Investment banks Services 1. Making an acquisition/ effecting a buyout (mergers and acquisition): With increasing competitive pressures being placed on businesses and the trend towards globalization, companies are engaging more and more in M&A activity. Many companies looking to expand or streamline their business will use investment banks for advice on potential targets and/or buyers. This normally will include a full valuation and recommended tactics. The investment bank's role in mergers and acquisitions falls into one of either two buckets: seller representation or buyer representation (also called "target representation" and "acquirer representation").

One of the main roles of investment banking in mergers and acquisitions is to establish fair value for the companies involved in the transaction. Investment banks are experts at calculating what a business is worth. They are also able to predict how that worth could be altered (i.e., what happens to the value of a company in a number of different scenarios and what those potential futures would mean financially). Financial models are constructed by investment banks to capture the most important fixed and variable financial components that could influence the overall value of a company.

Investment banks do not just rely on buyers and sellers approaching them. They will also source deals by studying the market themselves and approaching companies with their own strategic ideas (i.e., they might suggest that two companies merge, or that one company acquires, or sells to, another). An investment bank that represents a potential seller has a much greater likelihood of completing a transaction (and therefore being paid) than an investment bank that represents a potential acquirer.

2. Share repurchasing: A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. The company can buy shares directly from the market or offer its shareholder the option to tender their shares directly to the company at a fixed price. Because a share repurchase reduces the number of shares outstanding (i.e. supply), it increases earnings per share and tends to elevate the market value of the remaining shares.

Investment banking teams are dedicated to serving all the equity capital markets needs of clients, from accessing capital to optimizing equity markets strategies. They get to know business, and have experts who will partner with core team to help execute share repurchases. Multi-disciplinary team will work with the Co. to ensure that any repurchase program supports the overall goals of the business and is attuned to the market and shareholder dynamics.

3. Leveraged loans arrangements: A leveraged loan is a commercial loan provided by a group of lenders. It is first structured, arranged, and administered by one or several commercial or investment banks, known as arrangers. It is then sold, (or syndicated) to other banks or institutional investors.
A loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower. The borrower could be a corporation, a large project, or sovereignty (such as a government). The loan may involve fixed amounts, a credit line, or a combination of the two. Interest rates can be fixed for the term of the loan or floating based on a benchmark rate such as the London Interbank Offered Rate (LIBOR).

Typically there is a lead bank or underwriter of the loan, known as the "arranger", "agent", or "lead lender". This lender may be putting up a proportionally bigger share of the loan, or perform duties like dispersing cash flows amongst the other syndicate members and administrative tasks. 4. IPO/FPO: The investment bank is primarily responsible for organizing and implementing the IPO. It frequently acts as intermediary between the company and the regulator and it may have to demonstrate to a regulator and/or a stock exchange that the company is suitable for listing.
Principal tasks of the investment bank: * Assess the company's suitability for listing. * Participate in drafting the prospectus and coordinating due diligence. * Determine the price and underwrite the offering. * Liaise with regulatory authorities. * Oversee settlement, including underwriting and the exercise of any over-allotment option and price-stabilization mechanisms, as required. * Market the offering and book building (if required).

The investment bank generally plays the lead role in the IPO process. If there are several investment banks involved, the investment bank that organizes and runs the offering is commonly referred to as the 'global coordinator'. The global coordinator is responsible for coordinating the preperation of the prospectus, organizing the due diligence and coordinating the underwriting, marketing and distribution of the securities. In smaller offerings, especially where such offerings are not international in nature, the investment bank leading the offering may simply be referred to as the 'lead manager'.

5. Underwriting: In addition to being responsible for the organization and marketing of the IPO, the investment bank may also act as underwriter to the offer, commonly in a syndicate with one or more other investment banks. This ensures that the company and any selling shareholders will sell the total number of shares offered and will raise the amount of money that it or they intend to raise.
Such an undertaking can either be a best efforts undertaking based on market appetite (referred to as a 'soft underwriting') or a firm undertaking to underwrite the securities offered regardless of the market conditions and investor appetite (referred to as a 'hard underwriting'). The underwriters' obligations are contained in an 'underwriting agreement' entered into with the company.
The underwriting agreement will determine the price of the offered shares and the percentage commission charged for doing so. The underwriting agreement will typically be conditional upon the satisfaction of certain conditions, i.e. the outcome of the offering and the payment of the securities. In addition, the underwriting agreement will contain representations, warranties and indemnities to be given to the underwriters by the company that relate to the company's business and the contents of the prospectus.
The investment bank may require the company, and likely any selling shareholders, to abstain from any further sale of shares for a set period following the IPO. This so-called lock-up arrangement can also be included in the underwriting agreement. Finally, the underwriters may request either the company or the selling shareholders to grant a 'green shoe' or 'over-allotment option'. This is a call option, provided to the underwriter, requiring the company to issue – or a selling shareholder to sell – a certain percentage of additional equity to the underwriter for a 30-day period to cover over-allotments. 6. Credit derivatives: Credit derivatives allow a lender or borrower to transfer the default risk of a loan to a third party. Though the terms differ from one credit derivative to another, the general procedure is for a lending party to enter into an agreement with a counterparty (usually another lender), who agrees, for a fee, to cover any losses incurred in the event that a the borrower defaults. If the borrower does not default, then the insuring counterparty pays nothing to the original lender and keeps the fee as a gain.
To illustrate, suppose XYZ Bank lends $10k to Bob over 10 years. Determining that Bob carries significant default risk as a borrower, XYZ Bank enters into a credit derivative with ABC Bank. The terms of the agreement state that in the event Bob defaults and is unable to repay the loan, ABC Bankwill compensate XYZ Bank for the remaining interest and principal in return for an annual fee of $100 through the end of the 10-year term. If Bob does not default on the loan, ABC bank may keep the $100 annual fee as a gain. 7. Credit default swaps:
A swap designed to transfer the credit exposure of fixed income products between parties. A credit default swap is also referred to as a credit derivative contract, where the purchaser of the swap makes payments up until the maturity date of a contract. Payments are made to the seller of the swap. In return, the seller agrees to pay off a third party debt if this party defaults on the loan. A CDS is considered insurance against non-payment. A buyer of a CDS might be speculating on the possibility that the third party will indeed default.
The buyer of a credit default swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the debt security. In doing so, the risk of default is transferred from the holder of the fixed income security to the seller of the swap. For example, the buyer of a credit default swap will be entitled to the par value of the contract by the seller of the swap, should the third party default on payments. By purchasing a swap, the buyer is transferring the risk that a debt security will default 8. Risk management: Risk management involves analyzing the market and credit risk that an investment bank or its clients take onto their balance sheet during transactions or trades. Well-known risk groups in JPMorgan Chase, Goldman Sachs and Barclays engage in revenue-generating activities involving debt structuring, restructuring, loan syndication, and securitization for clients such as corporates, governments, and hedge funds. Risk management groups such as operational risk, internal risk control, legal risk, are restrained to internal business functions including firm balance-sheet risk analysis and assigning trading cap that are independent of client needs, even though these groups may be responsible for deal approval that directly affects capital market activities. Risk management is a broad area, and like research, its roles can be client-facing or internal.

Corporate finance advisory: IB Integrates and customizes offerings and solutions across products, sectors and markets to help clients meet their strategic, financial and risk management objectives
Provides leading ratings advisory, capital structure and risk management, M&A structuring, equity, and credit-linked market solutions to clients
Researches and authors a number of well-received reports on capital structure, market and industry-specific issues