banking is the field of banking that helps companies acquire funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions that companies may engage in.
Through investment banking, an institution generates funds in two separate ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Investment banks, by nature, have higher risk tolerance levels than do commercial banks. The principal reason for this is that investment banks are not financial intermediaries in the sense that they take deposits and lend them out. Therefore, default risk is not a concern for these institutions. They focus on assisting corporations in the issuance of securities, principally stocks and bonds. Since investment banks receive fees for their service at the issuance of these securities, the future successes or…...

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