The Role of Investment Banking in private Equity

Evaluate an investment bank 's role in private equity

Introduction

Investment Banks provide capital requirements of a firm by performing IPOs , Bond offers , Mergers and Acquisition (M As ) and Private Equity Investment Banks also advise corporations and other Private Equity firms on various financial transactions majorly Mergers and Acquisition valuing IPOs and other funding structure . In both of their roles of capital raising and financial advice , they have a crucial role to play for the success of their clients like Private Equity firms . Private Equity is the equity capital that is

not publicly listed on the exchange . The major investors of Private Equity like retail and institutional investors mainly invest their capital into acquisition of an operating company . M As through Leverage Buyout (LBO , Venture Capital , Distressed investments etc are some of the investment strategies in private equity

Investment Banks and M As

The majority of financial advice of Investment Banks relates to M A . The client company has the motives of expanding its business by acquiring another business . Some of the possible commercial reasons are -

Product range expansion

Increasing geographical footprints

Vertical integration

Strategically complementing existing products

Preventing competitors from acquiring business in question

To give effective advice on successful M A , investment banker needs to have an understanding of matters such as product improvement , market analysis or management of organization because they , too , will have an impact on shareholder value

Here are the major roles that an Investment Bank plays in the transaction -

Investment banks are specialized in...