Equity Sale means selling the common shares of that company instead of the assets. In a typical equity sale, the company retains the same value but the ownership structure shifts between the buyer and the seller.
It’s slightly different from an asset sale, wherein the buyer obtains the assets, including the liabilities (both undisclosed and disclosed) in a single unit. Therefore, equity sales will result in less commotion among the employees, consumers, and stakeholders of that company as the operation continues to be the same before the transaction was conceived.
Because of the simplicity after the successful transition from equity sale, buyers are more interested in this type of sale. The company, too, retains the same position without any hurdles from the setup requirements of a closing date.
However, before the deal is closed, the buyer should perform an additional assessment to foresee anything that the company needs to disclose, such as warranty obligations, pending litigation, and tax reassessment. This assessment is quite important because it will save the buyer from any contingencies in the future.
Traditionally, investment banks have attracted equity trading business from institutional investors by providing them with access to equity research analysts and the potential of being first in line for “hot” IPO shares that the investment bank underwrote.
A firm’s sales force is responsible for conveying information about particular securities to institutional investors.
Traders are the final link in the chain, buying and selling securities on behalf of these institutional clients and for their own firm in anticipation of changing market conditions and upon any customer request.
The role entails being the face of the firm and reaching out to potential clients and managing existing ones while constantly staying up-to-date with the firm's products and to monitor market activity.