What type of firm is classified as a sell-side firm?

A sell-side firm primarily provides services related to buying and selling securities and facilitates transactions in financial markets. Investment banks, which are classified as sell-side firms, play a crucial role in this process by underwriting new debt and equity securities for all types of corporations, aiding in selling securities to investors, and facilitating mergers and acquisitions.

Investment banks engage in market-making, trading, and providing research and advisory services to clients. They are active participants in the financial markets, working to promote liquidity and assist in the price discovery process. Their role is instrumental in connecting issuers of securities with investors seeking those securities.

In contrast, mutual funds, hedge funds, and pension funds are generally considered buy-side firms. These entities primarily focus on investing capital in securities, with the goal of maximizing their returns for their clients or beneficiaries. Their strategies typically involve purchasing and holding investments, rather than facilitating transactions in the market like sell-side firms do. Thus, sell-side firms are distinct in their function and objectives within the financial ecosystem.