CONSULTATION WITH INVESTMENT BANKERS AND LENDERS
Another useful approach in deciding the proportion of various securities in a firm’s structure is to the opinion of investment analysts, institutional investors, investment bankers and lenders. analysts, having been in business for a considerable period of time, acquire expertise and access to information regarding securities of a large number of companies and know how the evaluates them. They are, therefore, in a better position to assess a particular financial plan.
Similarly, the opinions of prospective lenders and investors are likely to be very useful to the it is they who will alternately provide funds to the firm. Therefore, the type of securities they will prefer to buy is very significant information for the financial manager and helps taking a decision regarding the form of securities to be issued. It is imperative that if a decision is to contribute to the valuation of the firm, the finance manager must think in a similar to that of the investors.