So, EXACTLY WHAT DOES An Investment Banker Actually “Do”?
On by“Investment bank.” If you’re running a business, you’ve likely heard these two words uttered count numberless times. But what does an investment banker actually do? Whether you read the Wall Street Journal, start CNBC, pay attention to political talk shows, or follow the latest Bitcoin news, investment bankers appear to be everywhere.
This increases the question, what does an investment banker actually “do”? It can include capital raising, both debt and equity, into both public and private enterprises. It could include advisory services for transactions also, such as mergers, acquisitions, and divestitures. Inside the M&A category, it can cover both buy-side and sell-side advice. There’s the cousin industry of providing private business valuations also. And you see firms engaging in ESOP formation advice. Did I yet lose you?
What don’t we do? Well, what isn’t an investment banker! That’s a bit easier to explain. The word “bank” is a little of the misnomer, as investment banking institutions don’t become depositories and don’t directly provide or make investments capital in clients. But you do see traditional banks such as JPMorgan Chase, which have direct lending services, investment banking divisions, and even investment arms that blur the lines between these verticals.
So commercial banks can in fact own investment banking institutions; it’s just that they don’t offer the same set of services. We at Hilliard Lyons touch virtually every one of the traditional investment bank services in some capacity. But, like the majority of firms, we have a tendency to spend a lot of our time in a specialty.
For us, that section is M&A advisory work. Now, you may ask, isn’t this a valuation publication? That is indeed true. We’ve in-house, credentialed colleagues like Jackson and Jim that can handle valuations for traditional ESOPs, estate planning, present tax, etc. But there is quite a bit of overlap in valuing a private business and providing M&A advisory services.
Knowing just what a private business is worth is an integral element of any successful M&A practice. Ultimately, a business is worth what someone can pay you for it. That said, there’s quite a little of the underlying art and science that can provide a business owner a good sense of what the market might bear. Fortunately for us, we can use our experience buying and selling companies as a litmus test for our valuation practice. Getting back again to the actual “doing” of Investment Banking, it is hard to depict a “day in the entire life,” because each day can be quite different.
Given the project-oriented nature of our business, it shall rely on in which a project is in its life cycle of a deal. An average M&A assignment usually takes six to nine months to complete, so one could be in the middle of marketing, in purchase agreement negotiations, in the initial due diligence phase, in a confidential memorandum drafting, and the list continues on. When it comes to process and getting the deals done, a good investment banker can serve as the quarterback of the team. There’s always going to be a dependence on quality legal and accounting advice on top of the investment bank, so every one of the united team members need to be aligned and in sync with the latest information.
- 18 units near UT in Austin – $1.750M
- Subscription to any notified securities/notified deposits plan. e.g. NSS
- Market evaluation and forecasts from 2016 till 2030
- Effective rate of return on PPF may be much higher because from it being EEE investment
- Investment to help existing areas ‘capture up’, however, not really provide for future growth
- Medical equipment investment should develop at a moderate pace
- The material facts concerning the conflict could not be completely and fairly disclosed
We at Hilliard Lyons maintain close relationships with a variety of professional companies and identify the critical role that attorneys and accountants play in getting transactions done. Not exactly glamorous: Many people in and outside the business community associate investment banking with big-city glamour, flashy suits, Wolf of Wall Street-esque celebrations, and surplus.
This couldn’t be further from the reality in many respects. Optimizing capital, time, and ownership on Main Street: The truth is that investment banking provides an essential function in the transfer of business possessions to another generation or possession group for the business to hopefully thrive and grow. Raising capital provides options for businesses to get into new product lines, new hires, and new opportunities. Business valuations provide owners with understanding into the true value of their fairly illiquid asset.