Merchant Banks deal mostly in (but are not limited to) international finance, long-term loans for companies and underwriting. Merchant banks do not provide regular banking services to the general public.
Their knowledge in international finances make merchant banks specialists in dealing with multinational corporations.
Merchant banks invest their own capital in client companies and provide fee-based advice services for mergers and acquisitions, among other services they provide.
Merchant banking practices take care of the needs of commercial international finance, stock underwriting, and long-term company loans. This type of bank primarily works with other merchant banks and financial institutions with its prominent role being that of stock underwriting, and the bank works in the realm of private equity where securities of a company are not available for public trading.
Of the most common private equity investment strategies, these include venture capital, leveraged buyouts, distressed investments, growth capital, and mezzanine capital. Leveraged buyouts generally obtain majority control over existing or mature firms, whereas growth capital and venture gains invest in younger or emerging corporations without obtaining the majority of control.
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