American Psycho

Investment Banker

How to start a small business? One way would be to open a large company and wait six months, the other would be to call an expert. Chances are you have heard of this term, but you are not quite sure what it means. To put it simply, investment banker is the individual in charge of raising capital for the firm. Invest money and acquire capital, sounds simple right? The investment process is a little more complicated than that. Being in the business of the financial markets, which are considered to be the most efficient markets, investment banks are the largest financial institutions today.

So, what does an investment banker do? As John Paul Getty once said "If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem." The most obvious is that they work at investment banks, like Morgan Stanley, JPMorgan Chase, Goldman Sachs and such. Their main function is to help in big and complicated financial transactions. They give advice on how much can a company be worth, what’s the best way to handle a deal if the banker’s client wants to make a large purchase, which can include a buying another company or a company merger. Banker also help in the process of selling bonds to raise funds for client groups. Creating the documentation for the Securities and Exchange Commission needed for a company to go public can be a complicated process in itself and that is something an investment banker can assist you with.

Two descriptions help to sum up investment banker’s duties to their clientele:

•  Provide expert advice
•  Facilitate deals and financial transactions

Providing expert advice

Generally speaking, the investment banker will save your company time and money by pointing out the risks associated with a project before the company moves forward. In theory, the investment banker is a financial doctor who has a finger on the pulse of the current investing climate. Businesses and institutions reach out to investment bankers for advice on how to plan their development in the best way possible, investment bankers, in their turn, can tend the needs of their customers and recommend an action in the context of the present state of economic conditions.

Facilitating deals and financial transactions

An investment banker serves as the middle man between a company and investors when the company wants to start selling stocks or bonds. Investment bankers assists with pricing financial assets in a way to maximize revenue for the company while navigating regulatory requirements of SEC and other regulatory agencies. Often, when a company holds its initial public offering (IPO), which is simply the starting price on the stock, an investment bank will buy all or much of that company’s shares directly from the company.

Now, I have to be honest, I’m not an investment banker, but that is something I’m considering to explore as a career choice. The reason I became interested in the field is because one of my professors was lecturing in my finance class, which I thought was incredibly boring (go figure), about the investment banks and how they serve as investment vehicles and have massive influence over the economy in the United States. Mainly, what stood out was the act that before 1930’s banks were allowed to operate as both a commercial bank and an investment bank. The Glass-Steagall act separated them into two different entities, because people were blaming investment banks for causing the Great Depression. Well that and all the parties, booze and huge bonuses for doing mostly nothing. Now if you'll excuse me, I have to return some videotapes.