Types of Investment Banking

Types of Investment Banking

Investment banking services provide companies with assistance for raising capital by underwriting or acting as their agent in issuing debt and equity securities, or arranging mergers and acquisitions.

Industry analysts categorize banks into three broad groups: bulge bracket, middle market and elite boutique markets. Most banks employ research departments which conduct macroeconomic, credit and equity analyses.

Bulge Bracket Banks

Bulge bracket investment banks are global firms offering M&A advisory, underwriting securities offerings, sales and trading services as well as asset management. They are considered major players in capital markets with extensive market shares in both debt and equity markets across multiple countries – not to mention an international presence and brand recognition that come hand-in-hand with working on some of the biggest deals possible.

Alongside M&A advisory, bulge bracket banks feature strong capital markets groups that help clients raise huge sums through debt and equity capital markets. Being chosen as lead syndicator can bring extra fees as well as add prestige that could boost business.

Aspiring professionals looking to launch a career in investment banking should pursue a bachelor’s degree in finance. Once professional experience has been gained, these candidates may take the necessary steps towards earning either a master’s in finance (MBA) or graduate certificate program certifications.

Middle-Market Banks

Here you will find banks that specialize in serving companies with annual revenues between $10 million and $1 billion, often known as middle-market investment banks (MM banks). They do not provide as diverse of a selection of services as bulge bracket or regional boutique investment banks but still provide ECM, DCM, M&A and restructuring as well as equity research as well as sales & trading divisions.

These firms may not have as prestigious a reputation, but their hardworking culture, solid exit opportunities, and generous cash compensation make them invaluable partners for companies collaborating with them.

Be cautious when reading online reviews and discussions of banks. Many people use commentary to exaggerate a bank’s strengths or weaknesses; such commentary isn’t useful when trying to determine whether a place is an ideal workplace. You should also carefully assess their numbers and performance.

Boutique Banks

Boutique investment banks are specialized investment banking firms that provide niche financial services. These firms often specialize in relationship-sourced deals with middle market companies. Transactions under $500 million are handled regularly. Boutique banks may specialize in technologies media real estate or energy industries as well.

Elite boutiques are typically established by senior bankers from bulge bracket firms who want to launch an investment bank dedicated solely to M&A advisory. Such firms typically operate both nationally and internationally.

Individuals looking for an entryway into business may benefit from working for smaller firms, which provide steep learning experiences with greater job security than larger firms. Unfortunately, small firms sometimes struggle to generate enough business during slow periods and could easily lose clients with one bad deal or scandal.


Retail banks accept deposits and lend to borrowers while investment banking undertakes higher-risk projects and clients. One of its core activities involves raising capital through selling securities like stocks or bonds to high net-worth individuals or organisations like pension funds.

An additional key activity involves finding, facilitating, arranging, and pricing mergers and acquisitions – such as leverage buyouts by private equity firms as well as restructuring and recapitalizing companies.

Conflicts of interest often arose in this area in the past. For instance, equity researchers often traded positive stock ratings to investment banking businesses for investment banking business – however laws, lawsuits and penalties have helped curb this practice. Other groups have become more responsible and no longer work directly with clients such as middle office “Credit Risk”, which monitors capital markets risk through review of trading activities utilizing VaR models; other non-revenue generating functions like internal corporate strategy groups are essential elements to business operations.

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