What is the definition of Equity Research?

Equity Research is a division within either a buy-side or sell-side firm which is responsible for the research used by the firm and its clients. The purpose of an equity researcher is to provide insight and detailed analysis into a company, entity or sector and this information is then used by investors to decide how to allocate their funds and by Private Equity firms and investment banks to value companies for mergers, LBOs, IPOs etc.

Buy-side firms will then pay the equity research team for access to their information, and this is why equity research is a revenue-producing group for an investment bank. Equity Research can be thought of as a liaison between investors and corporations. Typically an equity research department is split into different coverage groups, and these coverage groups will be small teams that focus on a specific sector (i.e. mining, energy & resources, healthcare, consumer etc.). Each team will usually cover 5-20 companies.