Capital Markets and Investment Banking Process

Essay by cmcdevUniversity, Bachelor'sA-, July 2008

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�PAGE � Investment Banking �PAGE �1�

Capital Markets and Investment Banking Process

August 7, 2006

An investment is the current commitment of money or other resources in the expectation of reaping future benefits. The time committed to reading the textbooks is an investment. I may or may not benefit from the readings so I am investing my time. I could very well be wasting my time if I do not study and do well with this course. The cost of about $1500 for five weeks of studying is a big investment for me. Currently, I am sacrificing my time in the hopes of earning more money based on what I learn in this course. If I walk away without learning anything, I will have wasted my investment of time and money.

Investment Banking Process

In its simplest form, investment banking is nothing more than a series of well defined steps executed with strong project management skills.

In the investment banking process, you need to review the company financial and operational data, identify issues, and initiate personal tax planning. Research the industry to identify potential strategic and financial buyers. There is a marketing process that involves sending a one page summary and having open discussions with interested parties. The serious parties will then be qualified and then provided an incentive to move to a letter of intent. The next step would be to accept the letter of intent and enter the due diligence phase followed by completing the tax analysis. In order to execute and close the investment banking process, due diligence issues will need to be resolved as well as agreeing on a price.

Portfolio Construction

There are a few good steps to follow when an investor is constructing their portfolio. The investor needs to establish what type of investor...