Investment banks are the matchmakers and money-raisers of finance. They help companies raise capital, advise on big deals and enable markets to function. Here is what investment banking actually does, broken into plain language.
Raising Capital
Banks help companies raise money by selling shares (equity) or borrowing (debt) — via IPOs, follow-on offerings and bond issues. They price, market and place these securities with investors.
Mergers and Acquisitions (M&A) Advice
When companies buy, sell or merge, investment banks advise on valuation, structure, negotiation and financing — earning fees for successful deals.
Other Activities
- Sales and trading: buying and selling securities for clients.
- Research: analysis that supports investors and deals.
- Advisory and restructuring: helping distressed companies reorganise.
- Private placements and other financing structures.
The People
Teams run from analysts (modelling and decks) to associates, vice presidents and managing directors who lead client relationships and close deals.
FAQ
Is investment banking the same as retail banking?
No — retail banks serve individuals; investment banks serve corporations, institutions and governments.
Do investment banks trade for themselves too?
Within strict rules, some trading occurs, but client services are the core.
Related: History of Investment Banking and Where Is J.P. Morgan?.