Overview of the Corporate Finance Sectors
Financial organisations operating within the corporate finance sector deal with issues surrounding the funding sources, wealth creation, planning and allocation of financial resources of large organisations. Most clients are already public limited companies. Corporate advisers provide financial planning advice to Directors of companies seeking to raise funds from money markets or through share allocations.
Similarly, there are many expert firms providing venture capital services, business loans and diversified lending to fast-growing companies hoping to raise working capital or float on a financial exchange (such as the Alternative Investment Market all the NASDAQ). There are many well-established professional roles within the corporate finance sectors. These include senior financial advisers, brokers, lawyers, chartered accountants and management specialists.
Investment banks are the main type of corporate financier and have teams of analysts dedicated to vertical markets. Investment banking analysts constantly analyse the financial health of publicly listed companies. They assess recent financial results, company announcements, dividend yields, exposure to market risk and threats from major competitors. Many analysts provide public recommendation to private investors regarding their opinions on whether to buy, sell or hold shares in specific companies or tracking funds.
Many large organisations have need for the services of a management consultancy to help them budget and organise large capital projects, reorganisations, management buyouts and mergers. Consequently, many organisations need to borrow large sums to finance major business activity. Many seek further investment funding from existing sources, or else attempt to renegotiate existing business debt (typically from banks). Management advisers also provide expert planning and analysis of working capital to help work out dividend policies, return on investment, shareholder value, and avoid cashflow difficulties.
Although most corporate finance activity occurs behind the privacy of closed doors, much of the final decisions made will then be announced using electronic data communication channels. For example, there are a host of online information services (such as quotes and charts subscription services) providing real time information to investors. These computer services' providers utilise exchange trading information, news feeds, company press releases and other electronic data sources to help investors make instant decisions. This provides the market with instant feedback regarding deals and decisions related to the capital structure of organisations.
There are many specialist providers of trading systems operating in the corporate finance sector. For example, foreign exchange services provide instant quotes for traders and investors using software driven quotation systems. These include spot prices and historical information related to global currency prices. These systems are highly regulated and hugely expensive to implement. Most clients of this type of platforms will include major banking establishments. In turn banks will use this capacity to offer its business customers the ability to exchange currency between one country and another.