Who advices companies on "optimal capital structure" - ECM/DCM?
If its either of the two would they not have a vested interest? is there another group in banks that helps companies decide the kind of capital to raise?
It depends on what you are talking to the company about doing.
Usually bankers don't show up and just have a chat about capital structure. Usually the conversations happens around pitching some financing idea. Which product group tags along to the meeting depends on what you are pitching.
I have never seen anyone include a page in a book with one of those graphs you see in college about optimal capital structure and WACC and all that crap.
Bottom line... companies need cash to fund shit, and we go see them to try to get them to let us lead the book or be joint books on capital raising and we talk to them about the cost, yes, but also about other thing..... usually its not a "optimal capital structure" conversation per say.
Sorry this answer is all over the place, its a really uninformed question.
no its a legit question. most banks have separate groups that do quantitative corporate finance, including a lot of capital structure optimization. these are usually called Financial Strategy Groups
Wouldn't a corporate treasury dept. know how to do all that shit already? They get paid to manage the capital structure and optimize it. I believe corporate tresuries hire lots of ex-bankers and CPA's to figure out what financial structure makes the most sense for them.
then why did you ask if ECM/DCM do it?
jpmorgan has a team dedicated to this: capital structure and advisory solutions - CAPSAS they only pitch, no execution.
^^^ that sounds awful
The Credit department at GS has input on how to structure the debt raising to minimize the cost of capital and limit the potential credit ratings downgrade as well.
every bank has a ratings advisory group dude.... who the fuck is posting in here these days? this is amazing
^Everyone needs to get knowledge from somewhere. I'm sure there was a time when you didn't know such a fact. How did you learn it?
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