As suggested by the name, investment banking involves the management of investments by bank representatives on behalf of clients. These services can be accessed at certain banks, like Chardan, by individuals, corporations and certain government organizations with high net worth. These entities work with the bank to implement and manage large projects. This save both money and time by identifying associated risks with the project prior to moving forward.
To explain in the simplest form, investment banking is a term used in reference to a highly specialized sector within banking operations that assists in raising capital and providing financial consultancy services relating to large, complex financial transactions.
Typically, the services include a thorough analysis, investigation and informed recommendations regarding how much a company or person is worth. Based on the results, investment banking experts will establish whether it merits consideration for a transaction. Furthermore, investment bankers will work to structure an impeccably profitable deal if a merger, acquisition or sale is being considered by the client.
The majority of investment banks maintain asset management and prime brokerage departments in addition to investment research businesses. As an industry, investment banking is divided into specialized businesses (the boutique market), mid-level businesses (middle market) and the upper tier (bulge bracket).
Different Categories of Investment Banking
Within a division of investment banking, there are usually two types of operational categories which are product and industry. Included among the most popular product groups are:
• Mergers and Acquisitions
• Equity Research
• Financial Restructuring and Leveraged Finance (Corporate Finance)
• Asset Management
• Sales and Trading
Benefits of Engaging in Investment Banking
• By the virtue of its very name, an investment bank will help its clients to invest their money effectively into other companies, so that more value is created for the organizations.
• Investors are assisted by the investment banker with the task of raising the necessary financial capital. This is done by underwriting or serving as an agent in the issuing of securities to accomplish the merger, acquisition or sale.
• A thorough investigation is carried out to make sure every compliance is satisfied for the deal its client will potentially establish. This minimizes any risk of loss of invested capital or overall failure.
Challenges of Being Involved Investment Banking
Changes in financial markets constantly have investment banking deeply impacted and in flux. This can be very difficult for individuals who work within the industry because it requires being quick on their feet and making adjustments as needed. Along with fluctuations that happen in the markets, there are other challenges in investment banking. These include the capacity to effectively manage client assets and to make sure that over time, the value of those assets increases.
As a result of many industry demands, investment banking typically calls for long hours. This is particularly true for individuals who are working as financial analysts. Nevertheless, by knowing what to look forward to and mastering how to deal with challenges, it can be very exciting working in this field.
