Posted in Marketing and Strategy Terms, Total Reads: 202
Definition: Sell Side
It is a term used in the finance industry. It refers to those corporate entities that deal in creating, promoting, analyzing and selling stocks of listed companies. A firm on the sell side provides investment service to asset management firms, which are referred to as the buy side (since they primarily buy stock products offered by the sell side).
In simpler words, sell side firms employ analysts, who research and publish reports on listed companies. The reports contain analysis of the company’s business and details of how the company stock is performing. Based on this analysis, the report contains recommendations on whether the stock should be sold or purchased in future. Apart from analysts, the sell side firms have a sales team that works in tandem with the research team, to execute purchase and sales of the recommended stocks for the buy side firms. Sell side firms earn a commission on the sales price of the stock bought by the buy side firm.
The sell side and buy side firms are interdependent. The sell side firms try to get the highest possible price for the stock they sell along with the analysis services they provide in form of reports. The buy side firms buy these stocks with the aim of deriving maximum profit at a later stage.
For example, investment banks like Goldman Sachs act as intermediaries between the companies who list securities (for e.g. Tata Motors which is listed on the BSE) and the investing firms.