Mason Securities Club: Can an entrepreneur use the services of an investment banker?
Article by Roland Harris, President of the Securities Club at Mason
I’m Roland Harris, a senior at George Mason University. Along with studying economics, I’m the president of the securities club and currently work as an intern at Smith Barney in Tyson’s Corner. To say the least, I have an interest in financial markets and asset management. In running the Securities club at George Mason, I encounter many aspiring investment bankers. The most common thing about students that approach me is that they are not quite sure what investment banking is all about. Truth be told, the banking process is similar at all levels- the clients, products, assets, and liabilities differ, but the concepts akin to dealings between lenders and investors hold true over the entire spectrum of banking. I make the point because people understand the importance of personal banking but neglect some of the most critical services that banks provide in other areas of life. Let’s explore a specific area of your life: your small to midsize business.
Viacom announced a $750,000,000 bond issuance led by Deutsche Bank last Tuesday. The process mega-billion-dollar corporations go through to borrow money is not much different from what we go through when consulting our favorite lenders about mortgages. We seek capital like corporations, so why don’t small business owner take advantage of financial consultation like corporations do. Perhaps your employees’ retirement plan could be revised to better benefit your team? Is there a way to pass more of your wealth on to your children and not Uncle Sam? Do taxes affect your business’ profitability? To help navigate these issues, you can put an investment banker to work for you at any point during your business’ life span. If Fortune 500 companies look to advisors to help them get the most out of every penny they have, why shouldn’t you do the same?
So what are some of the things that business owners and financial advisors talk about? My supervisor, George Cabalu, an advisor with Smith Barney discusses a typical conversation between him and a business owner, “When you have someone come in like that, accessing capital is an issue. Their retirement plan, do they contribute as much as allowed to their 401k? Business succession or estate planning . . . in case anything happens to that individual what happens to that company: individual life insurance and buy sell agreements. Lastly, further down the road, talk about an exit strategy, nobody want to work forever. [You are thinking] I have been in business for 10 years, I've got 20 years to go until my kids might take over, or I could sell the company to my employees. The company may also be at a point where they are getting offers from competition.”
There are a lot of things to consider. The technical side of finance can make it hard to appreciate where the benefits are. I asked George about the real benefit of advisement. “Our goal is to act as a client’s personal chief financial officer - our goal is to look at the big picture, work with the CFO, are you doing all these different things, bring in specialist on lending, retirement planning, and structure strategies that will address their needs.”
If the busiest people in the world are small business owners, then the second busiest people in the world are investment bankers. It's time to put them to work for you. If you are thinking about how tax strategies, managing growth, automating cash management, or discovering ways you can pass on your legacy and transfer as much to your loved ones and as little to the government as possible, then you are on the right track. Most advisors do not charge for consultations because relationships do take time to develop. So ask a trusted friend who you should go see, ask your best clients who their personal investment bankers are; the bottom line is there is someone out there that will look after you like you look after your own business. You can be the investment of a financial advisor.
For more information on Investment Bankers, contact one! George Cabalu at Smith Barney - 703-556-8143
About the Mason Securities Club: The Mason securities club arose from a gathering of two driven yet uninformed minds in February of this year. We wanted to trade securities when we graduated. We wanted the pressure and glory of working on The Street. Ambition led us through the formative stages of our club. Without structure and experience, that ambition was all that kept us together long enough to get officially approved. Our club is only seven months young, however we believe we are primed to leverage our network and hard work to accomplish our goal: invigorating financial knowledge and awareness to for betterment of our community.