Investment banks provide important services for companies, governments, and other institutions, with the purpose of acting as a mediator between the parties included. Most of the
, also known as “bulge bracket banks”, are full-service banks, providing a wider range of services to clients in addition to underwriting and advisory services, such as sales and trading, research, and asset management services. The investment bankers are
, which can take various forms depending on the agreement, but is usually made up by a cash fee paid when the deal has been completed, a fixed monthly fee, a success fee as a share of the deal value, or a combination of these fee types.
What is investment banking?
The main functions of investment banks are providing advisory services for mergers and acquisitions (M&A) and underwriting companies entering an initial public offering (IPO). Investment banks may provide both advisory and
underwriting functions when working with SPAC companies performing an IPO. When serving as the underwriter, the investment bank functions as the mediator between the investors and the company in the process. When working as an advisor for M&As, the investment bank functions as a mediator between the companies concerned by the acquisition. An IPO, however, does not necessarily need to have only one underwriter: When Saudi Arabian oil company Saudi Aramco had their IPO in 2019 – which is
to this day the largest IPO worldwide – a long list of many of the world’s largest investment banks were involved.
Which is the largest investment bank?
There are many ways to rank the largest investment banks: by fees, by revenue market share, by number of deals, and by underwriter value. Mainly the same top ten investment banks worldwide appear in all rankings, but the order varies depending on which measure is being observed. JPMorgan, for example, is the
largest investment bank in terms of revenue, while Citigroup is the
largest underwriter of special purchase acquisition company (SPAC) IPOs and number of SPAC deals. Meanwhile, Credit Suisse was the
underwriter of the largest IPO in the United States so far -Alibaba Group Holding in September 2014 - while in terms of deal value, Goldman Sachs is the
largest financial advisor to M&A transactions.
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