M&A - Investment banks are active in mergers and acquisitions, LBOs - leveraged buyouts, restructuring of companies, recapitalizations, restructuring of insolvent and distressed companies. These companies operate in one or more of the following ways:

1. Identifying M&A candidates for mergers or acquisitions.

2. Advising the board of directors of the acquiring companies or target companies on the price and non-price terms for the exchange

3. Assisting companies that are acquisition targets to prevent unfriendly takeover attempts.

4. Assisting acquired companies in obtaining necessary funds to complete acquisitions.

5. Providing an unbiased opinion to the Board of Directors regarding proposed mergers, acquisitions or asset sales.

Another area where investment banks provide advice is the capital structure of corporations. Significant changes in operating structure or corporate strategy are intended to improve performance. Such reforms are called financial restructuring of the company. This may be the result of an attempt to avoid bankruptcy, to avoid problems with creditors, or to restructure the company as permitted by the bankruptcy code.

The activities described above generate fee income which can be either a fixed retainer, as well as a fee based on the size of the transaction in the case of a merger or acquisition. For most of these activities the capital of the investment bank is not at risk. However, if an investment bank finances the acquisition, it puts its capital at risk.

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