Buy Side Firms (2024)

FAQs

What are the appropriate descriptions of buy-side firms? ›

The financial institutions of a free-market economy include a segment called the buy-side: firms that purchase investment securities. These include insurance firms, mutual funds, hedge funds, and pension funds, that buy securities for their own accounts or for investors with the goal of generating a return.

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The best examples of buy-side firms are private equity firms, hedge funds, and venture capital firms. They all raise money from Limited Partners (LPs), such as pension funds, sovereign wealth funds, endowments, and insurers, and invest in companies and securities.

Buy-side jobs generally make more money, as they are taking the risk. Typically, the further out on the risk spectrum you go, the more possible upside you have. One case where people might want to stay on the sell-side and not go to the buy-side is if they don't have the personality to take risk.

Because private equity funds make money by buying and selling securities, they are considered to be buy-side. Like hedge funds, pension funds, and other asset managers, they invest on behalf of their clients and make profits when those assets deliver returns.

Buy Side M&A Explained

Buy side M&A is a process in which a company or individual seeks to acquire a business or asset. This approach is typically taken when the buyer is looking to expand their market presence, diversify their portfolio, or gain a competitive advantage.

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JPMorgan Chase, Goldman Sachs, and Morgan Stanley are examples of sell-side firms. These companies offer investment banking, sales, and trading services to institutional and individual clients. Sell-side analysts provide research reports to their clients to help them make informed investment decisions.

What do sell-side firms sell? ›

Sell-side is the part of the financial industry that is involved with the creation, promotion, and sale of stocks, bonds, foreign exchange, and other financial instruments to the public market. The sell-side can also include private capital market instruments such as private placements of debt and equity.

Buy-side e-commerce refers to resource-procuring transactions that use the internet for all related operations. Sell-side e-commerce refers to transactions where products and services are sold to a customer via the internet.

The Buy-Side would include types of firms such as Hedgefund's, Asset Managers, Pension funds etc. Household names such as: Blackrock, Vanguard, Charles Schwab and Fidelity are all examples of Buy-Side firms. The big Sell-Side firms would be the likes of Goldman Sachs, Morgan Stanley, JP Morgan, and Bank of America.

Buy-side companies make money by buying low and selling high trade activities. They have to create value by identifying and buying underpriced securities.

In terms of M&A, the buy-side means working with the buyers and finding opportunities for them to acquire other businesses. Sell-side M&A, on the other hand, means working with the sellers who are trying to find a counterparty for the sale of a client's business.

The difference between a buy-side contract and a sell-side contract seems straightforward and contained within the terms. "Buy-side" contracts involve buying things while "sell-side" contracts are used to transact sales with your customers.