Business, Legal & Accounting Glossary
Boutique investment banks are small, non-full-service investment banks that specialise in specific areas of investment banking, such as corporate finance. They typically work on the sell-side for middle-market companies. They perform the same functions as larger bulge-bracket banks, but for smaller transaction sizes, typically ranging from $5 to $100 million in enterprise value.
A full-service investment bank would be involved in underwriting, trading, merchant banking, and so on, whereas boutique investment banks specialise in a specific market. Regional investment banks or elites with a larger national or international presence may also be included. Capital raising, mergers and acquisitions (buy and sell-side engagements), and restructuring and reorganisation are the primary activities of boutique investment banks.
The majority of boutique investment banks are founded or led by former partners of large banks who wanted to be more involved in the process but were constrained. Furthermore, boutique investment banks filled the gaps left by most large banks, which would not look at smaller deals unless they were exceptional in value.
Boutique investment banks specialise in a specific industry or transaction, or they may specialise in specific geographical areas, and are thus well-known in their niche. Their fees are lower than those of bulge bracket investment banks, but these smaller firms can provide clients with unwavering attention, resulting in long-term relationships rather than transaction-based ones. In addition, in a boutique firm, the deal maker may be more directly involved in the transaction than in a larger investment bank, where analysts and associates would do the majority of the work in a deal.
A boutique investment bank may not have the same network of contacts as a larger firm to find the best prospective buyers. Online social networks and deal sourcing platforms are helping to close the gap. Smaller firms may lack the professional resources required to properly execute large and complex transactions. Another disadvantage of the boutique investment bank is that the suite of services available to growing companies, such as the ability to go public, is limited. Often, the services are limited to the expertise of the firm’s deal-makers.
Private Investment Banker
Investment Bank
Bulge Bracket
Middle Market
Sell Side
Buy Side
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This glossary post was last updated: 11th August, 2022 | 0 Views.