private investors may know these famous companies like Tesla, but they may not know the details of their business operations. The investment bankers create a prospectus which describes the "story" of how these companies plan to make money, present financials in a way that is understandable (albeit likely an optimistic way), and then sell the investment as an opportunity.
For doing this work, the bankers do get paid handsomely. Whether this work results in a better investment price for said company remains to be determined tbh, but on the whole, i suspect it must be net positive, otherwise this method of IPO won't have continued for a century.
>"The investment bankers create a prospectus which describes the "story" of how these companies plan to make money, present financials in a way that is understandable (albeit likely an optimistic way), and then sell the investment as an opportunity."
How different are these prospectus from the reports that the companies already provide to their investors and boards though? I guess I'm asking isn't that "story" already written for them?
Sure. But that service is largely marketing. They do a roadshow and talk up your company to everyone who will listen.
That's certainly a valuable service. I'm sure it's even worth it to many companies.
I don't really see how it's that useful for well known B2C companies (e.g. Facebook and Tesla).