Chapter 15
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
566
On Slideshare
566
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
5
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. 15 Chapter Investment Banking: Public and Private
  • 2. Chapter 15 - Outline LT 15-1
    • What is Investment Banking?
    • Functions of the Investment Banker
    • Underwriting Spread
    • Public vs. Private Companies
    • Advantages and Disadvantages of a Public Company
    • Initial Public Offering and Leveraged Buyout
  • 3. What is Investment Banking? LT 15-2
    • Investment Banking deals with primary offerings of new securities
    • The Investment Banker serves as the intermediary or link between the corporation and the investor
    • Brings the two parties together by channeling money from one to the other
  • 4. Functions of the Investment Banker LT 15-3
    • Underwriter:
      • – buying the security and reselling it to the public
      • – the risk-taking function
    • Market Maker:
      • – ensuring an available market by buying and selling the security
    • Advisor:
      • – providing advice on the issue
    • Agency Functions :
      • – negotiating the best possible deal for the corporation
  • 5. PPT 15-1
  • 6. Underwriting Spread LT 15-4
    • Spread represents the compensation for those participating in the distribution
      • Spread = Public Price - Issue Price
    • It is shared by all the participants
    • Spread on common stocks is greater than the spread on bonds
  • 7. Public vs. Private Companies LT 15-5
    • Public company:
      • – when shares of a company are offered to the public
      • – anyone can buy shares of the stock
    • Private company:
      • – privately owned or held by an individual or family
      • – not available to the general public
  • 8. PPT 15-2
  • 9. PPT 15-3
  • 10. Advantages and Disadvantages of a Public Company LT 15-6
    • Advantages of being public:
      • – greater availability of funds (easier to grow and raise money)
      • – prestige
    • Disadvantages of being public:
      • – company information must be made available to the public (opening the company up to public scrutiny and criticism)
      • – high costs of going public (expensive)
  • 11. Initial Public Offering and Leveraged Buyout LT 15-7
    • Initial Public Offering (IPO):
      • – when a company sells its stock to the public for the first time
      • – the company becomes publicly traded
    • Leveraged Buyout (LBO):
      • – money is borrowed to repurchase all the shares of the company resulting in a great deal of debt
      • – when a company “goes private”