Investment banking is all about providing expert advice and management services for complex, large financial transactions, and the provision of services related to raising and creation of capital for corporations, organizations or even governments. The two primary roles for IBs are in underwriting debt/ credit financing and the equity issuances like IPOs, acquisitions, mergers, and buyouts of and for companies. IBs also offer advice to clients in the sale of securities, placement of stocks, handling placing of investments and trade brokering for large companies, corporate clients, governments, independent entities and HNIs.
Investment banks also form groups to aid coverage and financial products. Such types of investment banking groups within the bank have FAs with immense expertise in specific verticals, market sectors and industries like the technology, health-care, and medical sectors. The groups improve relationships with client companies and facilitate the financing, M and A, equity issue, etc. Thus they bring in new business and clients to the bank. Other such groups may exist in leasing, asset financing, public and leveraged financing, syndicated financing, etc. Each of the bank’s products also will have one or more groups for M and A, restructuring, corporate finance, IPOs, etc. The groups can also be designated depending on the areas they work in like debt capital, equity capital markets, sales, asset management, equity research, and trading.
IB firms can also be categorized in an investment banking course into boutique, middle-market and bulge bracket banks. The boutique banks are further subdivided as elite and regional boutique banks. Size is used to classify banks and such a comparison can be relative to the number of offices, employees, average size of M and A deals and such parameters.
The size and deal sizes are both small and these banks may not offer a full range of services. The number of employees, offices, products and geographical areas of operation set them apart. Their deal size is typically 50 to 100 million USD deals or even lesser.
They are like the bulge bracket banks in terms of their deal-sizes ranging from large to over 1 billion USD deals happening most times. They are known to be in international, domestic and niche markets while lacking the global presence of the biggie like JP Morgan and Chase. Elite boutiques are known to limit services to M and A issues, asset management, and restructuring deals. The well-known players are Qatalyst Partners, Evercore Group LLC, Moelis & Company and Lazard LLC.
Some of the better known firms in this sector are the Cowen Group, Houlihan Lokey and Piper Jaffray Companies. Middle-market investment firms and banks are smaller than the large bulge-bracket and larger than the small regional banks. Their deal range is 50 to 500 million USD and they also offer the full range of services with special groups for specific sectors like the KBW for financial sector clients.
These banks are the large majors like Deutsche Bank, Goldman Sachs, Morgan Stanley, Credit Suisse Group AG, and the Bank of America. The numbers of employees, offices, large multi-million deals, large corporate clients, Fortune 500 clients, etc help identify such banks. Their transactions are always high value and run into thousands of millions even in slumping economic situations.
They have both domestic and international presence, global offices, and generally, offer the entire range of services. Though M and A are the main focus areas they are not shy to cross sell products.
Though bulge bracket banks do cater to Fortune 500’s and large companies or groups a startling fact is that many of them prefer to do business with elite boutique firms and banks instead.
If you aspire to work in IB research the type of work the bank does and see if it suits you. Remember that the one-type or size of a bank does not necessarily offer all products in the other groups. Should the M and A sector interest you, then, it is better to join smaller banks. They do offer quicker progression on the career path and enable you actually handling such deals.
To learn all about the types of investment banking, do an investment banking course at the reputed Imarticus Learning. Very simply put it is a wise first-step to the banking career with assured placements, soft-skill development modules and most importantly the best curriculum on the global markets with widely accepted certifications. Hurry! Start your IB journey today.