Hey monkeys, This questions should not delve into PE vs IBD discussions but rather on the profitability of either side for an investment bank. I came across this question at an interview with an MM. Interviewer: What is more profitable to an investment bank? Sell-side or buy-side engagements? I don’t remember the exact answer to the question but I think it had something to do with fees being collected upon successful transaction... Could somebody enlighten me please? ecobiz

In terms of top-line, sellside generally has a higher certainty of close meaning sellside engagements are more likely to generate success fees. The basic reasoning here is on the sellside, the bank is running an auction with several or many potential buyers, generating competitive tension, and generally has optionality in running the most likely, interested, and compelling buyers to the finish line. On the buyside, the bank has to be representing the buyer that wins the auction. In terms of dollars earned for work performed, it depends.

Profitability: Sell-side vs. buy-side

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Profitability: Sell-side vs. buy-side

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