Investment Bank 

Investment banks play a key role in LBOs, both as a provider of financing and as a strategic M&A advisor. Sponsors rely heavily on investment bank to help develop and market an optimal financing structure. They may also engage investment banks as buy -side M&A advisors in return for sourcing deals and/ or for their expertise, relationships, and in - house resource. On the sell-side, sponsors typically engage bankers as M&A advisors to market their portfolio companies to prospective buyer through an organized sale process. 

Investment banks perform through due diligence on LBO targets their sponsor and go through an extensive internal credit process in order to validate the targets business plan and underwrite a debt financing for the target. they must gain comfort with the targets ability to service a highly leveraged capital structure and their ability to market the debt financing to the appropriates investors. 

Investment Banking 

Investment banking is a specific division of banking related to the creation of capital for other companies, governments and other entities. Investment banks underwrite new debt and equity securities for all types of corporations, aid in the sale of securities, and help to facilitate mergers and acquisitions, reorganizations and  broker trades for both institutions and private investors. Investment banks also provide guidance to issuers regarding the issue and placement of stock.

Many large investment banks are affiliated with or subsidiaries of larger banking institutions, and many have become household names, the largest being Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America Merrill Lynch and Deutsche Bank. Broadly speaking, investment banks assist in large, complicated financial transactions. This may include advice as to how much a company is worth and how best to structure a deal if the investment banker’s client is considering an acquisition, merger or sale. It may also include the issuing of securities as a means of raising money for the client groups, and creating the documentation for the Securities and Exchange Commission necessary for a company to go public.

Investment banks employ investment bankers who help corporations, governments and other groups plan and manage large projects, saving their client time and money by identifying risks associated with the project before the client moves forward. In theory, investment bankers are experts in their field who have their finger on the pulse of the current investing climate, so businesses and institutions turn to investment banks for advice on how best to plan their development, as investment bankers can tailor their recommendations to the present state of economic affairs.