An Example of a Followon Offering

New and Old Shares There are two types of shares that are sold in secondary offerings. When a company requires additional growth capital, it sells new shares to the public. When an existing shareholder wishes to sell a huge block of stock, old shares are sold to the public. Follow-on offerings often include both types of shares. Let's look at an example. Suppose Acme Company wished to raise 100 million to fund certain growth prospects. Suppose that at the same time, its biggest shareholder, a...

Buyout Firms and LBOs

Buyout firms, which are also called financial sponsors, acquire companies by borrowing substantial cash. These buyout firms (also called LBO firms) implement a management team they trust, improve sales and profits, and ultimately seek an exit strategy (usually a sale or IPO) for their investment within a few years. These firms are driven to achieve a high return on investment (ROI), and focus their efforts toward streamlining the acquired business and preparing the company for a future IPO or...

Trends In IBanking

Recent years have seen the return of the big bank merger. First came the October 2003 announcement that Bank of America would be acquiring FleetBoston for approximately 49 billion. In accepting the offer to merge, FleetBoston's chairman and CEO Charles Chad Gifford said that it became increasingly clear to us that scale is a tremendous advantage, if properly managed, adding that Bank of America was the one bank that was taking advantage of this scale. At the time, it looked like the large-scale...

The Morning Meeting

Every morning of every trading day, each l-banking firm both on and off Wall Street holds a morning meeting. What happens at these meetings Besides coffee all around and a few yawns, morning meetings generally are a way to brief sales, trading and research on market activity - past and expected. At smaller regional firms, the entire equity group usually meets the salesforce, traders, and research analysts. The bigger firms, because of their sheer size, wire speakers to an overhead speaking...

Corporate Finance

The stereotype of the corporate finance department is stuffy, arrogant white and male MBAs who frequent golf courses and talk on cell-phones nonstop. While this is increasingly less true, corporate finance remains the most white-shoe department in the typical investment bank. The atmosphere in corporate finance is, unlike that in sales and trading, often quiet and reserved. Junior bankers sit separated by cubicles, quietly crunching numbers. Depending on the firm, corporate finance can also be...