Boutique vs. MM Investment Banks: The Distinctive Edge of Boutique Institutions

January 11, 2024

The financial services world can be a little confusing at times. A useful first step in understanding your financial needs is learning the differences between bulge bracket firms versus boutique and mid-market banks.

That’s why, in this article, we’re exploring the key distinctions of various investment banking firms and how they compare. You’ll get insights into the three main types of investment banking firms, what they do, and the pros and cons of each. Read on to learn more.

What are the three types of investment banks?

Bulge bracket banks

Bulge bracket banks are what an average person typically thinks of when they imagine a bank, offering any service you may need: M&A, leveraged finance, restructuring, equity capital markets, debt capital markets, and so on.

For instance, JP Morgan, Goldman Sachs, and Bank of America are commonly known bulge bracket investment banks. Some especially large firms also offer consumer banking services, such as checking accounts and lending products for homes or vehicles (typically due to legacy mergers). 

Boutique banks

On the other end of the spectrum are boutique banks, which are the most variable type of investment banking firm. Typically, boutique firms have fewer bankers on staff than other organizations of equivalent revenue. Because of this, their defining feature is not their size, but rather, what they do: boutique banks usually specialize in a particular service.

Regional boutique banks are usually limited to a single state or city. They also tend to offer more specialized services than larger, elite boutique firms, and may only handle specific kinds of deals for a specific industry. For instance, handling mergers and acquisitions for energy or agriculture companies.

By comparison, elite boutiques tend to be larger and can even resemble bulge bracket banks in some ways. Instead of solely handling one type of deal, like regional firms, they may also offer restructuring or asset management services.

Examples of different boutique firms include Lazard (global M&A advisory), Cain Brothers, and Montgomery & Co (specializing in the healthcare and media/tech industry, respectively). 

Middle market banks

Finally, middle-market or mid-market banks are almost exactly what they sound like: they operate in the middle ground between boutique and bulge bracket banks. While some mid-market banks offer specialized services, most offer multiple services to local groups of professionals. 

A cross-section of American MM investment banks would include firms like Harris Williams, William Blair, and Raymond James. 

Boutique vs mid-market banks

The pros and cons of boutique banks

Boutique banks tend to specialize in one particular area of financial services, and therefore generally employ people with deep expertise in their field. Boutique banks can also form in-depth relationships with clients, offering a greater understanding of client goals and how to achieve them.

In general, boutique banks outperformed non-boutique firms in nine of 11 equity product categories on an annual basis by 62 basis points (bps). Investor portfolios exclusively in boutique firms would have enjoyed a 16% greater return on investment (ROI) than non-boutique investors. However, such a strong focus on particular industries or regions can be prohibitive, so boutique firms aren’t right for everyone.

The benefits of mid-market banks

In contrast, MM banks offer a broader range of services than boutique banks. While they may not have the same level of industry expertise as more niche, boutique partners, it does mean that clients can use the same provider for all their financial needs.

MM banks are also large enough to have a larger national presence and the resources to provide varied services, but not so large that they will not value your business as a client. So, MM investment banking firms can offer long-term value to a wider range of clients.

Bulge brackets: A league of their own

Owing to their size, bulge bracket banks are generally considered to be in a league of their own. The overwhelming majority of bulge bracket clients are Fortune 500, if not Fortune 100, firms executing multibillion-dollar deals. As such, they have huge teams in almost every major city. 

Data from the Wall Street Journal shows that the leading three bulge bracket firms (JPMorgan, Goldman Sachs, and BofA), had 2023 revenues in excess of 

Meanwhile, middle-market and large boutiques usually work on deals ranging from $50-500 million. However, the distinction between different categories of investment banking firms is neither exact nor fixed. What’s more, some banks straddle different categories. For instance, middle-market banks can specialize like boutique firms while also handling multi-billion dollar deals like bulge bracket firms. Blaylock Van is one such example. 

As a middle-market bank, we have a strong track record of serving clients from Fortune 500 firms to mid and small companies – each with a broad spectrum of financial needs. So, we break the mold of investment banking; providing our clients with the same market access as bulge bracket firms while maintaining close client relationships as boutique firms.

Bridging the banking gap with Blaylock Van

If you’re looking for an investment bank that offers the benefits we’ve listed above, look no further than Blaylock Van. We offer bulge bracket and middle market services to Fortune 500 clients and the deep client relationships, agile support, and specialization of a boutique firm.

We can structure and advise on both public and private market transactions, as well as a range of sales and trading transactions. 

To learn more about our sustainable finance solutions, history, and more, get in touch today.


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