Why Investment Banking Companies So Important to Growing Businesses?

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Why Investment Banking Companies So Important to
Growing Businesses?
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The Concept of Investment Banking
I am pretty sure that each one of us has heard
the term investment banking but we have never
really put in a lot of efforts into knowing what
it is. We havent really tried to understand how
these big financial institutions function and
what goes behind the scenes of this big glamorous
world. To put it in a simple language, investment
banks are like the middlemen in the big process
of gaining financial stability and security.
Ideally the buy the securities from companies and
then resell these to the public. This way they
bring the suppliers and the users together.
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Underwriting
It is a process through which the credit
worthiness of any customer is assessed through
any of the leading lending institutes. They see
the customers credibility and then they package
and sell this security on behalf of the client
that they just assessed. This process usually
involves them buying from a lower price (from the
customer) and then selling it in the market for a
higher price. So, it is like an insurance in
which the banker bears the risk of any adversity
in the market that may occur.
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The Function Distributing
This function in which the investment banking
companies in India or worldwide to issue new
securities is called distribution. In this the
securities that they get are sold to the
different organization and they also have a
specialized staff to help distribute these
securities. This way they perform the physical
distribution and functions more efficiently. This
is also very economical for individual company.
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The Role of Being an Advisor
The investment banking companies based on their
years of experience also become an expert in all
the trends in the market. Having a back up of
years of studies and research, they could also be
the best guides for the customers. it does not
matter how big or small your business is. The
investment banker assigned to you will all the
time make sure that you only earn maximum profit.
This way they become reliable advisors for their
clients.
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Be Careful Who You Choose
Although we have spoken so much about the
investment banking and the various companies, it
is important to note that one must be very
careful while choosing an investment bank for the
company. Investment banks are many in number
today. Therefore, before you approach any of them
with your company and financial portfolio, it is
advisable that you first do a background check
about the company. Afterall, it is your
hard-earned money that we are dealing with here.
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Thank You
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