f. What criteria are important in choosing an investment bank?


Randy’s, a family-owned restaurant chain operating in Alabama, has grown to the point that expansion throughout the entire Southeast is feasible. The proposed expansion would require the firm to raise about $18.3 million in new capital. Because Randy’s currently has a debt ratio of 50% and because family members already have all their personal wealth invested in the company, the family would like to sell common stock to the public to raise the $18.3 million. However, the family wants to retain voting control. You have been asked to brief family members on the issues involved by answering the following questions:
f. What criteria are important in choosing an investment bank?

Answer and ExplanationSolution by a verified expert


Criterion for choosing investment banker:

An investment banker should have a good reputation and position in the market.
An investment banker should be highly experienced in terms of handling trading on the behalf of the company, providing assistance to the company regarding issues and setting of price.
An investor banker should have a reach with a quite good and accredited band of investors who will buy the securities of the company.
An investment banker should be a trustworthy person with whom the company can share its personal data conveniently.
An investment banker should possess some entrepreneurial skills and come up with innovative ideas and growth plans for the investments of companies.

Verified Answer

Criterion for choosing investment banker:

He/She must be a person of good character,trust, moral and reputation.
He/She should be highly experienced in the investment sector.
He/She must have entrepreneurial skills that provide various innovation and capital growth plans.
He/She must have contact with wealthy investors.

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