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Financial Terms and Glossary

Merchant bank

Merchant Bank

A merchant bank is a financial institution that primarily engages in providing capital to companies in the form of equity rather than loans. Merchant banks also offer advisory services related to corporate finance, such as mergers and acquisitions (M&A), underwriting, and private equity investments. Unlike traditional commercial banks, merchant banks typically do not provide services to the general public but focus on larger businesses and institutional clients.

Example

A merchant bank advises a company on structuring a merger with a competitor and helps raise equity capital to fund the deal.

Key points

• Provides equity capital and corporate finance advisory services to companies.

• Specializes in mergers, acquisitions, underwriting, and private equity.

• Focuses on large businesses and institutional clients, not the general public.

Quick Answers to Curious Questions

What services does a merchant bank offer?

Merchant banks provide capital, corporate finance advisory, and underwriting services for mergers and acquisitions, among other services.

How do merchant banks differ from commercial banks?

Merchant banks focus on providing equity and advisory services to businesses, while commercial banks offer loans and services to the public.

Who are the typical clients of merchant banks?

Large businesses, institutional investors, and corporations are the primary clients of merchant banks.

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