Frequently Asked Questions about Investment Banking

CEO at Laidlaw & Company (UK) Ltd. in New York City, Matt Eitner has been working in the finance industry for over two decades and has held managerial positions at several financial institutions. Matt Eitner is an experienced equities trader and held a VP position at Casimir Capital, a boutique investment bank.

Investment banks aren’t like typical savings and loan institutions geared to the public. Rather, they work with large entities as securities agents, assist with mergers, and provide other support services. Here are some common questions that people tend to have about investment banks.

Q: How do investment banks raise capital?
A: The principal mechanisms are debt and equity offerings such as IPOs, selling shares, issuing bonds, and working with credit facilities.

Q: What is a boutique investment bank?
A: Just about any investment bank that doesn’t belong in the bulge bracket (the world's largest international investment banks) can be considered boutique. This includes those that specialize in specific industries or products or in working with small to mid-sized clients.

Q: What’s the best investment bank?
A: The answer really depends on the criteria used to grade the banks. There are numerous listings that evaluate investment banks by volume, prestige, number of deals, etc.

Capital Market versus Stock Market

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Chief Executive Officer Matt Eitner’s job with Laidlaw & Company, based in New York City, involves assisting clients in making wealth management decisions. As an investment banker and asset manager, Matt Eitner works in both the capital and stock markets to advise clients of the best ways to build their portfolio. Capital markets differ from the stock market in a few key ways.

One core difference is in the scope of what is traded in each type of market. Capital markets encompass a wide range of investments, of which the stock market is one category. A broad range of securities are traded on the capital market, including derivative options, such as debt, and commodity futures, which involve buying and selling raw material at specific dates at specific prices. The stock market, alternatively, is constrained to the buying and selling of shares in companies that have gone public.

Another difference relates to who has access to these markets. Some capital markets are accessible to the public, however, some markets are only accessible by large institutions. Within the capital markets, stocks on the NYSE and NASDAQ are accessible by the public.

Finally, capital markets are comprised of primary and secondary markets. Primary markets function to sell shares of stock to specific investors through an initial public offering (IPO), and the secondary market is the stock market, where buyers and sellers meet to trade shares.

Key Responsibilities of an Investment Bank in Mergers and Acquisitions

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With a career spanning nearly two decades, Matt Eitner has served in various leadership roles with leading investment firms in New Jersey and New York. Matt Eitner was named the CEO only six months after joining Laidlaw & Company, an investment banking and brokerage firm serving high-net-worth and institutional clients.

Investment banks specialize in complex financial transactions, including facilitating mergers and acquisitions (M&A). Listed below are some of the responsibilities of an investment bank in an M&A.

1. Valuation. Investment banks evaluate the value of a possible acquisition and help both parties agree on a fair price. They create financial models to capture the fixed and variable financial components that factor into the valuation.

2. Sell-side or buy-side work. An investment bank can represent either a potential acquirer, a potential seller, or both in the case of a merger. An investment bank performs what is known as a buy-side work, wherein they study the market to find a desirable company that best suits the strategic goals of the firm that it represents. On the other hand, a company may approach an investment bank to conduct a sell-side work and look for a buyer who is willing to purchase an entire company or part of it.

3. Financing. Should a potential buyer require funds to acquire a company, investment banks can act as an intermediary in selling securities or raising debt financing. Through valuation, investment banks can determine the best price of new shares and find investors who will buy the newly issued bonds or equities.

What Are Special Purpose Vehicles?

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The CEO of Laidlaw & Company (UK), Ltd., Matt Eitner has been leading the boutique investment bank since 2011. Working in the finance sector for more than 10 years, Matt Eitner has developed a professional interest in such things as special purpose vehicles (SPVs).

A legal entity, an SPV is a company subsidiary created with the purpose of completing a business activity while protecting the parent company from risk. Since SPVs are created with certain purposes in mind, their operations are often limited to financing or buying specific assets. 

However, SPVs are wholly separate from their parent company and continue operating even if the parent company goes bankrupt. Further, assets held by SPVs are not viewed as assets of the parent company, which protects them from financial issues. SPVs may also gather their own investors since they are their own legal entity.

What Are Alternative Investments?

Experienced investment banker Matt Eitner serves as chief executive officer of Laidlaw & Company Ltd. Tasked with managing clients’ wealth, Matt Eitner provides comprehensive investment options including alternative investments. 

Alternative investments are investments in assets outside the traditional stocks, bonds, and cash mix. This class of investments provides an alternative path to allocating wealth for the purposes of growing it over time or earning returns from it. 

Real estate and its derivations, stocks in private companies, hedge funds, venture capital, and commodities such as oil and gold have become widely accepted alternative investments. Other types of alternative assets include tax lien certificates, intellectual property, art and other collectibles, mineral rights, and equipment leasing. 

There are several reasons why investors may allocate capital to alternative investments. For one, these investments typically have a low correlation to traditional investments such as stocks and bonds. Therefore, they are a good option for diversification. Other reasons include tax advantages and higher potential for earning returns.