Roles of Investment Management Firms

Roles of Investment Management Firms Investment Management Firms help companies to manage their finances effectively. They can assist an organization in many ways. Whether a company is looking to issue stocks or want an expansion and needs large capital investment, investment bankers are the professionals to guide them and make it happen. Investment banking includes:     

Support companies to raise funds through equity and debt offerings Create financial models showcasing the benefits of a merger or an acquisition along with the cost involved Use various methods to conduct a business valuation analysis Research to find prospective clients and new business for their customers Manage various end-to-end financial transactions

Investment bankers are responsible for fulfilling multiple vital roles for a company to ensure its continuous growth. Roles of Corporate Strategy Advisory Apart from providing capital raising solutions to corporates, Investment Management Firms have much to offer. 

Mergers and Acquisitions

An investment management firm acts as a financial advisor to identify and simultaneously facilitate strategic mergers or acquisitions. They search for the sale of business or alliance opportunities for their clients all across the borders. Investment bankers advise companies planning to acquire other companies on the best way to go for an acquisition. -

They calculate the value of the target company and a sales price that represents its total value.

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In the case of a company putting itself for sale, investment bankers determine the asking price and evaluate the received offers. Capital Raising

Investment bankers originate and execute equity and equity-linked transaction that includes IPOs, right issues, accelerated bookbuilds, etc. Moreover, they help clients execute local and foreigncurrency debt transactions. The two effective techniques of investment bankers to raise capital for their clients are by issuing debt and selling equity in the company.

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Debt is issued by selling corporate bonds to various investors in the market. These investors are offered a fixed return on their investment for a fixed period. The issuing company pays interest throughout the bond term, and at the end of the term, the company remits the principal amount to the investor. Investment Management Firms are responsible for structuring the bonds and finding the most qualified investors.

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Companies also sell equity via an Initial Public Offering (IPO). It is the role of an investment banker to line up large investors willing to take an equity share at a price that meets the firm's needs along with meeting the investor's expectations for returns on their investment.

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Investment bankers also raise capital with the help of financing from capital markets. They underwrite the deals by buying the securities from the issuers and then selling them to the public as a way to manage risk. Underwriting is a strategy that involves purchasing the securities at one price and adding a markup on the sale price to generate a profit. However, to manage the risk, the investment banker may also work with a syndicate group to underwrite the issue. Pricing New Stocks and Bonds

A new issue is a security that is registered and issued and is further ready to be sold to the public the very first time. Both debt and equity can be newly issued; however, the most common form of a new issue is an IPO. These are also known as primary shares or new offerings. Companies record these new issues as paid-in capital in their balance sheets and are equal to par value plus additional paid-in capital. 