Equity Capital Markets (ECM) is the team / group that is responsible for providing advice on equity, equity-linked and equity derived products, including shares, futures, swaps and options. An ECM group will work closely with a client to organize transactions, structure the equity offering, and to improve valuation.
Define Equity Capital Markets Work
Some activities that an ECM group will advise on are:
- Distribution of new stock
- Equity private placements
What is an IPO?
An IPO is an initial public offering, in which the equity capital markets team helps a company issue shares to the public market to invest in on public exchanges.
What is a Private Placement?
A private placement is when a ECM team helps a company issue equity (not traded on an exchange) to a buyer or helps an existing investor sell shares to another private entity.
What is a Roadshow?
A roadshow is when bankers take the company looking to issue equity (or other financial instrument) around to potential large-scale investors such as hedge funds and pension funds. Together the bankers and the company management team pitch the new issue to potential investors.
ECM vs DCM
**To learn more about this concept and become a master at valuation modeling, you should check out our Valuation Modeling Course. Learn more here.**
Module 1: Introduction
Module 2: Valuation: The Big Picture
Module 3: Enterprise Value & Equity Value Practice
Module 4: Trading Comparables Introduction
Module 5: Trading Comps: The Setup
Module 6: Trading Comps: Spreading Nike (NKE)
Module 7: Trading Comps: Spreading Adidas (ADS.DE)
Module 8: Trading Comps: Spreading Lululemon (LULU)
Module 9: Trading Comps: Spreading Under Armour (UA)
Module 10: Trading Comps: Benchmarking and Outputs
Module 11: Precedent Transactions: Introduction
Module 12: Precedents: The Setup
Module 13: Spreading Tiffany & LVMH
Module 14: Spreading FitBit & Google
Module 15: Spreading Reebok & Adidas
Module 16: Spreading Jimmy Choo & Michael Kors
Module 17: Spreading Dickies & VF
Module 18: Valuation Wrap-Up
Module 19: Bonus: Non-GAAP Practice
Equity Capital Markets