The industry has grown moderately through the end of 2024. Merchant banks provide equity, debt and trade financing to middle-market private companies. Merchant banks often invest in the debt of private companies in the form of mezzanine financing and senior loans. Regarding trade financing, merchant banks provide foreign corporate investment and international transaction facilitation services; they also offer lines of credit and issue letters of credit between importers and exporters. While large financial holding companies, like The Goldman Sachs Group Inc. (Goldman Sachs), have merchant banking segments or subsidiaries, most merchant banks are relatively small and specialized, with the average enterprise employing about 21 individuals. Overall, industry revenue has grown at a CAGR of 4.7% to $13.1 billion over the past five years, including an increase of 1.9% in 2024 alone. However, profit is expected to lag to 34.4% of revenue in the current year. A large portion of merchant banking activity provides equity financing to private middle-market companies and short-term bridge financing to companies before an initial public offering (IPO). While drops in IPOs do not directly damage industry revenue, they reduce demand for bridge financing. In addition, amid depressed equity markets, the equity investments of merchant banks yield lower returns in the event of an IPO. However, rebounding equity markets and increases in IPO volume will contribute to higher yields on merchant banks' equity investments and greater demand for bridge financing provided by merchant banks. During the outlook period, as an alternative to expensive equity financing and rigid senior loans, flexible, affordable mezzanine financing will continue to grow in popularity. Mezzanine financing also produces higher yields on average than other forms of funding, which will limit industry revenue declines during the outlook period. The declines in initial public offerings will reduce demand for bridge financing. Industry revenue is forecast to decline at a CAGR of 0.3% to $13.0 over the five years to 2029.