Investment banks help large organizations move capital, manage risk, and make complex financial decisions. Their clients include corporations, governments, financial institutions, and large investors like pension funds and private equity firms. These services are not for individuals or small businesses. They are built to support clients who deal with billions of dollars and need access to global markets.
Here are the most important services investment banks offer.
Helping Clients Raise Money
One of the most important services investment banks provide is helping clients raise money from investors. This can happen through selling shares or issuing bonds. For companies, the biggest step is often going public through an Initial Public Offering, or IPO. This process allows a company to sell shares to investors on the stock market for the first time. Investment banks manage the entire process, from setting the share price and preparing legal documents to promoting the deal to investors and listing the company on stock exchanges like NYSE or Nasdaq.
A well-known example is Alibaba’s $25 billion IPO in 2014. It remains one of the largest IPOs ever made. Investment banks like Goldman Sachs and Morgan Stanley helped Alibaba handle the pricing, investor outreach, and regulatory requirements that made the deal possible.
Companies can also raise money after going public by offering more shares in what is called a follow-on offering. Investment banks help manage these deals quickly and in line with market conditions.
Governments also raise money through investment banks, but they do it by issuing bonds. These bonds allow governments to borrow money from global investors to fund public services like healthcare, infrastructure, and education. In 2020, during the COVID-19 pandemic, governments around the world raised over $10 trillion by selling bonds. Investment banks played a key role by advising on bond terms, pricing, and timing, helping governments secure critical funding during one of the biggest economic challenges of the decade.
Advising on Mergers and Acquisitions
Investment banks also help companies when they want to buy another business or merge with a competitor. This service is called mergers and acquisitions, or M&A advisory. The bank helps the company find the right target, estimate its value, plan the deal structure, and manage the entire negotiation process. This includes working with lawyers, regulators, and investors to make sure the deal goes through smoothly.
A major example is Microsoft’s $69 billion acquisition of Activision Blizzard in 2022. This deal was one of the biggest technology acquisitions in history. Investment banks worked behind the scenes to advise on valuation, structure the payment, and manage regulatory approvals in different countries.
Investment banks also help companies sell parts of their business, restructure their operations, or prepare for private equity buyouts. These deals can reshape entire industries and require a high level of technical and strategic expertise.
Supporting Governments with Privatizations
Governments also turn to investment banks when they want to privatize state-owned companies. Privatization means moving a company from government ownership to private investors. Investment banks help manage this process by preparing the company for sale, setting the right price, and finding qualified investors. These deals are often sensitive because they affect public services, jobs, and national assets. Investment banks help governments balance these issues while achieving their financial goals.
Advising Large Investment Funds
Large investors such as pension funds, sovereign wealth funds, and private equity firms use investment banks to find new opportunities and manage complex investments. Investment banks help these clients research potential deals, evaluate financial risks, and structure the investment to fit their long-term strategy.
For example, Bain Capital works with investment banks to target companies in healthcare and technology. Investment banks help them analyze the business, manage negotiations, and secure financing. They also advise these investors on when and how to exit their investments, whether by selling to another buyer or launching an IPO.
Helping Financial Institutions Manage Risk and Markets
Financial firms such as banks, insurance companies, and investment funds also rely on investment banks to manage their financial health and market strategies. Investment banks help these clients turn loans like mortgages into tradable securities through a process called securitization. They also advise on restructuring their balance sheets to improve financial strength.
In addition to structuring deals, investment banks provide market access. They help clients buy and sell stocks, bonds, currencies, and other financial instruments. They also design strategies to help clients manage risks like interest rate changes or currency swings.
Bottom Line
Investment banks provide essential services to organizations that need to raise large amounts of money, make big business moves, and manage global financial risks. Their clients include companies, governments, financial institutions, and large investors. These services are complex, not because they are designed to be complicated, but because they deal with major economic and financial decisions that affect entire industries and economies.
When a company raises money to expand, it creates jobs. When a government issues bonds, it funds public services that improve lives. When investors make smart moves in the market, they help economies grow. Investment banks are built to handle this level of responsibility, making sure that these important moves happen safely, effectively, and with the right long-term impact.