Investment Banking Areas Explained: Advisory Services
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The next type of investment banking services we will examine are advisory services, comprising assistance in transactions, like mergers and acquisitions (known as M&A) and debt restructurings.
As we already said, M&A stands for Mergers and Acquisitions.
In every M&A process, there are at least two parties. One of the companies is called the Buyer or the Buying company, and the other one is called the Target, which is the firm acquired.
The Buyer company can offer a compensation to the Target company’s shareholders in several ways. They can offer a cash compensation, a stock package of the new entity, or a combination of both. The technical name of the amount paid is called “consideration.”
There are several reasons M&A deals play an important role in a company’s life. Top managers understand that, sometimes, it is cheaper to acquire something that has been already created, rather than trying to generate it internally. In addition, businesses are so complimentary that their combination can unlock a great deal of savings, efficiencies, and opportunities. We will focus on these aspects in the chapter dedicated to the mechanics of M&A services.
Why do companies need help when acquiring other companies?
Investment bankers are ideally positioned to provide valuable M&A insights to their clients, as they know their business and the industry in which they operate. Sometimes, an investment bank advises several firms from an industry and can gain perspective through multiple points of view.
Besides M&A, many investment banks engage in restructuring services. These services are necessary when a firm cannot service its debt and is in danger of going bankrupt. I’m sure you can imagine how tough it is to work on these transactions and assist companies in deep trouble.
What leads to the distress of a company? Why would a company borrow money it can’t repay?
Well, the simple answer is that things change, and sometimes, unforeseen circumstances can materialize.
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Пікірлер: 24
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Fab videos thank you :) We are still waiting and wishing for the next two parts
very nicely explained. waiting for some more interesting videos on IB. thank you!
As college student going into the IB field, your videos have been extremely insightful. Thank you.
@schtabiel9068
3 жыл бұрын
are u an Investment Banker now?
@kw6143
3 жыл бұрын
Schtabiel www.linkedin.com/in/jason-nieh/ he’s a financial analyst at a law firm
well explain its simple and concise
A thoroughly informative presentation. I was wondering if you could say more about how the investment banks price their advise?
Thank you...for the information .its valuable..when are you uploading for Trading & Advisory and Asset Management.
Keep it up 👍 Where can I find the video about “ the mechanics of M&A services “, what you mentioned in this vid?
Very insightful video
Please make video on career in valuations
I give yo five stars
Eagerly waiting for video on valuation technique
How about the creditor side investment banking? Is that also a common service provided by investment banks?
@365FinancialAnalyst
7 жыл бұрын
Thank you for the question. Leveraged Finance or LevFin is an area with the investment banking department. The LevFin team would usually provide a corporation or a private equity fund with credit that is used in leveraged buyouts (LBOs). These loans are usually much larger than normal ones, e.g. in a typical LevFin deal, the investment bank would finance as much as 90% of the project. Another instance at which IBs engage in crediting are bridge loans. Bridge loans are short-term credit that is provided in times when long-term credit is not attainable, but will be in the future. Think about an M&A deal in which company A is acquiring company B. Company A needs 10mil in cash, in order to complete this cash/equity deal. Bank X promised to provide A with a long-term loan only if A manages to acquire B. So things would happen this way: 1. The investment bank working for A would give A a bridge loan of 10 mil. with a term of say 3 months. 2. A acquires B with the 10 mil from the loan and its own equity 3. Bank X provides A with the a 5 year, 10 mil loan. 4. Investment bank gets the money back and deal is completed This topic and much more are covered in 'The Complete Investment Banking Course 2017' that we offer on Udemy. www.udemy.com/the-complete-investment-banking-course-2016/ Cheers!
Where can I find links for next 2 videos ? can anyone help me out ?
@365FinancialAnalyst
5 жыл бұрын
Piyush Gaur hi! They are in our investment banking course on Udemy
@mohammadaliffsyahirbinsaha674
5 жыл бұрын
@@365FinancialAnalyst hi. I'm sorry can you give us the link for the other 2 videos please? Thank you.
Very insightful video