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Investment Underwriters

History

The investment field has early roots in the 1600s, when merchant bankers helped to finance investments overseas. In 1792, the New York Stock Exchange was established, enabling a greater number of people to invest. It was during the Civil War, in the 1860s, that bonds became popular. Banks sold government bonds to individual investors to help pay for the war. Large investment companies started to form around this time, including Goldman Sachs and Bache & Company, which was later acquired by Prudential Financial. By the 1900s, companies were raising capital by selling securities in the public markets. Financial firms partnered with the issuing companies, taking on tasks such as underwriting the financing, distributing the public offerings, and handling transactions details.

The investment banking industry has been in transition since the financial crisis of 2008. Some banks, such as Morgan Stanley and Credit Suisse, have retreated from their trading activities, focusing instead on expanding their wealth management divisions. Some companies are choosing not to use the services of investment bankers altogether during the acquisitions process. Companies will continue to need investment underwriters, however, for help with analyzing financial and operational performance, advising on various aspects of capitalization, and arranging and negotiating financial deals. Investment underwriters now use various technologies to accomplish their work, including financial analysis and spreadsheet software programs.

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