Major Similarities and Differences Between Sell Side and Buy Side

Are you in or looking to make a career in the investment banking industry? If yes, then it’s vital for you to know the difference between sell side and buy side. However, many of us are unaware of these essential terms and concepts. On many occasions, I have found students not only confused between the two terms but also about its usage in reference to investment banking roles in the industry.

Studies show that the sell side forms the 50 percent of the finance market while the buy side makes the other half. Let us explore the major highlights of sell side vs. Buy Side Research services.

Meaning

Sell side encompasses the entities which ease the decision making of the buy side. On the other hand, buy side includes entities that are often involved in making investment decisions.

Firms Involved

Where sell side includes firms such as commercial banking, investment banking, market makers and store brokers, buy side covers hedge funds, asset managers, retail investors, institutions investors etc.

Buy side firms are often bigger in terms of operations, but analyst may be lesser in number. These analysts usually interact with the sell side analysts. The number of analysts is higher when it comes to Sell Side Research services. These analysts are committed to the analysis of specific companies or sectors.

What They Do

Sell side companies keep track of the stocks, the performance of different companies and project their financials mainly based on trends and analysis. Sell side companies are generally “sell idea” to the client. These ideas are communicated for free in most cases. Their work is about financials and annual reports which may include a detailed analysis of the balance sheets, quarterly results, and other published data.

Buy side revolves around the entities that are used in deploying their capital. They may refer to the price and analysis offered by the investment banks for taking their investment decisions. Buy side has a pool of funds which is used for investing.

Goals

The main purpose of a sell side is to advise on research and close the deal. Sell side analysts conduct research and convince their investors to trade through their firm’s trading desk. In addition to that, the buy side firms work to beat the indices and generate investment returns for their valuable clients.

If you want to know more about buy side and sell side, Financial Modeling, and Analysis services, or anything else from the finance industry, you can contact Penterra Analytics now. The company provides excellent market research and analytics services.