When I was reading about investment banks, I came across the terms buy side and sell side. But what does that mean?
Buy side and sell side is a way of classifying investment banks based on the type of clients they represent, and the services they provide to those clients. Some investment banks can have separate divisions that focus on the buy and sell side of transactions.
So, what is a buy side investment bank?
Buy side firms represent clients that want to buy securities. Their clients typically have money that needs to be invested – like pension funds, endowments, insurance companies, hedge funds, etc. The main function of buy side investment banks is managing money on behalf of their clients to get them the best return possible.
And who does a sell side investment bank represent?
Sell side firms represent clients that issue or sell securities. These clients typically need to raise money in the most effective way possible. They could be corporations, advisory firms, or even other investment banks. The main function of sell side investment banks is marketing and selling securities to raise money for their clients.
Which one is better – buy side or sell side?
One is not better than the other – these two are dependent on each other, and often form the two sides of a financial transaction. For example, if a company is planning an IPO, it will hire a sell side investment bank to raise awareness of its IPO. A buy investment bank representing a pension fund can participate in the IPO if it thinks it would be a good place to put the client’s money. So both buy and sell side investment banks would have done their jobs well.
Podcast: Buy Side and Sell Side Investment Banks
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about Buy Side and Sell Side Investment Banks: What are Buy Side and Sell Side Investment Banks, What type of clients do buy side investment banks and sell side investment banks represent, Which one is better – buy side or sell side, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/what-is-a-buy-side-and-sell-side-investment-bank/