Editing Capital market (section)

===Company on primary markets===
When a company wants to raise money for long-term investment, one of its first decisions is whether to do so by issuing bonds or shares. If it chooses shares, it avoids increasing its debt, and in some cases the new shareholders may also provide non-monetary help, such as expertise or useful contacts. On the other hand, a new issue of shares will dilute the ownership rights of the existing shareholders, and if they gain a controlling interest, the new shareholders may even replace senior managers. From an investor's point of view, shares offer the potential for higher returns and capital gains if the company does well. Conversely, bonds are safer if the company does poorly, as they are less prone to severe falls in price, and in the event of bankruptcy, bond owners may be paid something, while shareholders will receive nothing.

When a company raises finance from the primary market, the process is more likely to involve face-to-face meetings than other capital market transactions. Whether they choose to issue bonds or shares,{{efn|Sometimes the company will consult with the investment bank for advice before they make this decision.}} companies will typically enlist the services of an investment bank to mediate between themselves and the market. A team from the investment bank often meets with the company's senior managers to ensure their plans are sound. The bank then acts as an [[securities underwriting|underwriter]], and will arrange for a network of [[Broker-dealer|brokers]] to sell the bonds or shares to investors. This second stage is usually done mostly through computerized systems, though brokers will often phone up their favored clients to advise them of the opportunity. Companies can avoid paying fees to investment banks by using a [[direct public offering]], though this is not a common practice as it incurs other legal costs and can take up considerable management time.<ref name = "IntCM">''An Introduction to International Capital Markets: Products, Strategies, Participants'', Andrew M. Chisholm, (2009), Wiley, see esp Chapters 1, 4 & 8</ref>