Different Types of Investment Banks
There are various benefits when you start entering an investment bank. Investment banks provide investors with management services, complex financial transactions, and services including capital creation for corporations, organizations, and governments. The main exercises being practice by investment banks are to underwrite debts financing and Equity securities issuance. That involves initial public offering (IPO) and advising mergers and acquisitions (M&As) for companies.
Investment banks also provide security sales and stock placement together with handling investments and trade brokering especially for corporate clients and sovereign entities. They could be your primary advisors, planners, and managers when it comes to corporate restructuring, for instance, divestitures.
The section in investment banks usually includes industry coverage groups and or financial product groups. Ideally, industry coverage is established to separate groups in the bank, including expertise in the specific industry or market sector (technology or health care). The groups then develop client relationships with companies in different industries bringing financing services.
Their product group focuses on investment banking financial products, for instance, IPOs, M&As, and other financing types. There could also be separate products specializing in asset financing, leasing, leveraged financing, and public financing.
Firms in connection with investment banking industry are to distinguished into three categories – bulge bracket banks, middle-market banks, and boutique banks. When it comes with boutique banks, they are often further divided into regional boutiques and elite boutique banks. Elite boutique banks somehow have similarity with bulge bracket banks than the regional boutiques.
Investment bank classification is based mainly on size but what we’ve to mean on the term size varies in the context and might refer to the size of the bank, number of employees, or average size of M&A deals.
In terms of the firm’s size and typical deal size, the smallest investment banks among the other. Regional boutique often handles not more than a handful up to a dozen employees. This type of investment bank doesn’t usually offer all the financial services offered by a bulge bracket investment banks. It mainly specializes in a single area, for instance, hanging M&As in a specific market sector.
Somehow different from regional boutique banks, elite boutique investment banks are nearly similar with bulge bracket banks when it comes to the dollar value and the deals they manage (often over $1 billion). It’s a similarity with bulge bracket banks includes having common size nationwide and in the international presence and operates dozen of offices within multiple countries. But they often lack global presence similar to major investment banks such as JPMorgan Chase & Company.
Middle-market investment bank occupies the middle ground between smaller regional investment banks and bulge bracket investment banks. This kind of investment bank often works on deals beginning around regional level going up close the bulge bracket level, which usually range about $50 million up to $500 million (or more). Middle-market normally operates in the middle ground (geographical reach), with substantial large presence than regional boutique yet falling short on the multinational field of the bulge bracket banks.
The major and international investment banking firms and are easy to recognize names including Goldman Sachs, Deutsche Bank, Morgan Stanley, and Bank of America. Bulge bracket investment banks are the largest when it comes to numbers of offices and employees. Additionally, they handle the largest deals and clients who we could consider as large corporates. Bulge bracket banks usually handle multibillion-dollar M&A deals, yet still, depends on the overall state of the economy or of the particular client. These firms usually handle deals priced in the low hundred million.