Investment consulting is an essential part of any investor or investing company. Investment consultants heavily influence the decisions of investors. According to a study, more than half of the corporate funds are currently using investment consultants. Investment is a serious business and should always be conducted with extreme precautions. Consultants are the people who have years of experience working in the financial industry and provide valuable advice for a fee. There are two types of consulting; sell-side consulting and buy-side consulting. Let’s take a look at both and find out how you can utilize both of these.
What is Sell-Side Consulting?
Sell-side is the part of the industry that is involved in the creation, promotion, analysis, and sale of stocks, bonds, foreign exchange, and any other financial instrument. Sell-side people and firms create products and make them available for the buy-side to buy.
The sell-side consultants are the guys that offer their expertise to the investors selling their bonds or stocks. Whenever a sale is made money runs across different hands. Some make money off it and the others lose a little. Sell-side consultants are the people who provide the service of advising the investors so that they can make the right decisions regarding sell. They use their experience of the financial world to analyze the true potential of the stock, the buyer and the timing of the sale. They charge a fee and devote their time and expertise to make sure that their client doesn’t lose any money.
The Importance of Sell-Side Consulting:
Investing is one of the most important games in life. It teaches one the essence of decision making, the success of it, and the price of the failure. These decisions on the sell-side include the timing of the sale, the acceptance of an offer, and the evaluation of the buyer. However, one decision that haunts the investors most is, should they hire a sell-side consultant? Or should they handle all their sales individually?
It is quite surprising to see that many business owners often make the mistake of handling all of their sales without the guidance of a sell-side consultant. The common factor behind these kinds of mistakes is always the perception of saving as much money as possible. People like it when they save the charging fees of the consultant. The lesson here is to look at investment as a marathon rather than a sprint. You make wise decisions losing short term money to gain a long term financial advantage. A sell-side consultant provides many benefits including the navigation of the sales. One should never attempt to handle all the sales even if the buyer is a potential one. Here are some of the best benefits a sell-side consultant provides:
True Value of the Asset
Investment is all about how you value the assets and companies. The most important factor of any sale negotiation process is the correct and most importantly fair valuation of the company. You can set the best sale price only when you perform an accurate and fair business valuation. In the investment business, the buying party, as well as the selling party, wants the best price for the sale. What they mean by this is the price that they are happy at. The only thing that can make both the parties happy is the fair evaluation of the company. A sell-side consultant analyzes and extracts the most accurate valuation possible.
Sell-Side Consultants Clear the Sale Functions
Business is simple when you are operating a small store on the corner of your street. But when the business enters the global financial industry and starts dealing in bonds and stocks it becomes confusing. The factors affecting the prices of businesses and products increase dramatically. If you feel like selling your business at any such time you can fall into any pit any time. Even if you manage to choose the right buyer the process can eat up your time and bring in a situation where you will have to sell it at an unfair price. A sell-side consultant is experienced and familiar with such pit holes. These consultants make the process more efficient and quick. When the deal processes faster and more efficient, the chances of getting the best price increase dramatically.
DIY loses Money
A business deal isn’t normally as simple as it seems. The business owners who like to negotiate their deals often find themselves trapped in an inescapable situation and soon the deal starts falling apart. If the deal diminishes in the middle of the process this not only makes it impossible to deal with the same buyer again but also sends a bad signal to the market. This saves you from selling your asset below the fair price.
What is Buy-Side Consulting?
The other side of Wall Street’s financial coin is the buy-side. Buy-side guys work insurance and mutual funds and buy large chunks of securities. Basically buy-side is the part of Wall Street that buys securities for money-management practices. A buy-side business is involved in purchasing securities, stocks, and other financial products for the clients.
A buy-side consultant provides the service of valuable advice and guidance to the clients buying stocks, bonds or securities. Buying stock in any company or any bond is a huge decision on the buyer’s part. Buy-side consulting provides the buyer with an experienced and expert outlook on the deal and reduces the chances of a risky decision.
The Importance of Buy-Side Consulting:
One of the most important decisions in an investor’s life is to choose which bond or stock to buy and which offer to leave. The workings of the financial industry are complex and often things start looking murky. At such times buy-side consultants act like an angel. Here are some of the benefits a buy-side consultant can bring you.
An Expert Analysis
The most important aspect of buying any bond or stock is to analyze its true value. The analysts associated with the investment industries release ratings on every bond or stock. However, one should be careful of these analysts as well. The easiest way to do that is to hire a buy-side consultant who can conduct expert analysis over your next investment.
If you put yourself entirely in the investment business soon you will find yourself completely isolated from the world. The analysis of the companies, risk of the deals, and the timing of the sales are time-consuming processes and at the same time most essential for business. A buy-side consultant takes up the job of conducting any kind of research which might eat up your family and personal time. Investment is a long marathon and needs to be run as smooth and patient as possible. A buy-side consultant charges you a little fee and takes all the menial work for himself.
Sell-Side V.S Buy-Side: Functions, Goals & Consulting:
There are some essential differences between the two faces of Wall Street. Here are the salient features of buy-side V.S the functions of the sell-side:
Sell-side people make financial products and facilitate the decisions of the buy-side firm.
Buy-side is involved with the entities associated with the investment making.
Investment Banking, Commercial Banking, Stock Brokers, Market Makers
Hedge Funds, Asset Managers, Institutional Investors, Retail Investing.
Sell-Side: Sell-side firms make and pitch assets and opportunities.
Buy-Side: Buy-side firms have the capital and look to make more money by buying the assets made by the sell-side firms.
Sell-Side: Sell-side consulting deals with negotiation processes and aims to make the deals smooth for the clients.
Buy-Side: The investors looking to buy financial products such as bonds and stocks benefit from the buy-side consulting to make the wisest investments.
The financial industry is evolving rapidly and only the ones busy in the current workings of the industry are aware of the newer products, services, and their impact on the overall functionality if the industry. When these experienced individuals become consultants they bring in the financial expertise and help their clients make the best investments. DIY in investment business never pays off. Sell-side, as well as buy-side consulting, is highly recommended if you wish to make the right investments.