JOB Post

Benjamin Hy

Writ 340

Prof. Hansen

8 September 2017

Investment Bankers

Whenever people think of investment banking, they usually tend to imagine one of two things. People either imagine clips from the movie The Wolf of Wall Street, or imagine sleazy business men that plot ways to swindle the poor to make themselves richer. Well, I’m here to rid people of these stereotypes by explaining what investment bankers actually get paid, a lot of money, to do.

Investment bankers, even though they often have bad reputations, are actually fairly important to growing companies. People often view investment bankers negatively because it seems as though investment bankers get paid large amounts of money to just move numbers around and shuffle money. Investment bankers might not provide or produce any tangible products, but the service that they provide is important. If investment bankers actually do provide services for companies and investors, and if they all didn’t act like the characters in The Wolf of Wall Street, what do they do?

Overview

When broken down, investment bankers only essentially provide a few services for their clients. The IB industry is still around today because clients cannot or do not want to complete these themselves:

·      Investors

o   Investing the money of investors to earn a return

·      Companies

o   Helping companies raise money, acquire other companies, and merge with other companies

What they do for investors

Investment bankers provide fewer services for individual investors than they do for large multi-billion, which makes sense because individuals have less money than large international companies. For individuals, investment bankers offer investing services.

For example, let’s say that you have a spare $10,000 sitting in your bank account. You want to invest the money instead of having it just sit there, but don’t have the time or the knowledge to make good investments. This is where investment bankers come in. People give large sums of money to investment banking firms to invest because the investment bankers:

·      Devote many hours regularly to studying industries, and making sure that they are “in the loop” within their particular industry

o   This means that you can trust, to a certain extent, that the person investing your money has more knowledge than you about specific industries

·      Have access to investments and deals that most people normally cannot access

·      Generally have proven track records

What they do for companies

Companies have very different needs than individual investors, and look to investment bankers for many reasons.

One of these reasons companies hire investment bankers is to raise money, in the form of an initial public offering, or an IPO. Investment bankers help companies raise money, and help to make the overall process much shorter than if the company tried to raise money through an IPO itself.

Another service that investment bankers provide companies would be help with merging with other companies, or acquiring other companies.

Let’s say that Toyota wants to buy or merge with a company. To do so, Toyota needs to go through many regulatory hoops and be careful not to infringe on any international laws. In this case, Toyota could choose to hire employees specifically for the purpose of facilitating mergers and acquisitions, or use investment bankers. Since companies do not regularly merge and acquire companies, the companies would have to pay hired employees a fixed salary, but the employees wouldn’t be working regularly. It makes more sense for companies to hire investment bankers to make sure that laws and regulations are being followed in these large changes.

Summary

As you can see, investment bankers are in the service industry. They sell their expertise and knowledge, and do a lot for both companies and individuals alike. If you take nothing else about investment bankers from this, just know that investment bankers save their clients time by selling their clients knowledge.

Statistics

Flesch Reading Ease: 65.1
Flesch-Kincaid Grade Level: 8.3
Passive Sentences: 0%