Popular Careers in Finance: Buy-Side, Sell-Side and Internal

Finance is probably one of the most expansive fields to make a career in. It has more options and sub-options for careers than one can count, and it can be overwhelming. For purposes of breaking down financial courses & careers in the domain of the side of the transaction they’re on, there can be a buy-side, a sell-side, and an internal finance practice.

The buy-side

The buy-side is, as the name suggests, the collective of parties that buys stakes for future profits. Buy-side finance is one of the most lucrative and difficult to crack professions. It mostly consists of:

• Private Equity: Private Equity firms are those which invest a substantial amount of time and money in companies that are not public to improve them and then make them public, netting a handsome profit in the process. The process is very long-term oriented and involves extensive business and modeling knowledge. Some recognizable firms in the space include KKR, Blackstone, Carlyle, and Warburg Pincus.
• Venture Capital: Venture Capital is a subset of Private Equity that focuses solely on early-stage companies – the ones with an idea or something that they’ve just launched and are looking for money to grow it. Venture, too is a long-term game, and returns are usually tenfold or zero. A high-risk space, it requires a lot of industry knowledge. Some notable firms include Sequoia Capital, Accel, a16z, and Bessemer Venture Partners.
• Hedge Funds: Hedge Funds are instituted across multiple types and strategies, but the core concept is to trade and hold positions in publicly listed companies to make profits. More and more specialized hedge funds have been popping up, which are increasingly becoming quant and code-heavy to be the fastest finger first to hot deals. Popular funds include Renaissance Technologies, Bridgewater Associates, Millennium Management, and D.E. Shaw.

The sell-side

Perhaps the most documented side of finance, the sell-side, is the facilitator to most deals in the space of finance. It comes with long hours and longer payrolls. It consists:

• Investment Banking: Investment Bankers take care of multiple aspects of a company once they are out there and have raised significant capital. It deals with equity raising, debt raising, and mergers & acquisitions. Bankers cover everything in a specific sector and have many coverage groups and capital market groups. Mergers & Acquisitions is one of the most sought-after groups in finance.
• Sales & Trading: Stock traders are people who actively work in the listed markets to either trade on the bank/firm’s money or get the best deals in place for their clients who want to participate in the markets. Traders work across equity, debt, currencies, and commodities. Again, Sales & Trading has multiple desks that trades and sales people sit on to make and execute deals across various asset classes and types of contracts.
• Equity Research: On the public-facing side of banks, equity research teams provide extensive coverage on particular stocks and sectors – a target price, a thorough outlook, and a decisive model to act as investment advice.

Investment Banks cover all these functions, and 8 bulge bracket banks lead the league tables for all 3 functions: Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley, and UBS.

Internal Functions

Internal functions look actively at a firm’s finances and risks – suggesting ways to maximize returns under permissible risk limits. They identify synergies and opportunities to grow a firm and weed out excessive cost burdens that add low value. They have

• Corporate Finance: In the corporate finance division of an organization, the main agenda is always allocation of financial resources and maximization of return on capital – be it for capital structure, internal budgeting, or working capital management.

Risk Management: As the name suggests, risk management functions look to mitigate and hedge risks based on the organization’s appetite. While there are multiple domains in risk, financial risk mostly looks at financial loss minimization via various internal controls or hedging strategies.