It is a fundamental part of our understanding of modern business that no business is above the law and can operate outside of it. It follows that since such a large part of modern business is taken up with the issues and processes that come under corporate finance, that there should be armies of corporate solicitors dealing in this area every day.
Investment banking has a close and interrelated relationship with the world of corporate finance. Investment banking is the tool by which business corporations raise capital to fund expansion, restructuring or things such as mergers and acquisitions. The banks do this by acting as the company’s agent or actively underwriting in the issuance of securities.
It is often said that in the business world the big fish eat the little ones. While this is true it fails to allude to the fact the small fish and also merge together to become bigger fish. This is the area of corporate management known as mergers and acquisitions (M&A), where the purchase, sale and combination of different companies take place.
The size and scope of the private equity market has grown at a fairly even pace since the 1970s. Private equity is what is known as an asset class consisting of equity (‘stock’) securities (a financial instrument that represents financial value) that are not traded in an open and public way on the stock exchange.
There is supposedly a historical rivalry between investment bankers on the one hand and corporate solicitors on the other. Investment bankers think that corporate solicitors are too focused on documentation and the application of dense theory, while solicitors think that bankers are too focused on creating profit, sometimes by exploiting loopholes and getting round the law.
Venture capital is a term that applies to an investment that is used to start up a business or company. Essentially venture capital is invested to get something rolling, whether it’s to sell a new invention, product or new business plan.