Investment bankers working on mergers and acquisitions (M&A) can work on different sides of a deal. This can either be the “buy-side” or the “sell-side”.
For more free resources delivered regularly to your inbox, sign up for the Close the Deal Newsletter.
When thinking about an M&A deal, there are 2 main parties involved: the buyer and the seller. Depending on who you are advising determines whether you are on the buy-side or the sell-side.
Buy-Side – Buys and invests in businesses
Sell-Side – Aims to promote the selling of a business to the buy-side
More generally in finance, the buy-side refers to someone purchasing securities or companies for sale. You already have or can secure capital to invest but need to determine where and what you will invest in. This is why moving into private equity is often described as “moving to the buy-side”. All institutional investors, like hedge funds, mutual funds, insurance companies and pension funds are on the buy-side.
In an M&A transaction, the buy-side advisor will research and present opportunities to their client, make initial approaches, chair buyer meetings, choose an offer price, submit and negotiate offers.
The sell-side refers to someone selling products, whether that be securities, like stocks or bonds, or an organisation. This includes when investment banks advise on debt capital markets (DCM) or IPO/Equity capital markets (ECM) transactions.
In March 2022, Evercore advised Advent International and Permira Advisers, multinational private equity/investment firms, on its acquisition of McAfee Corp. We can say Evercore was the buy-side advisor on this transaction.
In April 2022, Goldman Sachs, JPMorgan Chase and Allen & Company were financial advisors to Twitter on its sale to Elon Musk. Goldman Sachs, JPMorgan Chase and Allen & Company were sell-side advisors on this transaction.
How to Answer “What is the Difference Between Buy-Side and Sell-Side” Interview Question
The differentiation between buy-side and sell-side is important to remember in case studies and technical interviews in investment banking, private equity or corporate finance.
A sample answer to the question “What is the difference between the buy-side and the sell-side?” could be:
“The buy-side in financial markets buys and invests in products such as securities or organisations. On the other hand, the sell-side relates to creation, promotion, and selling these products.”
“In M&A, the buy-side advisor advises a company that is looking to acquire another or part of another company. The sell-side advisor advises on the sale or divestment of a business”
Join our M&A Competition to understand what investment bankers really do and to prepare for a career in corporate finance, private equity or investment banking.
コメント