GEORGIE: So, this is how Investment Banking works.
These are my flatmates, ZACH and LUCY.
They represent the client, a large company.
These clients come to an investment bank for guidance on the structure of their debt or
equity.
They also come to the investment bank to find investors or to float their business on the
stock market.
In this example, the client is trying to merge with another company.
ZACH: We've just found our dream house for next
year, but the problem is, there are six bedrooms and only three of us.
LUCY: We basically need to find three more housemates.
ZACH: Ones we actually want to live with.
GEORGIE: That's where I come in – as the investment
bank, I use my research and understanding of the industry to advise clients on the best
acquisitions to make, and how to do it.
Look, I heard the guys in Flat 4 talking about how they're struggling to find a house for
next year – why don't we ask them if they want to merge?
LUCY: Ooh good idea, I'll text them now!
GEORGIE: It's also the investment bank's role to
negotiate the terms of the merger or acquisition.
LUCY: Hello?
Ah...
OK.
They say they can't afford it – none one is willing to go above £80 a week.
GEORGIE: Hiya!
Look, we'll cut you a deal – you guys can pay less if you're willing to take the
smaller rooms.
Also, did Lucy mention how close the house is to uni?
What you'll be paying in rent you'll be saving by not having to get the bus.
ZACH: I'll send them pictures so they can see
how beaut it is inside.
GEORGIE: Uh huh, uh huh,
I think they're tempted!
Yeah, really nice house, really big, great for parties.
GEORGIE: It's the role of the investment Bank to
act as a trusted advisor to clients in their corporate finance decisions, and to use the
investment bank's research and insight into the industry, to guide them in their investments,
equity and debt.
Yeah, yeah.
Amazing, we'll send you the stuff over now.
They're in!
LUCY: Oh yes!
I'll call the landlord.
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