What is Underwriting and M&A?

Do you know all terminologies used by investment bankers? Below will illustrate two of them, which are common and must-learn terms if you want to devote yourself to this industry.

💡Mergers: The process of raising capital by means of selling bonds or shares, such as IPO, on behalf of corporations or other legal entities. Clients will be marketed to investors to acquire the capital.

Below are 3 types of underwriting:

1⃣Firm commitment: The underwriter agrees to purchase all the issue and bear full liability for any unsold shares.

2⃣Best efforts: Underwriter is committed to selling as much issue as possible at the agreed-upon offering price. In case of any unsold shares, the underwriter bears no liability and should return the remaining shares to the issuer.

3⃣All-or-none order: In the event of the entire being unsold at the offering price, the deal is cancelled and the issuer gains nothing.

💡As to M&A advisory services, IBankers would help corporations and institutions to look for, assess and complete business acquisitions. This function is important in investment banking. IBs use their networks and relationships to help their clients to identify opportunities and negotiate. They provide advice to both sides of M&A transactions, representing either the “buy-side” or the “sell-side” of the deal.

Below are 10 steps in an M&A process:

1⃣Acquisition strategy

2⃣Acquisition criteria

3⃣Searching for target

4⃣Acquisition planning

5⃣Valuing & evaluating

6⃣Negotiation

7⃣Due diligence

8⃣Purchase & sales contract

9⃣Financing

10 Implementation

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