Businesses hire investment banks for financial transactions. Boutique investment banks are smaller and specialize in certain industries, while large banks have divisions for multiple industries. Boutique banks may have lower fees and can work with larger banks for big transactions. They may also be started by successful bankers from larger banks.
Corporations hire investment bankers to carry out some of the most significant financial transactions allowed in the markets. Some of these banks are institutions and some are more niche focused boutique investment banks. Boutique firms are smaller than banking institutions but earn business based on the quality of individual investment bankers. As a result, small boutique investment banks may be chosen by a corporation over a large banking institution strictly based on an executive relationship.
There are several reasons why a business would look to an investment bank, whether it’s a large banking institution or a boutique company. Some of these criteria include selling stock or shares on public markets for the first time and for subsequent times, raising equity or debt on public markets in order to complete a major corporate event, such as an organic expansion or merger with another company. All of these endeavors require the skill of an investment banker, and many boutique investment banks have the muscle to complete all of these things.
The largest of investment banks are typically based in large cities, but boutique investment banks are often located in smaller cities. For businesses interested in doing business with a local boutique, this feature comes into play. There are also some boutique companies that have a specialization in the sector, such as energy. These firms will hire energy banking experts who understand deals and how an industry works. This differs from a large banking institution, which most likely does not specialize in a particular industry but instead has a hand in multiple industry groups, although it may have divisions dedicated to each industry.
The fee structure associated with boutique investment banks is likely to be less than the cost of hiring a larger firm. This could be a deciding factor when a company hires an investment bank. There are many cases, however, where a company hires more than one investment bank. For example, there might be one large investment bank and several boutique investment banks hired for a large transaction, such as a large-scale initial public offering or blockbuster merger. In this case, the bankers work together on behalf of the company to complete a deal.
Boutique investment banks are often an offshoot of a larger banking company. For example, a successful banker at a large bank may decide that he wants to earn a larger share of profits on operations, or he may simply have an entrepreneurial spirit. In this case, the banker might leave the large establishment and start his own boutique firm, in which case the banker will often try to keep as many clients as possible from his previous employer.
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