M&A Advisory - IB or CF?
Hello everyone,
New here, so apologies if this is not the right forum.
While most banks try to separate between corporate finance and Investment Banking, I am failing to see the difference (In Europe). Investment banking does IPO, M&A, Restructuring and corporate finance does ECM, DCM?
Does that mean M&A advisory falls entirely under IB? Take a pure advisory firm. How do they facilitate capital for M&A transactions without having a corporate finance division?
Thanks.
they go to loans bankers / funds / CLOs (not so much anymore) / the Japanese banks and go, "hey, do you want some debt. this company is raising debt, you want some?" they go "hells yes, we like debt and fees, here's our money"
there's no difference, except boutiques have to go outside of their office to have that chat, whereas full service banks just have to go across the office or onto another floor. boutiques just lack the certainty/ ability to bully their would be colleagues into underwriting something they don't want to.
just different terms, might describe the same thing, also dependent on bank how they make it out.
When you raise funds for a M&A, does it usually come from Debt? Is it possible to raise through equity market?
Thanks I will :) I was just confused that when a merger happens and the two companies combine to form one how they could raise the necessary funds through equity. But then I remembered reading about LBO.
I am still a learner sorry for silly questions :)
jointhebank, I can understand how the nomenclature could be confusing!
In my bank (universal bank, BB), IB refers to the M&A teams, that also partner up with ECM (who sit in a Capital Markets Division, thus outside of IB and CF, particularly in the context of IPOs / large-ticket SPOs) during transactions. We also have Corp Banking, which is basically the CF-equivalent. In terms of remit, the clue is in the name - you finance companies on a debt level (either syndicated/collateralised loans, credit lines or DCM-type bond issuances).
Characteristically you'll find that IB is more episodic and transaction-based as you look at strategic / M&A opportunities whereas in CF tends to be more relationship-based - i.e. you will continue to work with the client for all its financing needs (along with a host of other banks if they are a large client).
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