What Is Equity Capital Markets (ECM)?

Austin Anderson

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Austin Anderson WSO Editorial Board

Expertise: Consulting | Other

Equity Capital Markets (ECM) is the team / group that is responsible for providing advice on equity, equity-linked and equity derived products, including shares, futures, swaps and options.

An ECM group will work closely with a client to organize transactions, structure the equity offering, and to improve valuation.

Define Equity Capital Markets Work

Some activities that an ECM group will advise on are:

  • Marketing
  • Distribution of new stock
  • IPOs
  • Roadshows
  • Equity private placements

What is an IPO?

An IPO is an initial public offering, in which the equity capital markets team helps a company issue shares to the public market to invest in on public exchanges.

What is a Private Placement?

A private placement is when a ECM team helps a company issue equity (not traded on an exchange) to a buyer or helps an existing investor sell shares to another private entity.

What is a Roadshow?

A roadshow is when bankers take the company looking to issue equity (or other financial instrument) around to potential large-scale investors such as hedge funds and pension funds. Together the bankers and the company management team pitch the new issue to potential investors.

Related Terms

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Austin Anderson

Austin Anderson is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. Austin has been working with Ernst & Young for over four years, starting as a senior consultant before being promoted to a manager. At EY, he focuses on strategy, process and operations improvement, and business transformation consulting services focused on health provider, payer, and public health organizations. He received his BS and MBA from the University of Michigan. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.