{"id":10014,"date":"2020-04-14T11:43:50","date_gmt":"2020-04-14T06:13:50","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=10014"},"modified":"2020-04-14T12:00:14","modified_gmt":"2020-04-14T06:30:14","slug":"roles-responsibility-of-investment-bankers-in-ma","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/roles-responsibility-of-investment-bankers-in-ma\/","title":{"rendered":"Roles &#038; Responsibility of Investment Bankers in M&#038;A"},"content":{"rendered":"\n<p class=\"has-drop-cap\">M&amp;A is an efficient strategy that helps a business to grow and expand by forming synergies through resource optimization &amp; asset consolidation.&nbsp; With a rapid increase in competition, companies are more inclined towards globalization and engage in M&amp;A activities. Several companies seek the assistance of investment bankers to streamline the process of Merger and Acquisition. The role of investment bankers in M&amp;A is beyond assessment. Bankers guide companies about prospective buyers and sellers based on extensive valuation. This write-up will highlight the need for an investment banker to commence the <strong><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\">procedure of Merger and Acquisition<\/a><\/strong> successfully.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a35b067181\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a35b067181\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/roles-responsibility-of-investment-bankers-in-ma\/#Services_Offered_by_An_Investment_Banker\" title=\"Services Offered by An Investment Banker\">Services Offered by An Investment Banker<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/roles-responsibility-of-investment-bankers-in-ma\/#An_insight_into_the_role_of_Investment_Banker_in_M_A\" title=\"An insight into the role of Investment Banker in M&amp;A\">An insight into the role of Investment Banker in M&amp;A<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/roles-responsibility-of-investment-bankers-in-ma\/#Schemes_to_gain_profit_for_Investment_Bankers\" title=\"Schemes to gain profit for Investment Bankers\">Schemes to gain profit for Investment Bankers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/roles-responsibility-of-investment-bankers-in-ma\/#Why_are_Investment_Bankers_essential_for_the_M_A_of_SMEs\" title=\"Why are Investment Bankers essential for the M&amp;A of\nSMEs?\">Why are Investment Bankers essential for the M&amp;A of\nSMEs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/roles-responsibility-of-investment-bankers-in-ma\/#Investment_Banking-_a_perfect_gateway_to_raise_funds\" title=\"Investment Banking- a perfect gateway to raise funds \">Investment Banking- a perfect gateway to raise funds <\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/roles-responsibility-of-investment-bankers-in-ma\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Services_Offered_by_An_Investment_Banker\"><\/span>Services Offered by An Investment Banker<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An investment banker\nis a financial intermediary who bridges the gap between the user and the provider of capital. Investment bankers assist institutions,\ngovernments, companies with raising capital and executing transactions of\nMergers and Acquisitions. <\/p>\n\n\n\n<p>Such an individual regulates the price of\nfinancial transactions &amp; ensures to optimize the price. The \u201cbest price\u201d\nmust neither be the highest for sellers, nor the lowest for the buyers. Hence,\nthe chief role of investment bankers in M&amp;A is to create a fair value for\nboth companies involved in the transaction.<\/p>\n\n\n\n<p><strong>Investment Bankers provide an array of services which are as follows:<\/strong><\/p>\n\n\n\n<ul><li>Corporate Finance<\/li><li>Research <\/li><li>Asset Management <\/li><li>Merger and Acquisition <\/li><li>Syndication of Equity &amp;\nFixed Income <\/li><li>Restructuring<\/li><li>Custodian Services&nbsp; <\/li><li>Trading <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_insight_into_the_role_of_Investment_Banker_in_M_A\"><\/span>An insight into the role of Investment Banker in M&amp;A<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Investment banker act as a prominent advisor in the M&amp;A process. Enabling end to end assistance from approaching the target company to making negotiations, investment bankers are significant benefactors. They also help in drafting the <strong><a href=\"https:\/\/swaritadvisors.com\/non-disclosure-agreement\">confidential agreement<\/a><\/strong>, commence due diligence, assess valuation, do structuring, render financing, and managing the M&amp;A deals until the (PMI) Post-Merger Integration.<\/p>\n\n\n\n<p>During acquisition, a company acquires the target company which is offered for sale. In such a situation, an investment banker conducts valuation to determine the price which one company is willing to pay to another. <strong>Here are the functions of investment bankers in Merger and Acquisition:<\/strong><\/p>\n\n\n\n<ul><li>The investment bankers guide those\ncompanies which intend to carry acquisition. They assist the acquirer in\ndetermining the value of the company being acquired, i.e. Target Company. Also,\nit helps them to create the structure of the offer in the most favourable manner.\n<\/li><li>If the client of the investment\nbankers is a target company, then they assist in determining a reasonable value\nfor the company and consults about the favourable\/unfavourable structures of\nthe sale.<\/li><li>Thus, an investment banker\nbuilds a win-win situation for both the acquirer and Target Company.<\/li><li>Investment bankers are\nresponsible for advising the companies in regards to financial economies, industry\ntrends, market dynamics, deal structuring and pricing of business. <\/li><li>From the viewpoint of a seller\ncompany, an investment banker does extensive market research to connect with prospective\nbuyers. Moreover, they are also responsible for the negotiation and evaluation\nof offer to seal the deal.