Which type of firm primarily focuses on investment banking?

The type of firm that primarily focuses on investment banking is the investment banking firm. These firms are fundamentally designed to assist companies, governments, and other entities in raising capital, whether through issuing stocks, bonds, or other forms of securities. Investment banking firms also provide advisory services for mergers and acquisitions (M&A), helping clients navigate complex transactions and optimize financial outcomes.

An investment banking firm usually has a structured approach to underwriting new issues of securities, which involves assessing the value of the businesses they work with, helping to price the securities appropriately, and marketing these securities to potential investors. Their role can also extend to providing market intelligence and strategic advice, which is essential for clients looking to make informed financial decisions.

In contrast, a long-only firm typically focuses on asset management where they make investments solely in long positions in securities, without the dedicated investment banking services. Brokerage firms primarily act as intermediaries in financial transactions between buyers and sellers of securities, rather than originating or underwriting new issues. Online brokers assist individual investors with trading but do not engage in the investment banking functions of capital raising and M&A advisory. Thus, none of these alternatives encapsulates the core responsibilities and services provided by a firm that is primarily focused on investment banking.