Not all investment banks are the same. Some work on the world’s biggest financial deals, while others focus on smaller markets or specialized services. Understanding these differences helps explain how the investment banking industry works and why companies choose one type of bank over another.
This guide explains the main types of investment banks and what makes each one unique.
Bulge Bracket Investment Banks
Bulge bracket banks are the largest investment banks in the world. They handle billion-dollar deals, operate in all major financial markets, and offer a full range of services. These include mergers and acquisitions (M&A), stock and bond offerings, trading, wealth management, and asset management.
Their history goes back to the industrial age, when businesses like J.P. Morgan financed major projects like railroads and steel production. Today, firms like Goldman Sachs, JPMorgan Chase, Morgan Stanley, Bank of America, and Citi dominate the industry.
In 2023, JPMorgan Chase earned $38 billion in investment banking revenue and managed over $3.9 trillion in total assets. Goldman Sachs advised on over $1.2 trillion in M&A deals, showing just how massive these firms are. However, their size also means they face more regulatory pressure and risks when markets slow down.
Middle-Market Investment Banks
Middle-market investment banks serve mid-sized companies, usually with revenues between $10 million and $1 billion. They work on deals that are smaller than those handled by bulge bracket banks, typically ranging from $10 million to $500 million.
These banks focus on mergers, acquisitions, debt and equity financing, and business restructuring. They offer more personal service than larger banks, often building long-term relationships with clients.
Key players include William Blair, Houlihan Lokey, Lincoln International, Raymond James, and Piper Sandler. For example, Houlihan Lokey is known for its leadership in financial restructuring and mid-market M&A deals.
In 2024, many middle-market banks reported strong profits thanks to steady demand for advisory services, even as loan markets slowed due to higher interest rates. These banks continue to play a vital role by serving clients that larger banks often overlook.
Boutique Investment Banks
Boutique investment banks focus on specialized services, often in specific industries or regions. They typically advise on M&A, restructuring, and capital raising for deals worth less than $500 million, although some boutiques work on much larger transactions.
Many boutique banks were founded by former executives from large firms who wanted to offer more independent and personalized advice. After the 2008 financial crisis, their popularity grew as clients looked for conflict-free advice.
Leading boutique firms include Evercore, Lazard, Centerview Partners, and Moelis & Company. For example, Evercore earned $2.45 billion in advisory fees in 2024, proving that boutiques can compete with the biggest banks on major deals.
Boutiques often reward their top bankers with some of the highest pay in the industry. In 2024, managing directors at top boutique firms earned over $1.7 million, reflecting the demand for specialized expertise.
Regional Investment Banks
Regional investment banks focus on serving clients within specific geographic areas. They combine local market knowledge with a broad range of services, including M&A advisory, capital raising, and debt financing.
These banks typically work on deals ranging from $100 million to $1 billion, filling the gap between local banks and global giants. While they often start regionally, some grow to serve national or even international clients.
A well-known example is Jefferies & Co., which operates across the U.S. and globally but remains focused on specific industries and regions. In late 2024, U.S. regional banks exceeded profit expectations thanks to a surge in investment banking fees, driven by renewed market activity after the presidential election.
Regional banks play a key role by offering businesses access to tailored financial services within their local economies.
Merchant Banks
Merchant banks provide private investment and strategic advisory services, mainly to large companies and wealthy individuals. Unlike traditional banks, they don’t offer retail services like savings accounts or personal loans.
Historically, merchant banks helped fund trade and production in the Middle Ages. Today, they focus on private equity investments, corporate advisory, and direct capital investment in businesses.
One example is BDT & MSD Partners, which specializes in advising and investing in family-owned and founder-led businesses. In 2024, the firm expanded its advisory services for tech founders, reflecting the growing demand for specialized merchant banking in emerging sectors.
While the term "merchant bank" is used differently in various countries, their core role remains the same: providing capital and expertise for large, strategic investments.
Universal Banks
While many investment banks focus only on corporate finance and capital markets, some operate as universal banks. These are large financial institutions that combine traditional banking services like deposits and loans with investment banking services like M&A advisory, stock underwriting, and trading.
This model became popular after the repeal of the Glass-Steagall Act in 1999, which had previously required banks to keep commercial and investment banking separate. After deregulation, financial giants like J.P. Morgan Chase, Citigroup, and Bank of America started offering both retail and investment banking under one roof.
Universal banks benefit from having diversified revenue streams. They serve both individuals and large corporations, giving them steady income from consumer banking and higher profits from big financial deals. For example, J.P. Morgan Chase is the largest bank in the U.S. by assets, earning billions each year from both sides of the business.
However, this model also comes with greater risk and complexity. Managing consumer deposits while taking part in risky financial markets has raised concerns among regulators, especially after the 2008 financial crisis, when some of these large banks needed government bailouts to survive.
Today, universal banks remain among the most powerful players in the financial world, offering a full range of services to clients of all sizes, from everyday consumers to the world’s largest corporations.
Bottom Line
Investment banks come in many forms. Bulge bracket banks handle the largest deals on a global scale. Middle-market banks focus on mid-sized companies with specialized needs. Boutique banks provide expert advice in specific industries or regions. Regional banks serve local businesses with tailored financial services. Merchant banks invest directly in private companies and offer long-term strategic guidance.
Alongside these, universal banks combine both traditional banking and investment banking under one roof. These banks operate at massive scale, but they also face more complex risks because of their size and reach.
Each type of investment bank plays a different role in the financial system. Understanding these differences helps companies and investors choose the right partner—whether they need specialized advice, local market knowledge, or access to global capital.