James Dondero is the President and co-founder of HCM – Highland Capital Management. With an experience spanning over three decades, he has worked extensively in equity and credit markets. James Dondero has specifically specialized in distressed and high yield investing. He is also the member of various other organizations. Throughout his career, James Dondero has always advised people about knowing all about investment banking firms before setting up a consultation interview with one. A lot of people have little to no knowledge about investment banking companies and this makes the interview process so much harder for both the banker and the client.
Buying Side and Selling Side of Investment Banks – Investment banking is not the same as commercial and retail banking. There are two sides to investment banking – a selling side that is used for trading and easy transactions involving securities and cash, underwriting, research, and security promotions; and a buying side that helps high profile individuals and companies to invest in hedge funds, MFs, and pension funds so that returns can be maximized to the highest degree possible.
Private Side and Public Side of Investment Banks – Most investment banking firms deal in both the buying and selling side of things. These organizations also have public and private sides, ensuring that information is always confidential. The private information never percolates down to the public side. Public companies deal in shares on the stock exchange and have many investors. Funds can be raised by selling securities to the public (by disclosing ample information) for the purpose of private investment. Private companies, on the other hand, don’t have that many competitors and are not required to disclose too much information.
The public half of the bank also takes care of following all the governmental rules and regulations and therefore, this side always has more investors than the other. However, a leveraged buyout can help a public bank become a private one.
Financial Intermediation Is The Main Purpose Of An Investment Bank – If a company needs its prospectus to be prepared, then an investment bank can help it by offering valuable input and information. The investment bank’s role is vital in this respect, both for the company and the future investors. However, the role of an investment bank is purely that of an intermediary. It only offers investment related services and does not take any deposits. The services of an investment bank could include underwriting, intermediary services between issuers of security and the public that would be investing, broker services for institutional investors, mergers and acquisitions, and corporate reorganization.
Advantages of Investment Banks – Investment banks serve a variety of purposes, especially for startups looking to raise some capital. These banks deal with investors (buying side) and promote the securities (selling side) to ensure that a startup has enough capital to begin operation. Because the services are of a specialized nature, investment banks offer a world of knowledge, professionalism and expertise in the industry.
Investment banks are becoming a lot more popular than retail and commercial banks because of their expert insight and advisory services that have helped companies and individuals a lot.