Definition: Boutique investment banks are small financial institutions that offer specialized corporate finance and investment banking services.
What Does Boutique Investment Bank Mean?
What is the definition of boutique investment banks?Boutique investment houses specialize in industries, sectors or geographical areas, seeking to cover small and middle-market firms in particular niches. Because they are smaller than the bulge-bracket banks, their fees are significantly lower, yet their quality of service is impeccable.
Most of the small investment banks build long-term, mutually exclusive relationships with their clients, which grow stronger as time goes by. In addition, most of the times, the deal-maker of a small investment bank is directly involved in the transaction, seeking to complete it successfully. Their clients are corporations and companies with an enterprise value between $5 and $100 million.
Let’s look at an example.
Catherine is a financial analyst at a boutique investment house, headquartered in New York, NY. She is responsible for the emerging markets, and she offers her clients strategic advisory services that pertain to special niches in China, India, Malaysia, and Brazil.
Catherine, as well as her manager, recognize their dynamic working environment that requires a highly sophisticated workforce, able to deliver the best possible solution for every investor problem. Catherine’s expertise spreads across a range of investment banking services, which extend beyond strategic advisory, including an unparalleled industry knowledge and ability to offer sound guidance to her clients.
More than the strong customer relationships that she has developed, Catherine is satisfied with the firm’s philosophy that seeks to instill confidence in the prospect clients. On the other hand, the network of contacts is quite restricted, requiring Catherine to put an extra effort before getting the next best customer. Also, the suite of services is quite limited, a fact that makes Catherine having second thoughts as to whether she should stick with the small investment bank or shoot for a bulge bracket bank.
Define Boutique Investment Banks: BIB means brokerages that offer a niche set of asset management services.