Definition - What does Merchant Bank mean?
A merchant bank is similar to an investment bank in that they both provide their own capital for debt or equity financings in mid-market companies. Merchant banks are private, so they are not regulated and can be very flexible on the type and level of investments made. In addition to investing, merchant banks provide advisory services on corporate finance issues such as the purchase or sale of a business, with these services usually added on to the companies in which they invest.
Divestopedia explains Merchant Bank
A merchant bank could be another alternative source of capital for mid-market businesses. Business owners should always keep in mind the interest of the party providing them with advice. If a merchant bank has been engaged to provide financial advisory services and subsequently offers the required capital for financing, then the initial advice provided should be scrutinized by the owner. There is an inherent conflict of interest and, while the advice received may be adequate, it may have also been provided with the intent of securing the subsequent financing.