Many persons are not quite aware of the many services, currently offered by professional investment banking organizations. Services and products, nowadays, are quite abundant. The article addresses, in some detail, what services a CEO may expect from the investment banking institution.
Understanding more fully public offerings associated with debt and equity securities:
Basically, there are 4 standard types of offerings, relative to the public, inclusive of First off, initial public offerings, better known by their acronym of IPO, which are securities issued by way of organizations that have not ever issued any public securities. Generally, common stock is the first security that is issued within an IPO. Secondly, the offering is an initial public offering of new securities. These are securities that organizations consider already public and are public; which have not been issued prior to their current recognition of issuance. One example, is the issuance of a convertible debt security. Third, there are further public offerings of securities which are currently traded publicly. An example of the third classification is the issuance of additional common stock. Such an issuance comes into play when the price is high enough so that the cost of the Capital is reasonably low. The fourth issuance includes public offerings by shareholders of a corporation for securities that are already publicly traded. An example of the fourth classification is that of a private equity fund wishing to cash out as to its position.
During prior years, the differences in debt and equity securities were clearly obvious:
The debt and equity securities of yesteryear were easy enough to differentiate. The investment banking firm could easily place them into obvious, distinct categories. The investment grade corporate bond was, definitely, quite different from the high yield junk bond. Today, though, the types of bonds are rather blurred. In other words, the distinctions of days past have become unclear. With respect to debt and equity there are more considerations than what is allowable on a chart. The Junior zero-coupon convertible debenture is recognized as more of an equity than it is a debt. The Dutch Auction, preferred stock is considered more of a debt than it is equity. The lines, from a geographic standpoint, are also highly relaxed. The preceding means organizations are able to reach, basically, anywhere around the globe in way of lowering their cost as to Capital.
The concept of private placements of debt and equity securities:
By definition, private placements are the sales of securities to investors, without any requirements in the way of regulation with regard to those public offerings. The regulations which define private placements are highly complicated, and the securities and investment products are many. The range includes that of corporate equities to real estate; therefore, private placements carry with them a much higher return than securities that are similar in structure and that can be traded in the public market. The loss of liquidity is what enhances the risk. In other words, due to the loss of liquidity, the return on these type of securities is higher—proportionately.
Explanation of Mergers and Acquisitions (M&A):
Mergers and acquisitions are what make headlines. The M&As are relative to battles such as takeovers, hostility and fireball defenses. However, not all M&As are on the war path. The majority of M&As are quite friendly. The investment banking organization seeks to optimize the price and terms in order that the best price is acquired. The price may not be the highest price for the seller, due to the fact some deals may involve all cash or confidentiality, in properly closing them. In other words, it may be more important to the seller to keep the deal highly confidential than attaining the highest price. The investment banker, too, does not wish to attain a price that is lowest for its client purchasers. (The client purchaser, as well as the banking organization, both, make it a point to get the deal done properly and the preceding may have much more impact, than getting the lowest price during the sale). The following stated, investment banking organizations are able to facilitate proper price, and finance the M&A. It is important to note, too, that included within an M&A are leverage buyouts by way of private equity as well as the restructuring and recapitalization of organizations. The Merger and Acquisition service may include, too, the reorganization of companies that have fallen into troubled times.
Additional information with regard to Martin Lustgarten:
Martin Lustgarten is CEO of Lustgarten, Martin, an organization that he has founded. He has worked assisting many organizations in reaching their goals.
Martin Lustgarten has long been a resident within the Florida state area. He makes his residence, currently, in Miami with his family.