You may have heard the terms buy-side and sell-side when it comes to careers in finance. Have you heard that the two sides have different reputations, industry standards, and cultures?
You’ll hear that once you move the buy-side from the sell-side, you’ll never go back. How much truth is there in that statement?
If you’re curious about what this all means, read on to find out about the key difference between these finance terms.
Sell-Side
What is the sell-side?
You’ll often hear that people who work on the sell-side have to hustle. These are the investment bankers who promote stocks, bonds, or other financial products to others.
You’ll hear that you’re constantly working to please your clients and to stay on top of your market analysis.
It is misleading to say the sell-side has worse hours and worse promotional structure, though. It all depends on what kind of sell-side work you are doing.
Are you an investment banker? You may be working on big deals, and the hours might be highly irregular. You may have to start at 5 am and finish at 2 am the next morning.
However, if you’re on the sell-side and you work with stocks in the public market, then your hours will be a lot more predictable. You’ll be working around market open and market close.
Buy-Side
Some of the more famous buy-side careers include working as a hedge fund manager or with a private equity fund.
Instead of pitching stocks, people on this side of finance have the money and are looking to make purchases so they can get a return on their investment.
Yes, this side is about actually investing.
You may have heard that their pay is more lucrative and that their hours are better, but this could be a myth; sometimes hours are irregular, and depending on your returns, your compensation will be irregular too.
Working in the buy-side could even mean working with the elderly or other personal clients to manage and grow their assets and estates.
Finance Terms: M&A
Now, the buy-and-sell sides in practice.
Mergers and Acquisitions is a sector of finance that many firms specialize in. These guys handle selling a business or buying a business.
These firms assist other companies and assets in either merging (combining two firms) or acquiring (where one firm purchase another outright).
From its role, you would assume that it works with both the sell-side and buy-side in the world of finance. And people who work in M&A definitely do.
If you’re working on the buy-side of M&A, that means you are working with other buyers to find good opportunities for acquisition.
For example, you could be working with a private equity firm looking to acquire a mature startup, and facilitating the deal. This would be the acquisition part of merger and acquisition.
If you’re working on the sell-side of M&A, it’s likely you’ll be working with sellers who are trying to make a sale of the client’s business. The sell-side m&a process can involve private auctions of the sale, targeted auctions, or more exclusive negotiations.
Which Side Appeals to You?
There’s no easy answer to this question. Maybe you can go by heuristics; are you more interested in businesses? Maybe you’d like to work on big deals as part of sell-side M&A is more interesting to you.
Are you intensely analytical and love investing and researching public markets? Then maybe a buy-side role is more suitable for you.
At the end of the day, these finance terms and their associated cultures are just heuristics and you may want to gain actual experience before committing to either or.
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