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Schemes_to_gain_profit_for_Investment_Bankers\"><\/span>Schemes to gain profit for Investment Bankers<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Investment Bankers ease the procedure of M&amp;A for buyers and sellers, but what do they get in return? <strong>Here are some activities through which an investment banker can gain profit<\/strong>:<\/p>\n\n\n\n<ul><li><strong>Organizing&nbsp;a deal of Merger &amp; Acquisition:&nbsp;<\/strong>For instance, a\nsteel&nbsp;manufacturer&nbsp;wants to merge with one of its suppliers like iron\nor coal mining firm, so the investment banker can help steel&nbsp;manufactures&nbsp;to\nacquire its supplier.<\/li><li><strong>Develop Defence Mechanism:&nbsp;<\/strong>SMEs often<strong> <\/strong>reach out to investment bankers to take\nadequate protection from being the target of big companies.<\/li><li><strong>Establish a Fair Value: <\/strong>Investment bankers can gain ample sum of\nrevenue by establishing a fair value for the parties involved in M&amp;A.<\/li><li><strong>Arbitrage Operations:&nbsp;<\/strong>In terms of\ninvestment banking,<strong>\n<\/strong>it refers to the\nactivities of buying and selling of securities in different markets at variant\nprices and taking risk-free return.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_are_Investment_Bankers_essential_for_the_M_A_of_SMEs\"><\/span>Why are Investment Bankers essential for the M&amp;A of\nSMEs?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Unlike listed or large companies, small and medium scale enterprises do not have access to required information. The shareholders and management team of SMEs are often uncertain about their company\u2019s worth which further complicates M&amp;A transactions. Therefore, in order to increase the value of their company and make M&amp;A a successful venture, the SME owners need to seek the guidance of an investment banker. The role of an investment bank is of substantial importance in M&amp;A deals specifically for SMEs and Private Companies.<\/p>\n\n\n\n<p>In the case of Private Companies, it is\ndifficult to reckon and justify the value since there is no existence of their daily\nstock price. Thus, it incurs the need to hire a competent investment banker in addition\nto the accountants &amp; corporate lawyers. Thereby, the investment banker will\nidentify and quantify the value of a Private Company that can be achievable\nthrough Merger and Acquisition. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investment_Banking-_a_perfect_gateway_to_raise_funds\"><\/span><strong>Investment Banking- a perfect gateway to raise funds <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Now that we have understood the role of investment bankers in M&amp;A, let\u2019s take a glance at ways it facilitates finances: <\/strong><\/p>\n\n\n\n<ul><li>In general, the primary source of finance in a Merger transaction is the excess cash available with the acquiring company. However, another source of funds is required when the acquiring company do not have such excess cash.&nbsp;<\/li><li>&nbsp;It is under such circumstances the corporate finance&nbsp;comes into the picture. Many investment bankers render the service of corporate finance, which entails the activities of helping customers to raise&nbsp;funds&nbsp;in&nbsp;markets&nbsp;for the smooth deployment of Mergers and Acquisitions. <\/li><li>The services include coordinating with bidders, subscribing investors to issue security or negotiate with a Merger target. The <a href=\"https:\/\/en.wikipedia.org\/wiki\/Bank\"><strong>bank<\/strong><\/a> generates a pitch book&nbsp;containing financial information to the market to find potential M&amp;A clients. Further, if the bank succeeds, it arranges a deal for the same.<\/li><li>Product coverage groups of investments banking focus on financial products such as public finance, asset finance, Mergers and Acquisitions, leveraged finance, structured finance &amp; leasing, restructuring, equity, high-grade debt, and collaboration with industry groups to meet the specialized needs of the clients.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This document accentuates the role of\ninvestment bankers in providing M&amp;A advisory services. They play a dual\npart of lenders and advisors to the Acquirers and Target Companies. <\/p>\n\n\n\n<p>If you need any further assistance in the process of Merger and Acquisition, look no further than <a href=\"https:\/\/swaritadvisors.com\/\"><strong>Swarit Advisors<\/strong><\/a>. We have a big team of professionals who are the masters of the legal domain. Our team has catered several customers for the optimal use of M&amp;A.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/analysis-of-merger-and-acquisition\/\" target=\"_blank\" rel=\"noopener noreferrer\">Analysis of Merger and Acquisition<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>M&amp;A is an efficient strategy that helps a business to grow and expand by forming synergies through resource optimization &amp; asset consolidation.&nbsp; With a rapid increase in competition, companies are more inclined towards globalization and engage in M&amp;A activities. Several companies seek the assistance of investment bankers to streamline the process of Merger and Acquisition. [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":10015,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[546],"tags":[597],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10014"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=10014"}],"version-history":[{"count":4,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10014\/revisions"}],"predecessor-version":[{"id":10019,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10014\/revisions\/10019"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/10015"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=10014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=10014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=10014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}