Deal Making

• The job goal for an investment banker is to find credit worthy companies that need capital and, at the same time, seek out institutions that have capital to invest. These institutions can be pension funds, insurance companies, university endowment funds, and government funds, as well as hedge and mutual funds.Then comes the deal making. It involves understanding the investment requirements of the institutions and the need requirements of the companies. The investment banker works with the treasurer or chief financial officer (CFO) of the company and the portfolio manager of the institution. Sometimes the deals involve public offerings of stock or bonds, but often the deals are private deals involving one or several investors.
  
  

Public Offerings

• An investment banking house will work with other investment banking houses to manage the sale of stock or bonds to the public through initial public offerings (IPO) or secondary offerings, which are additional issues by a company that is already public. Working with other banking houses to issue securities to the public is called syndication. Initial public offerings require the investment bank to perform extensive due diligence on the potential issuer, and if the issuer is appropriate, extensive preparation including advisory services, legal documentation and pre-selling of the offering through informational presentations to potential investors.
  
  

Advisory

• One of the most important jobs of an investment bank is preparing a company for initial funding. This partly involves considerable education in the SEC rules and regulations that apply to public companies. Other preparation includes strategic planning including legal structuring, reorganization of the company's accounting for compliance with regulatory requirements, and creation of the company's pitch to investors. The investment bank wants to present a clean and credit worthy issue to the public or its private investment clients, and a private company is not always as well-organized as necessary to comply with regulatory and institutional investor standards.
  
  

Considerations

• If you are considering working with an investment banker to find private funding for your company or to take your company public, be prepared to provide the banker with access to all your company financial records and contracts. There will be audits and information requests that may seem excessive, but going through the hard work of an investment banking process is generally beneficial to your company. On the other hand, there are some companies that advertise themselves as investment bankers, but have little professional experience or skills. They generally promise big easy funding deals, charge large amounts of money up front, and fail to perform. Always check out the reputation of a potential investment banker with the SEC and state regulatory authorities, generally your state's office of the Secretary of State.