History of Merchant Banking
The
term "merchant bank" stems from leading merchants of the early 1800's,
whether trading in grain, paper or steel, who transitioned from merchanting
to banking when they had built up a sufficient reputation for soundness,
reliability and wealth to warrant their colleagues' trust. The profits
from banking the commodities of the day were greater and the risks were
lower.* Early examples of merchant banking often involved international
trade between the United States and Europe due to the sheer period of
time required to contract, ship and receive goods. Financing trade gave
merchant banks the opportunity to deal in commodities on their own account.
Merchant banking and its dealing in commodities is distinct from investment
banking dealing in securities. The merchant banker's role evolved in
the 1920's when leading firms became heavily involved in advising as well as financing their clients.**
Although not defined in U.S. federal banking and securities laws, today the term "merchant banking" is generally understood to mean "negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies". Other investment banking services -- raising capital from outside sources, advising on mergers and acquisitions, and providing bridge loans while bond financing is being raised in a leveraged buyout -- are also typically offered by financial institutions engaged in merchant banking.***
Building on a legacy of innovation, Ocean Tomo is guided by the nation's leading intellectual capital managers and advisors - intellectual capital merchants. We represent an integrated offering of asset management and advisory services, many of which can be traced over one hundred years to comparable offerings of the most well-known of merchant banks.
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Although not defined in U.S. federal banking and securities laws, today the term "merchant banking" is generally understood to mean "negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies". Other investment banking services -- raising capital from outside sources, advising on mergers and acquisitions, and providing bridge loans while bond financing is being raised in a leveraged buyout -- are also typically offered by financial institutions engaged in merchant banking.***
Building on a legacy of innovation, Ocean Tomo is guided by the nation's leading intellectual capital managers and advisors - intellectual capital merchants. We represent an integrated offering of asset management and advisory services, many of which can be traced over one hundred years to comparable offerings of the most well-known of merchant banks.
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