What Are Investment Banks?

Mergers & Acquisitions covers the purchase, sale, merger, and spin-off of companies and business units. The objectives include growth, succession planning, and portfolio focus. Services range from sell-side and buy-side advisory, succession solutions, and carve-outs to minority investments and joint ventures. Advisory also encompasses the structuring of growth, acquisition, and refinancing transactions using both debt and equity capital.

Investment banks are also active in securities trading, including equities, bonds, and derivatives. Such trading supports market liquidity, with revenues generated from services, commissions, and—within regulatory limits—proprietary trading and position-taking. Research reports are produced by analysts; since MiFID II, research costs must be unbundled from trading activities (research unbundling).

Investment banks support capital raising for governments and corporations, for example through the placement of bonds or shares (including IPOs). Their role extends from documentation and pricing to distribution. For public offerings or listings, a prospectus is required under the EU Prospectus Regulation (EU) 2017/1129, with interpretative Q&As provided by ESMA. 

Pension funds—both corporate and public—require long-term investment strategies to secure sustainable returns for their beneficiaries. Given the high level of competition and the need for reliable asset allocation, careful planning is essential. Investment banks provide expertise and proven approaches to support pension funds in developing and implementing effective long-term strategies.

Through comprehensive advisory, investment banks help insurers analyze investment risks, manage liquidity, and align processes with regulatory requirements under Solvency II. This ensures that insurance companies and pension institutions remain financially resilient and capable of meeting their obligations at all times.

Foundations also benefit from professional investment banking support in structuring their assets, diversifying portfolios, and managing risks and liquidity. With tailored strategies and continuous portfolio monitoring, foundations can safeguard their obligations while ensuring sustainable asset growth and risk minimization.

Equity—or net assets—is a key component of corporate capital, as it serves as the liability base for creditors. Unlike debt, equity carries no fixed interest payments or maturities with repayment obligations. It is often most relevant when financing high-value, long-term assets such as real estate or machinery.

The main advantages of equity financing include a lower risk of insolvency or over-indebtedness, greater independence for the company, and the potential to capture higher long-term returns. However, disadvantages include the increased personal risk borne by the shareholders, the reduction of distributable profits due to dividend payouts, and the absence of tax deductibility, unlike interest payments on debt.

Debt financing also carries its own advantages and disadvantages. In certain cases, a hybrid form may be preferable: mezzanine capital. This financing category includes instruments such as silent partnerships, shareholder loans, and profit-participating rights (Genussrechte). The terms of remuneration depend on the specific contractual agreements, balancing risk and return between equity and debt characteristics.

Corporate bonds enable companies to raise debt capital from the capital markets, with coupon, maturity, and repayment terms contractually defined. From a technical perspective, these instruments are classified as bonds (as per Bundesbank terminology). For public offerings or listings, the requirements of the EU Prospectus Regulation apply.

By combining appropriate products with suitable investment strategies and robust risk management, investment banks can provide clients with customized financial solutions that align with their objectives and risk tolerance.

Investment banks offer a broad range of services that are integrated into their advisory processes. These include analytical tools, portfolio and risk management strategies, and access to trading platforms and capital markets. Such integration ensures clients receive comprehensive and seamless support.

Sustainable and trusted client relationships are built on regular and transparent communication. A detailed needs assessment at the outset of the relationship establishes client expectations and identifies viable options. With tailored, solution-oriented financial structures and high-quality service, investment banks create long-term and successful partnerships with their clients.

At the outset, a solid market analysis—continuously updated—is essential. Investment banks closely monitor economic developments and adjust the precise timing of each decision accordingly. This enables them to identify opportunities early and implement strategies that mitigate risk while maximizing potential.

Leading investment banks employ highly qualified experts with long-standing experience and specialized know-how. As a result, clients can expect competent advice across the full range of services as well as the successful execution of even the most complex and demanding transactions.

ODDO BHF emphasizes tailored international banking solutions that are fully aligned with each client’s individual needs, objectives, and expectations.

For its clients, ODDO BHF utilizes the comprehensive framework of Family Offices. The key advantage for clients lies in the fact that activities within the Family Office remain under the direct control of the investor, rather than being outsourced or supervised by third parties. Within this setup, all relevant services can be provided, with the specific scope of work defined contractually on a case-by-case basis.

ODDO BHF focuses on capital preservation, sustainable returns, and reliable cash flow. Investment strategies are tailored individually to each client, with tax considerations incorporated in line with applicable regulations (note: ODDO BHF does not provide tax or legal advice).