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Role of Investment Bankers in Merger and Acquisition.

Investment banker plays an Important role in M&A.  They help the merging companies in many ways like.

  • They help in organising mergers.
  • They help target companies to develop and implement defensive tactics.
  • They help in valuing the target company.
  • They help in financing mergers and,
  • They invest in stock of firms which are likely to merge.

Investment bankers gain huge profits through these merger related activities.

  1. Organizing Mergers: Suppose steel manufacturers interested in merging with one of its suppliers such as iron or coal mining firm.  Investment bankers help steel manufactures to acquire its suppliers.
  2. Developing Defensive Tactics: In order to avoid takeover by big firms, a target firm make use of Investment banking firm and a law firm.  Some of the defensive strategies are Golden parachutes, Poison pills, white square, white Knights etc.
  3. Establishing a Fair Value.
  4. Financing Mergers: If acquiring firms do not have enough fund of cash, then there is need for searching source of funds. (FYI: Earlier in 1980, Junk bonds were the only source for financing mergers and the primary developer for those were Drekel Burnham Lambert)
  5. Arbitrage Operations: Here it refers to buying and selling of securities in different markets at different prices and taking risk free return.


  1. Nice blog and the posted content seems quite informative to get more idea about Investment Banking Process and this blog helped me a lot on the same.

    Thanks for sharing the post....


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