What is a merchant bank?
Merchant Bank (MB) is a financial establishment that gives the money for debt or equity financings. Most commonly, merchant banks provide services for large corporations. Usually, they include fundraising, advising, underwriting, or money loans.
Such banks are commonly independent so the investments can be different. The MB implements advisory assistance on corporate finance matters such as the purchase or sale of a business. The bank can evolve into the substitute source of capital for medium-sized organizations.
The MBs, for the most part, cooperate with firms or large companies that are incapable to increase capital with the help of the IPO by giving mezzanine financing, bridge financing, equity financing, and corporate credit outputs.
Great MBs establish equity confidentially along with various banking establishments by obtaining a reasonable share of partnership from the corporations which have a considerable capability for high growth levels in order to close the gap between the public store and investment funds.
For instance, in the UK, the merchant bank equals the investment bank. So, it will offer the services that are typical for the investment banks. At the same time in the United States MB performs the investment bank’s functions but somewhat narrows them. That lives US-based merchant banks to catering to multinational large corporation needs. Anyway, the can also provide consulting services.