Product Groups within Investment Banking work on specific deals, such as Mergers & Acquisitions, Equity Capital Markets, Debt Capital Markets, and Leveraged Finance. On the other hand, in industry groups, bankers work within one specific industry, such as healthcare, but on many different types of deals.
Investment banks offer their clients many different services, also known as products, to their clients. These services include mergers & acquisitions, equity capital markets, debt capital markets, and leveraged finance. Bankers working in product groups work on one specific deal type across many different industries.
What are the different products?
With mergers & acquisition deals, there are two different types: buy-side deals and sell-side deals. Buy-side deals occur when the client wants to purchase another company and would like assistance in financing the purchase. Sell-side deals occur when a client would like to sell their company and would like assistance in this process. Equity capital markets can be described as the intersection between investment banking and sales and trading, and bankers who work in this specific product group help a company raise equity capital. On the other hand, debt capital markets raise funds by trading debt securities. In leveraged finance, bankers provide advice to companies to raise debt, but while LevFin focuses in below-investment grade issuances that fund different transactions, DCM focuses on investment-grade debt issuances that fund everyday transactions.
There are many different types of industries, such as healthcare, natural resources, technology & media & telecommunications (TMT), financial institutions group (FIG), industrials, and real-estate. Bankers working in industry groups work on different types of products within a specific industry.
Putting It All Together
If there is a deal between two pharmaceutical companies, two different bankers are required to help with this deal: the M&A banker and the healthcare banker. The healthcare banker would do most of the work on the initial pitch, such as compiling a list of potential buyers. In the next step, the M&A process, both bankers would be involved, but the M&A banker is more likely to build the models. However, both the M&A banker and healthcare banker would be involved in the closing dinner, equally sharing the acknowledgement of contributions that led to the successful deal.