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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4542
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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What is investment banking? How would an investment banker assist an organization in going public? As a chief financial officer, what information would you need to select an investment banker?
Submitted: 5 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 years ago.
Dear Friend,

Investment Banking -- Investment Banking can be defined as an financial intermediary function that delivers variety of services. This includes underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients. The role of a Investment Bank begins from pre-underwriting counseling and continues after the distribution of securities in the form of advice.

As an Investment Banker -- he would have a very important role to play in assisting an organization while going public. As an Investment banker, he would advice the firm regarding its valuations and fixing the issue price. He would also assist in timing the issue. This means he would play critical role in selecting the time when the Issue should be made after careful study of market conditions. He would also oversee the drafting of prospectus, comply with regulations, Statutory filings with the SEC, etc. He will have role to play until the issued shares start trading on the exchange.

As a Chief Financial Officer, one would need to take care of certain important factors while selecting an investment banker.This is one of the most serious decisions. A CFO needs to check the history of completed similar transaction in the industry. An adviser who has done deals in “manufacturing” is not necessarily good enough—they should have experience doing deals specifically in your industry niche.Retaining an adviser who has recently completed transactions in your industry helps ensure that they have fresh industry contacts and more importantly, deeper insight into who is actively making acquisitions.

Also, the size of deal is important. Size is critical. An advisor who has sold two $600M companies to GE Plastics is not right for you if your company is one-tenth the size and is hoping to find a majority private equity partner instead of 100% sale to a strategic. One also needs to see if any of the initiated deals in the past has broken due to any reasons.

(Approximately 337 words)

I hope this helps...
Warm Regards,