Investment Bank
An investment bank is a financial institution that advises on capital raising, M&A, and structured financing, often acting as an intermediary between issuers and investors.
Allocator relevance: Investment banks influence deal flow and pricing—allocators must understand intermediated processes and incentives.
Expanded Definition
Investment banks can lead capital raises, run sell-side processes, structure financings, and provide strategic advisory. In private markets, banks often shape process dynamics: timelines, information access, bidding pressure, and valuation framing.
For allocators, bank-intermediated processes can mean higher competition and faster timelines, making diligence discipline and governance even more important.
Decision Authority & Governance
Decision authority: banks advise, but the issuer/sponsor controls final decisions. Governance issues include conflicts (multiple mandates), information consistency, and fair disclosure across investors. Allocators should track whether processes are controlled, rushed, or selectively disclosed.
Common Misconceptions
- Bank-led means “clean process.”
- The bank’s narrative is objective.
- Banks reduce diligence needs because materials are polished.
Key Takeaways
- Banks optimize processes; incentives matter.
- Underwriting discipline matters most in competitive rounds.
- Treat marketing materials as inputs, not facts.