Merchant Banking Services in the US Industry Market Research Report Now Available from IBISWorld

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Impaired capital markets and falling asset valuations have particularly damaged small merchant banks in recent years. For these reasons, industry research firm IBISWorld has added a report on the Merchant Banking Services industry to its growing industry report collection.

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Industry volatility is expected to subside, but regulation may hinder revenue growth.

Despite hedging revenue to a certain degree by providing an array of financial services, the performance of the Merchant Banking Services industry has been damaged by falling underwriting activity and subdued trade over the five years to 2014. Merchant banks share a number of characteristics with investment banks and private equity firms, and often invest alongside their clients as a means to endorse potential investments. More specifically, merchant banks provide foreign corporate investment, trade financing and international transaction facilitation services, along with bridge and mezzanine financing. While large bank-holding companies, including Goldman Sachs, have merchant banking segments or subsidiaries, the majority of industry operators are relatively small in size, with the average enterprise employing approximately a dozen individuals. Impaired capital markets and falling asset valuations have particularly damaged these small merchant banks in recent years; consequently, industry revenue is expected to fall at an annualized rate from 2009 to 2014.

Merchant banks typically provide bridge and mezzanine financing services to companies that are too large for venture capital firms but too small for large initial public offerings. Therefore, while drops in total equity underwriting activity do not directly damage industry revenue, they do indirectly harm revenue through reduced demand for bridge financing. According to the latest available data from the Securities Industry and Financial Markets Association and IBISWorld estimates, domestic equity underwriting is anticipated to fall significantly in 2014, and industry revenue is expected to drop in the same year. Yet, demand for industry mezzanine financing has increased in recent years, largely due to low bank and hedge fund capital provision.

The Merchant Banking Services industry has a relatively low level of concentration, with the four largest operators generating small proportion of revenue. Over the five years to 2019, general improvements in private equity supply and demand for alternative assets are anticipated to benefit merchant banks; consequently, industry revenue is forecast to increase at an annualized rate of over the period. However, according to IBISWorld Industry Analyst Stephen Hoopes, “mounting regulation in the financial services sector concerning conflicts of interest is anticipated to hinder revenue growth and damage profit margins.” Similarly, “declining fees among hedge funds and private equity firms are indicative of broader drops in charged fees and have the potential to damage margins for merchant banks,” says Hoopes.

For more information, visit IBISWorld’s Merchant Banking Services in the US industry report page.

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IBISWorld industry Report Key Topics

The Merchant Banking Services industry primarily makes private equity investments with firm or investor capital into the securities of private or public companies. It also provides a wide range of ancillary bridge, mezzanine, real estate and distressed financing as well as international trade financing and foreign direct investment services in varying degrees. This industry is a segment of the Investment Banking and Securities Dealing industry (IBISWorld report 52311).

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit or call 1-800-330-3772.

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Gavin Smith
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