Buy Side vs Sell Side
So you have decided you are set on a career in finance. What next? The first step is working out what job sounds the most appealing to you, based on a variety of factors. These may include: working hours, compensation, firm size and reputation, skills required, networking and exit opportunities, and finally exposure to senior management or high-profile deals. To break up the variety of jobs out in the financial world, we can separate these into two categories: the buy-side and sell-side.
Simply put, the sell-side offers services to businesses in order to raise capital, either through equity (issuing new shares) or through debt (providing the business with credit facilities such as a loan or by issuing corporate bonds). The sell-side also offers advisory services such mergers & acquisitions (M&A) and in issuing and selling new stocks (IPO) & bonds (flotation). Within investment banking, these services are split into the following divisions: Equity Capital Management (ECM), Debt Capital Management (DCM) and M&A. Their primary goal here is to generate revenue in the form of commission through these services. Other sell-side industries include corporate, commercial and retail banking, stock-broking, market-making and insurance.
Top investment banks offering ECM, DCM and M&A services, are referred to as 'bulge-brackets'. These include Goldman Sachs, JP Morgan, Morgan Stanley, Bank of America Merrill Lynch, Citi Group, Nomura, UBS, Jefferies, Barclays and Credit Suisse. These banks usually take on the 'bigger' deals with greater market capitalization. Commercial banks with investment banking operations include BNP Paribas, Société Générale, Banco Santander, Deutsche Bank and HSBC. 'Boutique' banks, which are non-full service investment banks that specialize in at least one aspect of investment banking (generally corporate finance), include Rothschild, Lazard, Evercore, Charles Schwab and Allen & Co.
On the other hand, the buy-side will seek the aforementioned services from the sell-side, in an attempt to generate a return (or profit) for their investors. They may purchase stakes in companies, buy companies outright, or invest in a variety of securities (both equity and fixed income). This is notably seen in asset management, private equity and by hedge-funds. The biggest asset managers include Blackrock, The Vanguard Group, Wells Fargo, Aberdeen Standard Investments, BNY Mellon and Fidelity. Notable private equity firms include Blackstone, Carlyle Group, Apollo Global Management and KKR & Company. Top hedge-funds include Bridgewater Associates, AQR Capital Management, Two Sigma, BlueCrest Capital Management and Man Group.
Fundamental differences exist between the buy-side and the the sell-side, although a degree of overlap exists in their interactions with one another and the skills required for their jobs. The first factor worth addressin