"Using" your balance sheet
Hi, I apologize if this is a dumb question but, I keep hearing people say that certain banks "use their balance sheets" to win business. I've specifically heard this more in terms of BBs. I've heard the opposite in the context of smaller firms like Moelis where they "don't have a very large balance sheet" and can't use it to win business. What does exactly does this mean? Large vs. small balance sheet and how exactly does one use that to win business? Again I apologize if this is a dumb question I tried searching but found nothing.
Banks that do and don't finance deals.
Banks 'without balance sheet,' ie the Moelises of the world are strictly advisory.
As for the banks that 'use balance sheet' that can mean a few things depending on context. Broadly it means they have a capital markets business as well, they can issue debt and equity. But it is usually talked about in terms of M&A deals where the bank gets signed on as an M&A advisor because they are willing to finance the acquisition. Financing is involved in almost every large M&A deal, eg see the below article on the Freeport-McMoran deal in which JPM committed $9bn in financing.
http://dealbook.nytimes.com/2012/12/05/the-big-loan-backing-freeports-e…
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