What financial institutions are involved in the process of issuing securities and advising firms on mergers?

The process of issuing securities and advising firms on mergers primarily involves investment banks. Investment banks act as intermediaries between issuers of securities and the investing public, helping companies raise capital through the sale of stocks and bonds. They provide essential services such as underwriting, whereby they assess the risks associated with the securities being issued, set the price for the securities, and sell them to investors.

Moreover, investment banks offer advisory services for mergers and acquisitions. They assist firms in identifying potential merger or acquisition targets, conducting due diligence, negotiating terms, and navigating the complexities of regulatory requirements. Their expertise in valuation, market conditions, and financial structuring positions them as critical players in these transactions.

While commercial banks primarily focus on deposit-taking and lending activities and may engage in some investment activities, their role in securities issuance and mergers is limited compared to investment banks. Insurance companies and pension funds typically do not participate in these processes; instead, they are more focused on managing their own investment portfolios and providing coverage or retirement benefits, respectively.