These insights are communicated directly through the investment bank’s sales force and through equity research reports. The sell side research analyst supports the capital raising process as well as sales and trading in general by providing ratings and other hopefully value-adding insights on the firms they cover.
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The sales & trading function not only works on helping initial debt and equity offerings get subscribed, they are central to the ivnestment bank’s intermediary function in secondary capital markets, buying and selling already trading securities on behalf of clients (and sometimes for the bank’s own account “prop trading”).Įquity research analysts are also known as sell-side research analysts ( in contrast to buy side research analysts). Once a decision to raise capital is made, the sales & trading floor begins its job to contact investors and actually sell the securities. The DCM team plays the same role that ECM plays but on the debt capital side. For IPOs, for example, the ECM teams are the key hub in determining structure, pricing and and reconciling the clients’ objectives with current conditions in the capital markets. ECM’s job is to usher corporations through the process. Once the investment banker has established that a client is considering raising equity capital, ECM begins its work. The banker’s role is to probe and understand its corporate clients’ capital raising needs and to identify opportunities for the bank to win business. The investment banker is the primary relationship manager interfacing with corporations. Investment banking (M&A and corporate finance).The investment bank has several key functions that make its role as a seller of corporate securities to investors possible. In addition to helping companies raise capital, the investment bank’s sales & trading arm facilitates and executes trades on behalf of institutional investors in the secondary markets, where the bank matches up institutional buyers and sellers.Ī picture is worth a thousand words: Buy Side and Sell Side Infographic Roles on the sell side Those bonds and stocks are sold directly to institutional investors and are arranged through the investment bank’s equity capital markets (ECM) and debt capital markets (DCM) teams, who, along with the investment bank’s sales force, market via roadshows (see examples of roadshows) and distribute the securities to institutional clients. Investment banks work with companies to help them raise debt and equity capital. While we describe the various functions of the investment bank here, we can briefly outline its capital raising and secondary markets roles: They are the investors who buy the securities.Ī related function by the sell side is to facilitate buying and selling between investors of securities already trading on the secondary market. The buy side naturally refers to those institutional investors. It refers to a key function of the investment bank - namely to help companies raise debt and equity capital and then sell those securities to investors such as mutual funds, hedge funds, insurance companies, endowments and pension funds. Sell side refers primarily to the investment banking industry.
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You’ll often hear finance professionals describe their role as being either on the “sell side” or on the “buy side.” As is the case with a lot of finance jargon, what this exactly means depends on the context.